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#H1 FY2021 Results
Last edited 2 months ago

24-Feb-2021:  Half Year Results Announcement   plus   Investor Presentation - Half Year Results   and   Appendix 4D and Interim Financial Report

I hold SCEE (ASX:SXE) shares.  This was a poor H1 report, and they were sold down -3.6% today to 53.5 cps, after being down as low as 49 cps (-11.7%) earlier in the day at the height of the pessimism.  The saving grace was that they have guided for a MUCH stronger second half.  If they achieve that guidance, I would expect a strong positive re-rate.  I guess we'll see in August.  Meanwhile, there are a number of larger contract wins that they could announce between now and then that get start that ball rolling.


  • Revenue of $135.4m down 27% on prior 6 months impacted by later than anticipated award and execution of major resources projects
  • EBITDA of $9.7m down 9%, EBIT of $7.3m down 9% and NPAT of $4.5m down 15% on prior 6 months
  • Coronavirus continues to have impacts on productivity
  • Acquisition of Trivantage Group completed in period
  • Expecting significantly expanded H2 with works carried over from H1 and Trivantage contribution
  • Targeting full year revenues of $420m
  • Balance sheet remains strong with net cash of $53.3m and no debt
  • Record order book of $500m


  • Order Book
    • The Group continues to win work across its core markets. Significant awards during the half year included the Rio Tinto Gudai-Darri project ($65m) and circa $40m of commercial and datacentre projects in Sydney and Canberra.
    • The Group now has a record order book of $500m, including a $60m contribution from the acquisition of Trivantage, with secured works well balanced across SCEE’s three sectors.
    • There are currently over $700m of submitted tenders with clients pending decision and strong visibility of the Group’s opportunity pipeline.
  • Markets
    • Resources
      • Resources activity has rebounded since the low levels of FY20. The pipeline is expected to continue to grow as commodity prices remain high. Significant opportunities are emerging in iron ore, lithium, and renewables developments alongside resources projects.
      • Current ongoing works at the Kemerton Lithium Plant, Rio Tinto Gudai-Darri and Rio Tinto Gove projects will be strong revenue contributors in the second half.
      • We continue to perform minor works projects at various Rio Tinto and BHP sites and at Sino Iron and Boddington Gold.
    • Commercial
      • The Commercial sector remains the largest component of the order book. Wynyard Place and the Ribbon Project are expected to be the largest revenue generators in the sector in the second half of the year.
      • The medium-term outlook for the sector remains strong as developments commence around new infrastructure hubs.
    • Infrastructure
      • Infrastructure will be a less significant contributor in FY21 as the WestConnex, RAAF Tindal and Westmead Hospital projects are largely completed. However, peak activity in the sector is still to come with significant investment sanctioned and electrical work generally later in cycle.
      • Works on the Pitt Street Metro project will ramp up in FY22 and we are bidding further opportunities on Sydney Metro and continue to target other hospital, transport and defence opportunities.
  • Full year expectations
    • A significantly expanded second half is expected as work carried over from H1 is delivered and the Trivantage contribution is added to the Group. Full year revenues of $420m are targeted.


SCEE primarily sees itself as an electrical and associated services contractor diversified across the resources, commercial and infrastructure sectors.

Our growth strategy falls in two parts:

  • To continue to deepen our presence and broaden our geographic diversity in those sectors, noting the strong outlooks for resources and infrastructure; and
  • To grow our services, maintenance and recurring earnings offerings to complement our construction capabilities.

We will achieve this through both organic initiatives and by continuing to actively pursue acquisition opportunities.

CEO Comment

Commenting on the results, SCEE’s CEO Graeme Dunn said “the first half of the year has seen us significantly expand the Group’s capabilities and geographical presence through the acquisition of the Trivantage Group. The combination of this acquisition and a record order book means we are confident of delivering a much stronger second half result. Going forward, with a resurgent resources sector and strong infrastructure pipeline, we are well placed to execute our growth strategy.”

