REX - Regional Express Holdings

[CanOz]

Seems to be the standout for future potential in a turbulent section of the market

lol @ Boggo....

 

[odds-on]

The REX stock price is starting to show some life, my bet is that it will slowly drift up to around $1.20 before the end of the year.

Anybody willing to provide a TA view? I bought in April based on the discount to NTA and management.

Cheers

 

[Klogg]

The REX stock price is starting to show some life, my bet is that it will slowly drift up to around $1.20 before the end of the year.

Cheers

With the removal of the carbon tax, there probably is some capital gain to be made. But it really is a dog of an industry...

And the discount to NTA doesn't mean much in this case. The assets may be worth what is listed on the books, but when you put them to use you get very little in return...
Unless management start selling off planes and returning funds that is.

 

[McLovin]

And the discount to NTA doesn't mean much in this case. The assets may be worth what is listed on the books, but when you put them to use you get very little in return...
Unless management start selling off planes and returning funds that is.

I agree with you, Klogg. Often they end up mothballing the aircraft because there is no market for them. As for REX, my 30 second look at them left me wondering how they can increase their fixed assets by ~$50m but have their depreciation expense fall.

 

[Craton]

The following might have something to do with the SP movement.

Subsidy for regional air services reinstated after pressure from carriers.

The Abbott government has finally reinstated a subsidy scheme for airlines flying on marginal regional routes following pressure from carriers such as Regional Express.

Read more: http://www.smh.com.au/business/avia...m-carriers-20140915-10h7hu.html#ixzz3DjZRiveF

Although the subsidy isn't as generous as back in John Howard's day.

From REX's website re. profit, fuel/carbon taxes and no dividend: http://www.rex.com.au/NewspaperClip/index.aspx

Source: The Daily Examiner, 29 Aug 14

REX pulls more profit than airline giants Qantas and Virgin
Marco Magasic
THE economic climate is so toxic that REX airlines pulled a bigger profit last financial year than Qantas and Virgin executive chairman Lim Kim Hai says.

"The Australian economy continued to deteriorate over the period and REX lost 38,000 passengers, or a reduction of 3.4%," Mr Lim said. "The environment is so toxic that incredible as it sounds, REX is not only the most profitable passenger airline group for the third consecutive year, it has more accumulated profit before tax than Qantas or
Virgin Australia over the last nine years.

"As foreshadowed in my earlier warnings to the Federal Government, aviation in Australia is in deep crisis with Qantas and Virgin Australia losing a combined $4.4 billion at pre-tax level for the 2014 financial year. "Regional aviation is even harder hit. "We saw another two carriers collapse in the last nine months."
He said about 16 regional Australian airlines had shut down since September 11, some with decades of history.

Mr Lim said the price of fuel and the carbon tax had made things difficult to operate. "On top of that, we had the burden of increased government taxes in the form of the carbon tax and a significant increase in the fuel levy to fund the Civil Aviation Safety Authority," Mr Lim said.

"All of these taxes implemented by the previous Federal Government just add more nails in the coffin of the aviation industry."

He said REX would not issue dividends for this year, but would make it up once the airline recovered

Nope, no holding REX.

 

[odds-on]

The REX stock price is starting to show some life, my bet is that it will slowly drift up to around $1.20 before the end of the year.

Anybody willing to provide a TA view? I bought in April based on the discount to NTA and management.

Cheers

I see REX has got to $1.10 maybe it will get to $1.20 at the end of 2015! It is a pity i sold out in November at $1.02 but there were too many other opportunities tempting me at the time.

 

[Triathlete]

I see REX has got to $1.10 maybe it will get to $1.20 at the end of 2015! It is a pity i sold out in November at $1.02 but there were too many other opportunities tempting me at the time.

It is currently at a significant level presently and needs to break and close above $1.10 for this move to continue in my opinion . I have attached the weekly analysis chart for Rex.

 

[lewisjoshua]

I think Rex is a good stock to look at again, reasons are below:

- A healthy CAGR in Revenue of 6% over the last 4 years.

