NEXTDC LTD (ASX: NXT)

Establishing the Game Changers: Share price of NEXTDC slipped over 4% on January 15, 2018 with slight weakening of market sentiments on the stock. Recently, NXT scheduled a meeting for its members of the Asia Pacific Data Centre Trust for voting on its resolution to wind up the APDC Trust. The winding up will be done by distributing the net cash proceeds to all the members which will be in the best interest of APDC Securityholders. NEXTDC considered that APDC was no longer fit for the purpose for which it was established. NXT formally rejected the offers in relation to the portfolio of APDC data centres which included $130 million from Sydney S1, $110 million from Melbourne M1 and $60 million from Perth S1. It rejected the offers on the grounds of unjustifiable value which was promoted by the 360 Capital-appointed Board of APDC.

On the other hand, the group received Tier IV Certification of Constructed Facility on its new M2 Melbourne data centre from the Uptime Institute. M2 is the second Australian data centre to receive TCCF after NEXTDC’s B2 Brisbane facility. It also has a significant interest in the new Sydney S2 facility which is currently under developed and has already received orders for more than 5MW of its capacity. It will start recognising its revenue from 1HFY19 and initially these orders are for five years and will extend further according to their terms.
 

Achievements Summary (Source Company Reports)
 
NXT has expanded its network by increasing its S1 capacity from 15MW to 16MW, and M2 planned capacity also increased from 25MW to 40MW. It also established new standards for operational excellence, for instance, M1 and S1 achieved market leading NABERS star efficiency certification and P1 also achieved its highest possible UTI GOLD operational sustainability certification. During FY17, NXT performed well with revenue from its continuing operations up by 33% as compared to prior year, contracted utilisation up by 21% and profit before tax up from $11.1m to $12.8 m. It was well funded with $368.3m of cash and term deposits. Given the long-term potential, we put a “Hold” recommendation on the stock at the current price of $5.72
 
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