RBC downgrades Australia's Macquarie Telecom on increased capex

Macquarie Technology

08/09/2022 03:08

** RBC Capital Markets downgrades rating on Macquarie
Telecom Group  MAQ.AX  to "sector perform" from "outperform",   
cuts price target to A$68.00 from A$75.00 
    ** Brokerage cites increased capital expenditure for
Macquarie Data Centre's IC3 Super West and earnings forecast
skewed towards 2H23 as reasons to cut PT and downgrade rating
    ** Expects total capex of A$500 mln ($337.00 mln) to develop
IC3W, with bulk to be spent in FY24-25; estimates borrowing
expanding to about A$620 mln from current A$190 mln 
    ** Says unit Macquarie Data Centre's (MDC) FY23 EBITDA
guidance of between A$31 mln and A$33 mln misses RBC estimates
(https://bit.ly/3KTivCi)
    ** MDC contributed A$27.1 mln EBITDA in fiscal 2022 - 30.7%
of MAQ's total EBITDA of A$88.4 mln (https://bit.ly/3D7h0yG)
    ** Says EBITDA growth in FY23 skewed towards 2H23 due to
investments in Data Centres and Cloud Services unit
    ** Brokerage expects underlying NPAT to rise more than
five-fold by FY25 from FY22's A$4.7 mln, with a sharp jump to
A$20.5 mln seen in FY24
    ** MAQ shares rise as much as 5.3% to A$67.70, marking their
biggest intraday pct jump since May 31
    ** MAQ down 12.2% this year, as of last close, vs a 10.5%
decline in the ASX All Ordinaries index  .AORD  


($1 = 1.4837 Australian dollars)

 (Reporting by Sameer Manekar in Bengaluru)
 ((Sameer.Manekar@thomsonreuters.com; Twitter: https://twitter.com/sameer_manekar))