- Lack of competitors in the space, over 16 regional airlines have gone bankrupt since 2001 which has allowed REX to maintain good margins.

- I have analysed the routes that REX operates in; 66% of routes are ones with REX as the sole operator with an average ticket price of $ 570. 19.6% of the routes with REX being one of 2 operators and 14.2% of routes have REX as on one of 3 operators. While net margins are slightly better than Qantas (6% vs 5%), the P/E(TTM) is only 7.14 compared to 13 for Qantas.

-Having personally flown REX for work several times, I do speak from experience when i say that there are usually no alternatives to the routes they fly to and the ticket fares are not cheap.

- Also for FY19, REX stands 2nd in On-time departures and the cancellation rates are lowest in the industry.

- The low debt will provide wriggle room when the economy slows, Total debt currently stands at about $ 8 million , debt to equity ratio of 3.9.

- Own 2 pilot training academies, the Australian airline pilot academy, started in 2007 and the second one acquired just this quarter; ST aerospace academy.

- Also own 100% of Pel-Air which bids on miscellaneous services such as Air Ambulance

 

[barney]

I think Rex is a good stock to look at again, reasons are below:

Welcome to ASF Lewis. As you have already discovered, @Joe Blow tries to be accommodating where possible so good luck with your pick in this month's comp

REX used to fly in our area as well and were always efficient as you say. Not sure why they ended up moving on but another airline has taken up the routes so maybe they swung a deal to suit them both.

 

[lewisjoshua]

Hey Barney, Thanks for the greetings and Yes, i have noticed Joe's hospitality already .

Unsure on the area you are talking about but the management is very good at managing assets, you have to be when you operate in the airline business i suppose.

 

[barney]

Unsure on the area you are talking about

Best not to divulge that …. the constabulary may find me Lol …

Lets just say somewhere on the East Coast of Australia

 

[Dona Ferentes]

The third force gets an upgrade

Regional Express (REX) has today signed a Commonwealth Grant Agreement under the COVID-19 Regional Airline Network Support program announced by Deputy Prime Minister, the Hon Michael McCormack, on 28 March 2020. Under the program, regional airline carriers will be provided assistance to maintain a minimal weekly schedule to regional and remote ports. The RANS program will provide funding for up to six months with an initial approval for six weeks. Under the Grant Agreement, Rex will receive funding to operate 1-2 return services a week to most destinations on the Rex network.

 

[sptrawler]

The third force gets an upgrade

It makes sense, remote areas still require a service, even if it is cut back.

 

[Dona Ferentes]

It makes sense, remote areas still require a service, even if it is cut back.

Most medical specialists with practices in regional cities commute to these places from their capital city bases. As well, the wheels of govt must still reach out. And all the other services, like legal/ justice

Of the 76 service requests (regional airline carriers will be provided assistance to maintain a minimal weekly schedule to regional and remote ports), some 38 were approved.

WA (services regulated by state govt) gets one flight a week ex-Perth to Albany, Esperance and Carnarvon.
Qld (services regulated by state govt) gets a mix, but all One flight a week on Northern routes ex Cairns and Townsville, as well as ex-Brisbane. Most are multi-stop routes out west.
Qld (unregulated): one a week Townsville-Cairns, Cairns-Mt Isa, Cairns-Bamaga
SA (unregulated) get most services, one flight a week; Pt Lincoln, Mt Gambier, Broken Hill, Ceduna, Whyalla, Kangaroo Is.
Vic (unregulated) get all services, 1-2 flights a week: Mildura, King Is/ Burnie, Albury/ Wagga, Merimbula
NSW (unregulated): 1-2 a week SYD to most places, Cooma, Moruya/Merimbula, Broken Hill/Dubbo, Orange, Bathurst/Parkes, Grafton/Lismore, Wagga, Albury, Griffiths/Narrandera,

 

[sptrawler]

Most medical specialists with practices in regional cities commute to these places from their capital city bases. As well, the wheels of govt must still reach out. And all the other services.

