Maybank Research
May 16, 2025
CSE Global: 2H25 Poised for Strong Growth – Maintain BUY
Executive Summary
- Maybank Research maintains a BUY rating for CSE Global (CSE SP) with a target price of SGD0.58.
- Management anticipates a significant increase in order wins during the second half of 2025, with earnings expected to be more weighted towards 2H25 due to project timelines [[1]].
- CSE is strategically allocating capacity, particularly in the US, to cater to projects in the data center and utilities sectors [[1]].
- The company is positioned to benefit from the MAS SGD5bn program [[1]].
Investment Thesis
- CSE Global is expected to experience multi-year growth, driven by companies establishing factories in the US and the proliferation of data centers [[1]].
- The focus on data center and utilities projects is a strategic move to capitalize on higher-margin opportunities [[1]].
- Resilient margins are expected due to back-to-back pricing arrangements with suppliers, mitigating tariff risks [[1]].
- Strong order wins and profitability are anticipated in 2H25, contributing to a healthy financial performance for FY25 [[1]].
Company Overview
- CSE Global provides integrated systems solutions across the Energy, Infrastructure, and Mining & Minerals sectors [[1]].
- The company’s share price is SGD 0.45, with a 12-month price target of SGD 0.58 (+36%) [[1]].
- Key shareholders include Heliconia Capital Management Pte Ltd (22.6%), CSE Global Ltd (4.4%), and Fidelity Management & Research Co. LLC (4.1%) [[1]].
Financial Performance and Statistics
- 52-week high/low (SGD): 0.49/0.39 [[1]]
- 3-month average turnover (USDm): 0.7 [[1]]
- Free float (%): 95 [[1]]
- Issued shares (m): 707 [[1]]
- Market capitalization: SGD314.5M/USD242M [[1]]
Key Financial Metrics
The following table presents key financial metrics for CSE Global:
| FYE Dec (SGD m) |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Revenue |
725 |
861 |
913 |
977 |
1,046 |
| EBITDA |
15 |
27 |
44 |
48 |
52 |
| Core net profit |
23 |
26 |
35 |
39 |
43 |
| Core EPS (cts) |
3.7 |
3.7 |
5.0 |
5.5 |
6.1 |
| Core EPS growth (%) |
293.4 |
1.8 |
33.6 |
10.4 |
10.0 |
| Net DPS (cts) |
2.8 |
2.4 |
2.5 |
2.8 |
3.0 |
| Core P/E (x) |
11.7 |
11.1 |
8.9 |
8.1 |
7.4 |
| P/BV (x) |
1.2 |
1.1 |
1.1 |
1.0 |
0.8 |
| Net dividend yield (%) |
6.4 |
5.8 |
5.6 |
6.2 |
6.8 |
| ROAE (%) |
10.5 |
11.2 |
12.9 |
12.5 |
12.2 |
| ROAA (%) |
4.1 |
4.3 |
5.4 |
5.7 |
5.9 |
| EV/EBITDA (x) |
22.8 |
13.6 |
7.6 |
6.4 |
5.4 |
| Net gearing (%) (incl perps) |
35.2 |
28.2 |
6.1 |
net cash |
net cash |
| Consensus net profit |
– |
– |
38 |
39 |
43 |
| MIBG vs. Consensus (%) |
– |
– |
(6.1) |
(0.6) |
(0.1) |
Value Proposition
- CSE is on the cusp of a multi-year upcycle, leveraging trends in electrification and O&G [[2]].
- Energy, public infrastructure, and data center segments are poised for robust growth [[2]].
- The company offers an attractive prospective dividend yield of 6.3% [[2]].
- CSE is trading at a discount compared to its peers [[2]].
- As of 30 Sept’24, the company boasts a strong order book of SGD633.6m [[2]].
Financial Outlook
- Maintenance revenue is expected to increase as more projects are completed [[2]].
- Gearing is anticipated to decrease due to improved financial performance and operating cash flow [[2]].
- Dividends are likely to be maintained at SGD0.0275/share [[2]].
- Cash may be conserved for potential M&A opportunities [[2]].
Swing Factors
Upside
- Share price re-rating potential due to strong NPAT growth in FY23E and FY24E [[2]].
- Trading at a discount compared to peers warrants a re-rating [[2]].
- Attractive dividend yield of 6%+ [[2]].
- Potential for further M&As to enhance profitability [[2]].
- Exposure to the US O&G upcycle [[2]].
- Significant growth potential in US data centers [[2]].
Downside
- Potential for execution errors leading to cost overruns [[2]].
- Economic recession may slow down business and order intake [[2]].
