Review

• Rexit’s FY24 net profit of RM13.2mn came in within expectations, accounting for 97.9% of our full-year estimate.

• YoY, FY24’s net profit grew 20.0% to RM13.2mn, primarily owing to higher revenue. The group saw its revenue jump 19.9% to RM32.1mn, thanks to an increase in hardware, systems software sales, and software sales and services.

• QoQ, 4QFY24’s net profit dropped 14.2% to RM2.9mn while revenue was 11.6% lower at RM7.4mn. The weaker bottom line was primarily due to lower revenue as well as higher administrative expenses. Meanwhile, the decline in revenue was mainly due to lower software customisation service.

• Its balance sheet remains solid with zero debt and a net cash position of RM28.9mn as at end-4QFY24.

Impact

• Maintain FY25 and FY26 earnings forecasts. Meanwhile, we introduce FY27 numbers with a projected net profit of RM16.3mn, representing an earnings growth of 5.3%.

Outlook

• Generally, we expect the group to continue posting resilient revenue with stable growth, underpinned by increased utilisation of its eCover system by both existing and new customers.

Valuation & Recommendation

• No change to our target price of RM1.03, based on unchanged 12x CY25 earnings. Upgrade the stock from Hold to Buy following the recent weakness in share price.

Source: TA Research - 28 Aug 2024