US president Donald Trump’s declaration of a national energy emergency aimed at boosting oil and gas (O&G) production in the US is set to deliver a boost to Singapore mainboard-listed CSE Global, Maybank said.
The executive orders signed by Trump will see the approval of new drilling, pipelines, refineries, power plants and reactors.
In a note on Monday (Jan 20), Maybank analyst Jarick Seet said: “We believe that this move should boost US O&G-related activities significantly, which should benefit CSE Global which previously had significant exposure to O&G projects in the US.”
He added that the number of O&G-related projects in the past few years were “lukewarm”, resulting in the technology solutions provider pivoting to electrification. But those projects are now set to rise and benefit CSE by way of lower electric prices, he indicated.
The approval of new O&G facilities will enable the US to “dramatically increase energy production, generation and supply”, slashing electric and petrol prices by a targeted 50 per cent by the end of Trump’s first year in office, said Seet.
On Jan 3, the company said that it plans to divest an industrial property in the US for US$29.3 million and intends to deploy the proceeds to purchase a larger property in the US, “which will likely be built up in phases”, said Seet.
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“We believe this is due to the substantial growth opportunities available for the electrification of US data and utilities centres.”
Seet added that CSE Global is likely to “explore new states with better and friendlier tax incentives”, which adds more positives for the company.
He expects the new facility to be more than double the size of its existing one, which comprises 16.68 acres (6.75 hectares) of land and 215,474 square feet of building size.
Maintain “buy” call
Maybank maintained its “buy” rating on CSE Global with an unchanged target price of S$0.64.
Seet pointed out that as a global systems integrator, CSE Global is on the verge of a multi-year upcycle, with an “attractive” prospective dividend yield of 6.3 per cent. It is also trading at a significant discount compared to its peers.
He anticipates maintenance revenue to build as the company completes more projects, while gearing continues to decrease as its financial performance and operating cash flow improves.
“With the stars aligning for CSE Global, we believe the expansion of its US facility signifies the strong confidence management has in its prospects. We expect potential share buybacks as well as higher net margins year on year as well,” said Seet.
Shares of CSE Global were up 1.1 per cent or S$0.005 at S$0.45 as at 9.33 am on Wednesday.
CSE Global made its debut on the Singapore’s Fastest Growing Companies list this year, which features 100 local businesses that achieved markedly high revenue growth between 2020 and 2023, based on a study by The Straits Times and global research firm Statista.
The company grew its revenue by more than 44 per cent during this period.
