Group 1: Financial Performance - As of August 2023, the company received renewable energy subsidy funds totaling CNY 2.319 billion, with CNY 2.252 billion from national renewable energy subsidies [3] - In 2022, the company received a total of CNY 3.626 billion in electricity subsidies, with CNY 3.501 billion from national subsidies [3] - In 2023, the total electricity subsidies received were CNY 1.904 billion, with CNY 1.532 billion from national subsidies [3] - For 2024, the company expects to receive CNY 1.366 billion in electricity subsidies, with CNY 1.233 billion from national subsidies [3] Group 2: Capacity and Development Plans - The company aims for a total scale of over 13.6 GW for photovoltaic power stations by the end of 2025 [4] - As of June 2025, the operational capacity is approximately 6.535 GW, with 2.365 GW under construction and 2.217 GW planned [4] - The company has signed pre-purchase agreements for an additional 1.529 GW, totaling approximately 12.647 GW [4] Group 3: Market Participation and Pricing - In 2024, the average market transaction electricity price was approximately CNY 0.2172 per kWh, excluding subsidies [6] - The average curtailment rate for 2024 was 7.81% [6] - For the first half of 2025, the average market transaction electricity price increased to approximately CNY 0.2234 per kWh, with a curtailment rate of 14.88% [6] Group 4: Compliance and Regulatory Matters - The company has 121 operational centralized photovoltaic projects included in the national subsidy list, totaling approximately 3,903.90 MW [5] - Out of these, 77 projects, approximately 2,500 MW, are included in the first batch of compliance lists [6] - The company is actively cooperating with relevant authorities regarding subsidy policies and compliance [6]

Monetary Policy - Bank of Japan (BOJ) maintains interest rates as expected [1] - BOJ to begin selling its ETF and J-REIT holdings, decision passed unanimously [1] - Annual ETF sales target of ¥330 billion (approximately $2.1 billion USD based on current exchange rates), with future adjustments possible [1] Market Impact - Yen strengthens against other currencies [1] - USD/JPY declines by 50 points in the short term [1] - BOJ's quantitative tightening (QT) reduces Yen supply, potentially preparing for interest rate hikes, driving Yen appreciation [1]

Core Insights - The company has seen a continuous increase in new orders for its domestic data center business, driven by the demand from AI computing [1][2] - The data center industry is currently experiencing a cycle of improving supply and demand, with AI contributing to significant new demand [2] - The company is actively expanding its overseas business, with a goal of signing 1GW capacity within three years [2] - The successful issuance of the first domestic data center REITS project has garnered significant market attention, reflecting recognition of quality digital infrastructure assets [3] Domestic Data Center Business - As of the end of 1H25, the company has accumulated nearly 200MW of new data center orders in the domestic market, with 150MW added in Q1 and approximately 40MW in Q2, primarily driven by AI computing demand [1] - The domestic data center deployment rate reached a historical high of 77.5% in Q2 25, benefiting from the expansion of AI inference and internet applications [1] Industry Supply and Demand - The data center industry is in a phase of continuous improvement in supply and demand, with AI driving new demand and leading to a supply shortage [2] - The approval process for new projects has become stricter, and the company’s resource reserves in core locations are expected to provide a competitive advantage [2] Overseas Business Expansion - As of the end of Q2 25, the company’s operational scale reached 213MW, with a cumulative signed capacity of 783MW, aiming for 1GW capacity in three years [2] - The company has successfully signed a project in Thailand and has initiated construction of a second data center park in Finland, indicating strong growth potential in the European market [2] REITS Project - The Southern Data Center REITS has successfully listed on the Shanghai Stock Exchange, with a project valuation of 2.4 billion yuan and an implied EV/EBITDA valuation of 16.9 times [3] - The public offering received a subscription multiple of 456 times, showcasing market recognition of quality digital infrastructure assets [3] - The REITS project is expected to help the company reduce leverage, holding significant strategic importance [3] Financial Projections - The company maintains its revenue and adjusted EBITDA forecasts, expecting adjusted EBITDA of 5.29 billion, 5.93 billion, and 6.88 billion yuan for 2025-2027 [3] - The target valuation remains unchanged, with a target price of 45.83 HKD per share based on the SOTP valuation method [3]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 45.83 [5]. Core Insights - The company has seen a continuous improvement in the domestic data center business, with nearly 200MW of new orders accumulated by the end of 1H25, driven primarily by AI computing demand [2]. - The data center industry is currently in a cycle of improving supply and demand, with AI driving new demand and limited new supply due to strict project approvals in major cities [2]. - The company is successfully expanding its DayOne projects in Europe and Southeast Asia, aiming to sign contracts for 1GW capacity within three years [3]. - The successful issuance of the first domestic data center REITS project has garnered significant market attention, reflecting the capital market's recognition of quality digital infrastructure assets [3]. Summary by Sections Domestic Business Performance - By the end of 1H25, the company achieved nearly 200MW of new data center orders, with 150MW added in Q1 and 40MW in Q2, primarily from AI computing demand [2]. - The domestic data center business's deployment rate reached a historical high of 77.5% in Q2 2025, benefiting from the expansion of AI applications [2]. Industry Supply and Demand - The domestic data center industry is experiencing a continuous improvement in supply and demand dynamics, with AI contributing to increased demand [2]. - The limited new supply due to stringent energy consumption indicators in first-tier cities positions the company favorably due to its resource reserves [2]. International Expansion - As of Q2 2025, the company has an operational scale of 213MW and a cumulative signed capacity of 783MW, with plans to achieve 1GW capacity in three years [3]. - The company has successfully signed contracts for its Thailand project and has initiated construction of a second data center in Finland, indicating strong growth potential in Europe [3]. REITS Project - The Southern GDS REITS has been successfully listed on the Shanghai Stock Exchange, with a project valuation of HKD 2.4 billion and an implied EV/EBITDA valuation of 16.9 times [3]. - The public offering was highly subscribed, with an effective subscription multiple of 456 times, showcasing market confidence in quality digital infrastructure assets [3]. Financial Projections - The report maintains revenue and adjusted EBITDA forecasts, projecting adjusted EBITDA of RMB 5.29 billion, RMB 5.93 billion, and RMB 6.88 billion for 2025, 2026, and 2027 respectively [4]. - The target valuation remains unchanged, with a SOTP valuation method applied, resulting in a target price of HKD 45.83 per share [4].

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