Investment Ratings - The report maintains a "Buy" rating for GDS and VNET, with target prices set at US$37/HK$36 for GDS (20% upside) and US$12 for VNET (69% upside) [1][21] Core Insights - The China data center sector is expected to benefit from deleveraging and improved order visibility, which will support share price performance in the second half of 2025 [1] - GDS is positioned to capture demand from Generative AI-driven cloud growth, while VNET aims for significant capacity expansion under its Hyperscale 2.0 strategy [18][23] Summary by Sections GDS Holdings - GDS's C-REIT offering implies a 16.9x 2026 EV/EBITDA, scheduled for listing on July 14, which supports deleveraging with approximately Rmb1.6 billion proceeds [4][8] - Revenue forecasts for GDS remain largely unchanged, with EBITDA revised down by 7% for 2025E [9] - GDS's financials show a projected revenue of Rmb11,545 million for 2025E, with an EBITDA of Rmb5,335 million [16] VNET Group - VNET has raised its guidance for 2025 revenue and EBITDA, aiming for a total data center capacity of 10GW by 2036 [21][25] - The company has added 555MW in data center capacity from 2019 to 2024 and plans to reach 1GW by 2025 [23][27] - VNET's revenue for 2025E is projected at Rmb9,316 million, with an adjusted EBITDA of Rmb2,810 million [41] Market Dynamics - Improved visibility of chip availability is expected to lead to stronger order volume and faster revenue growth for both GDS and VNET in 2026E [4] - The report anticipates that Alibaba and Tencent's capital expenditures will recover sequentially in the second half of 2025 [5] Financial Metrics - GDS's net debt/adj EBITDA ratio is projected to decline to 5.1x by 2028E due to improving EBITDA and reduced capex [13] - VNET's EBITDA margin is expected to improve to 34.0% by 2027E, reflecting operational efficiencies [41] Strategic Outlook - GDS is focusing on backlog delivery to enhance revenue growth visibility, while VNET's Hyperscale 2.0 strategy emphasizes a platform-based approach to data center operations [18][23]

Core Viewpoint - VNET Group is experiencing significant stock price movement due to strong demand for its internet data center services, particularly driven by AI applications and robust customer orders across various industries [1][2]. Company Summary - VNET Group shares increased by 7.1% to $7.08 in the last trading session, with a notable trading volume, and have gained 19.3% over the past four weeks [1]. - The company is expected to report quarterly earnings of $0.02 per share, reflecting a year-over-year decline of 66.7%, while revenues are projected to be $313.14 million, marking a 14.1% increase from the previous year [2]. - The consensus EPS estimate for VNET has remained unchanged over the last 30 days, indicating stability in earnings expectations [4]. Industry Summary - VNET Group operates within the Zacks Internet - Software industry, which includes other companies like D-Wave Quantum Inc. [4]. - D-Wave Quantum's consensus EPS estimate has also remained unchanged, with a projected EPS of -$0.07, representing a 30% increase compared to the previous year [5].

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1][2]. Company Overview: VNET Group - VNET Group currently holds a Momentum Style Score of B, indicating potential as a solid momentum pick [3][12]. - The company has a Zacks Rank of 2 (Buy), which is associated with strong historical performance [4]. Performance Metrics - VNET shares have increased by 0.74% over the past week, while the Zacks Internet - Software industry remained flat [6]. - Over the past month, VNET's price change is 30.71%, significantly outperforming the industry's 0.69% [6]. - In the last quarter, VNET shares rose by 9.23%, and over the past year, they have gained 233.17%, compared to the S&P 500's increases of 8.73% and 13.86%, respectively [7]. Trading Volume - VNET's average 20-day trading volume is 4,162,718 shares, which serves as a bullish indicator when combined with rising stock prices [8]. Earnings Outlook - Recent earnings estimate revisions for VNET show 2 estimates moving higher for the current fiscal year, increasing the consensus estimate from $0.07 to $0.10 [10]. - For the next fiscal year, 2 estimates have also moved upwards, with no downward revisions noted [10].

