Firstly, NEXTDC has a very high level of Debt. Debt/Equity ratio is around 58% (As per the latest annual report). Though all of the debt is hedged (at a fixed rate), the number still is still too high for my comfort especially in the coming times of high inflation. Growth stock SPs may suffer immensely during times of high inflation.
Secondly, NEXT DC is planning to break even next year (EBITA guidance of 160-165 mln) from about 135 mln (FY 21). Capacity utilization is already at 79%. To achieve breakeven, they will have to have at least 100% capacity utlisation and add new capacities before FY 22. I am unsure if that's gonna be possible.
And lastly, my trust in the NEXTDC CEO is quite low given on one side he says FY 2021 will be like nothing we've ever seen before and then goes ahead and sells a chunk of his stocks tanking the trust and the SP.
The data centre space is primed to grow exponentially in future and NEXTDC may be able to capitalize on the boom. For me its a wait and watch.
Anything mentioned above is not financial advice.
GLTAH
DYOR.
What's in the News, page-1168
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