CSE Global - CGS-CIMB Research 2021-05-20: 1Q21 Systems Momentarily Paused

CSE GLOBAL LTD (SGX:544) | SGinvestors.io 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

Cezzane SEE CGS-CIMB Research | Kenneth TAN CGS-CIMB Research | https://www.cgs-cimb.com 2021-05-20
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