In a report released today, Daley Li from Bank of America Securities maintained a Buy rating on VNET Group, Inc. Sponsored ADR, with a price target of $15.10.
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Daley Li has given his Buy rating due to a combination of factors including VNET’s strong demand outlook driven by AI and its robust resource allocation. The company is seeing a solid order trend from leading cloud service providers and internet companies, with a significant portion of its data center capacity dedicated to AI training and inference. This positions VNET well for future growth as AI inference demand is expected to increase. Additionally, VNET’s operations in Ulanqab offer the necessary scale and cost efficiency for these workloads, supported by low-latency connectivity to Beijing.
Furthermore, VNET’s management is optimistic about data center demand growth in China and plans to expand its wholesale capacity significantly in the coming years. The company is committed to maintaining a healthy leverage ratio through diversified financing channels, including bank loans and asset monetization strategies. These financial strategies, combined with a focus on long-term contracts and high project returns, underpin the company’s potential for accelerated growth and attractive valuation, leading to the Buy rating.
In another report released on November 21, DBS also maintained a Buy rating on the stock with a $12.50 price target.