VNET - VNET Group: Still A Buy On Positive Results Preview And Multiple Tailwinds

2025-05-13 03:27:32 ET

Summary

• VNET Group is a Buy, considering my expectations of strong Q1 2025 results and the favorable read-throughs from recent events.
• I forecast VNET's revenue growth to hit 20% YoY in Q1 2025 with EBITDA rising 15% YoY, driven by an increase in data center utilization.
• The REIT listing approval by the Shanghai Exchange and Nvidia's chip adjustments for China have a positive impact on VNET.
• GDS is trading at a huge 31% premium over VNET based on the EV/EBITDA metric; this supports my view that the latter is undervalued.

I continue to be a bull on VNET Group, Inc. ( VNET ).

My prior February 28, 2025 article highlighted the company's intention to sell its DC ("Data Center") assets into property trusts and major Chinese technology firms' capex ("capital expenditures") guidance....

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