With a record order book this ASX small cap is surging higher

Shape Australia Ltd (ASX: SHA) shares are trading higher after the fit-out and construction services company released a strongly positive update to the market.

Records tumbling

The company said in a statement released to the ASX that its project wins had hit a record high of more than $1.16 billion as at the end of April, “significantly exceeding the FY25 full-year result of $981.6 million”.

Shape said it expected revenue to be between $1.175 and $1.225 billion, up 22.8% of FY25 revenue.

Net profit was also expected to surge, with it forecast to come in at $30 to $32 million, up from $21.2 million in FY25.

The company also said it had a strong forward pipeline of about $4.2 billion worth of work, “providing significant visibility into FY27 and beyond”.

Shape said in its statement that its strategy to grow in new sectors was paying off, with revenue from the education sector coming in at 22% of the whole this year, up from 12%, “largely underpinned by our modular operations”.

Data centre revenue had grown from less than 1% in FY25 to more than 10%, “driven by increased market activity in the Data Centre refurbishment market”.

Shape Chief Executive Officer Peter Matrix-Evans said regarding the update:

Shape is again delivering strong performance across key financial and operational metrics in FY26, continuing to drive results for our shareholders. Our resilient business model, with a strong weighting towards shorter-duration projects, combined with our focus on maintaining a shared risk profile with both our supply chain and clients, minimises potential impacts from cost escalation pressures. In addition, our strong and diversified pipeline of more than $4.2 billion enables SHAPE to remain selective, pursuing only the highest-quality opportunities and underpinning our continued growth trajectory into FY27. Through our deliberate sector and capability diversification strategy, SHAPE continues to strengthen its project portfolio while building the foundation for improved margins as we scale.

Shape also increased its headcount by 12% year on year to more than 850 people.

Analysts like what they see

Shaw and Partners’ most recent research note on Shape came with a buy recommendation and suggests there could be share price upside from the current levels of $7.05, up 5% on Tuesday.

The Shaw team said the company had done a good job of diversifying its work streams.

Aided by acquisitions, Shape has diversified its sector exposure into more resilient sectors including healthcare, defence, education, hospitality, and retail, and has expanded into solutions that capture more of the project lifecycle such as design & build and aftercare/facilities maintenance. This strategic shift contributed to its impressive financial results.

Shaw said Shape had a market-leading position in high margin fit out and a strong pipeline and net cash position.

The Shaw team in March upgraded their price target on Shape shares from $7.40 to $8.25 per share.

Shape also pays a fully-franked dividend yield of 3.94%.

The post With a record order book this ASX small cap is surging higher appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Shape Australia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.