On 9 May 2024, CSE Global Ltd (“CSE”) have announced their first quarter business update for 2024. Their revenue has increased this quarter and is higher than any individual quarter in the previous financial year. This is a good start for 2024.
Take note that the order book has increased as well when compared to the first quarter of 2023. However, when compared to the previous quarter of SGD731 million, it has decreased slightly by 1.5%. It is still a large order book and almost similar to the total revenue for FY2023, indicating good visibility for another year as of the time of reporting.
Website: General Announcement::Interim Business Updates For The First Quarter Ended 31 March 2024
Photo source: 5 things I like about CSE Global
Background
CSE is a Singapore-based technology company, which offers total integrated solutions to industries in the automation, telecommunications and environmental sectors. The Company is engaged in the business of systems integration solution and the provision of computer network systems.
The Company operates through Process Controls and Communications & Security segments. The Process Controls segment provides process control solutions that utilize supervisory control and data acquisition systems (“SCADA”), distributed control systems (“DCS”), programmable logic controllers (“PLCs”), motors, drives and plant transducers.
Its geographical segments include Asia-Pacific, America and Europe/Middle East. It offers safety critical solutions, including emergency shutdown systems, process shutdown systems, and integrated control and safety systems. Its products and services are installed on production facilities, as well as on drilling rigs.
Financial highlights
Revenue
| Metrics | Current | Previous |
|---|---|---|
| Revenue | +23.9% | +30.0% |
Revenue increased by 23.9% to SGD198 million for the first quarter of 2024 from SGD159 million for the same period in the previous financial year. The increase was mainly attributed to broad base growth across all business segments. Take note as well that the order book as of end of the quarter has increased by 49.8% to SGD719 million, compared to SGD480 million a year ago. The metric is Favorable.
Earnings per share
| Metrics | Current | Previous |
|---|---|---|
| Earnings per share | No Info | +311.2% |
Based on the announcement on 9 May 2024, earnings per share was not included in the business update for the first quarter of 2024.
The metric was Favorable as of 31 December 2023 as earnings per share have increased by 311.2% to SGD0.0366 per share from SGD0.0089 per share in the previous financial year. The significant increase was mainly due to the increase in gross margins by 36.7%. While operating expenses only increased by 17.6%.
Operating Cash Flows
| Metrics | Current | Previous |
|---|---|---|
| Operating Cash Flows | No Info | +558850.0% |
Based on the announcement on 9 May 2024, cash flow was not included in the business update for the first quarter of 2024.
The metric was Favorable as of 31 December 2023 as operating cashflows have increased by 558850.0% and there is an inflow of SGD55.9 million this year. The significant increase was due to an extremely small based of only SGD10,000 inflow in the previous financial year. The improvement is mainly attributable to their higher profits and supported by better working capital.
Gearing ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing ratio | No Info | 64.0% |
With effect from April 2024, my articles will be shifting the metric for this section from debt-to-equity ratio to gearing ratio. This will allow readers to have an easier comparison with Real Estate Investment Trusts (“REITs”) and determine the amount of financing each Company is using. Gearing ratio was 64.0% for the previous quarter, with total assets of SGD600 million and total liabilities of SGD384 million.
Based on the announcement on 9 May 2024, no detailed breakdown of the financial position to determine the gearing ratio was provided in the business update for the first quarter of 2024.
The metric was Unfavorable as of 31 December 2023 with the gearing ratio at 64.0%. This is an indication that CSE is reliant on external funding for operations.
Interest coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest Coverage | No Info | 3.7x |
Based on the announcement on 9 May 2024, no detailed breakdown of the financial results to determine the interest coverage was provided in the business update for the first quarter of 2024.
The metric was Favorable as of 31 December 2023 with the interest coverage standing at 3.7 times. This was computed using profit before tax of SGD28.7 million and interest expense of SGD10.7 million.
Price-to-book ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 1.17 | 1.24 |
Based on the announcement on 9 May 2024, Net Asset Value (“NAV”) was not included in the business update for the first quarter of 2024.
Price-to-book (“P/B”) ratio currently stands at 1.17. This is based on the NAV of the Group as of 31 December 2023 of SGD0.352 per share and closing share price of SGD0.410 as of 31 May 2024. The metrics is Neutral as you are paying a small premium for the book value of the asset.
Dividend
| Year | Yield | Total |
|---|---|---|
| 2024 | 3.66% | SGD 0.015 |
| 2023 | 6.71% | SGD 0.028 |
| 2022 | 6.71% | SGD 0.028 |
| 2021 | 6.71% | SGD 0.028 |
| 2020 | 6.71% | SGD 0.028 |
| 2019 | 6.71% | SGD 0.028 |
The Company does not have a formal dividend policy, but the Board have represented that they will strive to provide sustainable dividend payout. Since 2015, CSE have been consistently giving dividends of 2.75 cents per share.
On 31 May 2024, with a closing share price of SGD0.410 and dividend payout of SGD0.0275 per share, this translates to a dividend yield of 6.71%. For my benchmark, a general reasonable range would be around an average of 5.50% to 6.50% in the current environment. CSE is within the range. The dividend yield is Favorable.
Website: Reasonable Dividend Yield 2024Q2
Summary
| Metrics | Financials | Rating |
|---|---|---|
| Revenue | +23.9% | Favorable |
| Earnings per share | No Info | Favorable |
| Operating Cash Flows | No Info | Favorable |
| Gearing ratio | No Info | Unfavorable |
| Interest Coverage | No Info | Favorable |
| Price to Book Ratio | 1.17 | Neutral |
| Overall | | Favorable |
Overall, the metrics indicate that it remains Favorable to invest in CSE. With higher revenue and order books, this may in the future translate to higher profit margins which will give more sustainability to their dividend payouts.
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only.
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Website: CSE Global Ltd. (SGX: 544): 2023 Full Year Result