Core Insights - VNET Group (VNET) is currently more attractive to value investors compared to Spotify (SPOT) based on various financial metrics and analyst outlooks [1][3][7] Valuation Metrics - VNET has a forward P/E ratio of 71.59, while SPOT has a higher forward P/E of 83.78 [5] - VNET's PEG ratio is 1.31, indicating a more favorable valuation relative to its expected earnings growth, compared to SPOT's PEG ratio of 2.03 [5] - VNET's P/B ratio stands at 2.02, significantly lower than SPOT's P/B ratio of 24.03, suggesting VNET is undervalued relative to its book value [6] Analyst Outlook - VNET holds a Zacks Rank of 2 (Buy), indicating a positive earnings estimate revision trend, while SPOT has a Zacks Rank of 3 (Hold) [3][7] - The improving earnings outlook for VNET enhances its attractiveness in the current market [7] Value Grades - VNET has received a Value grade of A, reflecting its strong valuation metrics, whereas SPOT has been assigned a Value grade of F [6]

Core Viewpoint - VNET Group (VNET) shares have increased by 30.7% in the past four weeks, closing at $6.98, with a mean price target of $12.29 indicating a potential upside of 76.1% according to Wall Street analysts [1][11]. Price Targets and Analyst Estimates - The mean estimate consists of eight short-term price targets with a standard deviation of $5.54, indicating variability among analysts [2]. - The lowest estimate is $5.00, suggesting a 28.4% decline from the current price, while the highest estimate is $20.00, indicating a potential increase of 186.5% [2]. - Analysts' price targets can often mislead investors, as empirical research shows they rarely indicate actual stock price movements [7][10]. Earnings Estimates and Analyst Agreement - There is strong agreement among analysts regarding VNET's ability to report better earnings, with a positive trend in earnings estimate revisions, which historically correlates with stock price movements [4][11]. - Over the last 30 days, two earnings estimates for VNET have increased, leading to a 21.9% rise in the Zacks Consensus Estimate [12]. - VNET holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13]. Conclusion on Price Movement - While the consensus price target may not be a reliable indicator of VNET's potential gains, the implied direction of price movement appears to be a useful guide for investors [14].

Summary of AIDC Industry Update and Q&A Industry Overview - The AIDC (Artificial Intelligence Data Center) industry is experiencing a recovery in overseas computing infrastructure, with companies like Nvidia and Corewave showing positive performance focused on training and inference demand [1][2] - Domestic AIDC is constrained by chip limitations, model breakthroughs, and application deployment, but major data centers like GDS and Century Internet are maintaining stable deployment rates despite the H20 ban [1][2][3] Key Insights - **Overseas Market Recovery**: Nvidia's focus is on training demand, while Corewave caters to large enterprises like Microsoft. Companies such as Broadcom and Marvell have optimistic revenue expectations for ASICs, and Oracle's OCI business reflects growth in inference demand [1][2][5] - **Domestic Market Dynamics**: Despite short-term impacts from trade wars, major Chinese internet companies like Alibaba and ByteDance are investing heavily in AI. Long-term solutions for domestic AI challenges include breakthroughs in chips (e.g., Cambricon, Huawei Cloud Matrix 384) and improvements in model capabilities [1][3][4] - **Investment Recommendations**: Companies with stable deployment rates and core leading customer orders, such as Runze Technology, Aofei Data Port, Century Internet, and GDS, are recommended for investment due to their low valuations and potential for significant improvement [1][4] Performance Trends - **Overseas Demand Trends**: The overseas computing market is showing strong growth, particularly in GPU and ASIC demand. Nvidia has launched new GB series chips, and companies like Marvell and Broadcom have revised their market demand expectations upward [7][8] - **Domestic Market Performance**: The domestic computing market faced some disruptions in Q2 due to geopolitical factors and chip restrictions, but overall guidance remains stable. The AIDC sector is expected to see improved order visibility and capital expenditure growth in the coming quarters [8][9] Future Outlook - **Upcoming Quarters**: The outlook for the domestic computing market in the next two quarters is positive, with expectations of accelerated capital expenditure and construction progress, particularly in the AIDC core hardware supply chain [9] - **AI Data Center Growth**: AI data center-related sectors are showing good business growth elasticity, with significant order increases in server power supplies and UPS systems [10][14] - **HVDC Development**: Both domestic and international markets are seeing increased adoption of HVDC solutions, with major Chinese internet companies pushing for its application [11][12] Global AI Demand - **Inference Demand Growth**: Global inference demand is rapidly increasing, with companies like Google and ByteDance significantly ramping up their requirements [16] - **US vs. China AI Demand**: The US is entering a new model iteration cycle with large clusters, while China's AI demand is primarily focused on inference due to limited resources for training [17] Market Sentiment - **US AI Industry Expectations**: The US AI industry is expected to see significant changes in the next six months, with rapid stock price increases in sectors like NV and ASIC, indicating a potential expansion from overseas to domestic supply chains [18] - **AI Business Models**: The US has a stronger likelihood of successful AI business models due to higher payment willingness, while China's market faces challenges in this regard, potentially affecting profit margins [19] Conclusion - The AIDC industry is poised for growth, driven by both domestic and international demand for AI capabilities. Investment in key players with stable growth prospects is recommended, while monitoring the evolving landscape of AI business models and market dynamics is crucial for future success [20]

