• After a solid run from 50 cents a year ago on its nascent data centre business, CSE Global peaked at a dizzying ~$1.80 in late May 2026, before dropping precipitously to ~$1.30. • The latter happened following sobering management guidance that start-up costs for its massive US facility will chip away at margins in 1H2026 before a ramp in production for Amazon takes off in 2H2026. • Then came rumbles of internal corporate issues. Clarity on the issues finally came out via a SGX Regco query following the departure of the lead independent director Tan Chian Khong on June 2 ("I realised my position as board member had become untenable, I decided to resign"). • The stock has made a tentative recovery, further encouraged by UOB KH's opinion that these are not operational challenges as CSE fulfills a massive S$716m orderbook. Read excerpts below ..... |
Excerpts from UOB KH report
Analysts: John Cheong & Tang Kai Jie
CSE Global (CSE SP)
Highlights • CSE’s response to SGX RegCo's queries presents a board-refresh transition and immaterial differences in view, not an operational problem.
• CSE’s operating momentum remains intact, with revenue +29% yoy, order intake +75% yoy to S$271m and a robust orderbook at S$716m. • Maintain BUY with a target price of S$1.79. Expect a weaker 1H26 on new facility start-up costs; investors can look to accumulate on weakness. |
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Analysis
• RegCo response sharpens governance picture.
On 16 Jun 26, CSE Global (CSE) responded to SGX RegCo's queries on Mr Tan Chian Khong's resignation.
The response identifies the dispute as one between Chairman Mr Eugene Lai and Mr Tan, originating from a 19 May 26 phone call and subsequent letters.
Key types of electrification projects by CSEMr Lai, who chairs Heliconia and sits on the board of Temasek's 65 Equity Partners, conveyed the view of himself and Heliconia that the board would benefit from a refresh, including a Lead Independent Director (ID) with strong M&A experience.
Mr Tan declined to step down ahead of his term, holding that he was elected by and answerable to ordinary shareholders, and resigned on 2 Jun 26 citing a breakdown in trust and confidence.
• Friction ties back to the strategic review. Part of the tension relates to differing views on the pace of due diligence work for CSE's existing strategic review, for which Jefferies is adviser.
Mr Tan also alleged the Chairman pressed him, as Audit Risk Committee (ARC) chairman, to take punitive action against a member of senior management over that pace, and cited divergent views on operational direction; Mr Lai disputes these accounts.
We make no judgement on the differing accounts, but flag any strain between senior management and the board as a watch item, given that management is our key value driver.
• Our view. The dispute is now clearer and centres on board composition and the conduct of the strategic review.
With 1Q26 momentum intact (revenue +29% yoy to S$265m, order intake +75% yoy) and no operational or financial deterioration disclosed, we expect no impact to CSE's business fundamentals or operations.
• Oversight intact on paper. Four of seven directors remain independent, each board committee retains an independent majority, and the reconstituted Nominating Committee (NC) is searching for a new Lead ID and ARC chairman. The board sees no material impact on management's performance of duties, nor any material adverse impact on the business and operations.
• Watch points. We are watching the pace and calibre of the board appointments, any strain between senior management and the board, any further disclosures, and the progress of the Jefferies strategic review, which reads on controlling shareholder intent.
The episode points to a governance dispute rather than operational weakness, supporting our view that the sell down has overshot the fundamentals.
• Near-term headwinds; 2H26 should see recovery. We have previously published our view that 1H26 will be a softer period yoy due to rising material costs, start-up costs for the new 241,000sf electrification facility and closeouts of municipal projects in the renewables sector.
2H26 should see a recovery as the new facility reaches steady-state, start-up costs normalise and the S$716m orderbook converts into revenue.
| • Our assessment |
We acknowledge the governance gap but maintain our thesis:
| - No operational or financial deterioration disclosed. 1Q26 revenue grew 29% yoy to S$265m and order intake surged 75% yoy, and the relationship with Heliconia (a major shareholder since 2015) has been operationally stable for over a decade. We expect no impact to business fundamentals or operations. - Timely replacement is a governance positive. Swift, high-calibre appointments to the Lead ID and ARC chairman roles would restore independent oversight. - No change to capital allocation policy, subject to the strategic review outcome. |
 John Cheong, analyst• Maintain BUY with an unchanged target price of S$1.79, representing an upside of 30.7%, based on 29x 2027F PE (+2.0SD to mean).This reflects CSE’s re-rating from its historical 15x mean, driven by the data centre electrification narrative and strong order intake. We believe the premium is justified by the Amazon warrant relationship and its robust S$716m orderbook. • At S$1.37, the stock trades at around 22x 2027F PE, a meaningful discount to our multiple and in our view, a level that underprices the data centre growth story. While governance continues to be an overhang, it is resolvable and the business fundamentals have not changed. |
→ See also: CSE: 1H26 Margin Pressure Before Data Centre Project Ramp-Up Powers Stronger 2H26
