NXT - NEXTDC Limited

[tinhat]

Some interesting reading here on AWS and its potential impact:

http://www.itnews.com.au/News/326103,amazon-in-australia-the-industry-impact.aspx

I've thought a bit about investing in data centres such as NextDC and Data3, Macquarie Telecom but I think the industry is too contestable and that in the long run the only margins that will be defendable are achieved either through economy of scale or servicing market niches (and off the top of my head I can't think of any niches).

I've been involved in setting up one AWS instance (Amazon) and it is amazing how easy and quick it is to deploy a virtual linux machine in their cloud.

To a large degree cloud computing services, such as AWS are delivering a generic product - a virtual machine running either Windows or Linux.

 

[Ves]

I've thought a bit about investing in data centres such as NextDC and Data3, Macquarie Telecom but I think the industry is too contestable

DTL don't own and run data centres, by the way!

 

[tinhat]

DTL don't own and run data centres, by the way!

Oh right, thanks. Who was I thinking of I wonder? Macquarie Telecom, NextDC and the other one! : Sorry to go off topic.

 

[Ves]

Oh right, thanks. Who was I thinking of I wonder? Macquarie Telecom, NextDC and the other one! : Sorry to go off topic.

Possibly ASZ. Also might be interesting to note that NXT changed their ownership structure and now lease their data centres off the demerged listed trust AJD.

 

[McCoy Pauley]

Almost six months on and NXT has basically retraced down to where it was before it announced its good news. May give it a closer look now that it's retraced.

 

[McCoy Pauley]

Half-year report out. Haven't seen the numbers yet, but they must have been impressive. Share price has popped almost 6.5% today.

 

[VSntchr]

Half-year report out. Haven't seen the numbers yet, but they must have been impressive. Share price has popped almost 6.5% today.

Without analysing this one it looks pretty obvious that utilisation rates are still pretty low and the small increase they have provided have given the market hope that when they start to really take off that the bottom line will swell quite nicely. The revenue growth looked pretty good.

 

[galumay]

I dont believe Little Hedge understand the sector sufficiently. Their assumptions about the industry are not consistent with my understanding and knowledge of the sector. Tinhat makes some relevant points about the potential problems for companies in this sector.

 

[Little Hedge]

Thanks Galumay. Whilst there are potential risks from an increase in competition in the DC market we see the market for DC's growing rapidly enough to support NXT and it's competitors without significantly damaging margins. We like that NXT has a head start on Equinix (and Airtrunk) in terms of building out it's footprint in Australia and believe a consolidation is a real possibility (Equinix being the obvious buyer).

 

[nulla nulla]

Someone likes it. Share price flat lining on moderate volumes then a 12% spike in one day followed by a 6.00% spike the following day. Although I think the previous poster may have it wrong as to which company had the head start it would seem that "someone" has rated it a buy or there could be a takeover rumour circulating?

 

[bigdog]

NXT 31/08/2018 8:04:06 AM 4

FY18 Results Announcement

ASX Release 31 August 2018

FY18 Record Results
NEXTDC Limited (ASX: NXT) (“NEXTDC” or “the Company”) today announced its financial results for the
full-year ended 30 June 2018 (“FY18”).

FY18 financial highlights
 Revenue of $161.5 million vs guidance range of $152-158 million (FY17: $123.6 million)
 Underlying EBITDA1,2 of $62.6 million vs guidance range of $58-62 million (FY17: $49.0 million)
 Capital expenditure of $285 million vs underlying guidance range of $307-327 million3 (FY17: $159
million)
 Statutory net profit after tax of $6.6 million (FY17: $23.0 million4)
 Operating cash flow of $33.4 million (FY17: $44.9 million)
 Cash and term deposits of $418 million at 30 June 2018

Subsequent to 30 June 2018, the Company raised $300 million in the form of Notes IV, bringing its pro-forma cash and term deposits balance to $718 million. NEXTDC also continues to have access to senior debt facilities of $300 million, which currently remain undrawn.

Commenting on the FY18 financial results, Mr Scroggie, Chief Executive Officer said:
“We’re very pleased to report today’s results, with the Company achieving FY18 revenue and EBITDA above the top end of its upgraded guidance range. These results demonstrate NEXTDC’s continued strong growth and when combined with pro forma liquidity of more than $1 billion, the Company is extremely well placed to continue taking advantage of exciting growth opportunities.”

