CSE Global - Maybank Research 2025-01-06: Validation Of Electrification Prospects

• CSE Global sold a US facility for US$29.25m and we expect it to recognise a gain of US$8.6m after tax expense, which will offset the one-off US$8m settlement in Sep 2024. Proceeds from the sale will be used to buy a larger property in the US for business expansion while it will continue to lease the facility it sold at an estimated rental of US$2.5m/year.
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Sale & leaseback of US facility

• CSE Global sold its US facility to Gladstone Commercial Ltd partnership in Texas, US for US$29.25m. The current net book value of the property is US$17.8m. We expect CSE Global to recognise a gain of US$8.6m after an estimated 25% tax. This should offset the US$8m settlement incurred in Sep 2024.
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Expansion to a larger facility

• CSE Global intends to deploy the sale proceeds as capital for the purchase of a larger property in the US, which will likely be built-up in phases. We believe this is due to the substantial growth opportunities available for the electrification of US data and utilities centres etc.
• We believe it will also explore new states with better and friendlier tax incentives which add more positives for CSE Global.
• Lastly, we expect the new facility to be more than double of its existing facility which comprises 16.68 acres of land and 215,474 sqft of building size.

Maintain BUY with a higher target price of S$0.64

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Jarick Seet Maybank Research | https://www.maybanktrade.com.sg/ 2025-01-06 SGinvestors.io

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