KGI Securities has kept its “buy” call on Rex International with a target price of 50 cents as geopolitical risks boost oil prices.
In a Feb 14 note, the brokerage noted that both Brent and West Texas Intermediate rose around 3% on Feb 11 to US$94.44 and US$93.10 respectively, closing at their highest levels since Sept 2014.
This follows a warning from a senior White House official about the possibility of Russia invading Ukraine “very soon”, the brokerage said. “Even without the prospect of war, oil supply challenges among exporting countries still threaten to increase the tightness in oil markets and may continue to push prices higher, according to the International Energy Agency,” it added.
Rex has two oil-producing fields located offshore Oman and Norway. Due to report its full results on Feb 25, KGI said it will watch this set of earnings closely as it will include contributions from Norway’s Brage Field, which Rex acquired in 2021.
On Jan 26, Rex announced that it has obtained approval-in-principle from SGX for the transfer of listing from the Catalist to the Mainboard. This is to provide the company with a wider platform to reach out to a larger investor base, potentially facilitating greater access to equity and debt markets to maximise the group’s growth potential.
As at 1.42pm, shares in Rex are trading 2 cents higher or 5.12% up at 41 cents.
Photo: Bloomberg
