Southern Cross Electrical Engineering Limited (SXE) AI Stock Analysis

• Market Cap: AU$430.99M
• Dividend Yield: 5.02%
• Average Volume (3M): 367.21K
• Price to Earnings (P/E): 15.1
• Beta (1Y): 0.46
• Revenue Growth: 49.23%
• EPS Growth: 41.42%
• Country: AU
• Employees: 1,700
• Sector: Industrials
• Sector Strength: 90
• Industry: Engineering & Construction
• EPS (TTM): 0.06
• Shares Outstanding: 264,409,120
• 10 Day Avg. Volume: 431,683
• 30 Day Avg. Volume: 367,210
• PEG Ratio: 0.54
• Price to Book (P/B): 2.51
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 6.61
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: AU$2.37
• Price Target Upside: 45.37% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

• Rating: 61 Neutral
• Price Target: AU$2.00 ▲(22.70%Upside)

Southern Cross Electrical Engineering Limited's strong financial performance, characterized by robust revenue growth and a solid balance sheet, is a major positive factor. However, the weak technical indicators, including negative momentum signals, pose a risk. The reasonable valuation with a good dividend yield provides some balance, but overall, the stock shows a moderate risk-reward profile.

Positive Factors

Business Diversification

SXE continues its transition away from a resource focused business with diversity across both sector and geography.

Earnings Growth

Expected to contribute $10M EBIT in FY26, growing to $13M in FY27.

Strategic Acquisition

SXE acquires Force Fire Holdings, a fire safety solutions provider in NSW & QLD, complementing its electrical, communications, and security offerings.

Negative Factors

EBITDA Impact

FY25 revenue expected to be offset by costs; no change to SXE’s $53M.

Southern Cross Electrical Engineering Limited Business Overview & Revenue Model

Company Description

Southern Cross Electrical Engineering Limited provides electrical, instrumentation, communication, and maintenance services in Australia. It offers electrical and instrumentation (E&I) construction services, which include installation and commissioning of greenfield and brownfield upgrade projects in metropolitan, remote, and challenging environments. The company also provides fixed plant E&I construction; distribution and transmission line installation; substations, transformer, and switchyard installations; HV, LV control, instrument, and communication cabling and terminations; auditing, rectifications, and completions; constructability reviews; primary and secondary injection protection testing; instrumentation, loop checking, and calibrations; hazardous area installations; instrument air and tubing installation; procurement and logistics management; pre-commissioning, completions, and start-ups; and comprehensive handover documentation services. In addition, it offers E&I services and maintenance, such as brownfields operational support, programed and breakdown maintenance, planned shutdown management, and sustaining capital project development services; and in-house design and construct capability, asset life cycle management, hazardous area auditing and verification, procurement, and inspection and testing services. Further, the company provides communications services, including integration and installation of communications technologies comprising communication equipment, data cabling, and fiber optics. It serves mining, and oil and gas; industrial, utilities, and energy; telecommunications and data centers; commercial developments; and public infrastructure and defense. The company was founded in 1978 and is based in Perth, Australia.

How the Company Makes Money

Southern Cross Electrical Engineering Limited makes money through a diversified revenue model that revolves around providing electrical and instrumentation services to its industrial and infrastructure clients. The company's key revenue streams include project-based contracts for the design, installation, and maintenance of electrical and communication systems. SXE benefits significantly from long-term service agreements and recurring maintenance contracts with major players in the mining and energy sectors. Additionally, strategic partnerships and collaborations with other industry leaders help SXE to bolster its market presence and secure large-scale projects, contributing to its financial performance.

Southern Cross Electrical Engineering Limited Financial Statement Overview

Summary

Southern Cross Electrical Engineering Limited exhibits robust financial health with strong revenue growth, improved profitability, and a solid balance sheet with low leverage. Despite a decline in free cash flow growth, the company's consistent cash generation and strong equity position provide a stable financial foundation in the competitive construction industry.

Income Statement

Southern Cross Electrical Engineering Limited has shown strong revenue growth with a 18.8% increase from 2023 to 2024. Gross profit margin improved to 9.32% in 2024, reflecting better cost management. The net profit margin also increased to 3.97%, indicating improved profitability. While margins are improving, competition in the construction industry may pose challenges for sustaining this growth.

Balance Sheet

The company maintains a healthy balance sheet with a low debt-to-equity ratio of 0.04, indicating minimal leverage. The return on equity improved to 11.47%, showcasing efficient use of equity. The equity ratio of 52.42% demonstrates strong capital structure stability. Overall, the company is well-positioned financially to withstand industry fluctuations.

Cash Flow

The free cash flow growth rate showed a decline of 24.39% from 2023 to 2024, impacting the cash flow score. However, the company maintains a strong operating cash flow to net income ratio of 1.71, indicating good cash generation relative to net income. Despite a decrease in free cash flow, the company continues to manage cash flows effectively.

