Brokers’ take: CGS-CIMB cuts CSE Global target price to S$0.54 on lower margins

TECHNOLOGY solutions provider CSE Global : 544 0% will likely see lower margins amid supply-chain disruptions and inflation in the first half of 2022, said CGS-CIMB on Wednesday (May 18).

The research team lowered its target price on the counter to S$0.54 from S$0.57, after cutting its earnings-per-share estimates for CSE by 10.9 per cent in FY2022, 5.3 per cent in FY2023 and 2.7 per cent in FY2024.

It expects, however, that CSE’s earnings visibility will still be supported by its strong order book, and maintained its “add” call on the counter.

The counter closed at S$0.47 on Thursday, up half a cent or 1.1 per cent.

CSE on Tuesday posted revenue of S$117.6 million for its first quarter ended Mar 31, up 5.8 per cent from S$111.2 million in the year-ago period.

This was mainly due to a growth in revenue from its infrastructure segment, which rose 56.6 per cent on year to S$47.3 million in the quarter, driven by higher contributions across Australia, Singapore, the UK and the US.

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While the results were in line with expectations, CGS-CIMB said the infrastructure project wins were stronger than expected.

The research team expects the record-high quarterly order wins should result in a firmer income visibility, and raised its revenue forecasts by 2 to 4 per cent for FY2022 to FY2024.

However, it cut earnings estimates as it expects supply-chain disruptions will continue to weigh on project executions and be a key concern in the first half of 2022.