Daiwa sees opportunity to buy GDS after ‘surprise’ stock offering

Daiwa analyst Robin Leung says GDS Holdings (GDS)’ public offering of 5.2M American depositary shares at $24.50 came as a “surprise.” However, the share pullback creates a good buying opportunity in the near term as it strengthens GDS’s financial position, the analyst tells investors in a research note. To drive a meaningful re-rating in the shares, Daiwa believes the company must secure new orders and expand its capex guidance. The new funding “provides a buffer against” potential cash outflows if investors exercise their put option on the 2027 convertible bonds, contends Daiwa. It keeps a Buy rating on GDS with a $28.50 price target