CGS-CIMB has raised its target price for global technology group CSE Global : 544 +2.3% to S$0.45 from S$0.37, but maintains its &ldquo hold&rdquo call on the stock as current valuations remain &ldquo fair&rdquo .

 

The higher target price comes after the research team increased its revenue and core earnings per share (EPS) estimates. It said in a report on Thursday (Jul 20) that it expects faster order book executions from easing supply-chain pressures.

 

It predicts a core EPS increase of 9 per cent to 21 per cent for FY2023 to FY2025, with an increase in revenue forecasts for the same period by 11 per cent to 13 per cent, supported mainly by the energy and infrastructure segments.

 

At the new target price, CSE Global trades at 12 times CGS-CIMB&rsquo s price-to-earnings estimates for the 2024 calendar year, up from 10.8 times previously. The estimates are based on a historical average from FY2012 to FY2019.

 

Analysts Kenneth Tan and Lim Siew Khee also forecast a yield of 6.7 per cent for FY2023, which they find attractive.

 

They believe that Q2 2023 could be an &ldquo inflection point&rdquo for CSE Global, after seven straight quarters of supply-chain issues. They expect easing global supply-chain pressures will enable the group, helmed by chief executive Lim Boon Kheng, to speed up order book executions, leading to a clearer earnings recovery path.

 

The research team expects a core net profit of S$7 million to S$8 million, which is a 54 per cent to 76 per cent increase year on year, for H1 FY2023.

 

It also forecasts H1 revenue to go up by 25 per cent to 30 per cent on the year, supported by a sizeable infrastructure order book of S$265 million at the end of the first quarter.

 

TECHNOLOGY solutions provider CSE Global : 544 0% posted a 35.5 per cent increase in revenue to S$159.4 million for its first quarter ended Mar 31, 2023, from S$117.6 million in the previous year.

 

The company attributed the higher revenue to growth in infrastructure revenue in Australia and the Americas region, as well as contributions from recent new acquisitions, it said in a business update on Friday (May 12).

 

The group secured S$159.6 million of new orders in Q1, down 31.3 per cent from S$232.3 million of new orders in the year-ago period. This is because the group had secured two major contracts worth US$57.6 million in the first quarter of 2022.

 

Excluding the effect of these major contracts secured, the group&rsquo s order intake for the first quarter grew 3.5 per cent year on year.

 

By segment, the group&rsquo s infrastructure segment saw revenue grow 60.2 per cent to S$75.7 million, from S$47.3 million the previous year. This was mainly driven by higher revenue contributions in Australia and the United States, and contributions from new acquisitions.

 

The energy segment contributed S$70.7 million in Q1, up 21.8 per cent from S$58.1 million the previous year, on more project, time and material revenues recognised in the Americas region.

 

Revenue from the mining and minerals segment was up 5.8 per cent at S$13 million, from S$12.3 million previously.

 

Lim Boon Kheng, group managing director, noted that the first quarter is typically a slow quarter for the company. Nevertheless, its diversification strategy &ldquo has reshaped the infrastructure segment into a key revenue growth driver for the group&rdquo .

 

&ldquo While our order book remains robust, ongoing supply chain disruptions may delay project execution timelines,&rdquo he said, adding: &ldquo As we pursue more orders, we are committed to preserving margins and strategically allocating resources to support growth.&rdquo

Between Mar 9 and Mar 10, CSE Global : 544 +1.47% executive director, group managing director and CEO Lim Boon Kheng acquired 864,600 shares at an average price of S$0.345 per share.

 

With a consideration of S$298,287, this increased his total interest in the company from 2.57 per cent to 2.71 per cent.

 

Lim was first appointed as executive director in August 2013. He joined CSE Global in 1999 as the group financial controller. Prior to that, he began his career in 1990 as an accountant with ULC Systems (FE).

 

He then joined Singapore Technologies in 1991 as an accountant and was promoted to various positions in the organisation. He is concurrently the managing director of CSE Global (Asia).

 

On Feb 27, CSE Global reported its FY22 (ended Dec 31) revenue increased 19.0 per cent from FY21, mainly attributable to growth in infrastructure project revenues.

 

The group maintained a healthy order book of S$480.1 million as at Dec 31, 2022, lifted by new orders for the infrastructure sector recording 131.2 per cent year-on-year growth.

 

Lim noted FY22 saw CSE Global&rsquo s diversification strategy pay off through the year-on-year growth in revenue and orders, with the group successfully completing its rights issue with the support of its shareholders, as well as the acquisition of Logic Wireless and Radio One Group, which will further strengthen its offerings in the radio communications solutions space.