Business performance
As at 30 June 2018:
 Contracted utilisation up 28% to 40.2MW (30 June 2017: 31.5MW)
 Number of customers up 26% to 972 (30 June 2017: 772)
 Interconnection5 (cross connects) up 37% to 8,671 (30 June 2016: 6,342)

Commenting on the Company’s sales performance, Mr Scroggie said:
“We continue to experience strong demand for NEXTDC’s premium data centre services, with the Company experiencing not only strong growth in contracted utilisation, but also adding a record number of more than 2,300 interconnections during FY18. Furthermore, with NEXTDC currently in advanced negotiations in relation to further large customer opportunities, we expect to carry this strong momentum into FY19.”

Development activity
 B2 (Brisbane) and M2 (Melbourne) facilities opened for customer access
 S2 (Sydney) construction underway and remains on track to open in 1H19 for customer access with an initial capacity of 6MW and an accelerated development of an additional 8MW of capacity
 P1 (Perth) third data hall opened with development underway on the fourth and final data hall
 Announced three new sites at S3 in Sydney, M3 in Melbourne and P2 in Perth, with design and
development work to commence immediately for P2
 Expanded cloud offerings from anywhere in Australia through Oracle Fast Connect and Google Cloud
Platform via the NEXTDC AXON network, in addition to existing seamless connectivity to Amazon Web
Services, Microsoft ExpressRoute, IBM Cloud and other cloud on-ramps

Setting new industry standards
 B2 and M2 are the first Australian data centres, and the first Asia Pacific colocation data centres, to
achieve Uptime Institute (UTI) Tier IV Certification of Constructed Facility (TCCF), in recognition of their
exceptional fault tolerance
 P1 and S1 both certified global best practice UTI Gold Certification of Operational Sustainability
 In August 2018, B2 also received UTI Tier IV Gold Certification of Operational Sustainability, becoming
the first data centre to achieve the Tier IV Operational Gold rating in the southern hemisphere
 S2 is designed to achieve Tier IV TCCF for its opening in 1H19
 B2, M2 and S2 are designed to achieve an industry-leading NABERS 5-star rating for energy efficiency

Commenting on the Company’s achievement in setting new industry standards, Mr Scroggie said:
“I am incredibly proud of the outstanding milestones achieved by our team in FY18 and NEXTDC continues to raise the bar for the industry. The past twelve months has seen the Company deliver Australia’s first UTI certified Tier IV constructed facilities, deliver the industry’s most efficient NABERS 5-star designed data centres that certify record low PUEs as well as demonstrate operational excellence via UTI Tier III Gold Certification of Operational Sustainability across P1 and S1 and now delivering another benchmark first with UTI Tier IV Gold Certification of Operational Sustainability for B2.”

 

[greggles]

Bottom in for NEXTDC Limited following its share price decline in the wake of their FY18 financial results?

After falling from around $7.50 to a low of $5.78, NXT has consolidated around the $6 mark and appears to be forming a base at current levels. Volume is declining as the selling peters out and buyers move back in.

NXT is up 3.03% to $6.13 so far today.

 

[bigdog]

NEXTDC Limited (ASX: NXT) On-Market Takeover Bid for Asia Pacific Data Centre Group (ASX: AJD)
--- Trading Status PreOpen

Asia Pacific Data Centre Holdings Limited and Asia Pacific Data Centre Trust
NEXTDC Limited (ASX: NXT) On-Market Takeover Bid

Asia Pacific Data Centre Group (ASX: AJD) and NEXTDC Limited (ASX: NXT) have entered into a bid implementation agreement (Bid Implementation Agreement) relating to an, all-cash, on-market takeover bid by NEXTDC Limited (NEXTDC) to acquire all of the securities in AJD which it does not already own (NEXTDC Offer). NEXTDC currently holds an interest in 29.2% of the AJD securities.

The Bidder's Statement, which NEXTDC released via the ASX platform today, will be sent to AJD securityholders in the next 14 days. AJD will then issue its Target's Statement within 14 days.

The offer price under the NEXTDC Offer is $2.00 cash per security (Offer Price).
AJD securityholders will also be entitled to a special distribution of $0.02 per security payable on 14 November 2018, with a record date of 12 October 2018 (Special Distribution). To ensure they receive the Special Distribution, AJD securityholders must be on the AJD register of securityholders on 10 October 2018. Accordingly, AJD securityholders who wish to receive their Special Distribution, should not dispose of their AJD securities until the securities trade "ex" the Special Distribution. It is expected that the AJD securities will trade "ex" the Special Distribution on 11 October 2018.

AJD securityholders will be entitled to the Special Distribution irrespective of the NEXTDC Offer. The NEXTDC Offer will also have no impact on the September quarterly distribution of $0.02 per security, which was declared on 20 September 2018 and is payable on 25 October 2018, with a record date of 28 September 2018.

NEXTDC has stated it will offer to buy on market all securities which it does not already hold at the Offer Price from today until the close of the NEXTDC Offer.

