From penny stock to $1bn market cap: An overlooked data centre success story

SKS Technologies (ASX: SKS) likely sits a layer below what most investors have considered, providing the electrical infrastructure for data centres that cater to the booming demand for AI compute.

Speaking on Success and More Interesting Stuff, CEO Matthew Jinks, who took control of what was then a manufacturing and distribution business in 2012, said the turnaround almost didn’t happen.

“There were a couple of times where we were looking over the edge of the cliff, there's no doubt about that. Sometimes you've just got to stay on the park and keep sticking to what we felt we were good at,” Jinks says.

While SKS’ share price is up around 4,500% in three years, as is often the case with an overnight success, it took a lot longer to reach that point.

The long road to the inflection point

Back in 2012, SKS was losing money and needed urgent capital. The first few years involved making half the workforce redundant to save the other half, rebuilding from scratch, and pursuing a strategy of organic growth.

"We were reinvesting back into the business. We had a plan. We were going to take it towards services and grow that side of the business, and you're effectively sacrificing short-term profits in order for a much longer-term gain, and not every shareholder is patient for that to play out," Jinks says.

The turning point came in 2020, when SKS divested the poor-performing businesses, paid off all debt, and reset the balance sheet around the electrical services operation. But it wasn't until 2023, he says, that the balance sheet was clean enough that an external investor could look at it without finding a reason to walk away.

The $800,000 contract that changed everything

The data centre opportunity had been on Jinks' radar for years before it materialised, but SKS kept getting knocked back by operators who wanted to see proven capability before handing over work.

"We were tendering work and not being successful for quite some time. And then a little opportunity came up for us. It was an $800,000 opportunity, which we jumped all over."

That opportunity was a relatively small electrical fitout at an AirTrunk data centre in Melbourne that SKS delivered well. The next contract was $6 million. The one after that was $30 million. The trajectory from there is now part of the company's pitch to investors.

“[AirTrunk] were using someone else at the time. They probably had the foresight to see that their campuses were getting bigger, they were doing a lot of work concurrently, and probably a good risk mitigation strategy for them,” Jinks says.

“Instead of giving so much work to one particular company, [they assisted] us in gaining capability as well to then help with their future projects. So really thankful for that initial opportunity.”

The data centre spend

Data centres aren’t the only work that SKS does and has enjoyed a steady growth rate in what it terms “traditional revenue”. This includes electrical fitouts for hospitals and corporate projects, and has grown from $83 million in FY23 to $140.3 million in FY26.

That’s nothing to sneeze at, however the data centre work has gone from a standing start and $31 million in FY24 to $207.7 million. Projecting forward, the business is expecting total revenue to grow by around $150 million in FY27 and crack $500 million.

A large part of the value in landing data centre work is how much of the overall spend goes towards the electrical, which Jinks says is around 25-30% of the total capital expenditure. In those traditional corporate jobs, on the other hand, the electrical spend is closer to 10% of capex.

The opportunity is also growing. Australia currently has just over one gigawatt of completed data centre capacity, compared to more than 50 gigawatts in the US. On a per capita basis, the gap is even larger.

"The facilities that we're working on with our customer base, they're only getting bigger. The program timeframes are getting smaller. There's a big race to more and quicker," Jinks says.

"Certainly with what we're looking at, we can see three to five years with what we're doing. I think there’s every chance that's going to be much longer."

The balance sheet that caused investors to hesitate in earlier years is now a genuine strength. SKS generates minimal debt, runs rigorous monthly progress billing across all of its jobs, and has funded the extraordinary growth of recent years without going back to market for capital.

"Cash is king, as my dad used to say," Jinks says. "It's just so important."

For investors who have been watching from the sidelines, the question is whether the share price has kept pace with a business that has gone from near-collapse to the heart of Australia's AI infrastructure build-out in less than a decade.