"We believe CSE Global is gaining good traction with one of the largest data centre players in the US and is in the midst of qualifying for another 1-2 major customers," says Seet, who has kept his "buy" call and 70 cents target price.
Seet expects CSE Global's data centre and utilities-related projects to pick up in the current 3Q following its "strategic" move to focus on this space.
He expects the company's margins to remain resilient as management has ensured back-to-back pricing orders with suppliers to avoid any tariff shocks down the road.
Besides a pick up in orders, Seet is also expecting CSE Global to win larger-sized orders to come from Singapore government-related projects.
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In addition, CSE Global is seen to be one of the key beneficiaries of the $5 billion fund that the government is allocating fund managers to invest in smaller caps in a bid to boost the market.
"As a result, we believe CSE Global’s valuations will likely increase. This should be supported by the data centre space in the US, especially if it can win large-size orders in 2H," says Seet.
Given the growth prospects, he believes the company will expand its capacity "more aggressively" in 2HFY2025 especially if larger orders can be secured, to the tune of more than tripling by 2027 and 2028.
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The analyst likes this counter too for its 50% dividend payout guidance which will provide stability for shareholders.
"We remain bullish on the outlook for CSE Global and see potential for a multiyear growth story," says Seet.
CSE Global shares traded at 62 cents as at 9.16 am, down 0.8% thus far today but up nearly 48% year to date.
