Analysts from UOB Kay Hian and Maybank Securities have kept their calls and respective target prices on CSE Globalafter the engineering firm’s 1QFY2025 ended March 31 business update that came in largely within their expectations.
In 1QFY2025, CSE Global reported overall revenue of $206 million, up 4% y-o-y, thanks to stronger performance from the communications and automation segments in the Americas. On the other hand, there was a 4% y-o-y decline due to some project delays in Australia and New Zealand.
In the quarter, the company won orders worth $155 million, down 11% y-o-y. CSE recorded a healthy order book of $616 million as of March 31. Orders from its electrification segment dropped, but automation and communications-related orders rose.
UOB Kay Hian analysts John Cheong and Heidi Mo maintained their “buy” call and 61 cents target price, which is pegged to 11 times FY2025 earnings, its long-term historical mean. The stock is also supported by a “decent” 2025 dividend yield of 5.4%.
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For Jarick Seet of Maybank Securities, there are several reasons to be optimistic about this stock.
Citing management, he expects orders to pick up significantly in the current 2HFY2025. “CSE Global is reserving capacity, especially in the US, for projects within the data centre and the utilities markets space,” says Seet, who has kept his “buy” call and 58 cents target price.
He expects the company to be on the right side of the trend, with the US pushing companies to set up factories in the US, as well as more data centres to be built.
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“CSE Global is likely to be the main beneficiary in all three segments of its business and it’s likely to enjoy a multi-year growth story,” he adds.
In addition, Seet believes that this company, whose single largest shareholder is Temasek unit Heliconia Capital, will be one of the key beneficiaries of the proposed $5 billion fund that the Singapore government will allocate to fund managers to invest in small- and mid-caps.
Lim Siew Khee of CGS International remains “constructive” on CSE Global’s long-term fundamentals, thanks to its healthy order book and diversified revenue streams.
However, she has trimmed her FY2025 to FY2027 earnings estimates by 2%–3% to reflect a slower pace of order wins impacting its topline, as clients become more cautious, says Lim, whose new target is 68 cents, down from 70 cents.
“Management is confident of stronger 2HFY2025 order momentum,” adds Lim, who is keeping her “buy” call.
“Notably, management’s decision to increase the dividend payout ratio to a minimum of 50% underscores confidence in the company’s earnings resilience and stable cash flow,” she says. — The Edge Singapore
Geo Energy Resources
Price target:
PhillipCapital ‘buy’ 47 cents
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Road to higher production volumes
Paul Chew of PhillipCapital is keeping his “buy” call and 47 cents target price on Geo Energy Resourcesafter the coal miner reported earnings growth for its 1QFY2025 ended March 31 that were in line with expectations.
In 1QFY2025, Geo Energy reported earnings of US$14.4 million ($18.7 million), up 63% y-o-y, thanks to better sales as production volume more than doubled to 3.2 million tonnes due to favourable weather conditions, says Chew in his May 19 note. In addition, the company enjoyed lower unit production costs.
However, there was a drop in selling prices from around US$55 per tonne to US$47 per tonne now. “A combination of higher domestic production and warmer weather in China has resulted in softer imports,” says Chew.
Meanwhile, the construction of the new 92km, US$150 million hauling road and jetty is on track to be completed by the middle of next year.
This road will help Geo Energy move coal from its mines for export. The road is also leased by neighbouring mines. “There is strong interest in both the equity and access to this road infrastructure,” says Chew.
Noting that earnings and production are tracking ahead of his forecast, Chew is keeping his FY2025 earnings estimate and discounted cash flow basis valuation of 47 cents, even with volatility in coal prices.
Following a “considerable rebound” in production levels for this year, Chew expects another 50% jump in production by FY2027 with the completion of the road. — The Edge Singapore
Venture Corp
Price targets:
DBS Group Holdings ‘hold’ $11.80
Maybank Securities ‘hold’ $10.60
UOB Kay Hian ‘hold’ $12.01
CGS International ‘hold’ $10.97
Target prices reduced on tariff uncertainty
Ling Lee Keng of DBS Group Research has downgraded Venture Corp from “buy” to “hold” along with a lower target price of $11.80 from $14.70 after the company reported lower 1QFY2025 numbers while facing a “muted” near-term growth outlook and a lack of clear re-rating drivers.
In her May 15 note, Ling has cut her FY2025 and FY2026 earnings by 9% each, based on a 15 times earnings multiple, which is one standard deviation (s.d.) below Venture’s four-year average.
“Longer-term growth drivers remain intact, but near-term visibility and catalysts are limited,” says Ling in her May 15 note.
“While Venture continues to focus on product innovation and strengthening customer engagement, end-demand volatility and macro uncertainties, particularly surrounding the global tariff landscape, are weighing on short-term visibility.
Ling expects Venture’s coming 2QFY2025 and 1HFY2025 earnings to continue to face headwinds in some of its product segments, no thanks to broader uncertainty.
However, she believes Venture, with its manufacturing sites in Penang and Johor, is well-positioned to capture the accelerating China+1 shift and expects a stronger 2HFY2025.