Of the 76 service requests, some 38 were approved.

WA (services regulated by state govt) gets one flight a week ex-Perth to Albany, Esperance and Carnarvon.
Qld (services regulated by state govt) gets a mix, but all One flight a week on Northern routes ex Cairns and Townsville, as well as ex-Brisbane. Most are multi-stop routes out west.
Qld (unregulated): one a week Townsville-Cairns, Cairns-Mt Isa, Cairns-Bamaga
SA (unregulated) get most services, one flight a week; Pt Lincoln, Mt Gambier, Broken Hill, Ceduna, Whyalla, Kangaroo Is.
Vic (unregulated) get all services, 1-2 flights a week: Mildura, King Is/ Burnie, Albury/ Wagga, Merimbula
NSW (unregulated): 1-2 a week to most places, Cooma, Moruya/Merimbula, Broken Hill/Dubbo, Orange, Bathurst/Parkes, Grafton/Lismore, Wagga, Albury, Griffiths/Narrandera,

Interesting post Donna, as I said it does make complete sense, your post highlights it.

 

[Dona Ferentes]

Interesting post Donna, as I said it does make complete sense, your post highlights it.

but here's the joke:
"Support program announced by Deputy Prime Minister, the Hon Michael McCormack", and, look, no service to Armidale, NSW, home of Blowhard Barnaby

 

[finicky]

REX had a very nice recovery over the last 4 weeks or so, 40c - 85c, leaving out the 'wicks' on daily candles.
With government support, looks like one to check out in another downwave?

 

[Boggo]

REX had a very nice recovery over the last 4 weeks or so, 40c - 85c, leaving out the 'wicks' on daily candles.
With government support, looks like one to check out in another downwave?

There was a reason for that.

https://www.smh.com.au/business/com...nL_aT_5o8j2mASz5FM8fF37BPQSPkoHxOBHsZKSN5asOA

 

[Dona Ferentes]

REX gave an interview to a major daily last week that it was "thinking about flights between capital cities" but forgot to inform the market by way of an Announcement.

Rex’s response to that – lodged late on Wednesday afternoon – was hardly any better. “In this particular instance Rex believed that information about possible city operations was not sufficiently definitive to constitute material information”.

Over to Joe Aston for a bit of colour:
"Not sufficiently definitive?! Sharp had identified the cost ($200 million), the method of fundraising (“through the sale of new shares in Rex”), the number of planes (10), their routes (“The plan is to start flying between Sydney, Melbourne, Brisbane, Adelaide and Perth”), the timeline (“early next year”) and the number of interested parties (“we have been talking to half a dozen private equity and investment banking entities… and will narrow that down to one in the next three weeks or so”). Oh, and Rex has already discussed amending its flying license with the Commonwealth’s air safety regulator. Any more definitive and Rex would be selling tickets already!

The whole sequence lays out a stupendous failure of elementary public company compliance by the airline’s leadership."

 

[Chronos-Plutus]

REX gave an interview to a major daily last week that it was "thinking about flights between capital cities" but forgot to inform the market by way of an Announcement.

Over to Joe Aston for a bit of colour:
"Not sufficiently definitive?! Sharp had identified the cost ($200 million), the method of fundraising (“through the sale of new shares in Rex”), the number of planes (10), their routes (“The plan is to start flying between Sydney, Melbourne, Brisbane, Adelaide and Perth”), the timeline (“early next year”) and the number of interested parties (“we have been talking to half a dozen private equity and investment banking entities… and will narrow that down to one in the next three weeks or so”). Oh, and Rex has already discussed amending its flying license with the Commonwealth’s air safety regulator. Any more definitive and Rex would be selling tickets already!

The whole sequence lays out a stupendous failure of elementary public company compliance by the airline’s leadership."

I can't bring myself to invest in any airlines right now. Hard to see a bright future for them when their is no light at the end of the tunnel and commercial aircraft services don't look to be returning to normal for a very long time. Commercial flights are down ~67% from 120 days ago.

(https://www.flightradar24.com/data/statistics)