SKS Technologies (ASX:SKS) lands A$28m MEL2 works and the repeat-client flywheel kicks in

FY27 order book opens at A$312m, up seven times since 2023, with tenders past A$1bn

SKS Technologies Group (ASX:SKS) has secured A$28 million of early works on Built’s MEL2 hyperscale data centre in Melbourne’s northwest, a project underpinned by more than A$5 billion of planned investment and over 354MW of capacity. The award is small next to the A$120 million MEL1 job SKS wrapped for the same client. But that is exactly why it matters.

MEL2 is the first tangible proof that the MEL1 delivery, completed after being announced in July 2024, is converting into repeat hyperscale work. Management has been telling investors for a year that flagship jobs would become a launch pad for larger follow-on contracts. This is the first data point that says the strategy is landing.

The order book now opens FY27 at A$312 million, a seven-fold jump since June 2023. That is a 68% compound annual growth rate in work on hand across three years, unusual for a services business of this size.

For a company that only recently repriced from small-cap contractor to genuine data centre exposure, the shape of this announcement matters more than the headline number.

Why a A$28m early works package punches above its weight

Early works contracts are typically the tell in data centre construction. The client picks the contractor they trust to get the ground infrastructure right, because everything structural sits on top of it. Substations, gas insulated switchgear buildings, high-voltage conduits and communications infrastructure all fall inside this scope.

Winning early works on MEL2 puts SKS in pole position for the far larger main electrical package that follows. On MEL1 that main package was worth roughly A$120 million. If MEL2 tracks a similar ratio, the A$28 million announced today is the entry point to a materially bigger revenue stream over FY27 and FY28.

The pipeline math is doing something unusual

As reported in May, the tender pipeline sits at A$1.25 billion, up 120% from A$572 million in February. Data centre tenders alone account for just over A$1 billion of that, more than double the A$424 million figure from four months earlier.

Australian data centre capacity is forecast to grow from 1.4GW in 2025 to 3.2GW by 2030, a 128.6% expansion. Even at a 25 to 30% conversion rate on the current tender book, FY27 revenue would run well ahead of consensus, which is where the operating leverage story gets interesting given the 10% NPBT margin guide.

The concentration risk nobody is talking about yet

The flip side is client concentration. Data centres are now well over half the business, and hyperscale work is dominated by a small number of developers and their tier-one builders like Built. If one relationship cools, the pipeline number does not save you.

Our concern is that the market is now pricing SKS as a data centre pure-play while management still describes it as a diversified electrical contractor. Those two framings deserve different multiples, and investors should decide which one they are underwriting.

The Investors Takeaway for SKS Technologies

Today’s A$28 million is the appetiser. The main course is the follow-on electrical package on MEL2, which on the MEL1 template could add A$80 to A$120 million to the order book within the next 12 months. If that lands, the FY27 revenue base looks meaningfully higher than current forecasts.

The risk is that the stock has already run hard on this thesis, having roughly doubled in 2026. Our previous coverage at stocksdownunder walked through the valuation tension, and today’s announcement does not reset it. The next quarterly, and any mention of the MEL2 main package tender, is the catalyst worth waiting for.