Investment Rating - The report assigns a positive investment rating to Century Internet (VNET.O), highlighting its leadership position in the third-party data center service industry and its strong growth potential driven by its dual-engine business model [2][5]. Core Insights - Century Internet is a leading independent third-party IDC service provider in China, established in 1996, and is the first Chinese IDC company listed on the US stock market. The company has a robust presence in over 30 cities with more than 50 data centers [2][3]. - The company has entered a new development phase with Shanhigh Holdings as its largest shareholder, focusing on the synergy of "green electricity + computing power" [2][4]. - The base IDC business has shown significant growth, with a year-on-year increase of 86.4%, becoming the core growth engine for the company [3][5]. - The financial performance has improved significantly, with a net revenue of 21.20 billion yuan in Q3 2024, a year-on-year increase of 12.4%, and a net profit of 3.32 billion yuan, marking substantial growth [3][5]. Summary by Sections 1. Leading Third-Party Data Center Provider - Century Internet has a rich history in the data center field and has partnered with Shanhigh Holdings to enter a new growth phase [2][3]. - The company has a dual-engine strategy, focusing on both large-scale customized IDC and new-generation retail IDC services [2][3]. 2. Industry Recovery and High-Quality Growth - The digital economy infrastructure is supported by policies and is experiencing rapid growth, with the demand for AI computing driving industry recovery [2][4]. - The market for data centers is expanding, with a significant increase in the number of racks from 1.66 million in 2017 to 8.1 million in 2023, reflecting a compound annual growth rate of 30.24% [2][4]. 3. Base IDC Business Growth - The base IDC business is rapidly expanding, with operational capacity reaching 358 MW and a significant increase in the number of signed orders [3][4]. - The company has a strong pipeline of projects, with a total of 787 MW in construction and planned capacity, which is 2.2 times its current operational capacity [3][4]. 4. Financial Analysis - The company has shown a marked improvement in profitability, with a net profit of 3.32 billion yuan in Q3 2024, and a significant reduction in debt ratios [3][4]. - The capital expenditure for 2024 is projected to be between 50-55 billion yuan, primarily focused on the base IDC business [3][4]. 5. Core Investment Highlights & Valuation Comparison - The company is significantly undervalued compared to its peers, with an EV/adjusted EBITDA of 6.89X, which is only 56.57% of its competitor, GDS Holdings [5][6]. - The report emphasizes the strong investment value of Century Internet, given its strategic partnerships and growth potential in the AI-driven data center market [5][6].