CSE Global: CIMB likes CSE for its management quality, attractive FY16 dividend yield of 5.2%, net cash of c.S$60m (US$45m) and resilience vs. other small-cap O&M companies.
- It targets double infrastructure projects to comprise 30% of group revenue by FY17, lifting overall margins as infrastructure fetches EBIT of 14% vs. 6% for oil & gas.
- ERP 2 could also add S$40m-50m (US30m-37m) to CSE’s orders in FY16, bringing total wins to S$400m (US$298m) or 10% higher than in FY15.
- The house raises EPS by 3-5% for FY17-18, on higher gross margins to incorporate more infrastructure projects.
- Maintain Add with higher target price of S$0.57, based on 9.7x CY17 P/E (1 s.d. below 5-year mean). Stronger-than-expected order wins could catalyse the stock.
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