Excerpts from UOBKayHian report
CSE Global (SGX: 544)
- CSE Global contract win of S$231m in 2Q23 (+22% yoy) brings its 1H23 total contract win to S$391m, forming 60% of our full-year estimate and has exceeded our expectation.
- The strong order win is driven by the infrastructure segment, from stronger orders of radio communication equipment, automation projects and new acquisitions.
- We raised our 2024 earnings estimate by 21%, after raising our revenue and order win forecast.
Maintain BUY with a 43% higher target price of S$0.60 (15x 2024 PE).
Secured new orders of S$231m in 2Q23, exceeding our expectation
CSE Global (CSE) announced that it had secured S$231m of new orders in 2Q23. The 22% growth in orders was mainly attributable to higher flow orders secured in the infrastructure and mining & minerals sectors, particularly in the US, Australia/New Zealand and Singapore.
CSE’s contract win in 1H23 accounts for around 60% of our full-year estimate and has exceeded our expectation. The strong order win is mainly driven by the infrastructure segment, which reported 155% yoy growth, from stronger orders of radio communication equipment, automation projects and new acquisitions.
Strong order wins in the infrastructure and mining & minerals segments
New orders for the infrastructure sector grew 155% yoy, mainly attributable to:
- stronger orders of radio communication equipment and solutions in Asia Pacific
- higher award of automation projects in the Americas region
- higher order intake contributed by new acquisitions.
On the other hand, the mining & minerals sector clinched S$21m (+63% yoy) worth of new orders in 2Q23, mainly a result of new orders for radio communication network services and electrical equipment from mining customers in Australia.
Valuation/Recommendation
Maintain BUY and raise our target price by 43% to S$0.60. Our target price is pegged to 15x 2024F PE (based on +1SD above mean). We have rolled over our valuation base year to 2024.
Our target price implies a 2023 dividend yield of 4.6% as we expect CSE to maintain a full-year dividend of 2.75 S cents/share for 2023.
You can find the full report here and the company website here.
