• CSE Global can be described succinctly as Singapore's data centre winner. • Once known mainly for projects in the oil & gas and infrastructure sectors, the company is now riding the massive boom in data centres, especially in the US which is by far the world’s largest data centre market, with around 5,500 facilities. • Under a contract with Amazon Web Services, CSE is providing critical electrical infrastructure such as substations, switchgear, switchboards, and transformers. It's a huge pipeline of US$1.5 billion worth of work from Amazon over the next five years.  CEO Lim Boon Kheng. • Backed by Temasek Holdings as its largest shareholder (about 23%), CSE delivered a net profit of S$37.5 million in FY25 and analysts are optimistic about continued profit growth in the coming years. • The stock has surged 68% year-to-date to S$1.65. • But there are start-up costs for its Champion facility in the US, which will eat into margins in 1H2026, so CGS has lowered its target price. Read excerpts of the CGS report below ..... |
Excerpts from CGS report
Analysts: Tan Jie Hui & Lim Siew Khee
▪ ■ We hosted CSE’s management for a NDR on 2 Jun 2026 and remain upbeat on its strong DC-led growth trajectory and hyperscaler-driven momentum.
■ Retain Add, backed by FY26–28F EPS CAGR of 23%; lower TP of S$2.00 reflects a c.5% FY27F EPS cut, still based on 24x FY27F P/E. |
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| Continued optimism in DC demand and growth trajectory |
Affirmed by management during the NDR after the 1Q26 business update, data centres (DC) remain CSE’s key growth engine, with strong demand visibility over the next few years underpinned by Amazon Web Services’ (AWS, AMZN US; NR, CP: US$256) US$1.5bn programme. 
Key types of electrification projects by CSEDC contributed c.14% of FY25 revenue and management expects the contribution to rise to 20–25% in FY26F as orders scale after capacity ramps.
CSE secured S$186m of AWS orders in 4Q25 and c.S$140m in 1Q26 with deliveries largely scheduled for FY26F.
With the 241,000 sq ft Champion facility set to be fully operational in Jun 2026, CSE is well-positioned to execute a larger volume of projects, enhancing both growth and scalability of its DC platform.
Reflecting stronger-than-expected DC momentum, we raise our FY26F/FY27F/FY28F revenue by 8%/8%/4%.
| Expect greater margin pressure for 1H26F |
During the NDR, management flagged near-term margin pressure from higher material costs and start-up expenses tied to its Champion ramp-up.
Key inputs, particularly microprocessors used in switchboards, have seen cost increases, while supply chain tightness and longer lead times add execution friction.
The ramp-up of Champion facility is also driving elevated pre-operating costs including rental and labour ahead of revenue in 1H26F, resulting in margin pressures ahead of Champion’s revenue contribution in 2H26F.
Consequently, we cut our FY26F/FY27F/FY28F group EBITDA margin forecasts further to 8.0%/8.7%/9.2% (from 8.9%/9.7%/10.1%) to reflect the higher cost base.
 Tan Jie Hui, analystWe cut our FY26F-28F EPS by 4.6-6.7% to reflect margin pressure in 1H26F, partially offset by stronger revenue contribution in 2H26F. We reiterate our Add call with a lower TP of S$2.00, still based on 24x FY27F P/E (in line with peer average) as we believe CSE should deliver an FY26–28F EPS CAGR of 23%, underpinned by AWS’s US$1.5bn programme that could potentially be completed ahead of the five-year timeline. During the 1Q26F analyst briefing, CSE said that it is also targeting two communications M&A deals by end-2026F. Other near-term re-rating catalysts include further large-scale electrification wins and additional capacity expansion, while key downside risks remain cost overruns and slower-than-expected order intake. |
→ See also: CSE GLOBAL: FY26 Set to Outpace Strong FY25 as Amazon Data Centre Ramp Takes Hold
