KUALA LUMPUR (Jan 17): A controlling block of 92 million shares, or a 48.3% stake, in Rexit Bhd was crossed on Wednesday morning via a direct business transaction.
The block of shares was transacted at 85 sen per share or RM78.2 million in total. The transacted price was 7.6% below the last trading price of Rexit at 92 sen before the afternoon break on Wednesday.
It is not known who had purchased the block of shares of the information technology solutions and related services company.
According to a source, the block has been available on the market for about a year. Another source pointed out that the new shareholder could be a high net wealth individual, while another source said it could be a financial institution.
Should the large chunk of shares go to one single party, it will trigger the threshold for mandatory general offer under the listing rules.
It is believed that the block is owned by the company’s current chief executive officer Datuk Chung Hon Cheong through his private vehicle Rexit Venture Sdn Bhd.
Chung, 62, is the single largest shareholder of the company with a 41.2% stake, while the second largest shareholder of Rexit is Datuk Abdul Murad Khalid and his son Mohd Azmil via Global Hartabumi Sdn Bhd with an 11.94% stake. Meanwhile, Rexit non-executive director Kuah Hun Liang is the third-largest shareholder, with a 10.38% stake.
The ACE Market-listed company, which made its debut in 2005, focuses on delivering solutions and services to the financial services sector, particularly the general insurance industry.
The group offers several web-based insurance solutions that cater for front-end marketing and sales functions, as well as back-end operations and management requirements of insurance companies.
At 92 sen per share, the company has a market capitalisation of RM174.2 million and is trading at 14.2 times forward price-earnings ratio (PER). The dividend yield for the stock is 5.4%.
Based on peer comparison on Bloomberg, Rexit’s valuation is lower than its peers, namely Pentamaster Corp Bhd at 32.7 times and Microlink Solutions Bhd (20.7 times), and MyEG Services Bhd (13.68 times).
The low-profile company not only has the financial capacity to undertake large IT projects but it also has the experience of managing large IT infrastructures. Its business model is the provision of software as a service (SaaS), which is based on a pay-per-use basis — an arrangement that Rexit has recognised can benefit its clients, as there is no need for upfront capital expenditure for the application and its required hardware.
The group has also expanded the SaaS model to include the Malaysian unit trust industry, following its appointment by the Federation of Investment Managers Malaysia as the third-party administrator for electronic submissions by its member companies to the Employees Provident Fund.
Between the financial year ended June 30, 2020 (FY2020) and FY2023, Rexit’s profit climbed steadily from about RM9.52 million to about RM11.1 million, generated from annual revenues of between RM25.06 million and RM26.74 million. Its net margins were in the range of 36% to 42%.