The Datacenter Sector is rising across the board, as of the time of writing, $GDS-SW (09698.HK)$up by 15.4%;$KINGSOFT CLOUD (03896.HK)$up by 5.39%;$SUNEVISION (01686.HK)$up by 4.54%.
On the news front, according to Caixin, the Yuhang District of Hangzhou is assessing the interest of participation.$Alibaba (BABA.US)$Local supporting suppliers and core products of the Group's cloud and AI major investment plan. The scope of investigation includes software and hardware product providers registered in Yuhang District who are interested in participating in the Alibaba Group's cloud and AI ecosystem construction. It is reported that on February 24, Alibaba Group CEO Wu Yongming announced that Alibaba will invest over 380 billion yuan in constructing cloud and AI hardware infrastructure, totaling more than the past decade combined.
UBS Group Greater China Telecom Industry Analyst Wang Xinyi stated that driven by the demand for domestic large models, the project ROI and performance growth of China's Internet Data Center (IDC) operators are expected to exceed those of their overseas counterparts, although their valuation remains significantly lower, indicating potential for upward valuation. She pointed out that based on EBITDA/(net debt + equity), the average ROI of Chinese IDC companies for 2023 is 13%, higher than the global counterparts' 9%.
Driven by the demand related to AI, it is projected that by 2026, the ROI of the former will rise to 15%. Furthermore, the valuation of Chinese IDC operators based on market expectations is 17 times dynamic EV/EBITDA, lower than the global peers' 24 times. Given the clear improvement in the industry's supply-demand landscape, stabilization of project ROI, and the government's encouragement for data center operators to issue REITs to revitalize existing assets, it is expected that the valuation of Chinese IDC companies has room for upward potential.
Editor/ping
