Data centres in space? ... what‘s the risk of SpaceX‘s plans for Australian data centre operators?

Research evidence excerpt

Data centres in space? ... what‘s the risk of SpaceX‘s plans for Australian data centre operators?

IdeaMValuation Methodology and Risks

Infratil Ltd. (IFT.NZ)

Base case SOTP - NZ$16.60/share.

IFT is an investment company and only consolidates some (but not all) of its investments in

its reported financials. We focus on the two largest assets, which make up 65-70% of total IFT

value:

n CDC: DCF value NZ$12.74/share (WACC 8.1%, TGR 3%).

n OneNZ: NZ$4.49/share (7x FY27E EV/EBITDA, in line with A&NZ listed telco peers).

We include smaller investments at book value and adjust for group net debt and share count.

Risks to Upside

n Data center assets outperforming earnings expectations

n Investment of additional capital into new attractive assets

n Lower interest rates, driving a re-rating of infrastructure assets

Risks to Downside

n Data center assets are de-rated, miss earnings, or experience constructions delays

n Earnings and value leakage from other assets, detracting from the positive DC story

n Poor investor reception for M&A undertaken

Macquarie Technology Group Limited (MAQ.AX)

We derive a fundamental valuation range of A$81-83.3/share based on two methodologies

and set the approximate midpoint of A$82/share as our base case and price target:

n DCF = A$83.3/share: WACC 9% (vs. peer NXT at 8%) + TGR 3.0%

n SoTP = A$81/share: Target 5x applied to Enterprise Telecoms FY27E EBITDA, 30x to

data centres, and 15x to cloud services & government.

n Higher new customer + subscriber growth

n Rising EBITDA margins ahead of expectations

n Industry consolidation + higher strategic value for MAQ

n Faster deleveraging + earlier commencement of regular dividend

n Disappointing new customer + subscriber growth

n Intense competition. weighing on ARPUs

n EBITDA margins below expectations