Tan was also chairman of the company’s audit and risk committee, and also the nominating committee. Since Tan’s resignation, the share price has dropped by around 20% to $1.33 as of June 9.
Cheong and Mo note that the key point that remained unanswered at CSE Global, which has been conducting a strategic review since February, was whether the differences relate to a specific transaction, strategic direction or engagement with major shareholders.
While they acknowledge the “governance gap”, Cheong and Mo are maintaining their investment thesis on CSE Global. “There are currently no operational or strategic changes being disclosed and 1QFY2026’s revenue grew 29% y-o-y to $265 million and order intake surged 75% y-o-y, suggesting business operational growth,” they add.
At the same time, Temasek subsidiary Helicionia Capital, which has been CSE Global’s major shareholder since 2015, has co-existed with the board for over a decade without any operational incident.
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Having said so, the analysts point out that CSE Global is obligated to appoint a replacement lead independent director in a timely manner.
“A swift, high-calibre appointment would itself be a governance positive, and the reconstitution of the ARC and NC under new leadership would restore independent oversight,” the team explains.
Despite the resignation, there has been no change thus far to the overall capital allocation policy to CSE Global, which further reaffirms the analysts’ investment thesis on the company.
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That being said, they are keeping a close watch on any potential developments such as the pace and calibre of the lead independent director replacement, further board-level changes or any shift in capital allocation, which might signal a change in the intent of CSE Global’s controlling shareholder.
“In the absence of any such developments, we view the selldown as pricing in risks that are unsupported by current available facts,” the analysts state.
On the business front, 1HFY2026 will likely be a softer period y-o-y for CSE Global due to rising material costs, start-up costs for its new 241,000 sq ft electrification facility and closeouts of municipal projects in the renewables sector.
“2HFY2026 should see a recovery as the new facility reaches steady-state, start-up costs normalise and the $716 million orderbook converts into revenue,” the team predicts.
As such, Cheong and Mo are keeping their “buy” call along with the same $1.79 target price, which is based on 29 times FY2027 P/E ratio, which is 2 standard deviations above its mean.
“This reflects CSE’s re-rating from its historical 15 times mean of its P/E ratio, driven by the data centre electrification narrative and strong order intake. We believe the premium is justified by the Amazon warrant relationship and its robust $716 million orderbook,” state the analysts.
“At $1.33, the stock trades at around 21 times FY2027 P/E ratio, a meaningful discount to our multiple and in our view, a level that underprices the data centre growth story. While governance continues to be an overhang, it is resolvable and the business fundamentals have not changed,” the team concludes.
As at 10.20am, shares of CSE Global are trading 1 cent lower, or down 0.75% at $1.32.
