2025-08-31 16:21Summary of Conference Call Notes Industry Overview - The focus is on the China/Southeast Asia Data Center industry, particularly companies GDS Holdings and VNET Group. - The data center market is experiencing a divergence between operators capturing AI/cloud demand and those reliant on traditional retail demand. Key Points on GDS Holdings - GDS reported 40MW hyperscale orders in 2Q25, down from 152MW in 1Q25, indicating a supply bottleneck in AI demand [1] - GDS delivered above-expected revenue and EBITDA, attributed to solid customer move-in pace and resilient pricing [1] - Management's tone has shifted from deleveraging to growth-oriented, with plans for more active capex spending [3] - GDS aims to reduce net debt/adj. EBITDA to 5.7x after the C-REIT listing [3] - The target price for GDS has been raised to US$42/HK$41, reflecting a 25.5% upside potential [10] Key Points on VNET Group - VNET reported 20MW wholesale orders in 2Q25, down from 123MW in 1Q25, also indicating a supply bottleneck [1] - VNET's management remains optimistic about order intake in 2H25, especially from September onward [60] - The target price for VNET has been raised to US$13, indicating a 52.4% upside potential [59] DayOne Performance - DayOne, partially owned by GDS, reported a 144% year-over-year revenue increase and a 156% increase in adjusted EBITDA [4] - DayOne has become the largest data center operator in the SIJORI region with 224MW live capacity [4] - DayOne's total committed capacity reached 783MW, approaching AirTrunk's 800MW+ level [8] - DayOne's profitability is improving, but it still lags behind peers like NEXTDC in terms of EBITDA margins [44] Market Dynamics and Risks - There are policy uncertainties, such as new power tariffs in Malaysia, and rising competition in the APAC region [9] - The potential approval of Nvidia's Blackwell-based products for sale in China could lead to increased order volumes by late 2025 or early 2026 [2] - Risks include below-expected move-in demand, slower overseas revenue ramp-up, and customer churn [56] Financial Metrics - GDS's revenue forecast for 2025 is Rmb11,545.4 million, with an EBITDA of Rmb5,135 million [15] - VNET's revenue forecast for 2025 is Rmb9,745.1 million, with an EBITDA of Rmb2,921.8 million [59] Conclusion - The data center industry in China and Southeast Asia is poised for growth, particularly for companies like GDS and VNET, driven by AI demand and strategic expansions. However, challenges such as supply bottlenecks and competitive pressures remain significant.