CSE Global Limited’s (CSE) FY15 PATMI from continuing operations declined 6.4% to S$31.2m on the back of a 1.1% drop in revenue to S$412.0m due to lower contributions from AsiaPacific (-15.3%), but offset by 6.6% and 8.7% growth in the Americas (+6.6%) and Europe/Middle-East/Africa (EMEA) regions, respectively. CSE’s FY15 gross margins from continuing operations were stable at 28.7%, attributed to better sales mix of brownfield jobs, which command higher gross margins.

FY15 EBIT declined 13.0% to S$40.5m, dragged by Australian projects with lower gross margins and weaker AUD against SGD. FY15 operating expenses were 4.8% higher mainly due to inclusion of expenses of the newly acquired Crosscom business and higher provisions for doubtful debts. With headwinds in the oil & gas industry, new orders received for FY15 dropped 21.1% to S$351.0m while outstanding orders decreased 24.4% to S$192.7m. We are still cautiously positive on CSE given its resilient exposure to recurring brownfield projects. Pending a management briefing later, maintain BUY but place our FV of S$0.54 under review.

Source: OCBC Research - 25 Feb 2016