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GDS Holdings Ltd (GDS)
NASDAQ:GDS
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GDS Holdings
(NASDAQ:GDS)
Rating:68Neutral
Price Target:
$41.00
▲(11.66%Upside)
Positive Factors
International Expansion
DayOne's international business, where GDS holds a 35.6% stake, saw revenue surge 1.4 times year-over-year, driven by rising IT capacity utilization.
Market Demand
Very strong demand from hyperscalers in China, highlighted by a significant 152MW deal.
Revenue Growth
GDS reported a 12% year-over-year revenue growth in the China business, driven by a 15% expansion in the area utilized.
Negative Factors
Guidance Concerns
Some investors were disappointed with the guide for China and the lack of an accelerated international IPO pacing, leading to a stock decline.
Market Confusion
The market may have been confused by the de-consolidation of DayOne, which led to lower reported numbers and a negative initial reaction.
Supply Uncertainty
Uncertainty around chip supply in China is causing the company to be very cautious in accepting new orders.
GDS Holdings (GDS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.29B
Dividend YieldN/A
Average Volume (3M)1.90M
Price to Earnings (P/E)―
Beta (1Y)1.52
Revenue Growth9.42%
EPS Growth99.84%
CountryUS
Employees2,276
SectorTechnology
Sector Strength91
IndustryInformation Technology Services
Share Statistics
EPS (TTM)0.06
Shares Outstanding200,928,820
10 Day Avg. Volume2,425,910
30 Day Avg. Volume1,902,896
Financial Highlights & Ratios
PEG Ratio0.44
Price to Book (P/B)2.15
Price to Sales (P/S)0.00
P/FCF Ratio-16.47
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$39.70Price Target Upside8.12% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
GDS Holdings Business Overview & Revenue Model
Company DescriptionGDS Holdings Limited, together with its subsidiaries, develops and operates data centers in the People's Republic of China. The company provides colocation services comprising critical facilities space, customer-available power, racks, and cooling; managed hosting services, including business continuity and disaster recovery, network management, data storage, system security, operating system, database, and server middleware services; managed cloud services; and consulting services. It serves cloud service providers, large Internet companies, financial institutions, telecommunications and IT service providers, and large domestic private sector and multinational corporations. The company was founded in 2001 and is headquartered in Shanghai, the People's Republic of China.
How the Company Makes MoneyGDS Holdings makes money primarily through leasing space in its data centers to clients. The company's revenue model is based on long-term contracts with tenants, which include large-scale internet companies, financial services institutions, and other enterprise clients. These contracts often include fees for power usage, cooling, and additional managed services. The company also benefits from economies of scale as it expands its infrastructure and client base. Strategic partnerships with technology and telecommunications firms further enhance its service offerings and client acquisition capabilities, contributing to its financial growth.
GDS Holdings Earnings Call Summary
Earnings Call Date:May 20, 2025
(Q1-2025)
| % Change Since: 35.60%|
Next Earnings Date:Aug 26, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong performance by GDS Holdings with significant revenue and EBITDA growth, successful asset monetization, and strategic expansions both domestically and internationally. However, there are concerns about decreasing MSR per square meter, potential short-term AI chip supply issues, and regulatory challenges in China. Overall, the positive aspects outweigh the negatives.Q1-2025 Updates
Positive Updates
Strong Revenue and EBITDA Growth
In the first quarter of 2025, GDS Holdings achieved revenue growth of 12% and adjusted EBITDA growth of 15% year-on-year, marking the highest growth rate in the past two years.
Mega Deal in AI Sector
GDS signed a major deal of 152 megawatts during Q1 2025, indicating strong demand in the AI era. The order requires data center delivery within six months, with full move-in commitments within the following six months.
Successful Asset Monetization
Completed the first ADS transaction in Q1 2025 and made significant progress on the C-REIT transaction, providing financing flexibility and enabling cash recycling in China.
Expansion of DayOne Subsidiary
DayOne added 70 megawatts of new commitments, expanded into new markets in Thailand and Europe, and is on track to meet its target of 1 gigawatt of total power committed within three years.
Financial Discipline and Deleveraging
Maintained strict financial discipline with a focus on creating equity value with low investment and financing risk. The adjusted EBITDA margin increased to 48.6% from 46.9% year-on-year.
Negative Updates
Decrease in MSR Per Square Meter
The MSR per square meter decreased by 2.6% compared to Q1 2024, affecting the revenue growth potential.
Short-term Uncertainty in AI Chip Supply
There are short-term uncertainties around AI chip supply in China, which could affect demand and deployment plans.
Possible Regulatory Challenges in China
Concerns were raised about new government regulations controlling the expansion of AI data centers, which may affect private companies like GDS Holdings.
