ASX industrials stock Southern Cross Electrical Engineering Ltd (ASX: SXE) is in focus after its share price rose 14.69% yesterday.
It is made up of a group of companies that provides electrical, instrumentation, communications, security and maintenance services to a diverse mix of customers.
Investors were gobbling up this ASX industrials stock after its H1 FY26 results yesterday.
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What did the company report?
Included in yesterday's results was:
- Underlying EBITDA of $35.4m up 30.8% and Underlying EBIT of $29.1m up 25.5% respectively on then record prior corresponding period
- Gross profit for the period of $65.9m was a record half-year result and was up 30.3% on the prior corresponding period
- WestConnex arbitration settled resulting in legal dispute costs of $46.1m
- NPAT loss of $12.8m
- Revenue for the half-year was $349.1m, down 12.2% on the prior corresponding period revenue of $397.4m
- Fully franked 2.5 cps interim dividend declared.
The company also released updated FY26 guidance.
The board increased Underlying FY26 EBITDA guidance to at least $72m, up 31% on FY25 EBITDA, and expects further growth in future years.
Commenting on the half year results, SCEE Group Managing Director Graeme Dunn said:
I am pleased we have been able to raise our guidance for FY26 as we enter the second half of this financial year with a near-record order book. We are facing an unprecedented pipeline of data centre projects that we are tendering for now which anchors our expectations of further growth beyond FY26.
What did Bell Potter say?
Following the result, the team at Bell Potter released updated guidance on this ASX industrials stock.
The broker said the increasingly integrated business across services and product offerings is enabling the Group to capture a greater share of contract awards, sub-contracting fewer scopes.
SXE highlighted an unprecedented acceleration in Data Centre infrastructure investment, which has enhanced tendering opportunities.
The Data Centre project pipeline now stands at >$1,000m across the Group (up from $500m at the FY25 result). Increased momentum across other end-markets have given the company confidence in its expectation of further growth beyond FY26.
Price target upgrade
Included in the report was a buy recommendation (upgraded from hold).
Additionally, Bell Potter raised its price target to $3.70 for this ASX industrials stock (previously $2.35).
From yesterday's closing price of $3.28, that indicates an upside of 12.8%.
Increasing momentum in SXE's secular drivers including data centre construction and renewable energy development has enhanced the company's short-to-medium outlook. Strategic acquisitions completed over the past 5 years have broadened the Group's capabilities and enhanced its leverage to these increasingly bullish drivers.
