Citi initiates coverage on CSE Global with ‘buy’, S$1.70 target price
Company’s margins are expected to improve to about 10.5% by 2028
Citi has started covering CSE Global, a systems integrator, with a "buy" rating and a target price of S$1.70. Analyst Luis Hilado highlighted the company's upcoming margin improvements and its significant Amazon data center contract as key drivers. CSE Global's revenue, about 53% by the end of 2026, is primarily driven by electrification, which is expected to expand due to a potential US$1.5 billion Amazon project pipeline.
The analyst expects a two-year revenue and EPS compound annual growth rate of 15% and 22%, respectively. Citi also anticipates CSE's margins to improve to 9.8% in 2027, with scale benefits from its newly operational Champion facility in the US coming into effect by the second half of 2026. The facility manufactures power distribution centers and switchgear for data centers.
As Amazon could exercise warrants equivalent to up to 8% of CSE's expanded share base through the 2030 financial year, Citi believes this could become a significant customer and strategic investor. However, risks such as potential public resistance to data center construction in the US could impact CSE's electrification business, which accounts for more than half of its earnings.
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