Consensus community valuation
August, FY25 update:
So 92% revenue growth yoy with guidance of more than 15% for FY26. Given 72% work on hand is datacentres you would think some reversion is inevitable (work on hand reduced from 220m in May to 200m in June), but there still 358m in open datacentre tenders. Check out their customers, impressive list (microsoft, amazon, defence, alibaba, etc).
Sure price has 10x since start of 2024 (and up lots since I looked at it), but revenue has grown with that and these guys have executed wonderfully,
NPAT Margin only slightly improved to 5.3% from 4.9% yoy but they did pay themselves an extra 3m (not complaining and there hasn't been much dilution) and they say their cost base can support 350m of revenue. Overall, base case seems relatively conservative for FY26. It's still a cyclical business, H1FY26 may present as high margin and good exit point.
Note, I really should look into working capital and inventory - it's important for this kind of business.
bear case, 10% revenue growth, 5% NPAT margin, pe of 12 => $1.58
base case, 15% revenue growth, 5.5% NPAT margin, pe of 20 => $2.78
bull case, 20% revenue growth, 6% NPAT margin, pe of 30 => $5.63
weighing equally gives $3.22.
Feb, H1FY25 update:
This is a tough one, >100% revenue growth from H1FY24 to H1FY25 - this can't continue, but what could it be? Highly uncertain, but there lies the opportunity!
Assuming 20% revenue growth to FY29, 7% PBT margin, PE 15x gives EPS of 15 cps and $3.66, discounting back 5% gives 3.01.
Forward PE if 260m FY25 achieves @ 2.09 is 18, assume you would get multiple expansion if achieved but shouldn't rely on this. cf. IPG @ PE ~17 which has stagnant growth, similar revenue but higher margins.
Downside risk, I worry margins won't be stable, e.g. 5% PBT gives $2.10 ~ pretty much current price.
SKS had a welcome boost today after securing another $100M data centre contract, this time in western Melbourne. The award sent orders on hand to a record $220M. With the build expected to complete in September 2026, it sets the company up for a healthy FY26, after reiterating guidance for FY25. The project is for fitout of building C and follows SKS's successful completion of buildings A and B on the same site.
Up until today it had been a quiet few months for SKS and the SP had drifted, as it is prone to do. Today's announcement has put some attention back on them and we'll see how it lasts, although it does seem to be a stock that overextends at both the bullish and bearish ends of the barbell so here's hoping it goes on to test new highs.
Interestingly the order book is now exactly twice what it was 12 months ago when it was about to start a tear from circa 70 cents to a 12-month high of $2.45. Apart from the order book, the number of open tenders is also at a new high and the value of those tenders is similarly elevated (although not a record after the awarding of todays $100M contract).
[Held]
Anyone want to guess the time in SKS's results call that the CEO mooted a capital raise because "various organisations are encouraging us to do so"?
[Held]