- FX fluctuations could impact profitability [[2]].
ESG Analysis
- CSE Global is enhancing its sustainability strategies, focusing on environmental protection, reducing carbon emissions, and utilizing Sustainability Linked Loans [[3]].
- The company is committed to digitalization, reducing its paper consumption index [[3]].
- CSE maintains a healthy gearing level and ensures stringent supplier evaluations [[3]].
- Key risks include supply chain disruptions and achieving emission reduction targets [[3]].
Material Environmental (E) Issues
- CSE plans to measure Scope 3 emissions and reduce greenhouse gas carbon emissions [[3]].
- The company is negotiating with banks for Sustainability Linked Loans [[3]].
- Paper consumption index has been consistently decreasing [[3]].
- CSE plans to disclose its Task Force on Climate-Related Financial discussion roadmap [[3]].
Key Governance (G) Metrics and Issues
- The board comprises 8 directors, including the Executive Chairman, the CEO, and 7 independent non-executive directors [[3]].
- 25% of the board are females, indicating a decent level of diversity [[3]].
- Management has implemented a whistle-blowing policy [[3]].
- CSE conducts a Risk Assessment and Control Self-Assessment exercise [[3]].
- The company has a zero-tolerance stance against fraud, bribery, and corruption [[3]].
- CSE is planning to conduct climate-related training for all Board Members and Management Team [[3]].
Material Social (S) Issues
- The company recognizes employees as its greatest asset and promotes an inclusive environment [[3]].
- New hire rates stand at 30%, and the turnover rate is 27% as of the end of 2022 [[3]].
- CSE adopts flexible work arrangements for its employees [[3]].
- In 2022, CSE donated SGD5,000 to Yellow Ribbon Singapore and granted 30 bursaries to its Singapore employees [[3]].
ESG Quantitative Parameters
| Particulars |
Unit |
2021 |
2022 |
2023 STE |
SP 2023 |
| Scope 1 emissions |
tCO2e |
2,234 |
2,720 |
2,298 |
37,000 |
| Scope 2 emissions |
tCO2e |
2,415 |
2,447 |
2,363 |
74,000 |
| Total |
tCO2e |
4,649 |
5,167 |
4,661 |
111,000 |
| Scope 3 emissions (operational) |
tCO2e |
NA |
NA |
NA |
39,000 |
| Total |
tCO2e |
4,649 |
5,167 |
4,661 |
150,000 |
| GHG intensity (Scope 1 and 2) |
tCO2e/million hour |
9.900 |
9.300 |
6.400 |
11.000 |
| Electricity Consumption |
kWh |
5,597.12 |
6,062.77 |
5,821.25 |
350,833.33 |
| Electricity Consumption Index |
kWh/ SGD million |
11.94 |
10.87 |
8.03 |
60,833.33 |
| Paper Consumption index |
kg/SGD million |
11 |
13 |
9 |
NA |
| % of women in workforce |
% |
14.0% |
15.0% |
16.6% |
22.0% |
| % of women in senior management roles |
% |
14% |
16% |
19% |
14 |
| Economic performance |
SGD(m) |
443 |
510 |
638 |
9552 |
| Number of fatalities |
|
0 |
0 |
0 |
0 |
| Rate of high-consequence work-related injuries |
% |
0 |
0 |
0 |
NA |
| MD/CEO salary as % of reported net profit |
% |
5.50% |
18.12% |
9.35% |
0.89% |
| Board salary as % of reported net profit |
% |
25.35% |
80.28% |
26.47% |
0.40% |
| Independent directors on the Board |
% |
90% |
88% |
67% |
60% |
| Female directors on the Board |
% |
22% |
25% |
22% |
20% |
ESG Qualitative Parameters
- ESG Policy and Committee: CSE has an ESG policy executed through the Corporate Sustainability Work Group, managing material ESG factors and engaging stakeholders [[4]].
- Senior Management Salary: Senior management salary is not linked to fulfilling ESG targets [[4]].
- Climate-Related Disclosures: The company follows the task force of climate-related disclosures framework for ESG reporting [[4]].
- Scope 3 Emissions: CSE captures emissions from transportation of employees between homes and worksites [[4]].
- Carbon Mitigation Strategies: Investing in green technology such as energy-efficient electronic equipment, LED lighting, and solar power [[4]].
- Carbon Offsets: Carbon offsets form part of the net-zero/carbon neutrality target of the company [[4]].
