SKS Technologies' Data Centre Pivot Turned It Into a 10-Bagger

An electrical contractor's shift into hyperscale data centre construction drove a dramatic re-rating, though some early believers now warn the sector looks frothy.

30 Sep 2026 · 4 min read

SKS Technologies has become one of the ASX's great small-cap success stories, rising from around 20 to 49 cents a few years ago to a record above $9 as an electrical contractor that pivoted hard into hyperscale data centre construction, though by August some of its earliest backers were taking profits on valuation grounds even as the order book kept growing.

From electrical contractor to data centre specialist

Ellerston Capital said it invested in SKS Technologies two years ago at 49 cents a share, and by April the stock had hit a record $5.82, a ten-bagger, describing the company as essentially an electrical contractor that found a lucrative niche in what it called the digital gold rush. Wilson Asset Management said data centres now represent approximately 50 percent of revenue, up from zero in FY2023, and expects that exposure to keep growing given a large tender pipeline. 1851 Capital said it first bought in at 37 cents, making SKS the fund's most successful investment since inception.

Two years ago, James Barker and his team at Ellerston Capital invested in SKS Technologies when the shares were trading at 49 cents. This week, they hit a record $5.82, a 10-bagger.

— Ellerston Capital, Article, April 2026

Contract wins keep growing the order book

Ellerston Capital said the stock rose 69 percent in April after SKS secured an $80 million scope expansion on its MEL02A hyperscale data centre contract with Stack Infrastructure, lifting total work on that project to $210 million, alongside a smaller maiden New South Wales data centre win. Merewether Capital confirmed the extension took the total order book to $350 million, calling SKS one of the cleanest ways to play the ASX data centre build-out. In May, Merewether detailed a $22 million contract to fit out Coles' new Melbourne head office, though the bigger catalyst was management commentary that the tender pipeline was 120 percent higher than disclosed at the February half-year result, driven by an additional $600 million in data centre tenders, prompting Merewether to trim its holding before fully exiting later in the month, having originally bought in around 20 cents. Ellerston Capital said the stock rose a further 36.2 percent in May, with work-in-hand updated to $355 million and FY27 secured revenue at $270 million.

A rocket was put under the share price with commentary that the current tender pipeline is 120% higher than last disclosed at the half year report in February, driven by an additional $600m in data centre tenders.

— Merewether Capital, Monthly Report, May 2026

A re-rating that's drawing both admirers and skeptics

Centennial Asset Management said it maintains exposure to SKS as part of a broader theme spanning AI hyperscaler infrastructure, electrification and defence spending, acknowledging all trade at premium valuations but arguing it is earnings momentum and expectations that matter for now, not valuation alone. Naos Asset Management agreed the earnings underpinning the re-rating are real, with order books at multi-year highs, project mix shifting toward higher-margin work and pricing power improving as bid lists shorten, though it flagged valuations across the sector had become stretched. In July, Centennial reported SKS won a further $28 million of work on a Melbourne hyperscale data centre, and upgraded FY26 earnings guidance by 15.6 percent as increased scale delivered margin expansion.

By August, some early backers start taking profits

Seneca Financial Solutions moved to sell in August, taking profits despite strong momentum and management it still rates highly, arguing a bubble is forming across data-centre-linked electrical contractors as the sector re-rates from around 10 times to 20 times earnings, a level it considers frothy given these businesses scale by hiring rather than exponentially. Forager Funds made a similar call, noting the backlog is huge and next year's profit should be higher, but the current multiple reflects earnings roughly 100 times what the company generated two years ago, and expects margins to normalise once the data centre demand boom eventually slows.

Sees a bubble forming across data-centre-linked electrical contractors, with the stock re-rating from ~10x to ~20x earnings, which looks frothy given these businesses scale by hiring, not exponentially.

— Seneca Financial Solutions, Presentation, August 2026

Firetrail Investments remains among the believers, noting SKS built AirTrunk's MEL01 data centre in western Melbourne and has been one of its biggest performance drivers over the past year, valuing the company's focus on lowering the carbon footprint of digital infrastructure through better building practices.

What fund managers say they are watching next is whether the roughly $600 million pipeline of data centre tenders keeps converting into contracted work at the pace of the past year, whether margin expansion continues as the project mix skews further toward higher-value work, and whether the stock's valuation, now around 20 times earnings against a historical 10 times, proves sustainable or corrects as some early backers have already concluded it should.