CGS-CIMB and Maybank Securities believe CSE Global’s : 544 0% healthy set of half-year results marks an inflection point for the mainboard-listed group, which builds integrated systems for the energy, infrastructure, as well as the mining and minerals sector.  

CGS-CIMB upgraded its call on the stock to “add” from “hold”, and raised its target price from S$0.45 to S$0.54. 

The research house also lifted its FY2023 to FY2025 earnings per share estimates by 15 to 28 per cent. It also raised its earnings before interest and taxes (Ebit) projections by 29 to 35 per cent. 

This comes on the back of a 20 per cent to 21 per cent hike in forecast order wins for the same periods – especially in the infrastructure sector, which offers higher margins, noted its analysts in a report on Thursday (Aug 10). 

CGS-CIMB analysts, highlighting that the group reported year-on-year margin expansions across all operating segments, said they now believed CSE’s supply-chain disruptions have likely eased more quickly than previously expected. 

They expect the group’s US energy segment to remain profitable, in view of how CSE has mostly concluded the restructuring of its loss-making divisions. 

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Maybank reiterated its “buy” call on CSE, with a slightly higher target price of S$0.65 from S$0.62 previously, while highlighting the stock as its top pick in the small- and mid-capitalisation space. 

The research house lifted its profit after taxes and minority interests (Patmi) estimates by 4.5 per cent and 4 per cent for FY2023 and FY2024, respectively. 

This will be underpinned by a surge in order wins from Q3 FY2023, with potential near-term contract wins to follow after the group achieves a projected S$900 million order book for the whole of FY2023, said analyst Jarick Seet on Friday (Aug 11). 

“We believe that CSE is in a sweet spot to win contracts from multiple sectors, and we remain confident that in the coming months that it should be able to secure contracts from the public infrastructure, data-centre related solutions and the oil-and-gas space,” he said. 

The analyst also expects the group’s final dividend to be maintained at S$0.015, saying that it would result in a “fairly-attractive” 5.9 per cent dividend yield in FY2023, despite higher finance costs and additional debt. 

“We think that the debt will eventually be paid down slowly over the years and its historical dividend pay-out should be sustainable,” he added. 

Shares of CSE Global were flat at S$0.465 as at 1pm on Friday.