Shares in Digico Infrastructure REIT (ASX: DGT) are trading more than 16% higher after the data centre operator announced new customer wins and said its earnings would be as much as a quarter up on last year's result.
The $1.5 billion company told the ASX in an announcement on Friday morning that it had signed new business "from a combination of Hyperscale, Neocloud, Enterprise and Government customers".
The new contracts would increase Digico's Australian contracted IT capacity to 41MW by June 2026, more than 57% higher than the previous target of 26MW, which was only released in August.
These new customer wins are primarily at the SYD1 site, however they also include new signings at our Brisbane and Adelaide sites. Based on strong market demand for larger and denser deployments, Digico is accelerating the expansion of SYD1 and utilisation of its 120MVA of allocated power. DGT has capitalised on the flexibility of the SYD1 design to reshape and materially expand the 9MW project, delivering additional high-density capacity to serve these customers by mid-2026.
Earnings guidance positive
The company provided specific financial guidance for this financial year for the first time, saying underlying EBITDA was now expected to be in the range of $120-$125 million, up from $99 million for FY25.
The revenue from the new contract wins was expected to phase in over the second half of the financial year, Digico said.
The company also said it expected to pay a 12-cent dividend in total over FY26.
Digico Chief Executive Chris Maher said demand in the sector remained very strong.
As we noted at our FY25 results, the Australian pipeline, customer demand and scale of deployments has continued to track ahead of expectations at the time of the IPO (initial public offer) in December 2024. DigiCo is uniquely positioned to meet surging demand for high-density AI infrastructure – where performance, latency and connectivity are critical. As a result, we are targeting accelerated delivery of the full 88MW SYD1 project earlier than expected, and have reshaped our FY26 works program to deliver additional capacity sooner and capture this growth.
Mr Maher said there were strong demand signals over the medium term.
Sector to remain strong overall
Broker E&P Capital recently put out a research note on the Australian data centre sector, and had a bullish price target of $3.61 on Digico shares, compared with the current price of $3.18, up 16.5% on Friday.
The broker was generally positive on the sector, with its favoured pick, Macquarie Technology Group Ltd (ASX: MAQ), which E&P analysts have assigned a valuation of $112 against the current share price of $67.64.
We would regard the conclusions of this report as generally bullish for all companies, with continually large growth rates and emerging deeper supply constraints.
