CSE Global

CSE Global: (S$0.62) Consistent payouts; eyeing acquisitions Maybank-KE hosted CSE Global in a recent corporate day. CSE Global is a system integrator with more than 25 years of operating history. Investors expressed reservations about the company, as 77% of its 9M14 revenue was from the oil & gas sector. Management assuaged fears by clarifying CSE operates in the mid-downstream segments, where system maintenance opex is critical, citing its experience during GFC. Nevertheless, heightened competition could drive down profitability in the near term. CSE has been growing via acquisitions, and could increase gearing to 0.3-0.4x to fund new ones. The deteriorating sentiment in the O&G sector could present attractive opportunities to purchase synergistic companies, particularly those exposed to the North Sea and Middle East. Overall client interest was lukewarm, though investors acknowledged CSE's consistent payout and solid balance sheet. Some investors thought CSE could even be a potential acquisition target. CSE trades at 9.4x forward P/E and offers an indicative yield of 5.2%.