Vnet

The bond market is sending a different signal: April PPI hit 6% (a 3-year high), 30-year Treasury yields broke 5%, and Warsh was confirmed as Fed Chair.

With 30-year bond yields rising, can investing in long-term bonds offset inflation and the continued weakness of the US dollar?

Or should one seize the opportunity of the AI wave to further improve the asset allocation structure?

The market looks so strong but when you look deeper, it’s all on the surface. Only a few names are carrying the market and it’s quite easy to actually prop them up. I am staying defensive.

The market does look unstoppable isn’t it? It keeps going up and up. Think again coz that’s what the headlines want you to believe. Smart money needs lots of exit liquidity because that’s how inflated the market is! Do the smart thing. Stay safe!

Take profits on AI euphoria. Rotate to SG banks and REITs as real rates rise. Position SG-listed names for ESR and energy security tailwinds.

The ESR is still in the early discussion phrase, continue to seat on the sideline till there is a confirmation on the benefit. Do no jump into the bandwagon in such a hype up market!

With Warsh confirmation as the fed chair, the thesis that AI going to outpowrt inflation rate is here. The AI rally will continue for the year and wealth will be generated!

The memory chips is going off the racks, LITERALLY! This is a rotation of the usual big tech to these players instead. We are in a new regime and so get ready!

With 30Y yields above 5% and PPI still sticky, hard to go all-in on long-duration tech lah — keeping some powder dry for now and watching how the rate picture develops.

The US 30-year yield is back above 5% interestingly during Trump’s visit to China. Is it a protest?🤭

If long term yield move higher, global liquidity could tighten as borrowing conditions become tougher.😖

In summary, Fed has less room to support markets and higher interest rates may start weighing on valuations again. Watch out for REITs holders 😅

AI demand is expanding across multiple sectors globally, but market optimism feels crowded now. Staying selective with strong earnings visibility and sustainable growth stories remains important amid volatility.

AI momentum is broadening beyond a single geography or platform, which strengthens the structural bull case, but simultaneous crowding, higher producer inflation and rising long-end yields suggest valuation risk is becoming harder to ignore. Singapore banks may benefit from higher-for-longer rates, while selected REITs could stabilise if financing conditions stop worsening. AI-linked names still retain stronger earnings visibility, though volatility is likely to increase as policy and rates reprice together. For Singapore, the alignment of regulatory, infrastructure and insurance-capital developments is strategically constructive, but markets may wait for measurable capital deployment before fully rerating related SGX-listed beneficiaries.

Today, $Vnet(VNET.US) and $GDS(GDS.US) experienced significant adjustments. The main reasons investors are focusing on include: 1) Profit-taking effects; 2) Rumors of tighter AI chip restrictions gaining traction; 3) DeepSeek's public disclosure of inference efficiency and costs, where higher cluster utilization leads to lower unit costs.

Typical data center businesses and companies are not involved in computing power leasing. Their order demand and performance are more related to how much capital expenditure internet companies and other clients invest in server purchases, and subsequently, how much server hosting services (i.e., data center leasing demand) are generated. The judgment on whether the IDC market trend can continue essentially depends on whether domestic cloud providers' capital expenditure increases are sustained and whether they allocate orders to third parties rather than building their own facilities.

Regarding value-for-money improvement positions: Based on industry average valuations, GDS at 15x 2025e EV/EBITDA corresponds to a stock price of $31; VNET at 12x 2025e EV/EBITDA corresponds to a stock price of $9.3, both significantly below the industry average.

Regarding support levels: Based on expected REITs valuations, GDS at 13x 2025e EV/EBITDA corresponds to a stock price of $23; VNET at 10x 2025e EV/EBITDA corresponds to $6.7.

Key follow-up items to monitor: 1) GDS earnings call—new domestic and overseas orders, Capex guidance, Day One listing plan, REITs progress; 2) VNET earnings call—new orders for domestic base-type business, utilization expectations for urban-type business, Capex guidance, REITs progress; 3) Tencent's earnings capital expenditure guidance and actual progress in internet companies' capital expenditures; 4) Overall investment sentiment in tech stocks.

(Repost)