Morgan Stanley maintains "Overweight" rating on GDS, positive outlook on DayOne expansion

Morgan Stanley published a report stating that GDS (GDS.US), which holds a 35.6% stake in the global data center operator DayOne, announced the construction of Thailand's first 1GW data center park. The plan includes the expansion of the Chonburi Phase 1 park and adjacent land, increasing the power supply capacity to 300MW, and signing a memorandum of cooperation with Amata Group for the Chonburi Phase 2 park. DayOne also signed a renewable energy agreement to introduce solar power.

Morgan Stanley has a positive outlook on DayOne's expansion plan, with related contracts expected to bring additional momentum. Recent developments indicate that DayOne's growth potential is promising. The firm maintains an "Overweight" rating on GDS, with a target price of $54. Based on the bank's estimate of $14 per American Depositary Share for DayOne, the implied valuation of its China business is 9 times the expected enterprise value/EBITDA for 2026