--- end of excerpt --- [I hold SXE shares.] --- click on the links at the top for more ---

The chart below is part of the Macromonitor series on Transport Infrastructure Construction, and it is updated each year; this one was updated in January 2021 (last month).  In their presentation (link above) SCEE (SXE) mention that there is an infrastructure construction activity "peak" coming.  What I have noticed is there is always an activity peak in these charts, and it is always about 2 to 3 years ahead of wherever we are today, and there is always a sharp drop off in activity after that (as can be seen on the chart below).  In my experience, every time these Macromonitor charts are updated (which is annually) that peak has moved back another year, which suggests that the drop off is simply because we lack visibility of projects that far into the future; the projects are coming, we just can't see them yet.  That's why the peak does not appear closer on this year's chart than it did on last year's chart, or the year before, or the year before.  It is always 2 to 3 years out into the future, and it may stay that far out for another 5 or 10 years.  That's my experience anyway.  For what it's worth.

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#New Contracts
Added 2 months ago

18-Feb-2021:  New Contract Awards


  • SCEE awarded $40m of commercial and datacentre works in NSW and ACT

Southern Cross Electrical Engineering Limited (“SCEE”, ASX:SXE) is pleased to announce its East Coast-based subsidiary Heyday has been awarded a range of projects totaling $40m as follows.

Heyday has been awarded the following contracts with a combined value of over $15m:

  • In Sydney, a contract novation for The Ribbon Project from Probuild Constructions (Aust) Pty Ltd. The novation was as a result of Grocon Constructions, to whom Heyday was performing earlier works, and their client Greaton concluding their construction relationship and Greaton subsequently engaging with Probuild to complete the project with an increased electrical scope of work. The works consist of a new Imax cinema, 449 hotel rooms, 143 serviced apartments, and other office and retail offerings. The project is due for completion in December 2021.
  • In Canberra, Heyday has been awarded the design and construct contract to provide electrical, communications and security services for the new Throsby Primary School from Icon SI (Aust) Pty Ltd. In line with ACT Education requirements the school will achieve zero emissions through the use of energy efficient systems, solar PV array and airtight mechanical systems and buildings. The completion of the project is to align with the start of the school year in January 2022.

In Sydney, the following datacentre projects have been secured by Heyday with a combined value of circa $25m:

  • From Multiplex Australasia Pty Ltd, a contract for the design and construct of Stage 1 - Phase 1 electrical and communication works for the NextDC S3 datacentre in Artarmon. The S3 datacentre will be constructed to meet the Uptime Institute Tier IV Level Certification requirements and the works include MV/LV and communications infrastructure and fitout of data halls and offices. Project completion is August 2022.
  • J. Hutchinson Pty Ltd has engaged Heyday for a further stage at the RuData SYD053 datacentre in Eastern Creek in Sydney’s western suburbs, which is the fifth separate subcontract to Heyday on the site. This scope includes the full fit-out of an additional 1,200m² of data hall space, new HV and LV reticulation, switchboards, UPS, generator systems, lighting, and power. The works are expected to be completed by the end of third quarter 2021.


Commenting on the above, SCEE Managing Director Graeme Dunn said “This range of work once again demonstrates the strong position Heyday holds in these sectors in Sydney and Canberra.

It is particularly pleasing that we are now in a position to complete the electrical works on the prestigious Ribbon project on which we had so successfully performed at an earlier stage.”

--- ends ---   [I hold SXE shares.]

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#New Contracts
Added 5 months ago

23-Nov-2020:  SCEE awarded work at Rio Tinto Gudai-Darri

  • SCEE awarded electrical and instrumentation works at Rio Tinto’s Gudai-Darri iron ore mine
  • Contract valued at over $65m

Southern Cross Electrical Engineering Limited (“SCEE”) is pleased to announce that it has been awarded a contract valued at over $65 million by Rio Tinto for work at their new Gudai-Darri (formerly known as Koodaideri) iron ore mine located in the Pilbara region of Western Australia.

