CSE sank into the red in the 2Q ended June, reporting a net loss of $13.8 million during the quarter compared to earnings of $5.5 million a year ago.
However, this was due to an exceptional provision of $16.8 million arising from a settlement agreement with the US government to settle certain potential civil liabilities.
Revenue grew 15.1% to $85.5 million in 2Q17, from $74.3 million a year ago.
See: CSE Global swings to 2Q net loss of $13.8 mil
According to NRA, CSE’s operating profit appears to have stabilized since 2Q17. This is supported by some $90.7 million in new orders received during the quarter, compared to a low of $57.7 million added to the order book in 4Q16.
In addition, NRA notes that CSE’s net cash and investments amount to around $28.1 million, representing close to 16% of the company’s market capitalisation.
Further, NRA points to the company’s high dividend yield of 8%. CSE declared an interim dividend of 1.25 cents per share for 1H17 and has signalled its intention of maintaining its full-year dividend of 2.75 cents per share for 2017.
But most importantly, NRA opines that CSE offers an attractive valuation.
Pegging the company’s valuation at 10x EV/EBITDA or 1.07x P/B, NRA derives estimated valuations of 47.5 cents or 46.5 cents, respectively. This implies an upside of between 36.8% and 39.7% to CSE’s current trading price.
As at 2.55pm, shares in CSE Global are trading half a cent lower at 34 cents. The stock is trading some 38.7% lower than its year-to-date high of 55.5 cents in March.