Summary of the Conference Call Transcript Industry Overview - **Industry**: Chinese Internet Data Centre (IDC) Sector - **Key Players**: VNET, GDS Core Insights and Arguments - **Potential New Orders**: Anticipation of new IDC orders alongside a new round of GPU procurement, with significant events scheduled such as AliCloud's Apsara conference and potential REIT launches by VNET and DayOne [2][4] - **Utilization Trends**: Strong utilization ramp-up in major AIDC campuses observed in Q2 2025, indicating that AIDC orders from hyperscalers in Q4 2024 to Q1 2025 were supported by previously procured GPU chips [3] - **Resumption of Tenders**: New IDC tenders have resumed since September 2025 after a pause due to the H20 ban, with multiple new orders expected as hyperscalers plan AI capital expenditures for the upcoming year [4] Valuation Insights - **Valuation Multiples**: VNET is trading at an 11-12x EV/EBITDA multiple for 2026 estimates, while GDS is at 12-13x, both lower than GDS's private REIT asset transactions at 13x and public REIT IPOs at 16-17x [5] - **Policy Support**: Recent policy changes by the NDRC to support infrastructure REITs, allowing asset injections into public REITs six months post-IPO, are expected to positively impact valuations [5] Risks and Opportunities - **Downside Risks**: - Weaker-than-expected AI demand - Potential faults at data centers affecting reputation - Higher-than-expected interest rates - Unfavorable regulatory environment [10][11][12] - **Upside Risks**: - Stronger-than-expected growth in AI and cloud businesses - Lower electricity costs - Lower interest rates - Tighter control on licensing and PUE requirements [10] Additional Important Points - **Recent Order Wins**: VNET has secured significant new orders, including a notable 40MW win [4][6] - **Analyst Ratings**: Both VNET and GDS are rated as "Buy" with respective prices of US$9.95 and US$39.00 as of September 18, 2025 [24] - **Market Context**: The IDC sector is experiencing a shift with increased demand for AI-related infrastructure, which is expected to drive future growth [2][4] This summary encapsulates the key points from the conference call, focusing on the IDC sector's dynamics, valuation metrics, and the associated risks and opportunities.