Turnaround story

We continue to like CSE Global (CSE) and believe that it is still in the early stages of its turnaround story. As a brief recap, CSE was previously hit by a confluence of negative events. In 2Q11, the group incurred cost overrun of S$22m involving several telecommunications projects. In Feb 2012, it announced that the former Group MD (and a key shareholder with a 13% stake) Tan Mok Koon would be going on a sabbatical leave. Shortly after, CSE issued a profit warning and lowered its 4Q12 profit guidance on unexpected customer delays. Understandably, investor confidence took a hit then. However, we noted several operational and financial improvements over the past two quarters, reaffirming our view that the group is turning around.