VNET(VNET) INDUSTRIAL SECURITIES·2024-12-15 14:34Investment Rating - The report initiates coverage with a "Buy" rating for the company [7][11]. Core Insights - The company has shown steady revenue growth, with Q3 2024 revenue reaching 2.12 billion yuan, a year-over-year increase of 12.4%. The EBITDA has also continued to improve, with a Non-GAAP EBITDA of 595 million yuan, up 17.1% year-over-year [3]. - The IDC business is performing strongly, with an increasing rack rate. As of September 30, 2024, the operational capacity for the base IDC business was 358 MW, with a signed capacity of 352 MW and a utilization rate of 78.0% [3]. - The company has signed six large customer orders in Q3 2024, totaling 84 MW, with a significant portion related to AI demand [3]. - The company is advancing its Pre-REITs project, planning to sign a final agreement with a leading Chinese insurance company by the end of 2024, which will enhance its capital management [3]. Financial Summary - Revenue projections for 2024, 2025, and 2026 are 8,067 million yuan, 8,686 million yuan, and 9,409 million yuan, respectively, with adjusted EBITDA expected to be 2,236 million yuan, 2,536 million yuan, and 2,864 million yuan [6]. - The gross margin is projected to improve from 17.4% in 2023 to 24.0% by 2026, while the net profit margin is expected to turn positive by 2024 [6]. - The company anticipates a basic earnings per share of 0.11 yuan in 2024, increasing to 0.20 yuan by 2026 [6].