===================================================================
Currently two buyers for AJD 81,656,599 shares at $2.00

 

[bigdog]

SP $6.20 at 10:56 today

 

[bigdog]

ASX announcement today
17/10/2018 9:18:25 AM APDC Group Takeover Bid - Bankwest Default

Share price up!!

 

[bigdog]

ASX Announcement today
12/11/2018 8:27:00 AM Sydney S2 - 14MW Contracted Commitments

ASX Release
12 November 2018
Sydney S2 – 14MW Contracted Commitments

NEXTDC Limited (ASX: NXT) (“NEXTDC” or “the Company”) is pleased to advise that its new Sydney S2
data centre has now increased its contracted commitments by approximately 9MW to more than 14MW (47% of total planned capacity) since 30 June 2018.

The S2 data centre remains under development and on track to open in 1H19, with critical infrastructure
build out expected to continue for at least another two years.

Revenue recognition for the new contracted commitments will ramp up during FY20, with the full run rate impact expected to be recognised in FY21.

S2 capacity
At the start of S2’s construction, the site’s initial planned capacity at opening was only 6MW (phase 1).

At the Company’s FY18 results, an additional 8MW of new capacity was announced to reflect demand
expectations at the time (phase 2).

Given recent positive developments in the Sydney market, NEXTDC will now bring forward an additional
8MW (phase 3). As a result, the current capacity under design and development for S2 is now 22MW of the 30MW total planned capacity. This will not change the Company’s existing FY19 capex guidance (between $430-$470m) as the additional capex will form part of the additional capacity to be delivered in FY20.

Commenting on the new contracted commitments at S2, Mr Craig Scroggie, Chief Executive Officer said:

“We advised the market at the time of FY18 results that the Company’s sales pipeline was very strong and the timing of large sales to the hyperscale cloud market would be unpredictable given the long run nature of the sales cycle. We’re very pleased to have now locked in material MW contracted commitments against these expectations.

The demand for our data centre services continues to accelerate and exceed our expectations, particularly in the Sydney market, yet requires discipline and patience as the nexus between the hyperscale capacity planning, site development, infrastructure deployment and revenue recognition can in practice be 2-3 years for these very large hyperscale developments. This is all part of NEXTDC’s digital infrastructure business model, which continues to build long term value through contracted capacity and tangible asset backing.”

About S2
S2 is planned to be the third Tier IV data centre constructed in the Australian market and the first Tier IV data centre in Sydney. Furthermore, S2 is also scheduled to undergo the Tier IV GOLD operational sustainability certification. NEXTDC has already delivered the first two Tier IV design and construct certified data centres in Australia, being M2 Melbourne and B2 Brisbane, with B2 having already achieved the highly acclaimed Tier IV GOLD operational sustainability certification.

S2 represents the Company’s first hyperscale high-rise data centre. As part of NEXTDC’s ongoing focus on environmental sustainability, the facility will feature independent benchmarking of cooling efficiency with a full year target PUE of 1.29 and a seasonal best target PUE of 1.15, driving new levels of efficiency and sustainability. S2 will also feature our next generation of biometric security technology with those security systems being supported by our 24/7 security and around the clock onsite technical capabilities.

Building on the second generation of development with M2 and B2, S2 reflects NEXTDC Continuous
Development Methodology. In this regard, S2’s highly modular design delivers just in time capacity with over 75% of the critical plant being manufactured and tested off-site, minimising deployment and commissioning times and accelerating productivity.

 

[Paul_Fox]

As someone who works in the IT industry I have been watching NXT closely. I feel they have a lot of potential and are going about everything the right way for further expansion.


As of today they have Brisbane 1 and 2, Melbourne 1 and 2, Canberra 1, Sydney 1 and Perth 1 online and making money. Sydney 2 is due for completion early-mid next year.

They have also announced they are preparing for Sydney 3, Perth 2 and Melbourne 3.


The Sydney 2 facility has so much demand waiting for it they are completing phase 1 and 2 at the same time.

When DCs are built they are usually built in phases based on demand. There is no point maxing out your operational rack space if you have no customers in there (or contracted) yet as you’d be paying costs for things you aren’t turning a profit on yet. While they have the raw floor space already built into the facility, a new phase would consist of the aircon units, battery backups, electrical upgrades, internal cross connect upgrades, potentially even another backup generator. If you buy them before you have enough demand, not only do you incur the capital cost of the goods there is also the ongoing maintenance. This is why they are built in phases.


Perth 2 is right next to the CBD and has just been approved by council for construction. Demand for P2 has already started with the new INDIGO cable to Singapore and as a result they will be installing some pre-fab shipping container DCs for this comms link which will be fully built into and integrated with the new facility when its finished. This just creates more demand for local DC space in Perth which NXT are capitalising on.


