SINGAPORE - Mainboard-listed CSE Global plans to raise funds to pursue further growth through acquisitions or investments in its existing markets, including the United States, Australia and New Zealand.
The engineering company unveiled plans to raise $24 million via the placement of 60 million new shares at 40 cents each in a March 14 filing.
The issue price represents almost a 7 per cent discount to CSE’s volume-weighted average price of 42.81 cents.
This will allow it to raise net proceeds of $23.15 million after fees and miscellaneous expenses.
The new placement shares will form 8.9 per cent of CSE’s enlarged share base and 9.8 per cent of its existing issued share count.
On a pro forma basis, the group’s net tangible assets (NTA) per share would have been 21.62 cents instead of 19.96 cents after the proposed placement should it have been completed on Dec 31, 2023.
Listed on the Singapore Exchange since 1999 and led by chief executive Lim Boon Kheng, CSE is an infrastructure engineering specialist and systems integrator engaged in a gamut of projects, such as installing smart lighting or energy management systems.
It also has projects in the oil and gas, petrochemical, utilities, public infrastructure, environmental and healthcare industries in more than a dozen countries around the world.
The company recently announced a 372 per cent year-on-year rise in net profit to $22.5 million for the year ended Dec 31, 2023, on the back of a 30 per cent rise in topline revenue to $725.1 million over the same period.
CSE said it intends to use the proceeds of the rights issue to finance potential strategic acquisitions and investments in Australia, New Zealand and the US. It did not mention any specific acquisition target.
CGS International analysts Kenneth Tan and Lim Siew Khee believe potential acquisition targets are likely bite-sized and within the communications and electrification sectors, which will boost the company’s earnings.
“These are sectors that CSE is keen to grow in,” they wrote.
“Further growth of CSE’s infrastructure business is a longer-term positive, as such contracts tend to have higher margins compared with energy and mining, in our view.”
The investment house reiterated its “add” call on the stock with a target price of 62 cents, citing expectations of healthy earnings per share growth in the financial years of 2024 and 2025, backed by a record-high order book and higher-margin project mix.
It expects CSE’s financial year 2024 dividend yield to be around 6.5 per cent.
The placement, which is being handled by Maybank Securities and should be completed by May 10, is not underwritten. It is being offered only to eligible institutional and accredited investors.
Shares in CSE Global closed on March 15 at 41.5 cents, down 2.4 per cent.
