by winston » Thu Jan 07, 2010 8:34 pm
Not vested. From CIMB:-
CSE Global (S$0.96) - More contracts secured in Dec 09
Bullish on order-book outlook
Maintain Outperform and target price of S$1.37, still based on 11x CY11 P/E
(historical 7-year average). CSE had secured S$85m contracts in Dec 09, with earnings
contributions in FY10. FY09 order wins are estimated at S$500m (including variation
orders), meeting our assumption.
Thus, our earnings estimates and target price are unchanged. The share price has surged 10% since the start of the year, on the back of announcements of order wins. We believe announcements of more order wins and sustainable strong margins will further catalyse the stock.
Secured contracts worth S$85m
CSE announced that its various subsidiaries had won a total of S$85m contracts in Dec
09 from the oil & gas, and infrastructure sectors in various regions:
• Telecommunication and security surveillance projects in Saudi Arabia, Abu Dhabi and
Papua New Guinea
• Control and automation projects in the US, UK, Saudi Arabia and ASEAN
• A maintenance contract from the Singapore government.
Comments
In good stead for more contracts. While the Papua New Guinea contract win was
smaller than anticipated, we believe the win could pave the way for more contracts from
the booming Australian LNG market.
Meanwhile, we are assuming order wins of S$550m for FY10, including contracts from:
1) downstream oil & gas refinery projects in Saudi Arabia, UAE and Algeria;
2) recovering upstream spending in North America on stronger oil prices;
3) an acceleration in UK healthcare spending before upcoming elections; and
4) growth opportunities in the environment sector. Order book at end-FY09 is estimated
at S$400m (+22% yoy).
Valuation and recommendation
Maintain Outperform and target price of S$1.37, still based on 11x CY11 P/E
(historical 7-year average). More order wins and sustainable strong margins could
provide catalysts for its share price, we believe. CSE is our preferred pick in the smallcap
O&M space for its attractive valuations against peers and robust fundamentals.
We expect net gearing to improve to 0.3x by end-FY10 from 0.44x at 9M09, with the help of healthy operating cash flow and low capex plans. Gross margins are expected to hold at 37%.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"