Zinger Key Points
- GDS Holdings Q4 revenue rose 9.1% YoY to CN¥2.69B, driven by ramping up data centers, but missed consensus due to DayOne exclusion.
- Analyst Frank Louthan upgrades GDS to Strong Buy, forecasting strong AI demand and revised 2025 estimates, despite short-term confusion.
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Raymond James analyst Frank G. Louthan upgraded GDS Holdings Limited GDS on Thursday to Strong Buy from Outperform, with a price forecast of $53.
Yesterday, the company reported fourth-quarter results with net revenue increased 9.1% year over year to (Chinese yuan) CN¥2.69 billion ($371,126,624.72).
The revenue increase was mainly due to the ongoing ramp-up of the data centers.
GDS expects FY25 total revenues of CN¥11.29 billion–CNY¥11.59 billion and adjusted EBITDA of CN¥5.19 billion–CNY¥5.39 billion.
Louthan explains that the market may have misunderstood the fourth quarter results and forward guidance, as the reported figures excluded the subsidiary DayOne, which was moved to discontinued operations following a capital raise in December 2024.
The confusion arose because consensus expectations were based on combined results from both businesses, leading to a perceived miss.
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Furthermore, the spin-off of the P-REIT, while reducing revenue and EBITDA, actually has a “net positive” effect on valuation and should not have negatively impacted the stock, according to the analyst.
Louthan highlights that management is preparing for higher AI demand driven by DeepSeek and other AI platforms in China.
They also secured 150 MW in new contracts and saw a quicker, 12-month billing cycle, compared to the previous three-year timeline.
The analyst updated 2025 revenue and EBITDA estimates to CN¥11.45 billion and CN¥5.29 billion, down from CN¥14.08 billion and CN¥6.47 billion.
For 2026, Louthan forecasts revenue of CN¥12.87 billion and EBITDA of CN¥5.84 billion, excluding DayOne, GDS’s international unit.
Price Action: GDS shares are trading lower by 6.48% to $28.66 at publication Thursday.
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Photo: Courtesy GDS Holdings
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