Hot stock: Rex International rises 7.1% in early trade

SHARES of Rex International 5WH : 5WH 0%saw heavy trade on Monday morning, with prices going up more than 7 per cent.

As at 10.01am, the counter edged up 1.5 Singapore cents or 7.1 per cent to a high of 22.5 cents, with some 26.2 million shares worth S$5.8 million changing hands.

No married deals were recorded on Monday morning, according to ShareInvestor.

Rex International has been the most heavily traded energy stock on the Singapore Exchange (SGX) this year, in view of rising crude prices as global economies rebound.

Over a span of just two months, the Catalist-listed firm dished out two big deals, one of which was the purchase of an oil field in Norway, marking its first production asset in western Europe's largest oil-and-gas producer, where the company already has several key discovery assets.

Two weeks ago, the tech-driven oil firm, founded and led by the Swedish Lidgren family, who are also the company's largest shareholders, said it was dipping into the fast-growing commercial drone business to diversify its business as the green energy transition gathers speed.

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Meanwhile, analysts from KGI Securities on Monday initiated a recommendation of "outperform" on Rex stock, pitting a target price of S$0.32, praising its recent acquisition of the Norway oil field as an "accomplishment" from its early days as a pure-play oil and gas explorer when it first listed on SGX.

KGI's research team projects that the free cash flow generated by oil and gas (O&G) companies will break records this year, with an anticipated surge to US$348 billion from US$311 billion, a record from 2008.

"For Rex, the windfall will continue to strengthen its already-strong balance sheet and give it opportunities to diversify," the analysts said.

Describing Rex as "coming-of-age" as an independent poised to benefit, KGI opined that its portfolio of more than 10 licences including three discovery assets with commercial development potential puts it in an "excellent" position to generate record free cash flows from its producing assets.

"Rex’s strong balance sheet, free cash flow generation and access to capital, differentiates it from many other E&P (exploration and production) companies. Rex is the only game in town (at least on the SGX) for investors looking for direct exposure to the neglected O&G sector," the researchers added.

READ MORE: Rex International doubles down on oil even as it diversifies