GDS-SW Slumps Over 13% as G Sachs Says 1Q Revenue Slightly Misses, EBITDA In Line; Daiwa: Strong Orders but Earnings to Take Time

GDS-SW (09698.HK) -5.260 (-13.296%) Short selling $64.53M; Ratio 22.241% opened 8.09% lower this morning (21st), hitting an intraday trough of HKD32.72. It was last at HKD34.18, down 13.6%, with turnover of 14.9607 million shares, involving HKD515 million.G Sachs said in a research report that GDS-SWs 1Q revenue was 1% to 2% below its and the markets expectations, while adjusted EBITDA was broadly in line with forecasts. The broker noted that the weak share price performance following the results announcement was mainly due to lower actual move-ins in 1Q, deliveries below expectations, and a slight decline in monthly service revenue per square meter (MSR).Nevertheless, the broker is encouraged by the companys outlook, citing strong sales momentum so far this year with 346 megawatts of IT power commitments secured. Year-to-date, new bookings and backlog combined have exceeded 1 gigawatt. Management targets 500 to 800 megawatts of new orders annually over the next three years. In addition, the company enhanced its financial flexibility by selling a 15% stake in DayOne and issuing USD300 million of convertible preferred shares.G Sachs expects the portfolios adjusted gross profit yield to remain within the 10% to 11% range as new orders are delivered. Assuming a six-year investment cycle, the broker estimates incremental investments could generate a 20% return on equity. It maintained a Buy rating on GDS-SW, with a 12-month TP of HKD54 for its H shares and USD55 for GDS Holdings Limited (GDS.US) .*********************************************************************************************Daiwa said in a research report that GDS-SWs core 1Q results met market expectations. Robust AI demand drove new bookings to a record high for a single quarter, but the earnings inflection point will be significantly lagged. Excluding one-off items, 1Q revenue was RMB2.9 billion and adjusted EBITDA was RMB1.4 billion, both up 8% YoY. Adjusted EBITDA margin was about 58%, broadly stable YoY.The broker noted that GDS-SW recorded net new bookings of about 200 megawatts in 1Q, marking the highest single-quarter level on record. Since 2Q, it has secured a further 138 megawatts of new orders from Shaoguan and Ulanqab, implying year-to-date bookings have exceeded 340 megawatts. Daiwa believes the full-year target of 500 megawatts is achievable and could even surpass 800 megawatts. However, as orders must go through approval, construction and ramp-up phases, initial revenue contribution typically takes around four quarters, with full impact requiring six to eight quarters. It expects 1Q orders to make more meaningful contributions only in 2H27.Daiwa forecasts that GDS-SW will continue to face strong bookings but muted earnings performance in 2026 to 2027. Adjusted EBITDA growth in 2026 (excluding one-off items) is expected to be only in the mid-single digits, with clearer earnings upside emerging in 2H27 and further acceleration in 2028. Potential catalysts include a DayOne IPO, the companys plan to pursue a primary listing in Hong Kong, and rising market focus on AI infrastructure investment. (ad/da)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-05-20 16:25.) (Real-time Streaming US Stocks Quote; Except All OTC quotes are at least 15 minutes delayed.)