I've done some modelling on the business that implies a share...

I've done some modelling on the business that implies a share price range of $0.70 to $0.90.

I have assumptions on the modular construction and corporate costs business but for simplicity - let's say they net out to nil.

Using publicly available information for the collocation facilities:

• Revenue per rack of ~$2,000 per month
• EBITDA margin of 65%

And own assumptions:

• 100% data centre fit out (ie ~950 racks) ramp up of 5 years
• Utilisation rate of 90% for max rack instalment, similar to NextDC
• Capital expenditure of ~$4m for each incremental instalment of racks
• Options exercised to fund capex

I have also assumed a WACC of 12% (which is aligned with the discount rates assigned by brokers for NextDC's upcoming developments) and a terminal multiple of 16x (which is at the low end of EBITDA multiples for global data centre peers).

The above stated share price represents a significant premium to today's prevailing market price.  So the  market is obviously pricing in risk that the business does not execute, which my model doesn't bake in.

However, given managements experience with establishing data centre limited it should be generally safe to say that management can execute again.  Some people also suggest that there's a risk that they cannot achieve sign ups as people are going to AWS and Azure.  It is likely that this point is moot becusse Amazon, Microsoft and potentially other large tech titans require the use of third party collocation providers.  For example, Microsoft is a foundation partner for the recently established AirTrunk data centre in the North West of Sydney.

In five years time once the data centres are completely fitted out and assuming current multiples remain along with a fully diluted shares on issue of 222 million, the share price should be closer to $2.00.  This obviously doesn't include the other growth initiatives that management are targeting, which include:

• A colocation facility in Brisbane
• Other colocation sites across South East Asia