Maybank Securities analyst Jarick Seet has kept “buy” on CSE Global 544 with a target price of 64 cents, adding that the company remains one of its conviction picks as a rare proxy for electrification, artificial intelligence (AI) and data centres themes.
CSE is expected to release its 1HFY2024 ended June results on Aug 6. Maybank believes that the company will perform well in the period, with its strong order momentum win rate to likely continue.
“We also believe that a substantial shareholder, who had been paring down their stake since 2023 has likely pared all their stake. This would be positive for CSE as the overhang suppressing the share price is likely gone,” says Seet.
He believes that the company would register double-digit growth y-o-y in its 2QFY2024 order wins, following a strong pipeline of infrastructure projects from the US. This will likely boost its already robust order-book, which is also a good indicator of its potential revenue going forward, says Seet.
In April, CSE announced that it has secured a $49.2 million contract variation which is for the design, engineering, fabrication, installation and integration of power management systems and solutions for data centres in the US.
Maybank thinks its client is “one of a handful” of main cloud providers in the US. CSE is likely to win more data centre contracts from its existing and new customers, Seet says. “AI technology and data centres require huge amounts of energy to develop and run and will benefit power management system integrators like CSE,” he adds.
Aside from offering investors a unique opportunity to ride the upcycle in attractive growth areas, CSE also offers a sustainable 6.5% dividend yield.
Maybank believes CSE has a clear multi-year growth outlook, expecting further accretive acquisitions — especially in the critical communications segment in the US and Australia — which could accelerate its growth. “There is also a strong possibility of management share buy-backs and company share buy-backs,” Seet says.
As at 11.35am, shares in CSE are trading 1.5 cents higher or 3.29% up at 47 cents.
