SKS is a contractor.My understanding is that it does mainly...

SKS is a contractor.
My understanding is that it does mainly electrical works*, as well as related audio visual works and IT works.
Mainly in Victoria, according to the last presentations I have seen.
This description of their business is probably not clear enough, so I recommend to watch their October 22 presentation (Coffee micro cap, available on Youtube).

After remaining around 20 c for a long time since 2020, the stock had a huge run recently and has now reached a new 52 weeks high at 55 c.
After a significant reorganization of the business in 2020, the company is showing an interesting profile :
- strong top line growth, driven by the growth of data centers, as well as more contracts with the defence sector.
- and large margin recovery, due in particular to less sub-contractor contracts**.
Together, these 2 elements have enabled the company to show a significant level of cash flow and free cash flow.
During Q2 24, SKS had a free cash flow of 2.3 m $, which corresponds to 9.2 m $ for an enterprise value of 58 m $.

As always with this kind of company, the main question is regarding the sustainability of the growth and earnings.
It seems that they still depend on one off contracts, even if they claim that 96 % of their revenue comes from repeat business.
Their CEO, Matthew Jinks, also recognises this weakness of their business model and is trying to get more into the maintenance business and not just in the installation of commercial buildings. In October 22, he said that the service business still represented a small portion of its total revenue.

Based on their last guidance, the earning growth is expected to continue :
- the company is guiding for a revenue of 120 m+ $ in FY 24 (+ 45 %),
- "mid term growth can now largely be achieved under the current cost basis".

* for example, it received a major order in Nov 23 for the design, installation and commissioning of the electrical systems for a 28 MW data center.
** work for end users went from 0 in Aug 22 to 16 % in Nov 23. It partly explains why the EBITDA margin went from 3.4 % in H1 23 to 5.6 % in H1 24.