NXT has been talked about a bit on Sky News/Your Money Your Call...

NXT has been talked about a bit on Sky News/Your Money Your Call lately.

I wanted to give my latest thinking.

I think this next 6 months should see atleast a continuation of the previous 6 months in terms of new revenue. The reason being is the main revenue generators of Syd/Melb still have capacity to sell and nothing has changed in the market.

Revenue growth as a percentage will obviously continue to fall as we grow off a bigger base, so it's all about the raw revenue. We will continue to see more of this revenue make it to the bottom line. That operating leverage will see the profit start to crank up.

Obviously something to keep in mind is that they are still on a strong growth path, meaning a large capital spend over the next 24 months too get the new data centres built and fitted out. Meaning interest costs will increase.

But really happy with their debt levels/financial management

I think we may just get away with it in the FY181H too, after that will be an interesting period.

In the 2 Major Markets:
I am liking Melbourne, it has historically performed strongly and I believe it will have far less supply. Equinix did start up there, I have not confirmed Airtrunk presence yet.

Sydney is a different story, demand will be very strong but I think there will be a lot more supply. We have:
* Equinix SY4 to fill up.
* Global Switch Sydney East - Have walked past and its looking pretty close to getting finished (it will be massive)
* Airtrunk's Sydney DataCentre - Have confirmed construction is well underway via Nearmap.
* Digital Realty - Out near Airtrunk, is not long ago built. Another large DC, I have not confirmed its Utilisation.

I got very overweight after the SP got into the low $3's. So have cut this back to 25% as the SP trended upto $4. Very positive about it long term, short term I do worry about the overall market and the usual April/May Selloff. I think we are still looking at about 4-5 years to see it really hit its strides.