For now, investors can stay pat that Venture’s cash position remains strong, equivalent to 40% of its market cap as of Dec 31, 2024, up from just 25% a year ago.
This should support its dividend payout for this current financial year, which Ling expects to be kept at 75 cents per share, which works out to an “appealing” yield of 6.7%.
In addition, Venture is stepping up its share buyback plans to improve returns.
Jarick Seet of Maybank Securities similarly highlights Venture’s dividend potential as a bright spot.
“We believe there is share price support until the trade situation improves,” says Seet in his May 15 note.
However, Seet warns that Ventures faces an “uphill” task to maintain its margins.
Nonetheless, with the US cutting tariffs — at least for 90 days — he has revised his earnings assumption for the company, leading to a higher FY2025 and FY2026 earnings estimate.
While keeping his “hold” call given the uncertain outlook, Seet now figures Venture is worth $10.60, up from $9.40.
Meanwhile, John Cheong and Heidi Mo of UOB Kay Hian have kept their “hold” call but with a lower target price of $12.01 from $13.35.
“The broad consensus among Venture’s customers is that the ongoing tariff situation has created significant uncertainty in the global economic environment, with no clear visibility in the tariff landscape over the next 12 months,” state the analysts in their May 15 note.
They have trimmed their FY2025 to FY2027 earnings forecasts by 9% and 14%, respectively, to consider weaker customer demand amid the ongoing tariff uncertainties.
Their target price of $12.01 is based on Venture’s long-term earnings multiple of 15.3 times, to factor in the continued delay in recovery due to various geopolitical uncertainties.
William Tng of CGS International describes the outlook for Venture this year as “challenging”, but has kept his “hold” call, if not for the 6.7% dividend yield and support from the company’s net asset value of $10.11 per share.
In his May 15 note, Tng says he had previously given a 12.1 times earnings multiple, which was the level traded by Venture back in the 2007 to 2009 Global Financial Crisis years.
He has now tweaked the valuation multiple to 13.1 times FY2026 earnings, which is 0.5 s.d. below the company’s 20-year average.
“We use 0.5 s.d. below average to balance the possibility of better q-o-q net profit in 2QFY2025 against the still-cautious FY2025 demand outlook for the group,” says Tng, whose new target price is now $10.97, slightly raised from $10.13.
For Tng, upside risks include new product launches by customers and better-than-expected revenue opportunities as business opportunities emerge from companies diversifying their production from China to Malaysia.
On the other hand, downside risks include potential supply chain disruptions affecting the availability of parts and components it needs, and a worsening global economic outlook potentially reducing orders from its customers even further, as well as further cuts to healthcare spending and grants to universities in the US resulting in lower demand for its life science customers. — The Edge Singapore
Prime US REIT
Price targets:
RHB Bank Singapore ‘buy’ 18 US cents
DBS Group Research ‘hold’ 19 US cents
Broader economic uncertainties, but leasing momentum
Vijay Natarajan of RHB Bank Singapore has kept his “buy” call on Prime US REITfollowing 1QFY2025 ended March 31 results, which were in line with his expectations.
“The impact of US tariff policies has been muted so far, with the REIT highlighting active lease negotiations and anticipating two large lease signings,” says Natarajan in his May 15 note.
However, considering “elevated macroeconomic uncertainties”, he has lowered his valuation multiple from 0.4 times FY2025 P/B to 0.3 times, leading to a lower target price of 18 US cents from 23 US cents.
The REIT has no debt refinancing due until 3QFY2026 and about 66% of its debt is hedged.
The REIT expects two big lease signings of more than 100,000 sq ft each by 3QFY2025, bringing the portfolio occupancy rate to mid-80%, from 78.9% as of 1QFY2025.
The first is at Park Tower, where a government tenant is consolidating its operations at the building, which would take the asset’s occupancy rate to mid-80%.
Next, at Waterfront at Washingtonian, the REIT is in advanced stages of signing a long lease with an energy sector tenant.
“The leases, if signed, will contribute positively from FY2026 onwards and are likely to result in a significant asset valuation uplift, considering the cash flow visibility,” says Natarajan.
In 1QFY2025, the REIT’s distributable income declined 24% y-o-y on the back of higher interest costs and occupancy declines.
For the full year, the REIT expects to incur capex of US$45 million ($58.33 million) to US$50 million, driven mainly by tenant incentive packages for large leases, but this is likely to decline from FY2026.
As such, coupled with rent commencements kicking in, Prime US REIT’s distributable income will ramp up in FY2026, says Natarajan.
He expects the REIT’s payout ratio to be maintained at 10%, 50% and 60% over FY2025 to FY2027. The REIT now offers a FY2026 yield of 11% based on a 50% payout ratio.
DBS Group Research, meanwhile, is cheered by how the REIT is gaining leasing momentum that started in 1QFY2025.
“This bodes well for the REIT as we see a clearer route towards recovery and a resumption of meaningful dividends to investors,” says DBS, which has a “hold” call and 19 US cents target price. — The Edge Singapore
