TECHNOLOGY solutions provider CSE Global : 544 -1.32% secured S$220.8 million worth of new orders in its fourth quarter ended Dec 31, 2022, up 68.3 per cent from the same period a year earlier.

 

This was mainly attributable to higher orders secured in the US and Singapore, particularly from the infrastructure sector, the company said in a bourse filing on Wednesday (Feb 15).

 

Some S$131 million of new orders were secured by the group&rsquo s infrastructure sector, as compared to S$32.1 million in the same period in 2021. This was mainly due to a multi-year system maintenance contract secured from the Singapore government, as well as higher orders secured for the wastewater market in the Americas region, the company said.

 

Meanwhile, new orders for the group&rsquo s energy sector fell 8 per cent on year to S$78.7 million, while new orders for its mining and minerals sector fell 17.8 per cent on year to S$11.2 million, mainly due to delays in the award of radio communication projects in Australia.

 

Lim Boon Kheng, group managing director of CSE Global, said infrastructure remains a key focus area for the company, and noted that the strong growth in new orders secured for the sector is likely a result of the company&rsquo s efforts to diversify its business.

 

&ldquo That said, the continued supply chain disruptions are expected to prolong project execution timeframes and have an impact on our gross margins,&rdquo he added.

 

In a separate filing, CSE Global said it expects to report significantly lower net profit for its second half (H2) of FY2022, following a periodic review of its various business operations around the world.

 

In H2, the company restructured a business division in the US and incurred a restructuring cost of S$1.3 million. It also recorded a loss of S$5.9 million after the restructuring, due to cost overruns in two projects as a result of under-estimation.

 

CSE Global noted that it continued to execute its diversification strategy in FY2022. While this resulted in an increase in new orders and lowered revenue exposure from customers in the energy segment, the diversification has increased the company&rsquo s overhead costs and lowered its profits for the year.

 

The company said it still expects to report an overall net profit for the full year ended Dec 31, 2022. It will release its unaudited consolidated financial results for the second half and full year on or before Feb 27, 2023.

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S I N G A P O R E
F R O M T H E R E G I O N A L M O R N I N G N O T E S . . .
CSE Global (CSE SP)
Earnings Accretive Acquisition And Major Contract Wins
CSE just acquired a US radio communication group for US$11m. We view this
positively as the acquisition valuation appears attractive and is highly accretive as it
could lift CSE&rsquo s 2023F earnings by around 20%, assuming Radio One Group&rsquo s 2022
earnings can be sustained. In addition, CSE has won two major contracts worth
US$87m. We raise our 2023F EPS by 12% to factor in the positive developments. We
also raise our target price by 22% to S$0.45 (14x 2023F PE). Upgrade to BUY.
WHAT&rsquo S NEW
&bull Acquisition of Radio One Group. CSE Global (CSE) on 31 Jan 23 announced that it
had successfully acquired a US radio communication group, Radio One Group, for
US$11m. Radio One is based in Florida and provides radio communications solutions,
Federal Communications Commission licensing assistance, servicing and two-way radio
rentals to enterprise and government customers. It also installs and manages wireless
networks and video surveillance camera systems. The acquisition is part of CSE&rsquo s
strategy to expand and grow its communication businesses in the infrastructure industry
markets. We view this positively as the acquisition valuation is attractive at around 4x
2022 PE and is highly accretive as it could lift CSE&rsquo s 2023F earnings by S$3.6m or
around 20%, assuming the 2022 earnings of Radio One Group can be sustained.
&bull Winning of two major contracts worth S$87m. On 30 Jan 23, CSE announced that it
had secured two major contracts worth S$87.3m in the US and Singapore. The first major
contract is for the design, engineering, fabrication, installation and integration of complex
electrical, instrumentation and control systems and equipment for wastewater treatment
plants in the US, which is slated for execution from 2023 to 2027. The second major
contract relates to a multi-year system maintenance contract from the Singapore
Government in the infrastructure sector.
&bull Expect strong order wins for 2022. We expect CSE to achieve a record order win of
more than S$700m for 2022. To recap, CSE&rsquo s 9M22 order intake was up 77.3% yoy to
S$587m. Total orders in 9M22 have exceeded that of 2021, with improvement across all
industry sectors observed. In the energy sector, orders surged 80.5% to S$325m due to
higher field services orders, new contracts for the renewables market and for
maintenance of integrated control systems for production facilities secured in the
Americas region. Order intake for the infrastructure sector also rose by 80.5% yoy to
S$209m in 9M22. This mainly arose from new major contracts for the data centre market
and more wastewater and industrial project orders obtained upon increased infrastructure
spending in the Americas region. Stronger orders of radio communication equipment and
solutions by Australia and UK customers have also been recorded during the year. Mining
and minerals&rsquo order intake has climbed to S$53m (+50.4% yoy) as a robust order pipeline
for radio communication network projects from Australian mining customers has been
established.