DXN Analysis

Paid research from RAAS, bit still insightful.

DXN Ltd (ASXXN) is a vertically integrated prefabricated modular data centre business with manufacturing facilities in Perth and its own data centres, SYD01, at Sydney Olympic Park in Sydney and the recently acquired Data Centre 3 in Hobart, Tasmania. The company has reported Q4 cash receipts of $1.765m, up 218.6% on the previous corresponding quarter with strong cost containment evident in this result. Costs, apart from product manufacturing costs which are directly related to sales, were down across the board. Costs for the quarter were $2.58m, bringing total costs for 2H FY20 to $5.98m. Cash receipts for 2H FY20 were $3.9m, lower than our forecast for $5.2m but cash costs were lower than our forecast of $8.3m for 2H FY20. We have incorporated the final quarter result in our FY20 forecasts taking into account the company’s guidance for $5m in revenue but also the lower cost base. This has had the effect of increasing our base case DCF valuation by $0.01/share to $0.09/share fully diluted, implying a forward 12 months EV/Sales multiple of 7.97x.