CGS-CIMB and Maybank Securities believe CSE Global&rsquo s : 544 0% healthy set of half-year results marks an inflection point for the mainboard-listed group, which builds integrated systems for the energy, infrastructure, as well as the mining and minerals sector.

 

CGS-CIMB upgraded its call on the stock to &ldquo add&rdquo from &ldquo hold&rdquo , and raised its target price from S$0.45 to S$0.54. 

 

The research house also lifted its FY2023 to FY2025 earnings per share estimates by 15 to 28 per cent. It also raised its earnings before interest and taxes (Ebit) projections by 29 to 35 per cent. 

 

This comes on the back of a 20 per cent to 21 per cent hike in forecast order wins for the same periods &ndash especially in the infrastructure sector, which offers higher margins, noted its analysts in a report on Thursday (Aug 10). 

 

CGS-CIMB analysts, highlighting that the group reported year-on-year margin expansions across all operating segments, said they now believed CSE&rsquo s supply-chain disruptions have likely eased more quickly than previously expected. 

 

They expect the group&rsquo s US energy segment to remain profitable, in view of how CSE has mostly concluded the restructuring of its loss-making divisions. 

 

Maybank reiterated its &ldquo buy&rdquo call on CSE, with a slightly higher target price of S$0.65 from S$0.62 previously, while highlighting the stock as its top pick in the small- and mid-capitalisation space. 

 

The research house lifted its profit after taxes and minority interests (Patmi) estimates by 4.5 per cent and 4 per cent for FY2023 and FY2024, respectively. 

 

This will be underpinned by a surge in order wins from Q3 FY2023, with potential near-term contract wins to follow after the group achieves a projected S$900 million order book for the whole of FY2023, said analyst Jarick Seet on Friday (Aug 11). 

 

&ldquo We believe that CSE is in a sweet spot to win contracts from multiple sectors, and we remain confident that in the coming months that it should be able to secure contracts from the public infrastructure, data-centre related solutions and the oil-and-gas space,&rdquo he said. 

 

The analyst also expects the group&rsquo s final dividend to be maintained at S$0.015, saying that it would result in a &ldquo fairly-attractive&rdquo 5.9 per cent dividend yield in FY2023, despite higher finance costs and additional debt. 

 

&ldquo We think that the debt will eventually be paid down slowly over the years and its historical dividend pay-out should be sustainable,&rdquo he added. 

 

CSE Global has reported a 142.8% y-o-y earnings jump to $11 million for its 1HFY2023 ended June 30. Revenue in the same period was up 33.2% y-o-y to $349.3 million, thanks partly to contributions from newly acquired businesses.

 

The company plans to pay an interim dividend of 1.25 cents.

 

As at June 30, it has built up an order book of $521.8 million.

 

Lim Boon Kheng, the company' s group managing director, believes that with this robust order book, coupled with a positive turnaround in the financial performance of the business in the

Americas region, CSE is well positioned to achieve a strong financial performance in 2023.

 

&ldquo Our diversification strategy to invest in and acquire communications businesses has contributed to the better financial performance for the group," says Lim.

 

" Looking ahead, we will continue to enhance our engineering capabilities and technology solutions such as automation, electrification and critical communications, to seize and capitalize on emerging market prospects driven by the growing megatrends of urbanization, electrification, and decarbonization,&rdquo he adds.

TECHNOLOGY solutions provider CSE Global : 544 -4.17% on Tuesday (Aug 1) announced it has secured two contracts worth S$86.4 million in total, in the United States and Singapore.

 

The first contract is for the design and manufacturing of power distribution centres, as well as the integration of complex electrical and control systems and equipment in the US. The contract is slated for execution from 2024 to 2025.

 

The second relates to a multi-year maintenance contract for the Singapore government in the infrastructure sector. It will be carried out from the second half of 2023 to 2028.

 

Both deals were secured after the half year ended Jun 30.

 

CSE Global said the contracts do not have any material impact on the group&rsquo s consolidated net tangible assets per share or earnings per share for the current financial year.

 

The mainboard-listed group also noted that none of its directors or substantial shareholders have direct or indirect interest in the contracts.

 

Lim Boon Kheng, CSE Global&rsquo s group managing director, said: &ldquo These two major projects will strengthen our pursuit in the infrastructure sector and are expected to contribute positively to CSE Global&rsquo s financial performance for the financial years 2023 to 2028.&rdquo

 

The group is scheduled to release its half-year results on Aug 10.