- Strong Project Pipeline: Significant electrification contracts won in 3Q 2024, and favourable seasonality expected to boost order wins in 4Q 2024.
- Positive FY2025 Outlook: CSE Global will focus on electrification and communications segments to drive growth.
- Strategic Acquisitions: The company is pursuing opportunities in critical communications and data center projects to capitalize on emerging trends.
CSE Global Ltd (SGX: 544) (CSES.SI) is leveraging its strengths in the electrification sector to drive growth, despite facing some challenges in the third quarter of 2024 (3Q 2024). While order wins were lower by 38% year-on-year (YoY) and 9% quarter-on-quarter (QoQ), the company maintains a robust order book, bolstered by significant wins in November 2024. Moving forward, the company must focus on strong project execution, especially given past delays in engineering works for a client.
CSE Global is a systems integrator providing electrification, communications, and automation solutions. The company operates across the United States (US), United Kingdom, Singapore, Australia, and New Zealand, offering exposure to green energy, renewable energy, and electric vehicle infrastructure. CSE Global’s main business segments are electrification, communications, and automation.
3Q 2024 Earnings Highlights
- Revenue Growth: CSE Global reported a revenue of S$213.9 million for 3Q 2024, an 8% decrease QoQ but a 15.4% increase YoY. The growth was driven by strong electrification project execution in the US, with the communications and automation segments also showing YoY growth.
- Robust Order Book: The company secured S$186.7 million in order wins for 3Q 2024, bringing the total for the first nine months of 2024 (9M 2024) to S$565 million. The order book stood at S$633.6 million as of September 30, 2024, with the electrification segment accounting for the largest share. The electrification business segment secured S$78.3 million of new orders, which contributed about 41.9% of total order intake during 3Q 2024.
Company Outlook
- 4Q 2024 Pipeline: CSE Global’s order wins in 4Q 2024 are expected to be strong, including approximately S$130 million in major electrification contracts announced in November 2024, slated for execution from 2024 to 2026. Additionally, favorable seasonality and potential for larger infrastructure contract wins are anticipated. The order win outlook for FY2025 onwards appears positive as the electrification business gains further traction in the US.
- Key Segments: Over the next 2-3 years, CSE Global is well-positioned to benefit from trends in electrification. The company will continue to focus on its electrification and communications segments, which are expected to yield positive outcomes.
- Strategic Growth: CSE Global is pursuing acquisitions in the critical communications space in the US and will continue to focus on data center and automation projects to capitalize on emerging market opportunities.
Company Risks
- Investor Confidence: Recent investor confidence may have been shaken due to a US$8 million settlement charge incurred from delays in engineering works for a US-based client. While the company has improved its internal processes, further scrutiny is needed to mitigate such risks in the future.
- Weather Impact: Although the company reported revenue YoY growth in 3Q 2024, it was softer-than-expected due to the hurricane season in the US, which led to delays in offshore project execution.
Looking ahead, CSE Global is set to grow by focusing on electrification and communications projects. We have an ‘add’ rating with a target price of S$0.62 on the stock. Key factors that could boost the stock include winning large infrastructure contracts and improving profit margins. However, there are risks like project delays, legal issues, and a potential drop in new orders if the global economy slows down.
References
CGSI Note | CSE Global | Nov 15, 2024
Press Release | CSE Global 3Q 2024
Presentation | CSE Global 3Q 2024
Disclaimer: ProsperUs Manager of Content, Hailey Chung, does not own shares of the company.