SCEE will perform the plant electrical and instrumentation works at the mine as part of the Gudai-Darri Phase 1 Project. Mobilisation for SCEE is scheduled to commence late in 2020 with completion planned for December 2021.

Commenting on the award, SCEE Managing Director Graeme Dunn said “We are pleased to secure this significant award with such a longstanding and valued client as Rio Tinto for whom we have undertaken many successful projects in the Pilbara. This further boosts our already strong order book and will provide a solid base of construction work in the resources sector into the 2022 financial year.”

--- ends ---   [I hold SXE shares.]

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#Trivantage Acquisition
Last edited 5 months ago

18-Nov-2020:  Strategic Acquisition   plus   Investor Presentation - Acquisition of Trivantage


SCEE to acquire Trivantage for an enterprise value of up to $53.5m*:

  • Trivantage is a specialised electrical services group with over 50 years operational experience of providing complex electrical solutions across Australia
  • Trivantage is primarily a services oriented business characterised by a strong degree of recurring and maintenance work
  • Acquisition is a milestone in SCEE’s strategy to enhance its service and maintenance capabilities and grow into adjacent and complementary sectors and new geographies
  • Trivantage is budgeted to achieve FY21 revenue of circa $130m and normalised EBIT of $10.8m**, delivering enhanced scale and double digit EPS accretion for FY21F for SCEE on a pro forma basis*** 
  • Following the acquisition, the combined SCEE group is expected to generate revenue of circa $500m on a pro forma FY21F basis
  • Anticipate strong operational synergies and considerable cross-selling opportunities
  • Acquisition consideration structured to ensure ongoing alignment and acquisition success. Initial consideration is payable via $25.0m in cash on completion, and a further $10.0m cash and $5.5m in SCEE shares payable after achievement and confirmation of Trivantage FY21 targets. Further cash components will be payable subject to achieving performance hurdles in FY22 and FY23
  • SCEE to maintain a strong balance sheet with flexibility to pursue further growth opportunities
  • Trivantage management to remain in business
  • Paul Chisholm (significant shareholder and Chairman of Trivantage) to be invited to join SCEE Board


Southern Cross Electrical Engineering Limited (“SCEE”, ASX:SXE) today announced that it has executed a Share Purchase Agreement to acquire 100% of Trivantage Holdings Pty Ltd (“Trivantage”) from the current shareholders of Trivantage for an enterprise value of up to $53.5m on a debt free basis. Completion is expected to occur in mid-December 2020.

With over 50 years of operational experience, Trivantage is a leading provider of specialised electrical services across a range of sectors. Trivantage is characterised by a large degree of recurring service and maintenance work with a relatively low risk contracting profile. Headquartered in Melbourne, Trivantage has approximately 400 employees Australia-wide with offices in Victoria, Western Australia, Queensland, New South Wales, South Australia and Tasmania.


  1. (*) Refer Appendix for detailed transaction terms, including nature and timing of acquisition consideration
  2. (**) On a full year basis and excludes potential synergies, transaction and integration costs
  3. (***) Before synergies, transaction costs, integration costs and amortisation of customer related intangibles

--- click on the first link at the top for the full announcement including the appendix referred to in Note 1 above --- 

--- The second link (at the top) is to a presentation that SXE have released today concerning this acquisition ---

[I hold SXE shares.  I like this acquisition.  Double digit earnings accretive in FY21.  Even more recurring revenue for SCEE (SXE) - there's plenty to like about this.]

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#Substantial Shareholders
Last edited 6 months ago

On Tuesday- 16th April 2019 - Thorney Investment Group Australia (TIGA, ASX: TOP) increased their shareholding in SXE from 12.83% to 14.15%.  Westoz Funds Management (WIC) still hold 5.4%, and Colonial First State still hold 8%.  The founder of the company, Frank Tomasi also still holds 20% of the shares on issue.  Between TIGA, WIC, Colonial & Tomasi, that's 47.55% of the shares taken care of, leaving the remaining 52.45% as the free float (i.e. not held by substantial holders).

