Overseas mature IDC companies, profitability remains stable, Global Switch revenue continues to grow over a long period of time, thanks to the opening of new data centers in Hong Kong and Singapore in 2018. A new data center is expected to be built in Frankfurt, Germany, in 2019. At the same time, the company's strategic partnership with China Telecom Corporation and Daily-Tech is expected to continue to promote the globalization of the company's business, and domestic enterprises will have obvious advantages in using global data centers when going out to sea in the future.
Low leverage ratio and low financing cost provide a solid foundation for future expansion despite the sustained and rapid expansion of assets, Global Switch maintains a low leverage ratio for a long time, has strong asset side and long-term solvency, and continues to generate a large amount of net operating cash flow. At the same time, overseas IDC manufacturers can obtain lower financing and effectively reduce financing costs.
Europe and the Asia-Pacific region high-quality geographical location core resources; high-quality, stable customer resources, the average lease term continues to extend, the Asia-Pacific region is expected to become a new point of high income growth.
The annual weighted average lease life of Global Switch leasing customers further increased from 4.1 years in 2016 to 6.3 years in 2018, maintaining an overall CAGR of about 23%. In 2018, the Asia-Pacific region benefited from the construction of new data centers in Singapore and Hong Kong, China, and its receivables and EBITDA grew rapidly. With the implementation of its follow-up projects in the next three years, the Asia-Pacific region is expected to become a new source of revenue growth for the company.
Investment suggestion
According to the current GS power and land planning, and taking into account the company's additional issuance plan, the company's 2019-2021 pro forma performance (the total share capital is calculated according to the issuance price of the additional issuance plan), the total revenue is adjusted from 18.93 billion yuan, 20.15 billion yuan and 24.38 billion yuan to 13.47 billion yuan, 20.15 billion yuan and 243.8 billion yuan, respectively. The net profit of homing is adjusted from 1.67 billion yuan, 2.59 billion yuan and 3.23 billion yuan to 520 million yuan, 2.17 billion yuan and 3 billion yuan respectively, and the corresponding current price PE is 22.85 times of 87.14, 31.17 and 22.85 times respectively.
Risk hint
The trade dispute between China and the United States reduces the risk of overseas renewal rate; the expansion of domestic business is not as expected, which makes it difficult to make up for the burden of mergers and acquisitions and affect the operation; the approval opinions of the CSRC affect the process of corporate merger; exchange rate volatility affects revenue risk; systemic risk.
