SGH (ASX:SGH): A $19bn family-owned industrial conglomerate with a strong outlook

15 months ago, the former Seven Group Holdings (ASX:SVW) changed its name to SGH (ASX:SGH). Companies change their names when they want investors to forget about a troubled past and/or to look for a brighter future. It was the latter that was the company’s focus.

Overall in the last 5 years, there has been more good than bad with shares having nearly doubled and it was not as hit by supply chain issues as other construction companies were. Nonetheless, shares have stagnated in the last 12 months – will 2026 be better?

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The evolution and composition of SGH (ASX:SGH)

SGH is essentially the investment vehicle of the Stokes’ family – a family led by Kerry but with his son Ryan being CEO of the company. It was named Seven after the media group that it had a 40% holding in, up until Southern Cross took it over in early 2026. The name ‘Seven Group’ was adopted in 2010 when 7 and WesTrac Holdings merged, the latter company being one of the world’s largest dealers of Caterpillar vehicles.

SGH’s other holdings include a 30% stake in Beach Energy (ASX:BPT), ownership of construction materials business Boral, equipment hire business Coates and lightning & power solutions group Allight. T

Good financial results

The last couple of reporting seasons, the headlines were stolen by Ryan Stokes’ comments about the ‘State of States’ and essentially saying Victoria wasn’t in the best of shape.

But look closely at its results and these were quite solid. Revenue rose modestly by about 1 % to approximately A$10.7bn, while EBIT increased by ~8 % to around A$1.54bn and NPAT grew ~9 % to about A$924m on an underlying basis. Operating cash flow surged nearly 49 %, enabling leverage reduction to below 2x net debt/EBITDA and supporting a fully-franked total dividend of A$0.62 per share, up 17 % on the prior year.

The key event in the last couple of years the company’s acquisition of the balance of Boral that it did not already own and the company timed its run well with Boral seeing margin expansion and improved pricing discipline. WesTrac continued to benefit from mining and resource sector fleet sales and parts revenue, while Coates faced softer demand in some regions but maintained disciplined cost control.

It boasts 19% EBIT CAGR over the last decade.

More growth to come

For FY26, the company guided to ‘high to mid single-digit EBIT growth’. Nothing to snuff at in a difficult environment for industrial companies.

SGH’s strategy for FY26 and beyond is built around structural demand themes across industrial services and energy rather than short-term cyclical spikes. WesTrac, as the largest Caterpillar dealer in WA/NSW/ACT, remains one of SGH’s biggest earnings engines, and management emphasises that services, fleet rebuilds and parts are expected to continue supporting earnings even if capital sales moderate.

SGH has told investors that while major new capital deliveries are expected to moderate, the underlying pipeline — driven by mining fleet replacement and rebuild demand — remains robust and should underpin stable revenues in the period ahead. This curated approach acknowledges that customers are balancing fleet expansion with operating cost discipline, but high utilisation and the age of existing fleets support ongoing rebuild and parts demand, which typically earns higher margins than upfront equipment sales

On the residential and infrastructure side, SGH’s investor presentations explicitly highlight the need for about 240,000 new homes to be built every year in Australia to hit government housing-supply targets, underpinning long-term demand for construction materials, equipment hire and onsite services.

That level of activity, alongside a projected $1.7–$1.8 trillion pipeline in construction and infrastructure investment over the next seven years, informs SGH’s confidence in Boral and Coates capturing expanded volumes in concrete, asphalt, heavy materials, and rental equipment demand. While the timing of that recovery in residential building is uncertain and softer in the short term, SGH positions itself to benefit if broader construction activity strengthens.

In energy markets, SGH’s outlook leans on the thesis that domestic gas demand and LNG export markets are tightening. SGH’s presentations cite forecasts suggesting East Coast gas supply could struggle to meet both domestic and contracted LNG export demand in the second half of the decade, a backdrop that could support higher realised gas prices and incentivise investment in new capacity.

This is relevant to SGH’s minority ownership in Beach and its own upstream assets, including the Crux LNG project and Longtom gas field. If realised prices remain elevated or structural constraints bite, SGH’s energy exposure could deliver improved cash flow in the medium term

Conclusion

SGH has achieved impressive growth in the last couple of years, thriving when so many industry peers have barely been surviving. The risks with this one is potential for industrial accidents and a continued downturn in the sector. We also note that the company has net debt of over $4.6bn and will need to reduce it. To be fair, the company is doing this in refinancing certain facilities so there are no maturities until FY29.

Analysts have a mean target price of $51.44, over 10% ahead of the current price. Its estimates put the company at a P/E of 19.3x for FY26 and a PEG of just 0.6x.

SGH is one of the top companies to at least watch on the ASX because of its high exposure to industrials. It is impressive for how it has performed at a difficult time for the industry. We think there’s every reason to expect it to continue to perform.