Company Update: 10 December 2025
Amazon Framework Sharpens Data Centre Growth Optionality
- Strategic warrants with Amazon. CSE will issue 62,968,580 non-listed warrants to Amazon.com NV Investment Holdings LLC, each exercisable into one new share at S$0.7671, a 7% discount to the S$0.8245 VWAP on signing day. Full vesting occurs when qualifying payments cumulate to US$1.5b before expiry on 9 Nov 2030. We view this as a structured commercial partnership that can scale with Amazon’s spend in the electrification segment.
Order Momentum Mix For 3Q25
3Q25 orders were S$146.1 million. Year on year comparisons were pressured by FX and a high base, but Communications rose 24.2% year on year to S$75.2 million and Electrification grew 20.2% year on year on an adjusted basis excluding two large 3Q24 contracts, pointing to improved underlying demand in CSE’s data centre relevant stack. The 9M25 ending order book stood at S$467.5 million as the group converted earlier megaproject wins into revenue. We see this as normalisation rather than the start of a downcycle.
Valuation & Action
We raise our 12-month TP to S$1.08 (fully diluted) from S$0.73 and upgrade to OUTPERFORM from UNDERPERFORM. The revision reflects a step up in our base case from the newly announced Amazon linked warrant structure, where we now model a dedicated “Commercial Partnership” revenue stream alongside higher medium term Electrification growth, as well as resilient Communications order momentum.
Based on our refreshed DCF with 7.5% WACC and 2% terminal growth, the new assumptions yield a PT of S$1.08, implying 18.8% upside from the current share price of S$0.91. Our prior TP of S$0.73 embedded the same DCF assumption with no explicit mega-customer uplift. We now probability-weight incremental revenue arising from Amazon-related qualifying payments that drive vesting. In our conservative run-rate assumption, CSE captures a fraction of the vesting ceiling that equates to roughly S$60m–80m incremental annual revenue through 2026–2030, with 10% EBITDA margin and limited working-capital drag given flow business dynamics. Capitalizing S$6m–8m incremental EBITDA at 10x and discounting yields S$0.10–0.15 per share of value, which takes our TP to S$1.08.
Risks
The company is exposed to currency translation risk and foreign exchange risk as it operates its business in several key markets, with its key market primarily in the United States, Australia and the United Kingdom.