Disclosure:  While not exactly a substantial holder, I do own shares in Southern Cross Electrical Engineering.  SRG & SXE look remarkably cheap among their peer group - I hold them both.

Update (16-Oct-2020):  The latest substantial shareholder numbers in SXE are:

  1. With 18.9%, Frank Tomasi
  2. With 18.53%, TIGA/Thorney Investment Group Australia/ASX:TOP
  3. With 8.5%, Mitsubishi UFJ Financial Group, Inc.
  4. With 6.12%, Perennial Value Management Limited
  5. With 5.4%, Westoz Funds Management Pty Ltd

Those 5 holders together now own 57.45% of Southern Cross Electrical Engineering (SCEE, ASX: SXE), so the free float (available shares less substantial shareholders) has now reduced from 52.45% (see above) to 42.55%. 

Over the same 18 month period, SXE's SP (share price) has reduced from around 55c to now being around 45c, so the market capitalisation (market cap) is now around 18% lower as well.

[I still hold SXE shares.  I see significant upside from here, and it shouldn't take longer than a year or two for a serious positive market re-rate of SXE, IMO.  Management are doing an excellent job.  They're just not in a favoured sector at this point, so there is no positivity around the company.  Unloved and unappreciated.  My sort of company really.]

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#Business Model/Strategy
Added 7 months ago

moat: industrial/commercial electrical engineering expertise/contracts (seems strong relative to other sectors)
demand: year round essential services
covid effect: slight negative impact of travel/work restrictions, but also a positive of gov resources/infra stimulus expected in this sector
financials: strong balance sheet, no debt (exactly what you want during pandemic)
dividend:  fully franked ~6% dividend (ex dividend: 7 Oct 2020)
future: $440m contracts (including $330m work/contracts secured for FY21)
works with: RIO, BHP, commercial developers, NBN, gov transport etc
(verify for yourselves)

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Added 10 months ago

11-June-2020:  Decmil Subcontract Update

This highlights the pitfalls of being a subcontractor when the company you have been subcontracted by are rather sub-par (as Decmil - DCG - clearly are).  I note this work was performed a couple of years ago, and that Southern Cross Electrical Engineering (SCEE, ASX: SXE) have a business model that has evolved somewhat from then.  I believe SXE are a better company now - with better risk management.  That's why I hold SXE shares.  I also note that SXE have said, "SCEE remains committed to pursuing its substantive claims and is confident as to its entitlement. SCEE does not believe that this matter will have a material impact on the financial performance of the company for the year ending 30 June 2020 or any subsequent financial years.”

In other words, the eventual outcome of this to SCEE (SXE) is not going to be particularly material.  It was a pretty small contract, and the money owed to them by DCG (according to SXE) is not a particularly large sum in the overall scheme of things.

Decmil's announcement (09-June-2020):  DCG: Adjudication Update

Disclosure:  I hold SXE shares, but do NOT hold DCG shares.

I note that the S&P Index rebalance announcement today mentioned that both SXE and DCG are going to be removed from the All Ords Index on June 22nd (in 10 days' time).

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#New Contracts
Added 12 months ago

05-May-2020:  Contract Awards and Coronavirus Update

Sounds like business as usual mostly for SXE and that they are well positioned to capitalise on opportunities regarding increased infrastructure spending.  Over $50m in net cash (no debt).  Disclosure:  I hold SXE shares.

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#Bull Case
Added one year ago

Southern Cross Electrical (ASX: SXE) is an electrical, instrumentation, communication and maintenance services company.


