Goldman Sachs reaffirms "Buy" rating on GDS and Vnet, raises target price

Goldman Sachs released a report stating that despite expectations of supply bottlenecks in the second quarter of 2025, the demand for AI in Chinese data centers remains relatively calm. GDS-SW (09698.HK) (GDS.US) and Vnet (VNET.US) still achieved better-than-expected revenue and EBITDA, benefiting from a robust pace of customer onboarding and resilient pricing, reflecting their discipline in accepting high-quality orders and delivering new capacity. This contrasts with the quarterly weak performance of Guanghuan Xinwang (300383.SZ), reflecting a continued differentiation between data center operators that can capture the growth in AI/cloud demand and those more exposed to traditional retail demand, which remains moderate.

Goldman Sachs reiterated its "Buy" rating on GDS and Vnet, raising the target price for GDS H shares from HKD 39 to HKD 41, and the target price for GDS ADR from USD 40 to USD 42; the target price for Vnet ADR was raised from USD 12 to USD 13. The firm maintained a "Sell" rating on Guanghuan Xinwang, raising the target price for A shares from RMB 10.5 to RMB 11.4