| KUALA LUMPUR: The exit of Marubeni Corp of Japan from Rexit Bhd signals uncertainty in its international expansion, particularly to Japan, say analysts.
Last week, Marubeni which was a major shareholder in Rexit disposed of 18.93 million shares, or its entire 10% stake in the company.
It is not known why Marubeni sold the shares or who the buyer or buyers were, but Rexit's stock has been a laggard, declining 16.11% so far this year compared with the 44% gain recorded by the FBM KLCI.
Earlier this year, the share price had shot up 84.8% in less than three weeks — from 46 sen on April 9 to 85 sen on April 24. It closed at 63 sen yesterday with 60,000 shares done.
Signs of Marubeni's exit from Rexit could be seen with the resignation of its only Japanese board member, Motoda Ken, as non-independent and non-executive director on Dec 11. Rexit's management could not be reached for comment.
The information technology solution company focuses on providing software applications for the insurance industry. Its ties with Marubeni are said to be instrumental for Rexit to enter the lucrative Japanese insurance market.
Rexit has always haboured an ambition to expand overseas. It set up subsidiary Rexit International Sdn Bhd in 2006 to market its insurance software products abroad, focusing on three markets — Japan, Thailand and Indonesia.
Rexit owns a 51% stake in Rexit International, while Marubeni, an establised Japanese insurance company with 720 branches worldwide, owns the remaining 49% stake. Besides insurance, the Japanese company also has interest in iron and steel, infrastructure, utility and energy, trading and the food industry.
"This could potentially impact their business as Marubeni's interest in the company is testament to confidence in the company," said an analyst from a local research house.
Japan promises huge potential for Rexit, given that the total general insurance premiums generated there amounted to more than RM250 billion in 2008. In contrast, the insurance premiums in Malaysia last year only came up to some RM20 billion.
Among the major insurance companies with strong ties to Marubeni are Tokyo Marine & Nichido Fire Co, which has a 2.87% share, and Meiji Yasuda Life with 2.48%.
In July 2007, Rexit International was issued a letter of intent by Marubeni Safenet Co Ltd, an insurance agency subsidiary of Marubeni, for implementation of its insurance software and services for the Japanese company.
Marubeni Safenet counted the top three non-life insurers in Japan as its clients, namely Tokyo Marine, Sompo Japan Insurance Co and Mitsui Sumitomo. These three companies have a combined market share of 62% of Japan's non-life insurance market.
Rexit International reached another milestone in Japan in January last year when it signed a master agreement with Sompo Japan Insurance Co to provide e-Cover services at all its 75 branches in 29 countries.
The headway made was supposed to propel Rexit's earnings, with Maybank IB in its report then projecting a revenue of RM359 million and net profit of RM141 million for the financial year ended June 30, 2009 (FY09).
However, that did not materialise and instead, Rexit recorded a 18.9% drop in revenue to RM19.4 million in FY09 from RM23.9 million the year before while net profit fell 26.3% to RM7.1 million from RM9.62 million.
Rexit Venture Sdn Bhd is the largest shareholder in Rexit with a 37.69% stake. Other major shareholders include T Rowe Price International with 7.71% and HSBC Holdings plc with 5.63%. |
0 comments:
Post a Comment