NEXTDC Ltd (NXT) reported solid FY18 results, which saw revenue up +30% to $161.5m and the strong operating leverage saw underlying EBITDA increase by +28% to $62.6, both figures surpassing guidance ranges of $152 – 158m and $58 – 62m respectively.

We maintain our recommendation based upon:
1. NXT’s EBITDA growth – underscoring the Company’s effective operating leverage;
2. potential for further capacity expansion (new and existing facilities);
3. strong corporate cost performance and upcoming near term benefits of scale;
4. quality assets and locations;
5. positive outlook for industry growth; and
6. solid balance sheet

For FY19, management has announced the development of three new sites – P2, S3, M3 (following the opening B2 and S2 centres in FY18), and guides revenue between a range of $183 – 188m, Underlying EBITDA between $83 – 87m and CAPEX between $430 – 470m.

We have updated our earnings estimates and peer group trading multiples. For FY19E, we are largely in line with management’s guidance. Our equal-weighted and blended (DCF, PE-multiple, EV/EBITDA) valuation arrives at $7.80 per share.