The company's net loss increased due to the impairment of non-cash assets. In 2023, the company achieved total revenue of about RMB 9,957 billion, up 6.8% year on year. The adjusted EBITDA was RMB 4.624 billion, up 8.8% year on year, and the adjusted EBITDA rate was 46.4%, which remained stable. In 2023, the company recorded a net loss of RMB 4.29 billion, far greater than previous years. The main reason for this is the data center leased by the company. Due to lower sales prices, slower than expected occupancy, and fixed future rental periods, future cash flow is lower than the book value of assets, resulting in asset impairment losses.
The subscription of convertible bonds reflects the confidence of international capital in the company's international business expansion. Entering 2024, the company received a total subscription of US$587 million in convertible preferred shares, mainly for the operation of GDS's international business. In recent years, the company has been committed to international business expansion. It has invested in data center projects in Hong Kong, Singapore, Malaysia and Indonesia. Currently, it has received orders for more than 200MW of capacity, and 70MW has already been put into operation. The company takes international business development as a strategic task and is expected to become the company's second growth pole in the future.
The company's revenue growth is expected to increase in '24. Based on the current economic environment, we have indicated in our previous report that customer demand in domestic data centers is still at a low point, awaiting an inflection point. The company's asset impairment losses in Q4 '23 also showed the weak state of the market. However, we believe that the stock price has reacted in the previous period. Currently, the stock price fluctuation is overreacting. Since a one-time deduction has been completed in '23, the net loss for '24 is expected to return to normal. Also, in 2024, one of the company's major customers moved in-house, affecting the company's revenue contribution of about 5%, which will be restored in 2024. Therefore, we expect the company's revenue growth rate to grow by more than 12% in 24, and the company's revenue growth guide is 13.9% to 18.1%.
Investment advice: We estimate that the company's revenue for 2024-2026 will be 111.51 (+0.19%)/128.24 (+0.19%)/RMB 15.04 billion, respectively. The Company's adjusted EBITDA for 2024-2026 was 50.46 (+0.16%)/56.67 (-2.0%)/RMB 6.332 billion, respectively. According to comparable company statistics, the average EV/EBITDA in 2024 was 14 times, and the EV/EBITDA of the two leading US IDC companies was 22 times and 21 times, respectively. Considering factors such as the company's industry position, industry supply and demand relationship, performance growth rate, etc., and referring to the two US benchmark companies, we gave Wanguo Data an EV/EBITDA of 13 times in 2024 (originally 15 times), and the corresponding target market value was RMB 26.892 billion, and the target price was RMB 17.64 per share, corresponding to HK$19.09 per share (-12.7%), maintaining the “superior to the market” rating.
Risk warning: Affected by the slowdown in overall industry growth, the company's data center listing rate fell short of expectations, affecting revenue growth, which in turn affected the company's EBITDA level; unexpected events in the company's overseas expansion led to risks such as increased costs and decreased profitability.