Sinnet(SZ:300383)2025-08-14 01:36Summary of Conference Call Notes Industry Overview - Industry: Data Centers in China - Key Players: GDS, VNET, Sinnet, DayOne Core Insights and Arguments - Upcoming Earnings Reports: China data center operators are expected to report 2Q25 results soon, with GDS and VNET anticipated to show revenue growth of +11% and +15% year-over-year respectively, and adjusted EBITDA growth of +6% and +21% year-over-year [1][3] - Chip Supply Constraints: There are expectations of soft order intakes due to chip supply constraints and reduced capital expenditures from hyperscalers, with Tencent's 2Q25 capex down by 30% quarter-over-quarter to US$2.66 billion, despite a year-over-year increase of +119% [1] - C-REITs Performance: Following the listing of China's first two data center C-REITs, the Southern GDS Data Center REIT and Southern Range Tech Data Center REIT saw share price increases of +37% and +36% respectively [1] - Domestic Order Visibility: Commentary on domestic order visibility for the second half of 2025 will be crucial for share price movements in the sector, especially in light of US chip export approvals and domestic usage caution from Chinese authorities [1] DayOne's Performance - Growth Strategy Execution: DayOne has made significant progress in its growth strategy, securing 974MW of total capacity in the SIJORI region, which is approximately 25% of the region's total capacity [2][20] - Debt Financing: DayOne raised nearly US$4 billion in debt and secured agreements for over 500MW of green power, indicating strong financial backing for its expansion [2] - Construction Updates: DayOne has commenced construction on the SG1 facility in Singapore, expected to be operational by 2026, and is also developing a data center campus in Tokyo with an initial capacity of 18MW [2][15] - Regional Expansion: DayOne is expanding into Thailand and Finland, with a combined potential addition of ~220MW to its committed capacity, bringing the total to ~750MW [2][15] Investment Ratings - GDS and VNET: Both companies are rated as "Buy" due to their strong market positions and growth potential [3][22][26] - Sinnet: Rated as "Sell" due to market share losses and limited demand recovery visibility [3][28] Additional Insights - Cloud Revenue Growth: Anticipated acceleration in cloud revenue from major players like Alicloud, Tencent Cloud, Baidu Cloud, and Kingsoft Cloud, projected at +21% year-over-year for 2Q25 [18] - Market Dynamics: The data center sector in Southeast Asia is expected to benefit from rising cloud penetration and expansion by US and Chinese hyperscalers, alongside increased demand for AI capabilities [9][15] Risks and Considerations - GDS Risks: Key risks include below-expected demand, slower overseas revenue ramp-up, and pricing pressures [23][25] - VNET Risks: Risks involve financing challenges, execution issues, and geopolitical uncertainties regarding AI [27] - Sinnet Risks: Limited demand recovery and market share erosion pose significant risks for Sinnet's future performance [29]