Telecity's shares trade at a premium to other data centre services providers. So when chief executive Michael Tobin declined to raise 2008 guidance after a strong start to the year, investors took fright, sending Telecity's shares down over 10 per cent. Mr Tobin says it's early in Telecity's public life for upgrades, while lack of liquidity makes the shares a "magnifying glass to whatever happens on the market". An imbalance of supply and demand in data centre owners' favour means Telecity is "bullet-proofed to deliver the numbers", says Mr Tobin.
Constrained supply means Telecity can hike its charges towards the latest market price, even for existing customers. Mr Tobin says these clients understand that "responsible pricing" is required for Telecity to invest in new capacity for "both our futures". New Telecity sites in London and Amsterdam will open in coming weeks, while is acquiring at steep prices in Europe, suggesting it sees good growth prospects too. Much of Telecity's growth is coming from media companies, such as the BBC and ITV, as they take early steps towards using the internet to deliver more programming.
Citi expects EPS of 5p in 2008, rising to 9.3p in 2009 (loss of 0.6p in 2007).
Telecity Group (TCY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 208p | MARKET VALUE: | £412m | |
| TOUCH: | 208-209p | 12-MONTH HIGH: | 338p | LOW: 193p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 76p* | NET CASH: | £3.7m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2004 | 25.8 | -7.0 | -2.8 | nil |
| 2005 | 29.6 | -9.7 | -3.5 | nil |
| 2006 | 68.9 | -15.8 | -10.2 | nil |
| 2007 | 97.9 | -7.8 | -4.7 | nil |
| % change | +42 | - | - | - |
*Includes intangible assets of £46.9m, or 24p per share | ||||
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