Building new data centres costs a lot of money. With that being said they are still turning a profit and re-investing it back into the business. I can only assume that they are wanting to become the next Equinix, starting in Australia and more than likely expanding into Asia then the rest of the world. The INDIGO cable that terminates into P2 and cross connects into Sydney would be a good boost to interconnection should they announce plans for a DC in Singapore.


I am only seeing good things coming out of this company. The management care about their staff and their development (the last 3 years upper management forewent pay rises to pay their staff more). They are also investing in green power in the hopes of offsetting their power usage to be carbon neutral.


Given the current share price of $6.24 today, this might be a bargain price for a growth stock.


Disclaimer: Held

 

[Miner]

As someone who works in the IT industry I have been watching NXT closely. I feel they have a lot of potential and are going about everything the right way for further expansion.


As of today they have Brisbane 1 and 2, Melbourne 1 and 2, Canberra 1, Sydney 1 and Perth 1 online and making money. Sydney 2 is due for completion early-mid next year.

They have also announced they are preparing for Sydney 3, Perth 2 and Melbourne 3.


The Sydney 2 facility has so much demand waiting for it they are completing phase 1 and 2 at the same time.

When DCs are built they are usually built in phases based on demand. There is no point maxing out your operational rack space if you have no customers in there (or contracted) yet as you’d be paying costs for things you aren’t turning a profit on yet. While they have the raw floor space already built into the facility, a new phase would consist of the aircon units, battery backups, electrical upgrades, internal cross connect upgrades, potentially even another backup generator. If you buy them before you have enough demand, not only do you incur the capital cost of the goods there is also the ongoing maintenance. This is why they are built in phases.


Perth 2 is right next to the CBD and has just been approved by council for construction. Demand for P2 has already started with the new INDIGO cable to Singapore and as a result they will be installing some pre-fab shipping container DCs for this comms link which will be fully built into and integrated with the new facility when its finished. This just creates more demand for local DC space in Perth which NXT are capitalising on.


Building new data centres costs a lot of money. With that being said they are still turning a profit and re-investing it back into the business. I can only assume that they are wanting to become the next Equinix, starting in Australia and more than likely expanding into Asia then the rest of the world. The INDIGO cable that terminates into P2 and cross connects into Sydney would be a good boost to interconnection should they announce plans for a DC in Singapore.


I am only seeing good things coming out of this company. The management care about their staff and their development (the last 3 years upper management forewent pay rises to pay their staff more). They are also investing in green power in the hopes of offsetting their power usage to be carbon neutral.


Given the current share price of $6.24 today, this might be a bargain price for a growth stock.


Disclaimer: Held

Hello @Paul_Fox
Great informative positing. I do not hold and have been watching NXT for some time.
I do not know how I should call a stock a bargain price with PE is 280.
My knowledge is shallow and appreciate to know your logics to call $6.24 for NXT is a bargain.
Thanks

 

[bigdog]

Motley Fool reports today

The NEXTDC Ltd (ASX: NXT) share price has zoomed 19% higher since this time last year. Investors have been buying the data centre operator’s shares after it reported yet another year of strong growth and pulled forward capacity expansions in response to increasing demand. Demand has been so strong that NEXTDC has seen customer numbers increase by a compound annual growth rate of 49% and interconnections by a compound annual growth rate of 76% over the last five years. I expect similarly strong growth over the coming years due to the cloud computing boom, potentially making it a good option for investors. Though, given the premium its shares trade at, it is a high risk one.

 

[bigdog]

Motley Fool reports
https://www.fool.com.au/2019/02/22/2-asx-tech-companies-with-massive-growth-potential/

2 ASX tech companies with massive growth potential
Michael Guinery | February 22, 2019

NEXTDC Limited (ASX: NXT)
NEXTDC is a technology company enabling business transformation through innovative data centre outsourcing solutions, connectivity services and infrastructure management software.

The NEXTDC share price has benefitted from the increasing need for data warehousing. As data continues to grow, the need to store that data also increases and therefore the company receives economic tailwinds to its earnings.

NEXTDC is Australia’s largest hyperscale data centre solutions provider and currently has 8 data centres across the country, with 3 more in development. The company operates on a “Build it and they will come” type model, where there are large costs associated in building the centres before it receives a return on investment through contracts with customers.

The issue NEXTDC faces is maintaining utilisation of the data centres, as they’re an expensive fixed cost and need to be generating revenue. Whilst the tailwinds are currently there for more data flowing in if the market gets saturated with centres than they may struggle to charge any sort of premium for service.

NEXTDC currently has a P/E of 271 and is generating earnings per share of 2.2c. It has a market capitalisation of ~$2.4 billion.

I hold