There appears to be a lotof misunderstanding around the capital cycle n this business, the industry and the timing of contract cycles that exists.
You cannot bid or tender for contracts where you previously did not meet the capacity, allocation or infrastructure requirements of the client. NextDC was not in a position to offer a sum of services contract to some of the larger clients when they were seeking to renew contracts due to constraints on their physical infrastructure at hand hence the aggressive leveraging of their existing balance sheet to grow their supply offering.
The capital cycle is actually quite close to the contractual cycle for most clients.
It is a cycle and they are banking on being the most reliable, secure and technologically relevant (cloud) service provider when the contract cycles rolls over, with S2, M2 and P2 all available and options for catering to further need and growth in client demands.
The significant risk is if management cant secure the contracts 12-24 months AFTER the provision of the infrastructure.
NXT Price at posting:
$6.46 Sentiment: Buy Disclosure: Held
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