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Regional Express Holdings

ASX:REX
Snowflake Description

Flawless balance sheet and fair value.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
REX
ASX
$119M
Market Cap
Airlines
Company description

Regional Express Holdings Limited, together with its subsidiaries, engages in the air transportation of passengers and freight in Australia. More info.


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Regional Express Holdings is covered by less than 3 analysts.
SHARE PRICE
3 Month History
REX
Industry
5yr Volatility vs Market

Value

 Is Regional Express Holdings undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
  • It is not possible to calculate the future cash flow value for Regional Express Holdings. This is due to cash flow or dividend data being unavailable. The share price is $1.095.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avacados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for Regional Express Holdings's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are Regional Express Holdings's earnings available for a low price, and how does this compare to other companies in the same industry?
  • Good value based on earnings compared to the Transportation industry average.
  • Good value based on earnings compared to the overall market.
Price based on expected Growth
Does Regional Express Holdings's expected growth come at a high price?
  • Information is not available.
Price based on value of assets
What value do investors place on Regional Express Holdings's assets?
  • Good value based on assets compared to the Transportation industry average.
X
Value checks
We assess Regional Express Holdings's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) (Click here or on bar chart for details of DCF calculation.)
  2. Is the PE ratio less than the market average, and/ or less than the Transportation industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Transportation industry average (and greater than 0)? (1 check)
  5. Regional Express Holdings has a total score of 3/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (0%).

    Full details on the Value part of the Simply Wall St company analysis model.
X
Discounted cash flow (Dividend Discount Model)

The calculations below outline how an intrinsic value for Regional Express Holdings is arrived at by discounting future dividends to their present value. This approach is used for finance firms where free cash flow is difficult to estimate (e.g. Banks/ Insurance firms).

If the firm does not pay the majority of its earnings out as a dividend this method will often arrive at a value significantly lower than the share price.

See our documentation to learn about this calculation.



Value of the stock

Value = Expected dividends per share / (Discount Rate - Perpetual growth rate)
$0 = ($0 / (9.11% - 2.6%)

Value per share:
$0

Current discount (share price of $1.095): %



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 9.11% = 2.6% + (0.88 * 7.4%)



Estimate of Bottom Up Beta

The Levered is used in the case of financial firms, but it is not adjusted for financial leverage like with non-finance firms. Therefore the average levered beta from comparable firms is used as the bottom-up beta. It is limited to 0.8 to 2.0 (practical range for a stable firm).

Average Levered Beta from peers = 0.88

Levered Beta used in calculation = 0.88



Assumptions
  1. The risk free rate of 2.6% is from the 10 year government bond rate in AU.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (10%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is Regional Express Holdings expected to perform in the next 1 to 3 years based on estimates from 0 analysts?

  • Future performance analysis is based on estimates from less than 3 analysts.
The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
  • Insufficient estimate data, unable to calculate 1 year growth expectation.
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occured. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Analysts growth expectations
2 year growth check
Super high growth metrics x1.5?

Which of the these is expected to increase by over 50% in 2 year's time?

  • Revenue data unavailable.
  • Cash flow data unavailable.
  • Profit data unavailable.
Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • No 3 year Return on Equity data available.

Improvement & Relative to industry
  • No 3 year Return on Equity data available.
  • No 3 year Return on Equity data available.
X
Future performance checks
We assess Regional Express Holdings's future performance by looking at:
  1. Is the growth in earnings expected to beat the low risk savings rate, plus a premium to keep pace with inflation, in 1 year and 3 years? (2 checks)
  2. Does the average analyst expect Revenue to increase by 50% or more in 2 years? (1 check)
  3. Does the average analyst expect Operating Cash Flow to increase by 50% or more in 2 years? (1 check)
  4. Does the average analyst expect Net Income (Profit) to increase by 50% or more in 2 years? (1 check)
  5. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
Regional Express Holdings has a total score of 0/6, see the detailed checks below.

Note: If no +3 year data is available, +2.5 year data may be used.

Note 2: We use GAAP per Share in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

 How has Regional Express Holdings performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare Regional Express Holdings's growth in the last year to its industry (Transportation).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • Regional Express Holdings's has become profitable in the last year making it difficult to compare the industry average.
  • Regional Express Holdings's has been loss making last year but is now profitable.
  • Regional Express Holdings earnings have fallen over the past 5 years.
Profit History
Regional Express Holdings's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Poor return on shareholders funds (ROE) last year.
  • Regional Express Holdings performed worse than the Transportation industry average based on return on assets (ROA) last year.
  • Performance based on revenue producing assets (ROCE) has improved significantly over 3 years.
X
Past performance checks
We assess Regional Express Holdings's performance over the past 5 years by checking for:
  1. Has earnings per share (EPS) increased in past 5 years? (1 check)
  2. Has the EPS growth in the last year exceeded that of the Transportation industry? (1 check)
  3. Is the current EPS growth higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
Regional Express Holdings has a total score of 1/6, see the detailed checks below.

Note: We use GAAP Earnings per Share in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is Regional Express Holdings's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up Regional Express Holdings's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • Regional Express Holdings is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • Regional Express Holdings's cash and other short term assets cover its long term commitments.
Balance sheet
This treemap shows a more detailed breakdown of Regional Express Holdings's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • High level of stock/ inventory/ unsold assets.
  • Total debt is covered by short term assets.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
  • The level of debt (14%) compared to net worth is satisfactory (less than 40%).
  • The level of debt compared to net worth has been reduced over the past 5 years (17% vs 14% today).
  • Total debt is well covered by annual operating cash flow (greater than 20% of total debt).
  • Interest on debt is well covered by earnings (10.4x coverage).
X
Financial health checks
We assess Regional Express Holdings's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by short term assets? (1 check)
  6. Are earnings greater than 5x the interest on debt (if comapany pays interest at all)? (1 check)
  7. Regional Express Holdings has a total score of 6/6, see the detailed checks below.


