RHB Bank Singapore analyst Alfie Yeo has highlighted CSE Global 544 ’s exposure to global growth across diversified segments in an August 27 unrated report.
Yeo notes that the global systems integrator offers exposure to energy, infrastructure, mining and minerals sectors across the US, UK, Singapore, Australia and New Zealand. The stock is a play on critical communications and infrastructure development, he adds.
Aside from registering a strong 1HFY2024 ended June, CSE Global also has a robust orderbook of $692 million. Yeo points out that the company’s order intake continued to be strong at $391 million, similar to 1HFY2023.
“Its orderbook is largely accounted for by the electrification segment, followed by automation and communications. We estimate that about 30% of its orderbook will be recognised in the remainder of this year,” he says.
Looking ahead, RHB thinks CSE Global’s growth would be driven by both the electrification and communications segments, with the automation segment outlook remaining stable.
The electrification segment, Yeo says, is driven by infrastructure and renewable energy development in towns and cities, steering more power grid electrification projects. These are where there is increasing demand for electricity due to digitisation, IT and automation, more data centres, adoption of electric vehicles and more efficient utility installation, among others.
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Meanwhile, growth in the communications segment will be supplemented through acquisitions in the US, where the company is looking to increase its contribution.
Yeo also highlights CSE Global’s new acquisition — the company recently announced the US$11.5 million acquisition of RFC Wireless Inc, an advanced communication solutions provider from portable and mobile radios to wide area networks and infrastructure.
The acquisition is earnings accretive. Based on net profit ended Dec 31, 2023, the acquisition will contribute to about 13% of CSE’s existing net profit.
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“Its strategy is to acquire and aggregate more of such similar companies across the US to bolster the customer and installed base for its communications business. Such acquisitions will support earnings growth going forward,” says Yeo.
As at 4.10pm, shares in CSE Global are trading at an unchanged 48 cents.
