CSE Global (SGX:544) reported FY25 PATMI of S$37.5m, beating our forecast by 7%. We believe the ramp up in data centres will start in FY26 given it secured a US$143m order in Dec-25.
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Net margin expanded to 3.9% from 3.1%
Revenue grew 12.5% y-o-y to S$968.9m with strong growth of 16.6% and 12.8% y-o-y from its Electrication and Communications divisions, respectively. While GPM dipped to 27% from 28% due to expansion costs to accommodate larger data centre orders, operating leverage from higher revenues expanded net margins from 3.1% to 3.9%.
For FY26E, we expect net margins to improve slightly to 4% as there are still expansion costs needed for its data centre operations despite the growth in revenue
New lease site ready by April 2026
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CSE secured a US$143m order in Dec 2025 from this customer and the order is slated for completion in 2026. We expect CSE to secure S$1.1bn of orders in 2026.
Execution is key
We remain bullish on CSE’s outlook and see potential for a multi-year growth story. The company expects to more than triple capacity by 2027/28, and we believe it will secure another data centre client by 1Q27. Its 50% dividend payout guidance will provide shareholder stability alongside upside from the positive industry outlook.
We see CSE as a proxy for the AI data centre boom in the US.
Maintain BUY with a higher target price of S$1.52
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Above is an excerpt from a report by Maybank Research. Clients of Maybank Securities may be the first to access the full PDF report @ https://www.maybanktrade.com.sg/.
