Shape Australia Corporation (ASX:SHA): On track for >$1bn revenue this year even in a tough construction market

How has a late 2021 IPO focused on commercial fit outs – as Shape Australia Corporation (ASX:SHA) was and is; managed to find itself <3x higher than its IPO price? It went through one of the toughest times to be in the construction space in living memory, even companies such as Reliance Worldwide (ASX:RWC) with a reputation for riding out tough times were hit. Indeed Shape did cop an impact, but things have gotten better for the company and shares have more than doubled in the last year. Why?

What are the Best ASX stocks to invest in right now?

Check our buy/sell tips

Overview of Shape Australia Corporation

Shape traces its roots back to 1989 when it was a private specialist in commercial fit-outs and interior construction. Over three decades it built a reputation on technically complex, high-quality delivery in occupied environments, mainly offices and commercial spaces. Its growth was steady, conservative and largely organic until it chose to broaden its horizons in the early 2020s.

The company made a pivotal strategic decision in December 2021 to list on the Australian Securities Exchange (ASX) under the ticker SHA via a compliance IPO; rather than raising fresh capital at that time, the listing was about giving existing shareholders liquidity and setting the framework for future expansion and funding.

Management emphasised the potential to build scale beyond its traditional markets and service offerings as a publicly traded entity. Of course, perhaps it also helped that the listing did not see new investors buy shares en-masse only to sell out quickly after one less than ideal result, let alone to have existing shareholders use the IPO just to exit…but enough of the what might have beens.

There was an impact from industry conditions

In the next couple of years after the IPO, however, the company’s progress was relatively muted compared to what many early-stage investors had hoped for. Like many mid-tier construction services firms, SHAPE’s performance through FY22 and into FY23 was buffeted by broader industry headwinds.

Rising materials costs, labour shortages, project delays and supply chain disruptions persisted as after-effects of the pandemic, constraining the pace of project delivery across the sector. Margins in traditional interior fit-out work were under pressure as clients tightened budgets and pushed timelines, and the company’s expanded capabilities — such as modular construction after its acquisition of modular builder KLMSA in 2022 — took time to scale meaningfully at financial-year level.

Despite a solid order pipeline and a strong reputation, SHAPE’s share price and market narrative through much of 2022–23 reflected these structural challenges. Revenue transitions were modest, margins stayed tight, and investors remained tentative as broader industry signals stayed weak. This is not uncommon for construction services firms which tend to lag macro-economic turning points; with projects taking months to contract and deliver, revenue recognition doesn’t instantly react to tendering activity.

At the same time, the relative lack of capital markets visibility in the bespoke fit-out segment meant that incremental operational improvements weren’t always reflected in valuation. That period thus looked, in hindsight, like under-achievement relative to the optimism that often surrounds newly listed small caps.

But things have gotten better

What changed for Shape by 2025 was a clearer execution of its diversification strategy and a very tangible impact on the company’s financials. By the FY25 full year, Shape reported nearly A$957m in revenue, up around 14 % year-on-year, with net profit after tax rising more than 30 % to about A$21m.

This performance was underpinned by broadening demand beyond traditional office fit-outs into sectors such as education, health and defence, stronger regional growth, and higher contributions from modular construction and new service streams. Backlog orders and identified pipelines at that point were notably robust, indicating work well into 2026.

You could argue the construction industry issues are helping the company’s cause – if the building needs a new lease of life but a full ‘knock down and rebuild’ is too costly, why not a simpler renovation? And of course, if you get the job done in a reasonable time frame and to satisfaction, can you really complain? The company boasted an 86% Perfect Delivery Score and a +85 Net Promoter Score.

Operationally, diversification has played a clear role in the turnaround — revenue from non-office sectors (such as Defence) and new capability pillars lifted overall resilience, while shorter-term, modular and refurbishment projects helped margins in a period when large scale, long-duration builds were riskier and cost-intensive.

A fascinating acquisition

In late 2025, Shape bought Arden Group, a national specialist in retail fit-outs and facilities maintenance for about A$25m upfront (with additional earn-outs).

This acquisition, done at a 4x EV/EBITDA multiple, extends SHAPE’s capabilities into multi-site facilities maintenance and retail fit out projects, diversifying both sector exposure and recurring revenue streams as well as increasing margins. Fuel and convenience sub-sectors were specifically named as areas the company would hereafter be exposed to.

Management asserted that the deal would be earnings accretive in the first full year and add around 10–14 % to the company’s EPS, underscoring that diversification — not pure volume growth — is now central to the group’s strategy.

So what next?

Looking ahead from early 2026, Shape’s outlook appears cautiously positive. The company has reported continued strong project wins, a growing backlog, and an expanded pipeline moving into FY26. Specifically it told investors it identified a $4bn pipeline and $492.4m in backlog orders. These figures were adjusted to $3.8bn and $686.1m at its 1H26 results during which $553.3m revenue and a $14m profit were reported (up 16% and 49% respectively).

The mean target price is $7.97, implying 15% upside, and analysts believe the company will surpass the $1bn revenue barrier in FY26. Specifically, they call for $1.16bn revenue and $0.35 EPS (up from $0.25 the year before). In FY27, analysts call for $1.28bn revenue and $0.41 EPS. Shape’s multiples are modest at 19.6x P/E and 1x PEG.

Still, broader construction market conditions in Australia remain structurally challenged. Many parts of building construction were and still are weak, with activity below pre-pandemic levels, productivity issues, planning constraints, and persistent labour shortages.

Supply chain disruptions and elevated material costs, while easing in some categories, continued to pressure pricing and delivery timelines. These fundamentals would appear to constrain growth for general contractors and fit-out specialists alike.

Conclusion