Breakdown
TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
693.73M	551.87M	464.71M	553.28M	370.21M	415.10M
	Gross Profit
79.91M	82.67M	44.62M	41.94M	24.86M	25.47M
	EBIT
43.82M	35.50M	31.26M	28.75M	14.67M	16.75M
	EBITDA
48.21M	40.89M	39.24M	32.78M	29.89M	21.74M
	Net Income Common Stockholders
28.45M	21.91M	20.09M	15.27M	13.76M	10.87M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
114.80M	84.08M	77.65M	53.08M	51.01M	55.27M
	Total Assets
380.50M	364.76M	318.43M	345.51M	337.24M	261.74M
	Total Debt
7.55M	8.10M	10.42M	10.96M	8.27M	5.97M
	Net Debt
-107.24M	-75.99M	-67.23M	-42.12M	-42.73M	-49.30M
	Total Liabilities
185.26M	173.59M	136.34M	171.22M	166.06M	103.37M
	Stockholders Equity
195.23M	191.16M	182.10M	174.29M	171.17M	158.37M
Cash Flow		Free Cash Flow
73.82M	33.94M	44.89M	26.19M	27.41M	9.52M
	Operating Cash Flow
78.89M	37.56M	48.17M	29.67M	29.28M	10.11M
	Investing Cash Flow
-10.78M	-15.64M	-8.03M	-12.03M	-23.63M	-5.73M
	Financing Cash Flow
-18.30M	-15.50M	-15.57M	-15.56M	-9.92M	-2.36M

Southern Cross Electrical Engineering Limited Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 1.63
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:SXE, the sentiment is Neutral. The current price of 1.63 is below the 20-day moving average (MA) of 1.78, below the 50-day MA of 1.77, and below the 200-day MA of 1.64, indicating a neutral trend. The MACD of -0.04 indicates Positive momentum. The RSI at 39.23 is Neutral, neither overbought nor oversold. The STOCH value of 17.07 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AU:SXE.

Southern Cross Electrical Engineering Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	66 Neutral	$4.52B	12.34	5.41%	3.62%	4.15%	-12.18%
SXE	61 Neutral	AU$430.99M	15.11	15.15%	5.02%	49.23%	41.42%
AUSTF		$149.07M	9.55	19.99%	1.93%	―	―
COLDF		$3.55M	1.25	53.87%	―	―	―
DNE		€2.32B	50.90	3.35%	4.00%	―	―
LYOPF		$269.55M	9.30	36.14%	1.11%	―	―
RCR	42 Neutral	AU$3.22M	―	-14.99%	―	―	60.71%

Southern Cross Electrical Engineering Limited Corporate Events

Southern Cross Electrical Engineering Issues New Performance Rights

Southern Cross Electrical Engineering Limited announced the issuance of 241,671 performance rights under an employee incentive scheme. These securities are unquoted and subject to transfer restrictions until the end of the restriction period, indicating a strategic move to incentivize and retain employees, which could enhance operational performance and stakeholder value.

Director Increases Stake in Southern Cross Electrical Engineering

Southern Cross Electrical Engineering Limited announced a change in the director’s interest, as Karl John Paganin increased his indirect shareholding by acquiring 27,304 ordinary shares through the company’s Dividend Reinvestment Plan. This acquisition, at a price of $1.7233 per share, raises Paganin’s total holdings to 1,909,501 shares, reflecting his continued confidence in the company’s financial performance and future prospects.

Director Increases Stake in Southern Cross Electrical Engineering

Southern Cross Electrical Engineering Limited announced a change in the director’s interest, with Simon John Buchhorn acquiring additional ordinary shares through participation in the company’s Dividend Reinvestment Plan. This change reflects the director’s increased stake in the company, potentially signaling confidence in the company’s future performance and stability, which may positively impact investor sentiment.

Southern Cross Electrical Engineering to Quote New Securities on ASX

Southern Cross Electrical Engineering Limited has announced the application for the quotation of 139,466 fully paid ordinary securities on the Australian Securities Exchange (ASX). This move is part of a dividend or distribution plan, potentially enhancing the company’s financial flexibility and market presence.

Southern Cross Electrical Engineering Updates Dividend Exchange Rate for NZD

Southern Cross Electrical Engineering Limited has updated its previous announcement regarding the foreign exchange rate for dividends paid in NZD to New Zealand-based shareholders. This update confirms the exchange rate for dividends related to the six-month period ending December 31, 2024, with key dates including a record date of March 26, 2025, and a payment date following shortly after.

SCEE Group Completes Acquisition of Force Fire Holdings

Southern Cross Electrical Engineering Limited has completed the acquisition of Force Fire Holdings Pty Ltd, a provider of fire safety solutions in New South Wales and Queensland. This acquisition supports SCEE’s strategy to enhance its service offerings and increase its recurring revenue streams by integrating fire safety solutions, which align with its core electrical and complementary capabilities.

SCEE Expands with Acquisition of Force Fire Holdings

Southern Cross Electrical Engineering Limited (SCEE) announced the acquisition of Force Fire Holdings Pty Ltd, marking another step in its strategic expansion and diversification. This acquisition is expected to enhance SCEE’s capabilities in providing fire safety solutions and strengthen its market position in the commercial, industrial, data centers, education, and retail sectors, aligning with its growth strategy and commitment to delivering shareholder returns.

SCEE Acquires Force Fire Holdings to Expand Fire Safety Solutions

Southern Cross Electrical Engineering Limited (SCEE) has announced its acquisition of Force Fire Holdings, a leading provider of fire safety solutions in New South Wales and Queensland, for up to $53.5 million. This strategic acquisition aligns with SCEE’s goal to enhance its service offerings and increase recurring revenue streams. The acquisition is expected to bolster SCEE’s position in the fire safety sector, a field characterized by non-discretionary demand and regulatory requirements, and offers potential for cross-selling opportunities and geographic expansion. The transaction is anticipated to contribute at least $10 million EBIT in FY26, with Force Fire’s management team remaining in place to drive growth.