CSE GLOBAL LTD (SGX:544)
CSE Global - 1Q21 Systems Momentarily Paused
- CSE Global reported 1Q21 revenue of S$111m (23%/22% of our/consensus FY21F forecasts) and EBITDA of S$10m (20%/18%).
- We deem the results in line as 1Q21 saw fewer contract executions in the US due to adverse weather; executions should pick up in coming quarters.
- Reiterate ADD on CSE Global with an unchanged target price of S$0.63, still based on 12x P/E (close to 2015-2020 average of 11.3x).
Winter storms hurt 1Q21 revenue and EBITDA
- CSE Global (SGX:544)'s 1Q21 revenue came in at S$111m (-16% y-o-y), due to lower revenues in the Americas (-27% y-o-y) as the US saw severe winter weather disruptions in Feb 21. This was slightly offset by revenue growth in Asia Pacific (+5% y-o-y) and EMEA (+142% y-o-y). The lower project execution and labour utilisation led to 1Q21 EBITDA declining 22% y-o-y to S$10m (1Q20: S$13m).
Order intake remains healthy despite seasonal weakness
- CSE Global secured S$106m of orders (-17% y-o-y, +8% q-o-q)) in 1Q21, with the bulk of the orders coming from energy (S$57m, -36% y-o-y) and infrastructure (S$38m, +50% y-o-y) segments. New orders from the energy sector declined as a result of a slower-than-expected start to the year, exacerbated by a significant winter storm in the US in Feb 21; however, new infrastructure orders surged y-o-y on the back of a stronger pipeline of projects.
- For the mining & minerals segment, the group secured a greenfield project worth ~S$5m to supply two-way radio equipment and solutions in Australia. Order book as at end-1Q21 totalled S$231m (4Q20: S$236m).
Cautiously optimistic on order outlook
- CSE Global's management shared that despite continued uncertainties from the COVID-19 pandemic and weak global economic outlook, project order wins had been satisfactory; and it still hopes to secure greenfield projects over the rest of FY21F. Net debt was also reduced to S$37m as of end-1Q21 (4Q20: S$39m) on the back of better working capital management.
Reiterate ADD with unchanged target price of S$0.63
- Despite uncertainties from COVID-19, we expect a better second half performance as deferred projects from 1Q21 are gradually executed.
- Going forward, the energy segment could see gradual recovery as oil price recovers while the infrastructure segment should continue to be bolstered by orders from CSE Global’s key markets (Singapore and Australia).
- We reiterate ADD call with an unchanged target price of S$0.63 for CSE Global, still pegged to 12x FY22F P/E, which is close to the group’s 2015-2020 historical average.
- See
- Potential re-rating catalysts are swifter project execution and higher-than-expected order wins.
- Downside risks are lower order wins and potential cuts in dividends.
Cezzane SEE
CGS-CIMB Research
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Kenneth TAN
CGS-CIMB Research
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https://www.cgs-cimb.com
2021-05-20
SGX Stock
Analyst Report
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