Company Update: CSE Global Ltd. (CSE SP/544.SI)
Company Update: 21 March 2025
Fundamentals still strong.
- Strong top-line growth in the electrification business. CSE Global reported strong topline growth for its electrification business in FY24, rising from S$334.5mn in FY23, to S$434.8mn in FY24, representing a 30.0% YoY growth. The company’s automation business saw growth of 14.3% YoY, while its communications business saw a growth of 5.2% YoY. The ongoing AI trend is likely to positively impact demand for data centres and continue contributing to strong demand for the company’s electrification business.
Continued Stable Order Books
CSE Global’s order book remained stable at S$672.6mn in FY24,which will be robust to drive revenue growth in FY25. On the other hand, order intake declined by 19.1% YoY, largely due to lower new projects orders in 2H24, as the U.S. Presidential Election approached. While uncertainties remain in the United States, which is CSE Global’s largest market, the company still expects strong orders to come in amidst ongoing global trends, pushing demand for energy and communication services higher.
FY24 Financial Results
The company reported total revenue of S$861.2mn for FY24, increasing by 18.8% YoY, compared to S$725.1mn in FY23. The growth was mainly attributed to strong growth in its electrification business, which experienced a growth of 30.0%. Net profit attributable to equity owners increased by 16.9% YoY to S$26.3mn, despite a one-time exceptional loss of S$10.4mn, compared to S$22.5mn in FY23. The group’s EPS was 3.91 Scents in FY24, compared to 3.66 Singapore cents in FY23.
Valuation & Action
We maintain our recommendation at OUTPERFORM with an unchanged TP of S$0.60, based on a financial analysis using Discounted Cash Flow (DCF), with a terminal growth rate of 2.0% and a WACC of 7.5%. Going forward, CSE Global’s strong business model positions the company well to capitalize on ongoing AI trends and reap benefits from them, driving future growth. The company’s continued robust order book and order intake also reaffirmed its growth trajectory. Our TP of S$0.60 implies a 29.0% upside.
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.
