Singaporean oil services firm remains bullish on the region's long-term prospects, despite growing unrest
Singapore's CSE Global , a systems integrator for the global oil industry, said on Monday it was delaying acquiring a Middle East company due to concerns over unrest, but remained bullish on the region's long-term prospects.
A near civil war in Libya following recent turmoil in Egypt has fed fears that uprisings in the Middle East could spread.
CSE shares have fallen 6.2 percent since the start of the year, hurt by concerns that firms with exposure to the region may be negatively affected. The firm listed in January 2009.
But CSE, whose main business includes providing technologies to automate systems for oil and gas firms, is still eyeing the Middle East as an important market.
"Our vision since our IPO of doubling profits every three to four years remains the same," Tan Mok Koon, CSE Global's executive deputy chairman, said in an interview.
CSE, which derives about 20 percent of its revenue from the Middle East, expects its sales from the region to hit S$300m a year in three years' time, compared with about S$90m in 2010, Tan said.
"We still think the Middle East is a key growth market for us, but we might be more cautious because of the unrest...and will slow down the pace of acquisitions," Tan said.
CSE, which was planning to buy a company that provides automated software systems in the Middle East, will delay its acquisition by six to nine months in the face of greater uncertainties, Tan said. He did not identify the company or which country it was in.
However, he added that CSE, whose Middle East operations are in Saudi Arabia, Qatar and the UAE, has not been affected by the turmoil so far.
"In the short term, there may be some hiccups here and there. If the situation gets worse in the Middle East, business may drop this year but in the long-term, I still believe it is a region that should give us that type of business volume," said
Besides the Middle East, CSE Global is also looking to expand its business in Australia to tap on the country's booming mining and oil and gas sectors.
CSE Global expects its annual revenue from Australia to also hit S$300m in three years' time, up from about S$45m last year, Tan said.
In order to expand at a faster pace, CSE Global is looking at acquiring an Australian automation systems company in the second half of this year, which will add another 80-100 engineers to its workforce in the country.
CSE had a full year net profit of S$52.5m last year, 20 percent higher than the year before, helped by more revenue from projects in the Middle East.
CSE competes with Singapore's Hup Soon Global, and has a 12-month forward price-to-earnings ratio of 9.5 times, compared to its sector median of 10.7 times.
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