CSE Global Limited’s (CSE) FY14 results came in within our expectations. For 4Q14, CSE reported a 59.3% YoY jump in core PATMI to S$10.4m despite a 6.8% decline in revenue to S$120.3m. And for FY14, core PATMI from continuing operations jumped 16.4% YoY to S$35.4m on the back of a 4.3% increase in revenue to S$433.8m.

Its FY14 revenue and core PATMI formed 104.1% and 103.1% of our forecasts, respectively. Full-year revenue growth was mainly driven by Asia-Pacific and the Americas regions, but partially offset by weakness seen in its Europe/Middle East/Africa market.

The YoY improvement in FY14 core PATMI was a result of higher revenue, better operating margins, large decline in finance expenses and no further provisions for project costs overruns. New orders received for 4Q14 and FY14 surprised us as it shot up 89.4% and 27.3% YoY to S$173.5m and S$461.6m, respectively, while outstanding orders at the end of the FY14 stood at S$255.0m (end FY13: S$227.2m).

Going forward, CSE expects to face increased competition for green field projects in the Oil & Gas industry, but maintain that businesses of its major subsidiaries are likely to remain resilient. With a change in analyst coverage and pending results briefing with management later, we maintain HOLD on CSE but put our FV of S$0.68 under review.

Source: OCBC Research - 27 Feb 2015