ESG Targets
| Particulars |
Target |
Achieved |
| Reduce greenhouse gas CO2 index by 10% by 2030 |
10% |
0 |
| Zero confirmed incidents of corruption |
0 |
0 |
| Zero cases of non-compliance with all applicable laws and regulations |
0 |
0 |
| Reduce paper by 1% annually |
1% |
1% |
Overall ESG Score
- CSE Global has an overall ESG score of 76 [[4]].
- The company has an established framework, internal policies, and tangible medium/long-term targets but needs to improve its quantitative “E” metrics YoY [[4]].
- CSE’s ESG rating is above average (average ESG rating = 50) [[4]].
Financial Statements
Income Statement (SGD m)
|
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Revenue |
725.1 |
861.2 |
913.2 |
977.1 |
1,045.5 |
| EBITDA |
14.9 |
26.8 |
43.8 |
48.0 |
52.5 |
| EBIT |
38.9 |
54.5 |
55.3 |
59.6 |
64.1 |
| Pretax profit |
28.8 |
35.7 |
47.6 |
52.6 |
57.9 |
| Reported net profit |
22.5 |
26.3 |
35.2 |
38.9 |
42.8 |
Balance Sheet (SGD m)
|
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Cash & Short Term Investments |
39.4 |
57.4 |
101.8 |
119.2 |
131.2 |
| Total assets |
599.6 |
632.6 |
665.7 |
703.7 |
746.2 |
| Total Liabilities |
383.6 |
376.6 |
374.4 |
373.4 |
373.0 |
| Total shareholder equity |
216.1 |
256.0 |
291.3 |
330.3 |
373.2 |
Cash Flow (SGD m)
|
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Pretax profit |
28.8 |
35.7 |
47.6 |
52.6 |
57.9 |
| Cash flow from operations |
72.0 |
47.5 |
104.1 |
79.4 |
76.8 |
| Free cash flow |
53.2 |
26.7 |
92.1 |
67.4 |
64.8 |
Key Ratios
|
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Revenue growth (%) |
30.0 |
18.8 |
6.0 |
7.0 |
7.0 |
| EBITDA margin (%) |
2.1 |
3.1 |
4.8 |
4.9 |
5.0 |
| ROAE (%) |
10.5 |
11.2 |
12.9 |
12.5 |
12.2 |
| Net gearing (%) (incl perps) |
35.2 |
28.2 |
6.1 |
net cash |
net cash |
Research Offices
ECONOMICS
Suhaimi ILIAS
Chief Economist
Malaysia | Philippines | Global
(603) 2297 8682
[email protected]
CHUA Hak Bin
Regional Thematic Macroeconomist
(65) 6231 5830
[email protected]
Erica TAY
China | Thailand
(65) 6231 5844
[email protected]
Brian LEE Shun Rong
Indonesia | Singapore | Vietnam
(65) 6231 5846
[email protected]
Azril ROSLI
Malaysia | Philippines | Global
(603) 2082 6818
[email protected]
Fatin Nabila MOHD ZAINI
Malaysia | Philippines
(603) 2297 8685
[email protected]
Luong Thu Huong
(65) 6231 8467
[email protected]
LEE Jia Yu
(65) 6231 5843
[email protected]
FX
Saktiandi SUPAAT
Head of FX Research
(65) 6320 1379
[email protected]
Fiona LIM
(65) 6320 1374
[email protected]
Alan LAU, CFA
(65) 6320 1378
[email protected]
Shaun LIM
(65) 6320 1371
[email protected]
STRATEGY
Anand PATHMAKANTHAN
ASEAN
(603) 2297 8783
[email protected]
FIXED INCOME
Winson PHOON, FCA
Head of Fixed Income
(65) 6231 5831
[email protected]
PORTFOLIO STRATEGY
ONG Seng Yeow
(65) 6231 5839
[email protected]
Sean LIM
(603) 2297 8888
[email protected]
MIBG SUSTAINABILITY RESEARCH
Jigar SHAH
Head of Sustainability Research
(91) 22 4223 2632
[email protected]
Neerav DALAL
(91) 22 4223 2606
[email protected]
REGIONAL EQUITIES
Anand PATHMAKANTHAN
Head of Regional Equity Research
(603) 2297 8783
[email protected]
WONG Chew Hann, CA
Head of ASEAN Equity Research
(603) 2297 8686
[email protected]
MALAYSIA
LIM Sue Lin, Co-Head of Research
(603) 2297 8612
[email protected]
• Equity Strategy
WONG Chew Hann, CA Co-Head of Research
(603) 2297 8686
[email protected]
• Equity Strategy
• Non-Bank Financials (stock exchange)
