CSE Global

CSE Global: Credit Suisse has an unrated note. CSE is an oil and gas industrial automation company . The majority of its business is from the Americas and Asia Pacific. It also has segments serving industrial telecommunications and "enviornment" (furnaces) sectors, though smaller and less profitable. The group focused on smaller ($100k - $10m) orders that are more profitable and less competitive, hence even though oil & gas capex is slowing, mgt is confident that maintenance and upgrade work shd continue. Order intake for 1H14 was down 5.5% y/y , although order book is down 28.6% y/y . Nevertheless, CSE expects gross margins of ~30% (FY13: 26.8%) hence mgt is confident of delivering 10-15% net profit growth for FY14/15, and including potential M&As, hopes to double earnings in three years. At 9.2x FY15e consensus P/E, CSE trades in line with the average of oil equipment and services companies in the market (8.7x, excluding outliers). CSE offers 4.6% FY15e yield.