Key Highlights

  • Smartgroup (ASX:SIQ) rose 4.61% to AUD 10.66, with shares up 29.37% over one year.
  • Southern Cross Electrical Engineering (ASX:SXE) gained 2.00% to AUD 4.09 and climbed 116.98% over one year.
  • Smartgroup reported Q1 2026 average monthly Revenue growth of 8% year on year.
  • SXE delivered H1 FY26 underlying EBITDA growth of 30.8% and expanded its order book to AUD 710 million.
  • Both companies highlighted ongoing strategic Investment, operational expansion, and sector Diversification initiatives.

Smartgroup (ASX:SIQ) and Southern Cross Electrical Engineering (ASX:SXE) stood out among ASX-listed industrial stocks on 8 May as investors continued rewarding companies delivering operational growth, recurring Demand exposure, and expanding market positioning. The two stocks have significantly outperformed broader market benchmarks over the past year, reflecting strong momentum across segments tied to infrastructure, fleet management, electrification, and industrial services.

Smartgroup shares climbed 4.61% to AUD 10.66, extending their one-year gain to 29.37%, while Southern Cross Electrical Engineering added 2.00% to AUD 4.09, taking its 12-month rise to almost 117%.

The gains come as investors increasingly focus on industrial businesses with Recurring Revenue streams, infrastructure exposure, scalable operating models, and long-term structural demand drivers.

Smartgroup Benefits From Novated Leasing Momentum

Smartgroup’s latest Business update highlighted continued momentum across its novated leasing and employee services operations during the first quarter of 2026.

The company reported an 8% increase in average monthly revenue compared with the prior corresponding period. Average monthly novated leasing settlements increased 7%, while average monthly novated leasing orders excluding refinanced vehicles surged 22%.

The figures suggest continued consumer and employer demand for salary packaging and vehicle leasing solutions despite broader economic uncertainty and softer household spending conditions.

Management also highlighted growing demand linked to electric vehicles. During Q1 2026, approximately 80% of battery electric vehicle orders were below AUD 75,000, while 88% were below AUD 80,000.

The company stated that government support for the Electric Car Discount Policy continues supporting customer adoption of electric vehicles, particularly among nurses, teachers, and not-for-profit workers seeking lower transport costs.

Smartgroup’s exposure to EV adoption trends may remain strategically important as novated leasing continues evolving alongside Australia’s electrification transition.

Digital Strategy and AI Remain Areas of Focus for SIQ

Beyond leasing growth, Smartgroup also continued progressing several technology-focused initiatives during the quarter.

Management confirmed the launch of a new mobile application designed to improve customer engagement and streamline user experience. The company also continued applying automation and AI capabilities to improve operational efficiency and service delivery.

The focus on digital infrastructure reflects broader competitive trends across financial services, fleet management, and salary packaging sectors, where technology platforms increasingly influence customer retention and operational scalability.

Smartgroup also highlighted strong client retention outcomes during the quarter while securing additional customers, supporting the company’s recurring revenue profile.

Management stated that the company remains focused on strengthening its digital platforms and competing effectively within a rapidly evolving market environment.

For investors, Smartgroup’s combination of recurring income, growing EV exposure, and digital operational initiatives continues reinforcing its positioning within the industrial and financial services landscape.

SXE Continues Infrastructure and Services Expansion

Southern Cross Electrical Engineering, meanwhile, continued benefiting from infrastructure-related demand and operational diversification.

The company reported H1 FY26 underlying EBITDA of AUD 35.4 million, representing growth of 30.8% compared with the prior corresponding period. Underlying EBIT increased 25.5% to AUD 29.1 million.

Although the company recorded a statutory net loss of AUD 12.8 million due largely to legal dispute costs linked to the WestConnex arbitration settlement, investors appeared focused on the underlying operational performance and expanding order book.

SXE’s order book increased 6% year on year to AUD 710 million, highlighting continued project demand across infrastructure and industrial markets.

Infrastructure remained the company’s largest revenue contributor, accounting for approximately 47.8% of total revenue during the period.

The company also reported cash holdings of AUD 58.8 million following payment of the WestConnex settlement before the end of December 2025.

Acquisition Strategy Continues Supporting SXE Growth

A major component of SXE’s long-term expansion strategy has been its acquisition program.

Since listing on the ASX in 2007, the company has progressively expanded through a series of acquisitions including Datatel, Heyday, Trivantage Group, MDE Group, and Force Fire.

Management stated that revenues have increased materially over the past nine years, rising from approximately AUD 200 million in FY17 to around AUD 800 million in FY25.

The acquisition of Force Fire was fully consolidated during the first half of FY26, contributing to broader service diversification across electrical, communications, fire protection, and industrial solutions.

SXE also remains geographically diversified, with approximately 85% of its order book located along Australia’s East Coast.

The company’s revenue mix continues broadening beyond electrical services, with adjacent disciplines contributing approximately 40% of H1 FY26 revenues.

This diversification strategy may help reduce dependence on any single Market Segment while supporting cross-sector infrastructure exposure.

Dividend and Shareholder Return Profiles Remain Relevant

Both companies continue maintaining shareholder return initiatives that may remain attractive to income-focused investors.

SXE declared a fully franked Interim Dividend of 2.5 cents per share despite the reported statutory loss associated with the WestConnex settlement.

Smartgroup also continues operating as a cash-generative business with recurring revenue characteristics linked to salary packaging and leasing operations.

In the current market environment, industrial companies capable of balancing growth investment with shareholder returns continue attracting investor attention, particularly where operational visibility and recurring demand remain relatively stable.

Industrial Sector Continues Attracting Investor Attention

The strong performance of both SIQ and SXE also reflects broader investor interest in industrial businesses tied to long-term structural themes.

For Smartgroup, EV adoption, salary packaging demand, and digital platform expansion continue shaping growth expectations. For SXE, infrastructure spending, energy transition projects, electrical services demand, and industrial construction activity remain important growth drivers.

At the same time, industrial businesses continue facing challenges linked to labour costs, project execution risk, inflationary pressures, and broader economic uncertainty.

Companies capable of maintaining operational discipline while scaling recurring revenue or infrastructure exposure may therefore continue attracting premium investor attention within the sector.

About the Companies

Smartgroup (ASX:SIQ) is an Australian provider of employee services, salary packaging, novated leasing, and fleet management solutions. The company services corporate, government, and not-for-profit sectors across Australia.

Southern Cross Electrical Engineering (ASX:SXE) is an Australian engineering and infrastructure services company providing electrical, communications, fire protection, and industrial services across infrastructure, commercial, and resources sectors.

Investment Risks and Challenges

Smartgroup remains exposed to risks linked to consumer demand, policy changes affecting EV incentives, competitive pressures, and economic conditions influencing salary packaging activity. Slower EV adoption or weaker employment conditions could affect leasing growth over time.

SXE faces risks associated with project execution, labour availability, infrastructure spending cycles, and legal or contract-related disputes. The WestConnex arbitration settlement highlighted the financial impact major disputes can have on Earnings outcomes.

From a bullish perspective, both companies continue demonstrating operational growth, diversification, and strategic positioning within expanding sectors. From a bearish perspective, softer economic conditions, cost Inflation, or project-related disruptions could continue influencing future earnings momentum.