Market Capitalisation: $152,282,906 (@61.5)

Earnings/Share:  5.44 cents

Price/Earnings Ratio: 11.31

NTA/Share: 32 cents

Dividend/Share: AUD 3 cents

Dividend Yield: 4.88%


  • Recently granted a number of projects across a number of industries in December, including approximately $65m of E&I works at the Kemerton lithium processing plant and a number of other new contracts with a total value of over $35m across the commercial, resources, health infrastructure and telecommunications sectors.
  • FY19 revenue of $386.0m up 11%, EBITDA of $23.6m up 13% and NPAT of 12.7m up 51% on prior year, primarily due to growth in public infrastructure activity.
  • Work diversified across different industries
  • Strong commercial and infrastructure  pipeline
  • Cash on hand of $53m and no debt (30 June 19)
  • Price trending up



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#New Contracts
Added one year ago

19-Dec-2019:  Contract Awards


  • Over $35m of projects won across the SCEE group
  • Awards in the resources, commercial, health and telecommunications and data centre sectors 

Southern Cross Electrical Engineering Limited (“SCEE”) is pleased to announce that it has secured a number of new contracts with a total value of over $35m across the commercial, resources, health infrastructure and telecommunications sectors. 
SCEE has been awarded the following resources projects: 

  • Talison Lithium Australia Pty Ltd has awarded SCEE a contract to install, erect, test and commission the primary and secondary equipment for an electrical infrastructure upgrade at the Greenbushes lithium mine in southern Western Australia. The works involve an electrical load increase from 25MVA to 60MVA installed capacity and are expected to be completed over the first half of 2020. 
  • Energy Resources of Australia Pty Ltd (“ERA”) has awarded SCEE a Master Services Agreement to provide electrical and instrumentation services at the Ranger Mine in Jabiru, Northern Territory. SCEE will provide ongoing support to ERA’s operations and assist with mine closure works for an initial term of two years and ERA has the option for a further two 12-month extensions.  

SCEE’s East Coast-based subsidiary Heyday has been awarded the following commercial projects: 

  • Shape Australia Pty Ltd has awarded Heyday the electrical fit-out of 14 floors of government office accommodation at 231 Elizabeth Street, Sydney. The new office accommodation will provide 21,600m2 of floor space for use by employees of Transport for NSW, and the Departments of Premier & Cabinet, of Finance, Services & Innovation and of Justice. The building fit-out is being managed by Property New South Wales on behalf of the government agencies. Heyday’s scope of work includes the distribution switchboards, cable support systems, specialist lighting and small power, communication services, security and access control systems and is expected to be completed over the first half of 2020.  
  • In Canberra, Heyday has been awarded a contract by Geocon Constructors (ACT) Pty Ltd on the City – 7 Development Project. The development comprises three buildings encompassing 544 apartments and 10 retail tenancies. The scope of works is for the design and construction of lighting, communication services, security and access control systems and is expected to be completed in early 2021. 
  • Also in the ACT, Heyday has secured a contract from Icon for work on the Parade Project which is part of Icon and JW Land’s mixed-use C5 Development in Barton. The development comprises 242 apartments, a 65-room hotel and eight retail tenancies. Heyday’s scope of work includes lighting, communication services, security and access control systems and is expected to be completed by the end of 2020. 

Health infrastructure 
SCEE’s subsidiary Datatel has entered into an agreement with Health Support Services in Western Australia for the provision of breakdown repair, planned maintenance and minor works activities and projects as required to the East Metropolitan, North Metropolitan and South Metropolitan Health Services. The agreement is a panel arrangement for an initial period of three years with options to extend the term for up to a further eight years. 
Telecommunications and data centres 
Heyday has been awarded a further stage of works by J. Hutchinson Pty Ltd at the RUData SYD53 data centre at Eastern Creek in Sydney’s western suburbs. This scope includes the full fit-out of an additional 1,000m2 of data hall space with Heyday’s scope including HV and LV reticulation, switchboards, UPS and generator systems and lighting and small power. The work is expected to be completed in the first half of 2020. 
Datatel has secured new and extensions to existing term contracts to perform customer connection works on the NBN, Optus and Telstra networks. 
Commenting on the awards, SCEE Managing Director Graeme Dunn said “I am pleased to be able to announce these new awards which demonstrate SCEE’s capabilities across a broad range of sectors and geographies.” 


Disclosure:  I hold SXE shares.

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