Apr[1] - CSE Global (Proxy to oil&gas, infrastructure and mining)

COUNTER: CSE GLOBAL LTD

OVERVIEW:
In 1985, CSE commenced as a engineering project division of Chartered Electronics Industries, the electronics arm of Singapore Technologies (ST). It formed company in 1997 and listed in SGX two years later. Throughout a series of acquisition, it has transformed itself to be global organization with over 1300 employees worldwide, such as US, Australia, China and India.

CSE offered integrated solutions to industries in Automation, Telecommunications and Environmental sectors. Recognized as one of the market leaders, it provides SCADA (Supervisory Control & Data Acquisition) systems to a wide range of industries, such as fire alarm, offshore, etc.

HIGHLIGHTS:
[1] FY2016 saw revenue and profit down 23% and 32$ year on year. However, net cash generated from operating activities up 34%. Gross margin improved 10% as well.

[2] Its earning is contributed by oil&gas, infrastructure and mining segments from worldwide region.

[3] Borrowing of 20m can be fully paid by cash. It shall be debt free after one year.

INVESTMENT THEMES:
[1] Earning per shares - 0.041 || Book Value - 0.487 || Dividend per shares ~ 0.0275
Last trading price, 0.53 translates to PE ~ 13, PB~ 1.1, dividend ~ 5.2%. Management indicated that earning and dividend payout for FY2017 shall be same as FY2016. 

[2] Management expects weaker performance on 1Q2017, due to delay in projects awarded. However, a turnaround could be seen on following quarters. From the revenue trend below, it could be see mining segment in growing phase. Infrastructure segment is stable while oil&gas could have seen the bottom.

[3] On 10 Mar, the group won two deep water offshore projects (executed in Gulf of Mexico) valued at USD30m. In Singapore, it is one of the suppliers to NCS-MHI consortium that won $556m ERP 2 contract awarded by the Land Transport Authority (LTA)

[4] A strong balance sheet (70m net cash) has sustained the group throughout last year oil crisis. It also allow the group to seek more business opportunity ahead.  

PRICE TREND:
Following announcement of new projects awarded on 10 Mar, the counter saw strong buying volume. 0.55 is immediate resistance. Price under consolidation phase meantime.

*** Note: Same counter has been mentioned in Mar[5] 2016 ***