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Yes, CSE's historical NPM have always been around 10%.. between high singles and low teens.
Their expertise does lie in customising, hence the emphasis on human capital instead of manufacturing systems. I guess the bigger competitors can't be flexible on this. Your friend seems to have more knowledge than me in this field. It will be good if you can ask him/her more regarding this and share on this forum. I am looking to speak to someone who is more knowledgeable in this as well.
I can ask mgmt regarding their connection with Keppel/SembMar.. but no guarantee of getting an answer. They seem unlikely to disclose on such information. They are not even transparent on segmental information alone.
As for their contractual breach, I suspect it is due to the shortcoming of their former Transtel MD.
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This company had an acquisition. Seems like a very small one...
Bro dzwm87, is their intention to grow big on oil & gas support jobs?
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Their integrated solution system has all along been core in the oil & gas downstream support sector. In early this FY, their contracts were on onshore gas projects which typically bag in lower margins than that of offshore projects. This explains the reason why 3QFY12 missed street's expectation - particularly in their margins. Honestly, I was taken for a shock as well because their recovery seemed to be well on-track and I missed the fact that order book was of lower margin projects. 3QFY12 was a disappointment.
Interestingly, the company started to disclose contract wins and the momentum had been high for the past few weeks. To summarise:
1. S$33m orders which consists of 1 telecommunication project for a L&G onshore facilities in Australia and 2 mental health projects (O&G and healthcare sectors)
2. S$36m orders which consist of another telecommunication project in Australia and another project to install 2 Molybdenum Roaster Hearths in US (MO&G and mining Sector)
3. S$5.6m orders which consist of an implementation of the Oceano PAS and RiO Care Record System (Healthcare sector)
4. S$26m orders which consist of 1 telecommunication order for the Inpex project in Australia and another contract in UK defence sector (O&G and other sector)
No. 3 is insignificant by itself but on a longer term view, it is significant because CSE's healthcare segment is now open to acute healthcare and it is no longer restricted to the niche mental healthcare industry. No 4 can be a signal for more order wins if CSE is planning to bid for more projects related to Inpex. Inpex is one huge O&G project (or otherwise known as Ichthys project) in Western Australia and if CSE is planning to leverage their expertise in it, there can be more opportunities.
As for the acquisition of Power Diesel Engineering, it is immaterial as its revenue is only around 4% to CSE's. It will be accretive on margin-wise but it won't be a huge game-changer.
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Unfortunately, I do not. Mgmt didn't disclose it as they deemed it as sensitive information. It is pretty hard to find out stuff with regard to any progression. I guess the institutions will have better access. For retail investors like us, we have no choice but to wait for quarterly releases or brokerage reports. This is essentially a black box which we have no forecast or understanding over.
A little correction to my above post. 3 of the telecommunication projects which CSE had clinched were in fact related to the Inpex project. From my understanding & based on mgmt's disclosure, there were only 3 telecom projects and CSE clinched all of them. As for oil projects, they are opportunities arising in the Gulf of Mexico region - I presume margins for these projects (if won) will be better than the onshore gas projects.
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The Q4 results is good.
Margins have almost returned to normal state, and gearing went down at end FY12. Cash holdings up...
It's a good management in a not-so-easy business.
They paid the former senior guy who came back, just $125,000 for consultancy.
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its order in-taking is slow and remaining order even not enough for one year.
If it can't take enough order fast enough, soon, it will take a big hit.
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16-08-2013, 10:54 AM
(This post was last modified: 16-08-2013, 10:54 AM by Thriftville.)
Hi dzwm87, hope to hear your views divesting of CSE UK?
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16-08-2013, 10:22 PM
(This post was last modified: 16-08-2013, 10:22 PM by starbugs.)
I have some CSE in my CPF portfolio.
I'm not dzwm87, but I find it very strange that CSE wants to divest 100% of the UK subsidiary, considering the UK business has much better margins compared to the rest of CSE.
It seems to me that they have made acquisitions in UK previously, just so they can repackage it for sale later in an IPO. Doesn't look like a sound long term-strategy.
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The divestment is rather material as UK business contribute to 20% of revenue. But I wonder how is it possible to divest 100% in IPO? I thought usually shareholders would want the old management to retain some stakes for a smooth transition? Maybe a management buy in?
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