In Brief: SKS Technologies, Banks & QPM Energy

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This week's InBrief tackles big themes, data centre beneficiary SKS, those pesky funds buying banks, and cashing in on peak electricity demand.

-SKS Technologies in the slipstream of cloud and AI demand for data centres
-Australia's banks have become the stocks de jour for foreigner investors
-Gas-fired peaking power plant boosts outlook for QPM Energy

By Danielle Ecuyer

This week’s quote comes from Macquarie:

Jesse Livermore famously said, “Markets are never wrong, only opinions are”. Maybe the market wasn’t crazy to re-rate stocks. Maybe it’s how we thought about PEs that was wrong.

SKS Technologies transitions to the 21-Century GenAI megatrend

With a forty-year track record, SKS Technologies Group ((SKS)), with over a $200m market capitalisation, rotated into Wilsons’ orbit this week, with the broker initiating coverage on the stock.

SKS offers technology infrastructure solutions across Australia, including audio-visual, electrical, communications, and security systems across a suite of sectors from commercial, retail, healthcare, education, defence, government, and data centres.

The latter is the central growth pillar for the group, with Wilsons restating the upside growth potential for the sector in Australia. Notably, the analyst states, “data centre demand was non-linear before GenAI demand, and it will be equally (possibly more) non-linear after factoring in GenAI demand”.

SKS’ data centre and technology segment has accelerated to over 60% of the group’s pipeline of work in 1H25 from low single digits, its importance has expanded tenfold to $270m in May 2025 from $29m in May 2023.

The pipeline was $335m in February, but SKS announced a $100m data centre contract. The numbers suggests another circa $35m was added to the group’s pipeline.

More importantly, the pipeline is translating into work-in-hand, which has grown to $220m in May 2025 from $26m in 2H21 and from $174m in 1H25.

Breaking down the sectors, data centre and technologies now sits at 55% of the pipeline and 72% of work-in-hand, corporate at 14% and 8% respectively, and government and defence at 10% and 7% respectively.

Wilsons believes the four-decade depth of experience positions the company to “lean into” the opportunity of the new megatrend of cloud and GenAI, with its Victorian presence highlighted due to the demand and development of data centres in that state, including good relationships with NextDC ((NXT)), Stack Infrastructure, and AirTrunk. End customers like hyperscalers Amazon and Microsoft are also well known to the group.

“SKS successfully delivered AirTrunk’s MEL01 hyperscale data centre infrastructure, encompassing the full suite of critical systems. The scope included high-voltage installations, transformers, backup generators, static bypass units (SBUs), uninterruptible power supplies (UPSs), and fully integrated data rack solutions.”

An Overweight rating and $2.36 target price are underpinned by forecast FY25 revenue growth of 91% to $260m, followed by 15% growth in FY26. The valuation, currently ascribed around 10 times EV/EBITDA, is at the top end of its trading range but viewed as justified.

Stockbroker Morgans has an Add rating with a $2.30 target price.

Just who owns Australia’s banks?

While CommBank ((CBA)) has been the focus of much debate and teeth-gnashing over the relentless rise in share price, Jarden’s latest dive into ownership of banks shines a light on who exactly has been pushing the “buy” button.

CommBank’s change in share registry is most notable, with institutional ownership in the seven quarters since September 2023 having risen to 54% from 48%. The rise has been emphasised due to “inelasticity”, in other words: demand is not weakening as the price rises.

The latest statistics on bank ownership reveal domestic institutions prefer National Australia Bank ((NAB)) and Westpac ((WBC)) over CommBank and ANZ Bank ((ANZ)), but retail investors have different ideas. They have been selling on higher share prices.

Offshore investors have been net buyers of the banks, and can thus be held responsible for the firm support of share prices, in stark contrast to shorting the banks for those readers who recall the widow maker trade between 2015 and 2017.

In the June quarter, offshore ownership of banks rose between 10 and 80bps, with CommBank most preferred, up 77bps on the previous quarter and 172bps on a year earlier to a record high of 25.5%.

Jarden suggests anecdotal feedback indicates an ongoing rise in offshore support for Australia’s largest banks and number one index weight, underpinned by further non-fundamental or passive flows.

ANZ has the highest offshore ownership at 31.3%.

In contrast, retail ownership continued to decline for a sixth consecutive quarter for all the major banks except ANZ. CommBank’s retail ownership slipped -74bps, followed by NAB at -70bps and Westpac down -50bps, with new retail ownership lows at 46.6%, 38.9%, and 45.4% respectively.

Jarden believes the trend reflects growth in ownership by super funds and ageing demographics, i.e. older shareholders selling.

Short interest declined -10bps on the prior month, with short positions targeting CommBank, NAB, and Westpac down between -4 and -30bps, while ANZ’s rose by 4bps.

Macquarie also pointed to offshore institutions investing over $2.7bn in banks over the June quarter, the highest since March 2020, with CommBank receiving $2.2bn alone. Macquarie believes these flows could reverse as super funds are increasingly turning investment flows outside of Australia.

Jarden has an Overweight (Buy-equivalent) rating on ANZ and $30 target, CommBank is Sell-rated with a $110 target, NAB and Westpac are Underweight-rated with respectively $29 and $30 target prices.

Pivoting to gas production and gas-peaking plants, a growth story for QPM

QPM Energy ((QPM)) owns and operates the Moranbah Gas Project (MGP) in Queensland’s Bowen Basin, producing roughly 30TJ of gas per day from coal mine methane. The company holds 100% ownership of Moranbah, which was acquired in August 2023 to reposition the company as a gas and electricity supplier on the east coast of Australia.

MST Financial research highlights Australia’s growing shoulder and peak electricity demand, and subsequently pricing, due to an increasing reliance on intermittent renewable energy. This opens opportunities for QPM to use gas reserves to redirect otherwise stranded gas into gas-fired power generation.

Like larger utilities AGL Energy ((AGL)), Origin Energy ((ORG)), and APA Group ((APA)), QPM is seeking to partake in the full value chain from gas producer to electricity generator.

The company has started the Isaac Power Project, a 112MW greenfield gas turbine generator co-located in the Moranbah gas field, with upside potential to double via a next-stage expansion.

The analyst highlights the average net-back for gas from power generation has averaged around $22/GJ compared to circa $4.2/GJ for gas sold to industrial users, notably in QPM’s case, to Dyno Nobel ((DNL)).

The dislocation in pricing is attributed to higher pricing and demand for peaking power (when the wind and the sun don’t meet supply capacity), which can be filled by fast-start gas-fired turbines or hydro, and likely increasingly other forms of backup battery storage.

QPM recently raised $10m via a share placement and share purchase plan, but the Isaac Project will require -$200m in capex. Management is currently in discussions for funding possibilities via debt and equity partners.

The company’s production infrastructure in central Queensland is well located near coal seam gas fields and coal mines that need to reduce gas waste from the mines, offering additional gas supply sources.

At current annual gas production levels of around 1011PJ, QPM’s proven and probable reserve life stands at around 40 years, excluding additional supply from third-party mines and gas fields. The analyst highlights management has been optimising its Moranbah field for new production and upgrading infrastructure to lengthen the field life, resulting in a rise to 30TJ/day from around 23TJ/day since September 2024.

MST has a sum-of-the-parts valuation of 16c per share, down from 18c, based on gas and electricity cash flows. The lower valuation is due to additional shares on issue post-raising.

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