CSE Global Limited (SGX:544), a it services company based in Singapore, received a lot of attention from a substantial price movement on the SGX in the over the last few months, increasing to SGD0.39 at one point, and dropping to the lows of SGD0.33. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether CSE Global’s current trading price of SGD0.35 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at CSE Global’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for CSE Global
What is CSE Global worth?
Good news, investors! CSE Global is still a bargain right now. In this instance, I’ve used price-to-book ratio (PB) ratio given that there is not enough information to reliably forecast the stock’s cash flows, and its earnings doesn’t seem to reflect its true value. I find that CSE Global’s ratio of 0.8x is below its peer average of 3.2x, which suggests the stock is undervalued compared to the it services industry. What’s more interesting is that, CSE Global’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What does the future of CSE Global look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. CSE Global’s revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? Since CSE Global is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.