All Systems Go at SYD1; Upgrade to Buy

Research evidence excerpt

All Systems Go at SYD1; Upgrade to Buy

DC 10.1x) and DGT could sell down other remaining

US assets KCM1/DAL1 (~US$250m combined value) to reduce leverage further.

Positive catalysts. Apart from potential contract wins, another catalyst is a special dividend. Figure 2 - DGT Contracted Capacity (MW) -

As per the company announcement, management is reviewing capital management initiatives Current vs previous forecasts

99.0post the divestment of CHI1 and LAX assets. We estimate DGT could pay up to 50cps in special 120100

76.9dividends in FY27, whilst still remaining in its target gearing range. However, DGT is also looking 80 62.7 60.8 66.0

53.4 60 54.8 53.0for greenfield sites, so management may keep some powder dry in the near term.

40 33.0 33.0

Attractive valuation. DGT looks attractive relative to global stabilised data centre comps, 200

trading on 16.2x FY28 EBITDA (vs DLR 21.5x, EQIX 22.5x, see next page). The share price is FY25 FY26E Current FY27EPrevious FY28E FY29E

trading at a steep discount to NAV of $4.2 per share, with a dividend yield of 5.8%. The discount .Source: Company data, Jefferies

reflects the risks at SYD1 but as the upgrade program is underway, we expect this gap to close

over time. Figure 3 - DGT's gearing is coming down

significantly in FY27

37%Earnings revisions and PT. Our EBITDA increases 2.4% in FY27E and 3.3% in FY28E, due to 45%40% 41% 30.0x 36% 25.0x 33% 35%

higher billing capacity at SYD1. Our PT increases to $3.00 from $2.80. Upgrade to Buy. 30% 25% 20.0x

25%

20% 15.0x

15% 10.0xFigure 1 - DGT Summary

10%

5.0x

5% A$m FY25 FY26E FY27E FY28E FY29E FY30E

Revenue 105.2 243.4 280.0 318.0 391.5 432.8 0% FY25 FY26E FY27E FY28E FY29E 0.0x

EBITDA 52.9 124.8 118.6 146.6 193.4 220.4 ND/ND+E Net Debt/EBITDA (RHS)