CSE Global is a subcontractor to the project and under the SBLC, the main contractor, the customer, could only call for amounts owed.
"CSE Global believes the call on the SBLC by the customer was frivolous and without merit," says Seet in his Dec 30 note, where he kept his "buy" call and 60 cents target price.
"We believe that both parties are likely to reach an agreement and CSE Global is likely to retrieve the US$6 million, as the project is not completed and it would cost the customer much more to change to another vendor," he says.
Seet calling "stars aligning" for CSE Global, maintains his view that the company will enjoy a pick up in order wins in the coming 1QFY2025 ending March, with new wins from electrification projects in the US and Singapore to reach between $60 and $80 million in the "near term".
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"We also expect more orders from data centre projects, which could be a key growth driver for FY25-28," he adds.
In addition, the company may signal its confidence with share buy backs. Also, Seet expects the company's core net margin to increase with higher operating leverage.
CSE Global shares, as at 9.14 am, was down 1.15% to change hands at 43 cents.
