GDS Holdings (GDS) AI Stock Analysis

• Market Cap: $5.07B
• Dividend Yield: N/A
• Average Volume (3M): 3.37M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.64
• Revenue Growth: 9.84%
• EPS Growth: 74.75%
• Country: US
• Employees: 2,345
• Sector: Technology
• Sector Strength: 65
• Industry: Information Technology Services
• EPS (TTM): -0.83
• Shares Outstanding: 188,948,820
• 10 Day Avg. Volume: 1,974,733
• 30 Day Avg. Volume: 3,368,210
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $43.17
• Price Target Upside: 67.59% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 10

GDS Holdings shows a strong recovery in financial performance, driven by revenue and net income growth, along with a more stable balance sheet. Despite these improvements, high debt levels and negative free cash flow present risks. Technical indicators suggest bearish momentum, while valuation metrics are unattractive due to a negative P/E ratio. The earnings call indicates potential growth from new orders and asset monetization but also highlights challenges with utilization rates and CapEx. Overall, the stock's performance is improving but requires careful management to sustain growth.

Positive Factors

AI Demand

The company's focus on AI inferencing demand and new contracts suggests a strong future demand, enhancing the growth outlook.

New Orders

GDS won total new orders of 151.6 MW from two projects, indicating a strong demand for its services.

Revenue Growth

The China business showed a 9% year-over-year revenue growth in the fourth quarter, driven by an 11% expansion in the area utilized.

Negative Factors

EBITDA Guidance

Adjusted EBITDA growth guidance for the upcoming fiscal year is slightly below market expectations due to the impact of asset-backed securities.

Investor Expectations

Some investors were disappointed with the guide for China and the lack of an accelerated international IPO pacing, leading to a stock decline.

Market Reaction

The market may have been confused by the de-consolidation of DayOne, which led to lower reported numbers and a negative initial reaction.

GDS Holdings Business Overview & Revenue Model

Company Description

GDS 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 Money

GDS Holdings makes money primarily through its data center services, which include colocation, managed hosting, and managed cloud services. The company leases space in its data centers to clients, providing them with the infrastructure and environment necessary for their IT operations. Revenue is generated from leasing agreements, which often include long-term contracts and service fees. Additionally, GDS benefits from economies of scale due to its large and strategically located facilities. Partnerships with major technology and telecommunications companies also play a crucial role in enhancing its service offerings and expanding its market reach, contributing to its revenue growth.

GDS Holdings Financial Statement Overview

Summary

GDS Holdings demonstrates a strong recovery and positive growth trends, particularly in revenue and net income, with improved profitability metrics. The balance sheet shows enhanced stability with reduced leverage, though high debt levels still pose risks. Cash flow improvements are evident, but ongoing negative free cash flow warrants attention. Overall, the company's financial position is strengthening, but careful management is required to sustain this trajectory.

Income Statement

GDS Holdings has shown solid revenue growth over the years, with a 3.67% increase from 2023 to 2024 and a significant 38.69% increase from 2020 to 2024. The gross profit margin improved to 21.54% in 2024 from 19.31% in 2023, indicating better cost management. Net income turned positive in 2024, marking a recovery from previous losses, which reflects positively on net profit margin improvement. However, historical volatility in EBIT and EBITDA margins suggests operational challenges.

Balance Sheet

The debt-to-equity ratio decreased from 2.40 in 2023 to 1.89 in 2024, indicating a stronger equity base relative to debt. The equity ratio improved to 31.97% in 2024, reflecting a healthier balance sheet structure. Return on equity (ROE) was 14.55% in 2024, showing effective use of equity to generate profit. Despite these improvements, high levels of total debt remain a concern.

Cash Flow

Free cash flow improved but remained negative at -1.03 billion in 2024, showing a significant recovery from previous years. The operating cash flow to net income ratio suggests sufficient cash generation relative to net income. However, the consistently negative free cash flow points to potential liquidity concerns and capital expenditure challenges.

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
	EBIT
1.15B	-2.46B	551.78M	569.52M	672.94M
	EBITDA
4.39B	1.36B	4.19B	3.36B	2.43B
	Net Income Common Stockholders
3.43B	-4.29B	-1.27B	-1.19B	-669.21M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
7.87B	7.71B	8.61B	9.97B	16.26B
	Total Assets
73.65B	74.45B	74.81B	71.63B	57.26B
	Total Debt
44.46B	47.99B	44.68B	37.79B	24.63B
	Net Debt
36.59B	40.28B	36.08B	27.82B	8.37B
	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

• Technical Analysis Sentiment: Positive
• Last Price: 25.76
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 25.76 is above the 20-day moving average (MA) of 21.92, below the 50-day MA of 29.13, and above the 200-day MA of 22.26, indicating a neutral trend. The MACD of -0.76 indicates Negative momentum. The RSI at 55.63 is Neutral, neither overbought nor oversold. The STOCH value of 83.49 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GDS.

GDS Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FRSH	70 Neutral	$4.47B	―	-6.85%	―	20.46%	39.37%
GDS	65 Neutral	$5.07B	―	-4.32%	―	9.84%	74.75%
DOCN	61 Neutral	$2.84B	35.54	-41.63%	―	12.66%	2097.85%
Sector *	59 Neutral	$10.75B	10.37	-6.64%	3.00%	7.30%	-12.02%
VNET	58 Neutral	$1.72B	77.65	2.99%	―	9.68%	―
NCNO	58 Neutral	$2.70B	―	-3.54%	―	13.45%	12.86%
KC	51 Neutral	$3.35B	―	-32.59%	―	8.56%	13.34%