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is Regional Express Holdings's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
0%
Current annual income from Regional Express Holdings dividends.
If you bought $2,000 of Regional Express Holdings shares you are expected to receive $0 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Paying below low risk savings rate. (3%)
  • Paying below the markets top dividend payers. (4.92%)
Historical dividend yield
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
  • Not paying a notable dividend.
  • Not paying a notable dividend.
Current Payout to shareholders
What portion of Regional Express Holdings's earnings are paid to the shareholders as a dividend.
  • Not paying a notable dividend.
Future Payout to shareholders
  • Insufficient estimate data to determine if a dividend will be paid in 3 years.
X
Income/ dividend checks
We assess Regional Express Holdings's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
  2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
  3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  5. How sustainable is the dividend, can Regional Express Holdings afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  6. Regional Express Holdings has a total score of 0/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of Regional Express Holdings's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Kim Hai Lim, image provided by Google.
Kim Hai Lim
CEO Bio

Mr. Kim Hai Lim has been Executive Chairman of Regional Express Holdings Limited since June 27, 2003. Mr. Lim serves as the Chairman of a biomedical company Lynk Biotechnologies Private Limited which has developed a revolutionary platform for transdermal delivery of water-soluble drugs and also Chairman of WooWorld Private Limited which is a supplier of online and mobile games to telcos in China, Japan and South East Asia. He served as the Executive Co-Chairman of Regional Express Holdings Ltd. He has been a Director of Regional Express Holdings Ltd. since June 27, 2003. Mr. Lim is also a Director in a military aircraft supply company as well as a Director in a medical supply company specialising in providing advanced medical systems to hospitals. After a period of 10 years as a Defence Specialist Engineer, he left the Civil Service to start his own businesses. He serves as Director of Transmedic Pte Ltd. He has an extensive portfolio of investments in many countries. Mr. Lim based in Singapore, has been awarded two scholarships by the Singapore Government. The first was to complete an undergraduate Masters degree in electronics engineering in the prestigious French 'Grande Ecole' schools of engineering. The second was awarded while he was serving with the Ministry of Defence of Singapore to read a Masters in Public Administration course at the elite ENA of France. Mr. Lim is a M. Engg from Ecole Nationale Superieur D'ingenieurs, Caen, France, in 1982, MPA from Ecole Nationale D'administration, France, in 1990 and MBA from National University of Singapore, 1991.

CEO Compensation
  • CEO's compensation has been consistent with company performance over the past year.
  • CEO's compensation appears reasonable.
Management Team

Kim Hai Lim

TITLE
Executive Chairman
COMPENSATION
$0

Neville Howell

TITLE
Chief Operating Officer and Executive Director
COMPENSATION
$241,293

Mayooran Thanabalasingam

TITLE
General Manager of Information Technology & Communications
COMPENSATION
$198,196

Warrick Lodge

TITLE
General Manager of Network Strategy & Sales
COMPENSATION
$192,510

Paul Fisher

TITLE
Chief Pilot and General Manager of Flight Operations
COMPENSATION
$245,606

Irwin Tan

TITLE
General Manager of Corporate Services and Company Secretary
COMPENSATION
$209,567
Board of Directors Tenure

Average tenure of the Regional Express Holdings board of directors:

Board tenure
8.4 years
  • The tenure for the Regional Express Holdings board of directors is about average.
Board of Directors

Kim Hai Lim

TITLE
Executive Chairman
COMPENSATION
$0

John Sharp

TITLE
Deputy Chairman
COMPENSATION
$102,340
AGE
62

Neville Howell

TITLE
Chief Operating Officer and Executive Director
COMPENSATION
$241,293

Chris Hine

TITLE
Group Flight Operations Advisor and Executive Director
COMPENSATION
$158,236

Ron Bartsch

TITLE
Independent Director
COMPENSATION
$39,799

Jim Davis

TITLE
Independent Director
COMPENSATION
$45,484
AGE
65
Recent Insider Trading
  • More shares have been bought than sold by Regional Express Holdings insiders in the past 3 months.
Who owns this company?
X
Management checks
We assess Regional Express Holdings's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. Regional Express Holdings has a total score of 6/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions.

Full details on the Management part of the Simply Wall St company analysis model.

Company News

Company Info

Description

Regional Express Holdings Limited, together with its subsidiaries, engages in the air transportation of passengers and freight in Australia. The company operates through Regular Public Transport and Charter segments. It also provides defense and government related aviation support services; aero-medical services for ambulance Victoria; fly in/fly out charter services; express freight services; and air tours charter services. In addition, the company offers training programs to students and other airlines. As of August 24, 2016, it operated a fleet of approximately 50 Saab 340 aircraft to 58 destinations in Australia. The company was formerly known as Australiawide Airlines Limited. Regional Express Holdings Limited is headquartered in Mascot, Australia.

Details
Name:Regional Express Holdings Limited
Ticker:REX
Exchange:ASX
Founded:
Market Cap:$119 million
Website:http://www.rex.com.au
Listings
Map

81-83 Baxter Road, Mascot, 2020, Australia

Street

Industry
Industry:Airlines
Sector:Transportation