SKS Technologies Group: Accelerating Growth Across Key Australian Sectors

About SKS Technologies Group Limited

SKS Technologies Group Limited (SKS Technologies, the Group, ASX: SKS) provides advanced audio-visual and IT convergence, electrical and communication networking solutions and integration synergies. The Group services the commercial, retail, health, defence and education sectors, and has a dominant market position in servicing data centres.

Compounding growth rates set to continue

SKS Technologies’ leadership position in electrical converged technology solutions has a wide application across the full spectrum of commerce in Australia. With offices in every state, its services in the audio-visual, electrical, and data communications space can be readily delivered to customers with a national footprint. Sectors covered include data centres, mining and resources, retail, education, defence, banking, and finance, and healthcare.

This diversified industry presence across Australia enables SKS Technologies to specialise on the sectors that are prevalent in each branch region. For example, SKS Technologies targets mining and resources work in Western Australia, defence work in the Northern territory and South Australia, and data centres in Victoria and New South Wales. At the same time, the Group is committed to building its traditional work on hand load. This includes projects spread across aged and healthcare, education, airports, sports entertainment and hospitality, retail, rail, transport, logistics and warehousing, as well as utilities and smart buildings and banking and finance.

This well executed growth strategy has seen sales revenue increase by 63 percent from $83 million in FY23 to $136 million in FY24. This result was the fourth consecutive revenue increase with the average annual compound growth rate since FY21 at more than 50 percent.

Similarly, work on hand is increasing in targeted market sectors and stood at $185 million as at 30 November 2024. Sixty-three percent of work on hand was related to data centres and technology, and seven percent was related to defence, with the remaining thirty percent represented by the Group’s traditional market sectors.

The broader pipeline of opportunities includes 1,100 open tenders valued at $413 million. Opportunities are heavily weighted by data centres and technology ($200 million), corporate services ($83 million), Government ($33 million) sports, entertainment and hospitality ($20 million), retail ($16 million) as well as defence ($16 million), and education ($10 million).

Demand in the data centre market is large and growing, buoyed by SKS Technologies’ early mover advantage which has provided a jump start on expertise and credibility in this sector. The future focus however is on winning work across all market sectors.

Double-digit growth rates must be judiciously managed.

Management and the Board recognise that high double-digit growth rates can lead to mis-placed ambition and clouded judgements, potentially creating under-performance. This was acknowledged at the recent AGM when the Chief Executive observed that the Group’s future strategy hinges on growth and consolidation concurrently. This means looking beyond just the next project. It means looking ahead to anticipate the needs and resources of forecast workloads in the years ahead.

Management considers one of the greatest risks to the business is, in fact, hubris. In other words, there is an acute need to select the right people to fit a culture of attention to detail and relationship-based customer servicing. This remains a constant effort along with a deliberate focus on margin preservation, ensuring that the cost base is managed on a project-by-project approach. Rapidly expanding businesses like SKS Technologies are dependent on larger and more comprehensive systems and processes. This remains uppermost in the minds of management and the Board.

The future

SKS Technologies’ management don’t just promise the world; they deliver it! The Group has an impressive track record of delivering to shareholders on what it set out to deliver in the timeframes committed to, and importantly, have done this successfully in a dynamic and fluid business environment.

SKS Technologies operates in an environment where demand in all market sectors is robust, and it has a dependable and modern operating platform that generates sufficient cash flow to fund its anticipated growth needs.

These attractive market fundamentals and strong internally generated cash flows, without an over-reliance on external debt funding or fresh equity, should deliver consistent earnings per share growth in the medium term.