Company Update: 5 November 2025
Fundamentals still stable
- Top-line growth led by communications business. CSE Global reported an improvement in topline growth for its communications business, rising from S$113.6mn in 1H24 to S$128.0mn in 1H25, representing a 12.7% YoY growth, but was partially offset by the company’s electrification and automation business, both of which declined marginally YoY. However, the company’s electrification business EBITDA saw a 14.4% growth YoY, helped by a one-off net gain on disposal of asset held for sale of S$5.5mn.
Acquisition Of Chicago Communication To Boost The Company’s Communication Business
With the recent acquisition of Chicago Communications, CSE Global have established a presence in four states for its Communications business in the United States of America, supporting its regional expansion strategy. While the acquisition cost was US$8.5mn, the acquisition will expand the group’s communication businesses in the infrastructure industry where demand for increased connectivity and security is expected to grow.
Recurring Businesses To Sustain Growth
In addition to providing clients with engineering solutions across different industries and different markets, CSE Global also provides their existing clients with other services, such as routine checks and maintenance for their infrastructures. This business model creates a layer of revenue drivers for the company, allowing it to derive recurring revenue from each project with their clients through maintenance and checks after the initial projects are completed, while simultaneously maintaining stable cash flow. The company’s recurring business makes up around 67% of the company’s revenue.
Valuation & Action
We change our recommendation to UNDERPERFORM and raise our 12-M TP to S$0.73, based on our 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 resulted in recent run up of the stock. Early November company update will determine if re-rate is intact and any wobble will trigger consolidation. Our TP of S$0.73 implies a 14.1% downside excluding dividends.
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.
