CSE Global: New US contract wins reinforce the Electrification growth story

• CSE Global’s USD 150 millions of new US contracts confirm continued Electrification growth and strengthen our confidence in earnings growth beyond 2026.

• A second Cheyenne order within six weeks adds a data centre demand source alongside AWS and extends visibility beyond the 1H26 order book.

• Major cloud and AI companies are projected to spend USD 625–745 billion on capital expenditure in 2026, sustaining investment in data centre capacity and electrical infrastructure.

• US data centre electrical equipment spending is forecast to rise from USD 20 billion in 2025 to USD 65 billion in 2030, increasing demand for reliable engineering and systems integration services.

• We maintain BUY and an SGD 1.43 target price, implying 18.6% upside, with higher throughput and margin recovery key to converting growth into stronger earnings.

New wins show Electrification demand is broadening

CSE Global’s 1H26 results established Electrification as its main growth engine, and recent contract wins provide further evidence that demand is broadening beyond a single customer programme.

On 24 September, CSE Global announced two electrification contracts in the US worth USD 150.0 million, or about SGD 190.5 million. The first covers the design and manufacture of power distribution centres, together with the integration of electrical and control systems, for the Calcasieu Pass 2 LNG expansion in Louisiana, with execution from 2026 to 2028. The second is a follow-on order for the Cheyenne Power Hub, a data centre project first announced on 14 August, with execution progressing through 2026 and 2027. Together, the awards show that demand for CSE’s electrification solutions spans both LNG and data centre projects, while its ability to integrate electrical and control systems across sectors, backed by a strong execution track record, has underpinned its success in securing these contracts.

The new awards add to an already strong order book of SGD 620.4 million as at end-June, extending revenue visibility further. Management does not expect a material contribution to 2026 earnings per share from these contracts, with the benefits building through 2027 and 2028 as execution progresses. The Cheyenne follow-on is particularly encouraging, as a second order within six weeks of the initial award points to further work as the project progresses rather than a one-off contract. This adds another source of data centre electrification demand alongside the AWS programme and strengthens the earnings growth outlook beyond the current year.

Hyperscaler spending and electrical equipment scarcity underpin demand

CSE’s Electrification business continues to benefit from rising hyperscaler investment and growing constraints in the electrical equipment supply chain. In 2Q26, the five hyperscalers’ combined capital expenditure reached a record USD 182.5 billion, up 87% YoY. This sustained investment reflects the need to expand data centre capacity as AI workloads drive cloud demand higher.

The strength of cloud demand is also evident in large, contracted backlogs. Google Cloud’s backlog stood at USD 514 billion, while AWS reported USD 496 billion of remaining performance obligations. Cloud revenue is also accelerating, with Google Cloud up 82%, Azure up 43% and AWS up 37% in their latest reported quarters. These commitments provide visibility on future capacity requirements, translating into continued investment in data centres and their underlying electrical infrastructure. As new capacity comes online, demand extends to power distribution, switchgear, transformers, control systems and other equipment, creating a direct opportunity for CSE’s Electrification business, which provides integrated electrical and control solutions rather than individual components.

The scale of this investment is further amplified by constraints in the electrical equipment supply chain. Wood Mackenzie estimates that the US data centre electrical equipment market will grow from about USD 20 billion in 2025 to USD 65 billion by 2030, while lead times for critical components have already reached 18–36 months. US demand for substation power transformers rose 116% between 2019 and 2025, while lead times for some high-voltage transformers have stretched to 160 weeks.

These constraints are increasingly affecting the pace of data centre deployment. Bloomberg reported in April that more than half of US data centres planned for 2026 were expected to be delayed as developers struggled to secure transformers and other electrical equipment. This increases the value of service providers that can coordinate procurement, integrate complex electrical systems and manage project execution amid prolonged equipment lead times. CSE’s ability to design and manufacture power distribution centres and integrate electrical and control systems positions its Electrification business to help customers navigate these increasingly complex requirements.

Taken together, sustained hyperscaler capex, contracted cloud demand and constrained electrical supply extend CSE’s growth runway. The opportunity extends beyond the number of data centres being built to the growing amount of electrical infrastructure required to power them, creating greater demand for engineering and systems integration services as projects become larger and more complex.

Margin delivery remains key to the earnings outlook

The 1H26 results reflected strong revenue growth but compressed margins, as SGD 5.3 million of one-off costs from winding down legacy water projects and the Champion facility operating below full run rate weighed on profitability.

We expect earnings to improve in 2H26, with around 70% of the current order book scheduled for execution within the year, providing a clear path for the SGD 620.4 million order book to convert into revenue. Some AWS deliveries previously expected beyond 2026 have also been brought forward, with further awards anticipated as the broader USD 1.5 billion programme scales. However, near-term earnings growth should come mainly from higher throughput and the roll-off of one-off costs rather than margin expansion, as management indicated that Champion’s margins remain broadly stable at the current run rate. A more meaningful margin recovery will require a further increase in production run rate.

We maintain our BUY rating and SGD 1.43 target price, based on an unchanged fair P/E of 16x applied to 2028E EPS, implying 18.6% upside from the 7 October 2026 closing price. The new contracts reinforce our existing forecasts rather than warranting an upgrade, while the upcoming Q3 business update should provide a clearer read on earnings growth and margin recovery.

Overall, CSE’s growing exposure to US electrification and data centre infrastructure provides a solid medium-term growth runway, with execution and margin delivery now key to converting this opportunity into stronger earnings.

Table 1: CSE Global earnings forecasts

CSE Global	2025A	2026E	2027E	2028E
P/E Ratio (X)	18.6	21.6	16.8	13.5
Earnings growth	34.7%	6.4%	28.5%	24.6%
EPS (in SGD)	0.053	0.056	0.072	0.090
Dividend Yield	2.6%	2.3%	3.0%	3.7%
Upside Potential Excluding Dividend				18.6%
Target Price (SGD)				1.43
Current Price (SGD)				1.21
Source: Historical data is from Bloomberg Finance L.P., Forecasted data are based on iFAST Estimates.
Data as of 7 Oct 2026.

Figure 1: CSE Global share price vs earnings per share

Related article: CSE Global 1H26: Margins bend, the thesis holds

Declaration:

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.

This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.