* Company has benefitted from both internal factors as well as external factors during last four quarters. As
company was in the red for a long period, now they seem to be having good internal controls. Externally,
most of the factors are favorable to them. Their main raw material "Rubber" prices are adjusting downwards
in each auction. Due to rupee depreciation, now they are more competitive in the international market. They
have better access to USA market, which is their main export destination due to inclusion of Sri Lanka in the
US GSP program in last year.
These favorable factors will remain in the foreseeable future.
* REXP was bottomed out during April-June period. Current global economic conditions are highly favorable for
the company's operations and quarter by quarter company is releasing impressive results. During March 2012
quarter REXP was stable on Rs.18/- levels against high market volatility. In June 2012 quarter most of the
days it was hovering at Rs.20/- levels.
During last month ASI touched 6000 and gone down to 5500 levels. But share price of REXP was steady, as
there was ample demand for the share. It was hovering around Rs. 30/- level after hitting a high of Rs.34/-.
So with impressive results for the quarter ended 30th Sep. 2012, it will try to find a new price range for the
share. Unless market falls drastically, it will remain above the current price. But it is extremely difficult to
collect a sizable quantity at Rs.32/- levels.
* As number of shares in the market is less than 1 million shares (including all shares except for the controlling
share holder), during last year it was highly speculative. From Rs. 28/- in March 2011, it was taken above
Rs.50/- within two months with no fundamental value. As a result most of the existing shareholders have
collected the shares when it was above Rs.40/-. Now no one seem to be selling, and no need either as
fundamental value of the counter is improving in every quarter.
If company managed to maintain the same profitability as in first half of 2012, it will end the year with an EPS
of Rs.15/- to Rs.18/-. At current share price of Rs.32.10 share trades at a PER of 2X, making it the lowest
PER ratio in CSE. Another factor to consider is, pending re-valuation of assets. REXP has not done any asset
When it was at Rs.18/- levels, I made the first recommendation under the heading "Shares that can give 100% returns in 2012". Now REXP is at Rs.32 after giving a 77% return in just six months.
Again I am publishing this revised report under the same heading.
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