(CSE SP / 544.SI)
Backlog-rich; margin recovery and Jefferies optionality decide the rerating
System Integration
1H26 revenue rose 27.4% and the S$620.4m order book was 8.1% higher y/y. Our model reaches S$1.13bn FY26E revenue and S$1.60bn by FY30E, with Electrification providing about 65% of the FY25-FY30 increment.
Gross margin fell 410bp and adjusted PATMI declined 12.4% despite the revenue surge. The base DCF requires a 13.0% 2H26 adjusted EBITDA margin versus 7.4% in 1H26, leaving execution as the principal forecast risk.
Heliconia requested the process and an EOI preceded it, but no price, scope or substantive progress had been disclosed. We keep review optionality outside our DCF and frame S$1.51-S$1.89 as a 20%-50% event-premium reference to the S$1.18 unaffected price.
We reiterate our OUTPERFORM rating on CSE GLOBAL LTD. with a 12-month target price of S$1.70 (previously S$1.79), based on our DCF using a 9.0% WACC and 2.0% terminal growth. A full-vesting/cash-exercise Amazon-warrant cross-check is S$1.61.
A slower H2 margin recovery; unawarded data-centre pipeline not converting; greenfield execution losses; working-capital and refinancing pressure; SEI integration/PPA; strategic-review delay or an unattractive/no-deal outcome; and Amazon warrant dilution.