Company Guidance
During the first quarter of 2025, GDS Holdings Limited provided guidance indicating robust growth and strategic positioning in the AI-driven market. The company reported a 12% year-on-year increase in revenue and a 15% growth in adjusted EBITDA, marking the highest growth rate in two years. The utilization rate reached 75.7%, with gross move-ins of approximately 20,000 square meters concentrated in Tier 1 markets. GDS highlighted a mega deal of 152 megawatts signed during the quarter, showcasing strong demand for AI inferencing in these markets. The company anticipates delivering around 40% of its current backlog by year-end and is well-prepared with 900 megawatts of capacity for future developments. Financially, GDS demonstrated significant progress in asset monetization, completing its first ADS transaction and advancing its C-REIT transaction. For the full year, GDS maintained its guidance for revenue and adjusted EBITDA growth, projecting high-single-digit percentage increases in quarterly adjusted EBITDA year-on-year, despite the deconsolidation of assets due to the ABS transaction.GDS Holdings Financial Statement Overview
Summary
GDS Holdings has demonstrated strong revenue growth and improved profitability margins, with a notable increase in total revenue and enhanced operational efficiency. However, challenges remain due to high leverage and negative free cash flow.Income Statement
GDS Holdings exhibits strong revenue growth with a notable increase in total revenue from 2024 to TTM (Trailing-Twelve-Months). The gross profit margin remains robust, although the net profit margin is buoyed by a large net income figure in the TTM, which requires careful interpretation. The EBIT and EBITDA margins have improved significantly over the years, indicating enhanced operational efficiency.75
Positive
Balance Sheet
The balance sheet reflects moderate stability with a substantial stockholders' equity base. However, the debt-to-equity ratio is relatively high, suggesting leveraged financial operations. The equity ratio indicates a strong asset base, but the significant amount of total liabilities presents a potential risk factor.65
Positive
Cash Flow
The cash flow statement highlights a substantial increase in operating cash flow, which is a positive indicator of liquidity. The company has managed to improve its free cash flow position from a deficit, though it remains negative in the TTM. The operating cash flow to net income ratio is robust, indicating efficient cash management relative to earnings.70
Positive
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 10.32B | 9.96B | 9.33B | 7.82B | 5.74B |
| Gross Profit | 2.22B | 1.92B | 1.94B | 1.78B | 1.55B |
| EBITDA | 4.39B | 1.36B | 4.19B | 3.36B | 2.43B |
| Net Income | 3.43B | -4.29B | -1.27B | -1.19B | -669.21M |
Balance Sheet | |||||
| Total Assets | 73.65B | 74.45B | 74.81B | 71.63B | 57.26B |
| Cash, Cash Equivalents and Short-Term Investments | 7.87B | 7.71B | 8.61B | 9.97B | 16.26B |
| Total Debt | 44.46B | 47.99B | 44.68B | 37.79B | 24.63B |
| Total Liabilities | 49.98B | 54.32B | 50.63B | 47.10B | 31.69B |
| Stockholders Equity | 23.54B | 19.96B | 24.07B | 24.47B | 25.57B |
Cash Flow | |||||
| Free Cash Flow | -1.03B | -4.19B | -4.95B | -8.50B | -7.70B |
| Operating Cash Flow | 1.94B | 2.07B | 2.86B | 1.20B | 320.89M |
| Investing Cash Flow | -8.76B | -6.33B | -11.27B | -13.69B | -9.38B |
| Financing Cash Flow | 17.06B | 3.14B | 4.86B | 8.12B | 20.14B |
GDS Holdings Technical Analysis
Positive
36.72
Price Trends
29.42
Positive
28.39
Positive
26.24
Positive
Market Momentum
2.34
Negative
65.11
Neutral
49.57
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GDS, the sentiment is Positive. The current price of 36.72 is above the 20-day moving average (MA) of 33.53, above the 50-day MA of 29.42, and above the 200-day MA of 26.24, indicating a bullish trend. The MACD of 2.34 indicates Negative momentum. The RSI at 65.11 is Neutral, neither overbought nor oversold. The STOCH value of 49.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GDS.
GDS Holdings Risk Analysis
GDS Holdings disclosed 119 risk factors in its most recent earnings report. GDS Holdings reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 2 New Risks
1.
If GDSH's beneficial ownership in GDSI falls below 50% or cease to have the ability to appoint the majority of the board of directors of GDSI or otherwise ceases to have the control over the management and policies of GDSI, a change of control would be triggered under certain of GDSI's real property leases, customer agreements and/or loan agreements, and the business development, financial condition and future prospects of GDSH and/or GDSI may be materially and adversely affected. Q4, 2023
2.
Our customer agreement commitments are subject to reduction, potential cancellation and non-renewal upon expiry; if renewed, the renewal may be at lower pricing terms or for a lower commitment of utilization. Q4, 2023
GDS Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $3.21B | 19.24 | 21.21% | ― | -0.64% | 30.96% | |
68 Neutral | $7.29B | ― | 0.74% | ― | 9.42% | 99.84% | |
67 Neutral | $2.70B | 7.04 | 12.88% | ― | -5.82% | 469.88% | |
67 Neutral | $2.18B | 137.59 | 2.28% | ― | 13.93% | ― | |
64 Neutral | $436.94M | 1.98 | 30.92% | ― | -14.38% | ― | |
63 Neutral | $34.55B | 5.25 | -11.40% | 1.91% | 5.47% | -20.39% | |
52 Neutral | $9.03B | 37.67 | 22.47% | ― | -8.20% | ― |
* Technology Sector Average
Performance Comparison
GDS
GDS Holdings
36.72
25.97
241.58%
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WNS
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CNDT
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2.83
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-30.47%
DXC
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14.83
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KD
Kyndryl Holdings Incorporation
39.06
12.43
46.68%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.