• Construction & Infrastructure
Desmond CH’NG, BFP, FCA
(603) 2297 8680
[email protected]
• Banking & Finance • Insurance
ONG Chee Ting, CA
(603) 2297 8678
[email protected]
• Plantations – Regional
YIN Shao Yang, CPA
(603) 2297 8916
[email protected]
• Gaming – Regional • Healthcare • Construction
• Media • Aviation • Non-Bank Financials
TAN Chi Wei, CFA
(603) 2297 8690
[email protected]
• Power • Telcos
WONG Wei Sum, CFA
(603) 2297 8679
[email protected]
• Property • Glove
Jade TAM
(603) 2297 8687
[email protected]
• Consumer Staples & Discretionary
Nur Farah SYIFAA
(603) 2297 8675
[email protected]
• Renewable Energy • REITs
LOH Yan Jin
(603) 2297 8687
[email protected]
• Ports • Automotive
Jeremie YAP
(603) 2297 8688
[email protected]
• Oil & Gas • Petrochemicals
Nur Natasha ARIZA
(603) 2297 8691
[email protected]
• Healthcare
Lucas SIM
(603) 2082 6824
[email protected]
• Technology (EMS)
Arvind JAYARATNAM
(603) 2297 8692
[email protected]
• Technology (Semicon & Software)
TEE Sze Chiah Head of Retail Research
(603) 2082 6858
[email protected]
• Retail Research
Amirah AZMI
(603) 2082 8769
[email protected]
• Retail Research
Amirul RUSYDY, CMT
(603) 2297 8694
[email protected]
• Chartist
SINGAPORE
Thilan WICKRAMASINGHE Head of Research
(65) 6231 5840
[email protected]
• Strategy • Consumer
• Banking & Finance – Regional
Eric ONG
(65) 6231 5849
[email protected]
• Healthcare • Transport • SMIDs
Jarick SEET
(65) 6231 5848
[email protected]
• Technology • SMIDs
Krishna GUHA
(65) 6231 5842
[email protected]
• REITs • Industrials
Hussaini SAIFEE
(65) 6231 5837
[email protected]
• Telcos • Internet
PHILIPPINES
Kervin Laurence SISAYAN Head of Research
(63) 2 5322 5005
[email protected]
• Strategy • Banking & Finance • Telcos
Daphne SZE
(63) 2 5322 5008
[email protected]
• Consumer
Raffy MENDOZA
(63) 2 5322 5010
[email protected]
• Property • REITs • Gaming
Germaine GUINTO
(63) 2 5322 5006
[email protected]
• Utilities
Ronalyn Joyce LALIMO
(63) 2 5322 5009
[email protected]
• SMIDs
VIETNAM
Quan Trong Thanh Head of Research
(84 28) 44 555 888 ext 8184
[email protected]
• Strategy • Banks
Hoang Huy, CFA
(84 28) 44 555 888 ext 8181
[email protected]
• Strategy • Technology
Le Nguyen Nhat Chuyen
(84 28) 44 555 888 ext 8082
[email protected]
• Oil & Gas • Logistics
Nguyen Thi Sony Tra Mi
(84 28) 44 555 888 ext 8084
[email protected]
• Consumer Discretionary
Tran Thi Thanh Nhan
(84 28) 44 555 888 ext 8088
[email protected]
• Consumer Staples
Nguyen Le Tuan Loi
(84 28) 44 555 888 ext 8182
[email protected]
• Property
Nguyen Thanh Hai
(84 28) 44 555 888 ext 8081
[email protected]
• Industrials
Nguyen Thanh Lam
(84 28) 44 555 888 ext 8086
[email protected]
• Retail Research
INDONESIA
Jeffrosenberg CHENLIM Head of Research
(62) 21 8066 8680
[email protected]
• Strategy • Banking & Finance • Property
Willy GOUTAMA
(62) 21 8066 8688
[email protected]
• Consumer
Etta Rusdiana PUTRA
(62) 21 8066 8683
[email protected]
• Telcos • Internet • Construction
Paulina MARGARETA
(62) 21 8066 8690
[email protected]
• Autos • Healthcare
Jocelyn SANTOSO
(62) 21 8066 8689
[email protected]
• Consumer
Hasan BARAKWAN
(62) 21 8066 2694
[email protected]
• Metals & Mining • Oil & Gas
Faiq ASAD
(62) 21 8066 8692
[email protected]
• Banking & Finance
Kevin HALIM
(62) 21 8066 2687
[email protected]
• Property • Cement
Satriawan HARYONO, CEWA, CTA
(62) 21 8066 8682
[email protected]
• Chartist
THAILAND
Chak REUNGSINPINYA Head of Research
(66) 2658 500
