CSE Global upgraded to Add by CIMB as earnings beat forecasts

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CIMB upgraded CSE Global to Add from Hold after first-quarter earnings beat its forecasts on higher margins.

“We have turned more positive on CSE as margins seem to have improved. Moreover, with the current recovery, the company could be able to maintain its dividend per share of 2.75 Singapore cents,” CIMB said in a note last week.

CSE Global reported last week that net profit for the first quarter jumped 90 percent on-year to S$5.7 million as revenue rose 23.7 percent to S$92.2 million, amid growth in the oil and gas and infrastructure segments.

CIMB said core net profit of S$4.7 million came in at 31 percent of its full-year forecast, beating expectations on a higher EBIT (earnings before interest and taxes) margin of 8.5 percent.

It raised its 2018-20 earnings per share (EPS) forecasts by 7.8-22.4 percent and increased its target price to S$0.50 from S$0.44.

CIMB noted however that CSE could see new markets emerge, but it was waiting for more details.

“We believe collaboration with the new shareholder opens CSE to downstream O&G, power and utilities contracts from the Middle East and Malaysia, assisting with order book replenishment,” it said, although it noted those project margins could be lower.

The stock ended Friday up 3.37 percent at S$0.46.