Shares of data centre operator Next DC initially opened in the...

Shares of data centre operator Next DC initially opened in the red after delivering its 2023 half year result which saw revenue growth slow, decelerating to just +10% whilst delivering a net loss of $2.8m versus a net profit of$10.2m. The stock ended the day in the green up +2.4% as the market weighed more positive aspects of the result, including the company’s 2023 full year operating earning guidance of $340m to $355m, with underlying operating earnings (EBITDA) in the range of $190m to $198m.

We believe Next DC is still a quality company with strong medium and long-term growth potential stemming from the explosion of data usage, driven by digital platforms and set to exponentially accelerate as a result of advances in cloud computing, blockchain, the Internet of things, mobile 5G, augmented reality and artificial intelligence. The explosion of data is a powerful investment theme that we are firm believers in. All this data created needs to be stored somewhere and data centres are crucial pieces of infrastructure, enabling the secure and reliable storage of data. With adequate balance sheet space to fund projects to expand their data centre capacity – NXT have $1.9 billion in cash and debt facilities available, NXT can play the explosion of data investment theme over the medium term, and we remain BUY rated.