Core Viewpoint - VNET Group, Inc. has announced a share repurchase program, reflecting the company's confidence in its future growth prospects, allowing for the repurchase of up to US$50 million of its American depositary shares [1] Share Repurchase Program Details - The share repurchase may occur on the open market at prevailing prices, through various legally permissible means, and will be subject to market conditions and regulatory requirements [2] - The program will be effective upon signing a formal agreement with a qualified broker-dealer and will last for 12 months, depending on market conditions and other factors [3] - The company is not obligated to repurchase a specific number of shares and may modify or terminate the program at management's discretion [3] Company Overview - VNET Group, Inc. is a leading carrier- and cloud-neutral internet data center services provider in China, offering hosting, IDC services, cloud services, and business VPN services [4] - The company operates in over 30 cities in China, serving a diverse base of more than 7,000 enterprise customers across various industries, including internet companies, government entities, and small to mid-sized enterprises [4]

Core Viewpoint - VNET Group, Inc. has raised its total net revenues and adjusted EBITDA guidance for the full year 2025, reflecting strong operational performance and strategic execution [1][2]. Financial Performance - The updated guidance for total net revenues in 2025 is projected to be between RMB9,150 million and RMB9,350 million, indicating a year-over-year growth of 11% to 13% [3][4]. - Adjusted EBITDA (non-GAAP) is expected to range from RMB2,760 million to RMB2,820 million, representing a year-over-year growth of 14% to 16% [3][4]. - Excluding a disposal gain of RMB87.7 million from the adjusted EBITDA calculation for 2024, the year-over-year growth would be 18% to 20% [3][4]. Business Outlook - The company attributes its optimistic outlook to faster-than-expected move-ins among wholesale IDC clients and ongoing operational efficiency gains [2]. - VNET operates in over 30 cities across China, serving a diverse customer base of more than 7,000 enterprise clients from various industries [6].

Core Insights - Century Internet (VNET) experienced a 2.19% increase in stock price, reaching $5.6 per share, with a total market capitalization of $1.507 billion as of June 23 [1] - As of March 31, 2025, Century Internet reported total revenue of 2.246 billion RMB, reflecting an 18.34% year-over-year growth, while net profit attributable to shareholders was -238 million RMB, a decrease of 27.03% year-over-year [1] Company Overview - Founded in 1996, Century Internet is a leading enterprise in digital infrastructure in China and the first Chinese IDC company listed on the US stock market [1] - The company operates a dual business model of "base-type + city-type" IDC services, providing comprehensive cloud computing services and solutions [1] Operational Capacity - Century Internet operates over 50 data centers across more than 30 cities in China, with a base-type operational capacity exceeding 480 MW and over 52,000 city-type cabinets [2] - The company has established large-scale data center industry clusters in key regions such as Beijing-Tianjin-Hebei, Yangtze River Delta, and Guangdong-Hong Kong-Macau [2] Strategic Partnerships - As a strategic partner of Microsoft, Century Internet Blue Cloud operates international standard cloud services including Microsoft Azure, Microsoft 365, Dynamics 365, and Power Platform in China [2] - The company has built a solid foundation for business development for over 6,000 high-quality enterprise clients, including nearly 100 high-growth industry leaders [2]

Core Viewpoint - Century Internet (VNET) is a leading digital infrastructure company in China, focusing on data center services and cloud computing solutions, with a significant presence in the market and a strategic partnership with Microsoft [1][2]. Financial Performance - As of March 31, 2025, Century Internet reported total revenue of 2.246 billion RMB, representing a year-on-year growth of 18.34% [1]. - The company's net profit attributable to shareholders was -238 million RMB, showing a decrease of 27.03% compared to the previous year [1]. Business Operations - Century Internet operates over 50 data centers across more than 30 cities in China, with a base business operational capacity exceeding 480 MW and over 52,000 operational cabinets in urban areas [2]. - The company has established large-scale data center industry clusters in key regions such as Beijing-Tianjin-Hebei, Yangtze River Delta, and Guangdong-Hong Kong-Macao, facilitating smooth data migration from first-tier cities to edge cities [2]. Strategic Partnerships - As a strategic partner of Microsoft, Century Internet operates international-standard cloud services in China, including Microsoft Azure, Microsoft 365, Dynamics 365, and Power Platform [2]. Client Base - The company has built a solid foundation for business development for over 6,000 high-quality enterprise clients, including nearly 100 leading companies in high-growth industries, leveraging its strong resources and operational capabilities [2].