• Rexit Berhad (REXIT) started off since 1998 and has evolved into one of the leading solutions providers to the general insurance industry.

• Ongoing expansion in both local and oversea markets leveraging on its reputation and expertise helps REXIT to capture the growing demand in the insurance industry.

• We initiate coverage on REXIT with a BUY call and fair value of RM0.83, based on 14.0x P/E pegged to its forward FY23f EPS of 6.0 sen.

Investment Highlights

• Experienced solutions provider. At the core of REXIT’s competitive advantage is its expertise, experience, and strong reputation in the industry, all of which are essential for customers retention. It will be hard for new market entrants to gain market share without the ability to gain the trust of customers. Besides, REXIT’s experience that is also replicable in developing solutions for different insurance companies is likely to help the company to save on cost.

• Ongoing expansion. We like REXIT’s ongoing expansion strategies by securing new customers, gaining new business from existing customers, and penetrating international markets. The two new customers coming up in FY23 and FY24 are a testament to the group’s commitment to market expansion. Moving forward, we believe the new customers will be the key driver for REXIT’s top line.

• Growing insurance industry. GlobalData projected the general insurance industry in Malaysia would expand at a compound annual growth rate (CAGR) of 4.8% from RM17.67bn in 2021 to RM22.31bn in 2026 in terms of direct written premiums, fueled by the rising demand for motor and property insurance amid economic recovery. The growth bodes well for REXIT’s customers in the insurance industry.

Source: Mplus Research - 8 Jul 2022