NEXTDC Limited (ASX: NXT) (“NEXTDC” or “the Company”) is happy to inform that since June 2018, the total planned capacity for its Sydney S2 data center has increased its commitments that were made in the contracts by 47%.
The development of the S2 data center is under progress. It is on track and is expected to open in the first half of the FY19. The critical infrastructure is already built out. It is expected to proceed for at least the next 2 years. The increase in the revenue for the new contracted commitments will be reflected during FY20. It is expected that the full run rate impact will be seen in FY2021.
In the early phase of S2’s construction, the initial planned capacity of the site was only 6MW (phase 1). Based on the FY18 results, an announcement was made for an additional 8MW of new capacity to meet the demand expectations at the time (phase 2). Based on the recent developments in the Sydney markets, NEXTDC is now introducing an additional 8MW (phase 3). This has resulted in the increase by now 22MW of the 30MW total planned capacity. The current capacity is under design and development. The company also highlighted that there will be no deviation in the existing FY2019 capital expenditure guidance report (between $430-$470m). This is because the additional capital expenditure will form part of the additional capacity which needs to be delivered in FY2020. Based on the new contracted commitments at S2, the CEO of the company, Mr. Craig Scroggie stated that based on the FY18 results, the company was hopeful that its sales pipeline was very strong. He also states that the nature of the sales cycle is of a long run so the timing of large sales to the hyperscale cloud market will be unpredictable.
There is a continuous increase in the demand for the data center services. S2 continues to accelerate and it has exceeded above the expectations especially in the Sydney market. Further, there is a requirement of discipline and patience in terms of establishing a link between the hyperscale capacity planning, site development, infrastructure deployment and revenue recognition for very large hyperscale developments. The above forms a part of the digital infrastructure business model of NEXTDC which is making continuous efforts to build long-term value through contracted capacity as well as the tangible asset support.
An Overview of S2
Amongst the Tier IV data center, S2 is planned to be the third-Tier IV data center that is constructed in the Australian market and the first-Tier IV data center in Sydney. Besides, S2 is also on the way to undertake the Tier IV GOLD operational sustainability certification. S2 will also provide the next generation of biometric security technology whose security systems is supported by 24/7 security with having technical capabilities. Along with M2 and B2, S2 is working continuously and also developing methodologies in order to build the second generation of development.
There was an increase in the share price by 2.524%. The market price of the share was A$6.5 with the market capitalization of A$2.18 billion and PE ratio 281.78x.
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkinemedia.com and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.