CS has already stated sales will be lumpy several times. They...

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Smurph

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08/10/19

21:24

Post #: 40782074
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Originally posted by zsan ↑

Umm the annual results that showed a huge loss and dismal sales? Exerpt from previous post below:

Losses are acceptable if we are in the first 3 years of listing. Company has reached a different stage of growth. Incurring losses at this stage is actually a reflection of poor management.

Being heavy in growth means spending more on Capex which will not reflect in the profit & loss. If I receive $50 revenue and spent $100( $80 CAPEX and $20 OPEX), I will get $30 profit. The fact that we are having losses means OPEX is too high. Management is spending too much or/and have no clue how to reign their expenses in.

Next part to consider is Sales. I've extracted a Morgan's analysis below which sums things up pretty well.

"Our primary focus is on MW’s contracted by NXT. Over the course of FY19 NXTcontracted 12.2MW which was up 38% on 8.9MW contracted in FY18. We estimate thatNXT contracted 10.3MW in 1H19 and
1.9MW in 2H1
9
. 2H19 was below our expectationsbut FY19 was still a record contracting year for NXT. Importantly MW’s contracted willprogressively convert to MW billing which underpins strong revenue growth for the nexttwo years. NXT has built 58.4MW of capacity and contracted 52.5MW or 90% of this.Capacity planned from Generation 1-3 Data Centres totals 306MW. Assuming 95%utilization is the fill target then NXT still needs to contract around 240MW. Assuming MW’scontracted in FY19 hold steady in to perpetuity, which clearly won’t happen, then
it willtake 19 years to fill the facilities
. We estimate that 93% of MW’s contracted in FY19 werein Sydney. This market is strong but the other regions need to start lifting to accelerateNXT’s fill rate. NXT noted increased Cloud interest in Melbourne and we think that Perthis a contender to positively surprise given two submarine cables went live there last year. "

Basically the sales team worked for 1/2 the year and sat on their hands for the next 1/2. This is being generous. If the sales have been working hard the 1.9MW is a reflection of the new trend, it will take more than 19 years. Company does not have a design/ engineering issue. It has a management and sales issue. So what's positive about this result that warrants reward via incentives? The rate cash is being burned, expect a capital raise in the next 3 months.

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CS has already stated sales will be lumpy several times. They did increase contracted utilisation by 31% for fy19. Whether it was 1h or 2h is insignificant. I would be happy with another 31% sales increase this financial year. Gltah

NXT Price at posting: $6.32 Sentiment: Buy Disclosure: Held
1 Upvote

0 Great analysis

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