ASX:SKS
SKS Technologies Group Ltd
Investment Summary
The fund managers believe that SKS Technologies Group Ltd is well-positioned for growth based on its recent performance. With first quarter revenue of $64.9m, SKS is on track to meet its FY25 guidance of $260m. Management’s target profit before tax margin of 6% leaves the company trading at around 16x forward earnings, which is towards the upper end of its fair value range. However, the fund managers express skepticism about the conservative revenue guidance, suggesting the potential for outperformance. Following a strong performance in February 2025, where SKS reported 117% revenue growth and 216% profit growth, market sentiment shifted towards profit-taking despite the positive indicators. The fund managers note that achieving full year targets requires a robust second half, with approximately 45% of guidance already met. In their opinion, investors should closely monitor SKS's upcoming results for potential upside.
Commentary From The Managers
Mereweather Capital
28 Feb 2025
$1.83
- Mereweather Capital observes that SKS Technologies (SKS) had a result that generated initial market enthusiasm.
- However, as market sentiment shifted, there was significant profit taking.
- Similar to AHC, the market's attention quickly moved from positive headline numbers (117% revenue growth and 216% profit growth) to underlying concerns.
- SKS has provided full year guidance, aiming for substantial growth.
- The first half results achieved approximately 45% of the full year targets, indicating the necessity for a stronger second half.
- Mereweather Capital continues to monitor the situation closely regarding the likelihood of meeting guidance.
Mereweather Capital
31 Oct 2024
$1.45
- Mereweather Capital notes SKS Technologies announced first quarter revenue of $64.9m, positioning them on track to meet FY25 revenue guidance.
- Management targets a profit before tax margin of 6%.
- Shares are trading at roughly 16x forward earnings.
- This valuation sits towards the upper end of SKS’s fair value range for a contracting-based business.
- There is potential for management's FY25 revenue guidance to be conservative, with the possibility of exceeding $260m.
- An increase in revenue could lead to a decrease in earnings multiple accordingly.
- Mereweather Capital continues to monitor these developments closely.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.