GDS Holdings Ltd 公司研究

Forecast Change China Strong demand trends continue Peter Milliken, CFA Research Analyst+852-2203 6190 Revenue for the quarter was up7%YoYwhile adjusted EBITDA grew more slowly rising 3% (to CNY1,406m).Adjustingfor the two China spin-offs; on a pro-formabasis revenue and adjusted EBITDAwouldhave risen12%.GDS reported a2Q26netprofitof CNY838m, duetoarevaluationgainatDayOne. Newbookingsof263MWwerereported,bringing1Hto471MW,justslightlybelowthe2023-25combinedadd.Managementexpectstobook1GWfortheyearandtoprovisionreservations ofanextra1GW-toprepareforfollow-ondemand.Ordersare split evenlybetween cloud and Al, and come despitethe companybeingselective intaking on business,particularlyfrommostofthe independent Alfirms.andfairlyevenlybetweenexistingandnewmarkets.GDShas1.6GWofcapacityinservice,0.6GWunderconstruction,anda3.6GWpipeline,sothescaleoftheorderscoming in is transformative. 235MW of move-in is expected for 2026, but thecompanyguidesforthattoreach700MWnextyearandaround950GWin2028. Thecompany liftedareautilizedby21ksquaremetersQoQ,which isnearthehighend of the 16-22k of the prior four quarters, with management saying in 1Q itexpects this to reach70k for theyear.Utilized area wasup 13%YoY, even with theassetmonetizationstakingout15k sq.m.Utilizationrateadvanced4ppQoQto79%. DayOnevaluetakesoff DayOne,has filed foran IPO and is widelyreported tobe seeking to raiseUSD5bn.Thevalueuplifthasbeensignificant,withitsJanuarysale6.5xthefirm'sinvestmentcost.Ifapostmoneyvalueof USD2Obn is achieved,weestimateGDSwillbookaCNY9bn gain. Software&ServicesGDS Holdings Ltd Duetotherapidorderflow,the company has lifted its capexguidanceforthis year fromCNY9bntoCNY10bn,Italsoliftsguidanceforrevenueby1-3ppto11.1%-13.7%and liftingadjustedEBITDAguidanceby2-3ppto9.2%-12.9%(CNY12.7bn-13.0bn).Excluding one-time items in 1Q the mid-point would be a 6.5% gain inadjusted EBITDA. Further gains will come as it completes its follow-on offerfor itsC-REIT, and from the DayOne IPO. We think current prices for GDS have become more attractive.We stick with ourUSD50persharevaluationwhichisDCFbased,andretainourBUYrating(seepage4 for Valuation & Risk details). Quarterly financials Valuation and earnings forecast changes Weadjustourestimatestoreflectguidance,andincludeestimatedupcominggainsfrom itspendingChinafollow-onandDayOneIPO.WhileourDCFvaluationhasedgedupwards,westickwithourUSD5Opricetargetfornow. Figure3:Earnings forecast changes Key downside risks include: 1) Interest rates rising, lifting earnings pressure; 2)Over-investmenttendenciesreturning;3)Spotpricingdeclining;and4)Bloombergreportedjustbefore2Q25quarter'sresultsthatSTTelemedia isconsideringsellingits30%stake,andcutthatto27%inmid-Septemberviaablocktrade.Itislockedupforsixmonths,and couldfindabuyerfortherest,butthis is complicatedbythefirm'sVIEstructureanddual-classvotingshares Software &ServicesGDS Holdings Ltd Software & ServicesGDS Holdings Ltd Guidance and strategy RevenueofCNY12,700m-13,000m(up11.1%-13.7%) Adjusted EBITDAof CNY5,900m-6,100m (up 69.2%-12.9%)CapexofCNY10,000m growth story" of Al, as the company looks to help customers with their gigawatt-scale deployments.To meet this demand, GDS in 1Q26 outlined a three-yearbusinessplantoinvestCNY30bntoCNY5Obn.Managementsaysthiswillresult innetdebt/EBITDA rising to 5-6x.Whilethis will shake out some investors, we expectthe market to slowly warm to this change. The acceleration in build-out was evident in 4Q when the company announcedplans to enter Inner Mongolia, Ningxia, and Shaoguan (in Northern Guangdong),each among the eight national computing hub nodes in China's"Eastern Data,Western Computing"policy.The policyfocuses on moving hyperscaler activitytothe West, while connecting the hubs with high-speed, high-capacity trunkit difficult to profit, but demand is coming through, so GDs is ready to competeoutside ofitsinitial focus ofin-and-around Tier1cities.Theramp-up alreadyseemsto be lined up, with GDS noting it has 3.7GW equivalent of land and powerreservations. Management noted that agreements getting signed commit to a certain capacity.which the company records as"bookings"whilethe restofthe site is reservedforthecustomer's subsequentgrowth,withfollow-uporders overthenextone-to-twoyears"almost certain". Management has noteda build-out cost ofaround CNY2OmperMW,and forthatto drive around 10-11% adjusted gross profit yield (revenue less cashopex/grossPP&E).We would assume thetargetedutilization would be around 90%-butthishasnotbeenstated.Thiscompareswithitscurrentportfoliogenerating11%at75%utilization.The company provided such details, as MSR comes down along withdevelopmentcostsasmoreremote/largerscalesitesarebuiltout.Itwasalsonotedthatprice perGWtobuild out has dropped around15%in thelastthree years dueto lower costformechanical &electrical plant. Thecompanyplanstofunditsbuild-outusing60%debtfunding.SoattheCNY40bnmid-point of capex,that would mean CNY24bn of debt.It looks to fund theremainingCNY16bnofeq