VNET(US:VNET)2024-05-31 06:31Investment Rating - The report does not provide a specific investment rating for the company, but it estimates a fair value of $1.95 per share, indicating a potential upside of 7.0% from the current price of $1.82 [5]. Core Insights - The company's Q1 2024 performance was slightly below expectations, with revenues of approximately 1.90 billion RMB, a year-on-year increase of 5.1%. Adjusted EBITDA was 540 million RMB, a decrease of 2.9% year-on-year, representing 24.2% of the full-year forecast [1][3]. - The company maintains its full-year guidance, expecting revenues between 7.8 billion and 8.0 billion RMB, with a year-on-year growth rate of 5.2% to 7.9% [1]. - Wholesale business growth is a key driver for overall performance, with Q1 2024 wholesale revenue reaching 360 million RMB, a quarter-on-quarter increase of 22.4%, contributing 19% to total revenue [1][3]. - Retail business saw a decline, with Q1 2024 retail revenue at 920 million RMB, down 5.2% quarter-on-quarter, contributing 49% to total revenue [1][3]. - The company has a high pre-lease rate of 74.5% for its 139 MW of projects under construction, which is expected to drive future capacity and revenue growth [2]. Summary by Sections Financial Performance - Q1 2024 revenue was 1,898 million RMB, with a gross profit of 411 million RMB, reflecting a year-on-year increase of 16.6% [3]. - Adjusted EBITDA margin improved to 28.4%, up 5.2 percentage points quarter-on-quarter [1][3]. - Net profit for Q1 2024 was -159 million RMB, a significant decline compared to the previous year [3]. Business Segments - Wholesale revenue accounted for 19% of total revenue in Q1 2024, up from 16% in Q4 2023, while retail revenue's contribution decreased to 49% [1][3]. - Non-data center business revenue remained stable at 613 million RMB, contributing 32% to total revenue [1][3]. Future Growth Potential - The company has 557 MW of projects in the pipeline, with a strong pre-lease rate expected to support future revenue growth [2]. - The expansion target for 2024 has been raised from 100-120 MW to 100-140 MW due to the positive outlook for the wholesale business [1].