CSE Global: 3Q11 results miss expectations.
Net profit reached $12.7m, -12% yoy, on weaker than expected revenue. Sales reached $111m, +3% yoy, as revenue recognition for a few projects was delayed by ~6mths. A $1.2m charge was recognized in Scotland as the firm scaled down its presence. Gross margin fell slightly (36.1% vs. 37% in 3Q10) due to higher mix of greenfield projects.
CSE ended the quarter with a record backlog worth $486m and net gearing of 35%.

Mgt is guiding Transtel (Middle East) to recover profitably in 2012 while group earnings to recover sharply. CSE expects $150m orders to materialize in 4Q11, raising full-year order wins to ~$600m (vs $490m in 2010). Contract flow is not expected to slow down an order intake of $300-400m in 1H2012 is possible.
Geographically, Australia is most robust with several large-scale LNG/mining projects expected to conclude soon. Gulf of Mexico (onshore/offshore) and North Sea is also expected to see a pickup in order book as well. Asia remains unchanged while the Middle East is benefitting from a resurgence of small projects.

Citi notes CSE has not been able to capitalize on its strong orderbook. Cuts TP to $1 from $1.30, but keeps Buy rating.