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Posted: 2024-12-16 07:00:48

Morningstar analyst Roy van Keulen caught investors’ attention when he sent a note to clients in early December, before the company’s float, in which he argued the new data centre landlord’s stock was worth about $3.40.

On Monday, Keulen said DigiCo will provide investors with a “relatively speculative” exposure to growth in AI-driven data centres as most of its assets were either “turnaround stories or development projects”.

“We also believe DigiCo’s assets have been acquired near a likely peak in the highly cyclical data centre sector,” he said. “Despite the company riding a hot trend, in the long-term, we view data centres as no-moat businesses, as barriers to supply are relatively low.”

Di Pilla said DigiCo has high-quality assets, its financial metrics are compelling, and its growth outlook remains strong. “We’re confident that in the new year, once we get through this year-end trading period where volumes are probably a bit lower, it’ll come back strongly,” he said.

HMC wrangled two sizeable property deals within months of each other this year to seed the new company and support its underlying infrastructure and growth prospects.

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It purchased Global Switch Australia in a $1.9 billion deal in October, then tied up iseek in a $400 million acquisition. Di Pilla said the Global Switch assets in Sydney are a “key part of the value story” that will unlock future growth for the new company.

Angus Aitken, from boutique investment firm Aitken Mount Capital Partners, attributed DigiCo’s slump to “instant gratification” investors who “thought they were going to make 30 per cent day one” and are now selling.

“The sellers know zero more than you; don’t second guess yourself just because the stock prices are down. If you buy stock and sit on them for the next few years in both names [HMC and DigiCo], I am pretty sure you are going to make good money,” Aitken said.

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