We maintain Buy, but trim earnings by 21-31% due to lower than expected revenue growth since our last update. We raise target price to S$0.75 from S$0.55, based on 8.5x FY10E P/E (raised from 5.5x FY09E PE) as well as roll over to FY10E earnings multiple. Our 8.5x P/E is based on 17% discount to industry PE of ~10x, justified by CSE’s slower EPS growth vs. peers and lower share trading liquidity.
Our target price of S$0.75 (8.5x FY10E P/E) is based on a 17% discount to the industry's P/E of ~10x given CSE's slower EPS growth vs. peers and lower share trading liquidity. We believe the market has yet to fully appreciate CSE's strong business model. CSE does not have direct comparables in Singapore or in the region, and the majority of the oil/gas-related firms now trade at far higher multiples despite lower margins. We use P/E because the share price is closely correlated with earnings growth.
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