Page 2 - SMA changes Specialist Growth

Purchased NEXTDC (NXT) and Breville Group (BRG)

NEXTDC (NXT) is a leading independent data centre operator with an Australia wide network of high-
quality facili�es in the Australian market. NXT both develops and operates their centres, providing
outsourced data centre infrastructure and cloud connec�vity for small to large businesses. NXT
operates Australia’s largest IT partner program with over 750 clouds, networks, and IT service
providers. NXT’s Data-Centre-as-a- Service (DCaaS) business func�on allows business to host their own
IT infrastructure within a secure, high-density data centre with redundant power supply and support
services. The ONEDC cloud pla�orm enables customers to manage their data centre assets held within
NXT centres, which is offered as a monthly subscrip�on service. NXT also provides professional
services through their Remote Hands business, providing technical IT support to customers across the
full infrastructure planning lifecycle.

Our view:
- Beneficiary of the structural tailwinds including the large growth in data crea�on and the
transi�on to cloud compu�ng
- Australian market is less penetrated by global data centre operators, placing NXT in an
atrac�ve posi�on to con�nue to grow in the Australian market, even without offshore
expansion
- Onshore data centres a requirement for many Australian businesses due to security concerns
- Valua�on looks reasonable within the tech sector, with more defensive earnings than many
other tech stocks
- Capital expenditure is currently above trend signalling growth plans through expansions and
new facili�es

Breville Group (BRG) designs and develops small electrical kitchen appliances. The group sells its
products in the UK and Europe under the Sage brand and has a global distribu�on agreement with
Nespresso. Breville and Sage remain the core focus of the group’s strategy, but BRG also owns smaller
brands including Kambrook, Cli-mate, Aquaport and LELIT. Their products are sold in over 80 countries
and are now primarily focussed on the premium kitchen market.

Our view:
- High research and development expenses allows BRG to con�nue to innovate effec�vely,
ensuring a strong pipeline of new product releases
- Many product releases over the last few years were delayed given sales were very strong
without the need to release new product. Much of this product should be released over the
coming year as natural sales growth weakens
- BRG has a successful track record for expansion as demonstrated by their US growth, which
they are hoping to replicate as they con�nue to expand in the European market
- Premium product base should hold up in a weaker economic environment given the high level
of savings concentrated in higher income households, and the rela�ve strength of higher
income consumers
- Trading on a lower valua�on rela�ve to the past 5 years
- Very high-quality business with high returns on equity

psk.com.au

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Advisory Services Pty Ltd (ABN 30 008 587 595) AFSL #234656. This document contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to
consider your financial situation and needs before making any decisions based on this information.