Ann: NSW - Material Customer Contract Wins, page-24

Hey mate. Nice analysis there. I'll add a few thoughts into the convo and see where the discussion goes. I'm by no means an expert on this topic. Many assumptions are made below.

I had a look at NextDC's website. Total Planned IT power for all current and future planned (P2, S3, M3) data centres will be 306MW. I would expect these 3 centres and all existing centres to be fully built out and fully contracted in 10 years time.

Last HY20 financial results shows a recent average of $4.5m Revenue/MW. This was trending up over time until the last half year. I would therefore assume $5m/MW in the future.

Historical NextDC EBITDA/Revenue ratio is around 0.4-0.5. Lets assume there's future efficiences and its 0.5 in future.

So 306MW x $5M/MW x 0.5 = $765m EBITDA/yr (after full build out and utilisation)

Equinix is trading at an EV/EBITDA ratio of around 30 at the moment. NextDC is on a very high multiple as you say. I'll assume with more competition etc, these numbers will drop. Perhaps an EV of 25x EBITDA is reasonable? Long-term (10+yrs) multiples would continue to drop below this number most likely.

Current shares on issue is around 455m (give or take). NextDC will need to raise a lot of money in future as you say. This is the big unknown for me. Maybe for S3, M3, P2 construction and full expansion/fitout of remaining centres could be $3 Billion? It may be much more or less. At a future average equity raising share price of $15 (another estimate), this would be another 200million shares on issue, if equity was raised instead of debt taken.

So thats 655m shares on issue after these equity raisings.

So $765m/yr EBITDA x 25 (EV/EBITDA ratio) = $19.1B market cap

Which at 655m shares is around ~$29/share.

This is without expansion above what's currently planned by NextDC.

These are just ebitda multiple calculations. NextDC is capital intensive and loss making st the moment, but their centres are 20-30yr REIT style assets, so the profits will come in later years.

If you make more conservstive assumptions for all of the above, you could end up around ~$20-$25/share.