NextDC's Expansion Plans Are Consistent With Our Expectations; AUD 10.85 Fair Value Estimate Intact

No-moat NextDC announced plans to expand capacity through development of a massive wholesale scale colocation data centre in Western Sydney. The company purchased a site for AUD 124 million to accommodate a data centre with about 300MW of capacity. The capacity of this one proposed facility exceeds NextDC's total capacity built and in the pipeline of 246MW as of first half fiscal 2021. We expect this expansion is underpinned by strong demand from hyperscale cloud providers for additional data storage space over the next decade and additional availability zones.