Broker: UOB Kay Hian
Date of Report: 18 August 2025
CSE Global: Robust 1H25 Performance and Strategic Shift Unlocks Data Centre Growth Potential
Overview: CSE Global Delivers Steady Earnings, Eyes Data Centre Upside
CSE Global (SGX: CSE) continues to reinforce its market position as a leading systems integration and information technology solutions provider. The company reported 1H25 earnings of S\$16 million, marking a 9% year-on-year increase and representing 44% of UOB Kay Hian’s full-year forecast. The performance was underpinned by resilient revenue growth and a notable one-off gain from asset disposal, offset slightly by higher operating expenses and a strategic shift in business mix.
CSE Global at a Glance
- Share Price: S\$0.645
- Target Price: S\$0.85 (Upside: +31.8%)
- Market Cap: S\$461.6 million
- Major Shareholders: Temasek Holdings (23.0%), FMR LLC (10.0%)
- 52-week High/Low: S\$0.710 / S\$0.375
- FY25 NAV/Share: S\$0.39
- FY25 Net Debt/Share: S\$0.09
1H25 Results: Solid Growth Amid Strategic Reshaping
| Financial Metric |
1H25 |
1H24 |
YoY % Change |
| Revenue (S\$m) |
440.9 |
428.9 |
+2.8% |
| Gross Profit (S\$m) |
123.0 |
118.4 |
+3.8% |
| Gross Margin (%) |
27.9 |
27.6 |
+0.3ppt |
| Net Profit (S\$m) |
16.3 |
15.0 |
+8.5% |
| Net Margin (%) |
3.7 |
3.5 |
+0.2ppt |
| New Orders Received (S\$m) |
366.7 |
378.7 |
-3.2% |
| Outstanding Orders (S\$m) |
573.8 |
692.3 |
-17.1% |
The first half of 2025 saw CSE’s revenues climb 3% year-on-year to S\$441 million, led by a remarkable 13% increase in the communications segment and supported by contributions from new acquisitions (+S\$17 million). On a constant currency basis, revenue growth would have been even stronger (+5%), illustrating robust demand despite headwinds from weaker US and Australian dollars.
Gross profit rose 4% to S\$123 million with margins remaining stable at 27.9%. However, operating expenses increased by 6% to S\$101 million, largely due to higher personnel, building, equipment expenses, and depreciation.
Dividend and Capital Allocation: Focus on Growth
CSE declared an interim dividend of 1.14 S cents per share, down 9% from the previous period. This represents a 49% payout ratio, as management opts to reinvest for future growth and maintain strategic flexibility.
Order Book and Strategic Shift: Positioning for Higher Value
- Order Book (as of 30 Jun 2025): S\$573.8 million, down 17% YoY
- Order Intake (1H25): S\$366.7 million, down 3% YoY
The decline in orders is attributed to a strategic pivot away from lower-value municipal projects, particularly in electrification, to focus on larger-scale data centre and infrastructure opportunities in the US. Electrification order intake fell 21% to S\$130.9 million, while the flow business revenue—which includes smaller municipal and greenfield/brownfield projects—moderated by 4% to S\$294.9 million.
Conversely, communications order intake surged 9% to S\$160.5 million, buoyed by robust demand in the Americas and recent acquisition activity. This shift is expected to yield a healthier, more profitable order mix and position CSE for growth in high-margin sectors.
Business Segment Performance: Communications Leads Growth
| Segment |
1H25 Revenue (S\$m) |
YoY % Change |
| Electrification |
214.8 |
-0.9% |
| Communications |
128.0 |
+12.7% |
| Automation |
98.1 |
-0.5% |
Communications remains the standout performer, delivering double-digit growth and reflecting CSE’s ability to capture demand in high-value markets.
Financial Forecasts and Key Metrics
| Year |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover (S\$m) |
725 |
861 |
924 |
963 |
1,003 |
| EBITDA (S\$m) |
55 |
72 |
82 |
86 |
85 |
| Net Profit (S\$m) |
23 |
26 |
37 |
39 |
41 |
| EPS (S\$ cent) |
3.7 |
5.4 |
5.5 |
5.8 |
6.0 |
| PE (x) |
17.6 |
11.8 |
11.8 |
11.1 |
10.7 |
| Dividend Yield (%) |
4.3 |
3.7 |
3.7 |
3.7 |
3.7 |
| Net Margin (%) |
3.1 |
3.1 |
4.0 |
4.1 |
4.1 |
| Net Debt/Equity (%) |
35.2 |
28.2 |
22.3 |
14.4 |
8.4 |
| ROE (%) |
10.5 |
11.2 |
13.8 |
13.6 |
13.1 |
Valuation and Recommendation: Upside Remains Attractive
The BUY rating is maintained, with an unchanged target price of S\$0.85, pegged to a 2025F PE of 15.6x (+2SD to mean). This valuation implies a healthy 2025 dividend yield of 3.7%, supported by improving order win momentum and CSE’s increasing exposure to the fast-growing data centre segment. The company’s strategic reorientation is expected to yield a more profitable business mix and drive long-term shareholder value.
Key Catalysts to Watch
- Wins in large infrastructure projects, especially in the data centre space
- Accretive acquisitions that boost scale and capabilities
Order Book Breakdown by Segment (S\$m)
| Segment |
1H25 |
FY24 |
1H24 |
| Electrification |
292.0 |
394.9 |
395.0 |
| Communications |
106.6 |
99.9 |
106.2 |
| Automation |
175.2 |
177.8 |
191.1 |
| Total |
573.8 |
672.6 |
692.3 |
Balance Sheet and Cash Flow Highlights
- 2025F Cash/Short-term Investments: S\$67.9 million
- Net Cash Inflow (2025F): S\$10.6 million
- Net Debt/Equity (2025F): 22.3%
- Ending Cash & Equivalents (2025F): S\$67.9 million
- Interest Cover (2025F): 11.0x
Conclusion: CSE Global Well-Positioned for Next Phase of Growth
CSE Global’s 1H25 performance demonstrates resilience and adaptability, highlighted by steady earnings, robust communications growth, and a successful pivot toward higher-value data centre and infrastructure projects. With a strong balance sheet, disciplined dividend policy, and clear strategic focus, CSE Global offers an attractive risk-reward profile for investors seeking exposure to the digital infrastructure revolution. The company’s growing presence in the data centre sector is poised to unlock new avenues for profitable growth in the years ahead.
