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
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[SINGAPORE] Citi has initiated coverage on systems integrator CSE Global , pointing to upcoming margin improvements and its Amazon data centre contract as upside drivers.
“With the bulk of revenues and order book generated outside Singapore, CSE stands out as a global champion in the small to mid-cap space,” said Citi analyst Luis Hilado on Wednesday (Sep 9).
He set a S$1.70 price target and assigned it a “buy”, though he cautioned that the stock had a “high risk” as well. Shares of CSE Global closed 5.1 per cent or S$0.06 higher at S$1.24 on Thursday.
The company’s largest revenue exposure – about 53 per cent by the end of the 2026 financial year – comes from electrification, said Hilado in a note. This is set to grow further given the potential US$1.5 billion data centre electrification project pipeline from Amazon alone.
With CSE aiming to build further relationships with other hyperscalers, Citi expects room for further pipeline growth and forecasts a two-year revenue and earnings per share compound annual growth rate of 15 per cent and 22 per cent, respectively.
Margins are also expected to improve to 9.8 per cent in 2027 for CSE, with startup costs for its Champion facility in the US having weighed on its first-half results. The facility manufactures power distribution centres, switchgear and critical power infrastructure for data centres.
With the facility now in full operation, Citi expects scale benefits to come into effect from the second half of 2026. Margins are expected to improve further to 10.5 per cent by 2028.
With Amazon potentially being able to exercise warrants equivalent to up to 8 per cent of CSE’s expanded share base through the 2030 financial year, Citi noted that the company could gain not only a major customer “but also a strategic investor”.
“Whether the warrant structure could be utilised for future contract deals with Amazon or other customers remains to be seen, but we believe this is a potential source of future order book build-up,” said the note.
Still, risks such as the emergence of public resistance to data centre construction in the US pose a risk to CSE’s electrification business, which makes up more than half of earnings, it added.
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