Jingwu Financial News | HTSC released a research report indicating that gds holdings (09698) total revenue in Q3 2024 increased by 17.7% year-on-year to 2.966 billion RMB, mainly driven by the improvement in domestic industry supply and demand conditions and strong growth in overseas business. The company's adjusted EBITDA for Q3 2024 was 1.296 billion RMB, a year-on-year increase of 15%, which is in line with Bloomberg's consensus expectation (1.295 billion RMB). The company's adjusted EBITDA profit margin was 43.7% (Q3 2023: 44.7%).

The report stated that by the end of Q3 2024, the company's datacenter operation area reached 647,468 square meters (16.8% year-on-year increase); the supply and demand situation of domestic IDC business has improved, leading to an increase in the domestic cabinet utilization rate to 73.6%, with a stabilized unit price of 2034 RMB/square meter/month. The company’s overseas business is rapidly expanding, with operational IT capacity increasing to 103 MW. In Q3 2024, overseas operations generated revenue/EBITDA of 0.363 billion/0.097 billion RMB. The company expects its overseas operational capacity to increase by 400 MW within 18 months, with reserved project IT capacity reaching 412 MW. Following Malaysia and Indonesia, the company also became the first service provider to deploy a large-scale datacenter in Thailand. In addition, due to the high prosperity of overseas business and the demand from signed customers, the company has raised its capital expenditure guidance for overseas business in 2024 to 8 billion RMB.

The report noted that driven by AI demand, the domestic datacenter industry has shown a sustained recovery trend, and overseas datacenter construction maintains a high level of prosperity. The company, as a leading IDC provider in terms of operational scale and overseas layout, is expected to benefit. The firm is bullish on the company’s long-term development, referring to the 2025 Bloomberg consensus expected comparable company EV/EBITDA average of 15.6 times. Considering that the shareholding ratio of the listed company in its international subsidiary has decreased after the B round of financing, a 13 times 2025 EV/EBITDA valuation is given, corresponding to a target price of 26.40 HKD (previous value: 27.49 HKD, based on 15.5 times 2024 EV/EBITDA). Maintain a 'buy' rating.