Southern Cross Electrical (ASX:SXE) raises A$150m, lifts FY27 EBITDA to A$100m

Data centre awards do the heavy lifting and the acquisition warchest now sits primed for expansion

Southern Cross Electrical Engineering (ASX:SXE) has done something most contractors only dream about. It has upgraded near-term guidance, initiated a much bigger FY27 number, and tapped the market for A$150m at a discount of less than 5% to last close. That combination is rare and it tells investors something specific about how the business is travelling.

The fully underwritten institutional placement is priced in a A$3.85 to A$4.00 range against a A$4.02 close on 12 June. A non-underwritten share purchase plan adds up to A$15m on the same terms. Macquarie and Barrenjoey are running the book.

Alongside the raise, management secured over A$150m of new works awards, including early works for Multiplex at NEXTDC’s S4 data centre, a Trivantage switchboard order, and a Rio Tinto Pilbara Master Construction Agreement. FY26 underlying EBITDA guidance lifted from at least A$72m to at least A$75m. FY27 guidance was initiated at at least A$100m, a step-change of roughly 33% on the new FY26 number.

Why the FY27 step-change matters more than the placement size

Most commentary will fixate on the A$150m placement and the dilution math. We think the more important number is the FY27 EBITDA floor of A$100m. That implies the business roughly doubles its FY25 EBITDA of A$55m inside two years.

The bridge is not hand-waving. Management expects data centre revenues to grow approximately 3.0x from FY26 to FY27, with active tenders above A$1bn across the group. With eight data centre projects already running for six providers, conversion risk is lower than for a contractor building this exposure from scratch.

The skeptical read is that contracting businesses are notorious for over-promising. But SCEE has actually delivered. Revenue went from A$370m in FY21 to A$801m in FY25, and EBITDA tracked that growth without margin collapse.

Where the A$150m goes and why the dilution is tolerable

Around A$100m of placement proceeds funds working capital for the new awards. The remaining A$50m sits as balance sheet flexibility. Combined with new debt facilities of A$100m and an expanded A$200m bank guarantee and surety bond capacity, SCEE will sit on pro forma liquidity of around A$308.8m.

Dilution at the bottom of the price range is 12.8%. That is meaningful, but FY27 EBITDA grows by roughly 33% over the same period. On those numbers, EBITDA per share still moves higher after the raise.

Our concern sits elsewhere. Doubling manufacturing floorspace to over 17,000 square metres and scaling fast raises operational stakes. A single material cost overrun on a large data centre fit-out could absorb the FY27 upgrade margin in a hurry. And the WestConnex dispute still sits outside the underlying number.

The Investors Takeaway for Southern Cross Electrical Engineering

The FY27 A$100m EBITDA target is the anchor for any investment case here. If management delivers, the placement at A$3.85 to A$4.00 will look like a sensible price, and the SPP gives retail holders a way to participate.

The next 12 months will tell us whether the data centre revenue ramp is as clean as guidance implies. Investors looking for broader coverage of ASX contractors riding the data centre buildout can read more at stocksdownunder. For now, SCEE has earned the benefit of the doubt by upgrading rather than downgrading, but the bar it has just set is one it now has to clear.