Excerpts from CGS-CIMB report

Analyst: Cezzane See

CSE Global Bolstered backlog!
■ CSE today revealed that it achieved c.S$230m new orders in 4Q19, taking its FY19 win to S$580m (+50% yoy).

CSE GLOBAL

Share price: 
52 c

Target: 
73 c

■ While within our expectations, we are still excited with this as we see it as confirmation its end-FY19 order book exceeded S$300m (2018: S$181m).

■ We expect CSE to report FY19F net profit of S$22.5m (+9% yoy). We keep our forecasts, call and TP. Reiterate CSE as our favourite small cap.


S$230m order intake in 4Q19, padding order backlog
briefing819(L-R): MD Lim Boon Kheng | Non-executive Chairman Lim Ming Seong | CFO Eddie Foo. NextInsight file photo ● Order wins in 4Q19 include oil & gas greenfield projects worth a total of US$74.7m (S$103.7m) announced in Oct 2019, implying brownfield projects worth c.S$120m.

● According to CSE, of the S$230m new orders won, S$190m were by its oil & gas division, S$25m by its infrastructure division, and S$16m by its mining division.

● FY19 order intake rose 50% yoy to S$580m (vs. c.S$384m in 2018), fuelled mainly by CSE’s oil & gas (+c.100% yoy) and mining (c.+200% yoy) divisions.

● We estimate that CSE could end FY19F with an order backlog of at least S$300m (end-3Q19: S$232.6m), its highest order backlog in five years.

4Q19F preview
● CSE will likely report its 4Q19 results at end-Feb.

● We estimate 4Q19F revenue of c.S$111m on the back of higher project execution, and core net profit of c.S$5.6m on net profit margin of c.5%.

● We project FY19F revenue of S$407m (c.+8% yoy) and core net profit of S$22.5m (c.+9% yoy).

● Final DPS of 1.5Scts is also in the bag, in our view.

Reiterate Add
CezzanneSeeCezzanne See, analyst● CSE has been our preferred small cap O&G pick in part due to its i) earnings growth potential, ii) sustained dividend; and iii) padded order backlog.

● As at end-Sep 2019, CSE was in a net debt position due to acquisitions. Nevertheless, we look favourably on the acquisitions as they are earnings-accretive and could lead to cross-selling synergies for CSE’s Americas business.

● Our TP of S$0.73 is based on 13.5x CY20F P/E (+0.5 s.d. of its 5-year mean due to the company’s better footing from FY19F onwards).

● Stronger-than-expected order wins and GPMs are potential re-rating catalysts.

● Lower than-expected order wins and GPMs are key downside risks to our Add call.



Full report here


Share Prices

Counter NameLastChange
AEM Holdings3.6200.030
Avarga0.265-
Avi-Tech Electronics0.435-
Best World Int.1.360-
CEI0.8800.010
China Sunsine0.410-
CNMC GoldMine0.3050.010
CSE Global0.4650.005
Food Empire0.590-0.005
Golden Energy0.155-0.003
GSS Energy0.050-
ISDN Holdings0.4200.010
ISOTeam0.149-
IX Biopharma0.265-
JB Foods0.570-
KSH Holdings0.330-
Medtecs Intl1.270-0.020
Moya Asia0.0660.001
Nordic Group0.205-
Oxley Holdings0.225-0.005
Procurri0.295-
REX International0.138-0.001
Riverstone3.880-0.020
Roxy-Pacific0.345-
SingMedical0.250-0.005
Sri Trang Agro1.3800.060
Straco Corp.0.485-0.015
Sunningdale Tech1.6800.020
Sunpower Group0.5850.005
The Trendlines0.089-0.002
UG Healthcare1.000-0.010
Uni-Asia Group0.415-0.015
Yangzijiang Shipbldg0.9800.010

NextInsight RSS

rss_2 NextInsight - Latest News

Online Now

We have 652 guests and one member online

  • josephyeo