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GDS Holdings Ltd (GDS)
NASDAQ:GDS
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GDS Holdings
(NASDAQ:GDS)
Rating:65Neutral
Price Target:
$27.00
▲(3.13%Upside)
Positive Factors
Demand and Orders
GDS won total new orders of 151.6 MW from two projects, indicating a strong demand for its services.
Market Outlook
The outlook for the Chinese data center market has improved, with the Chinese government reversing its multi-year efforts to control consumer technology proliferation.
Revenue Growth
The international business, in which GDS holds a 35.6% stake, saw its revenue surge 3.3 times year-over-year, driven by increased IT capacity utilization.
Negative Factors
Guidance Concerns
Adjusted EBITDA growth guidance for the upcoming fiscal year is slightly below market expectations due to the impact of asset-backed securities.
Investor Sentiment
Some investors were disappointed with the guide for China and the lack of an accelerated international IPO pacing, leading to a stock decline.
Supply Chain 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
$5.14B
Dividend YieldN/A
Average Volume (3M)2.09M
Price to Earnings (P/E)―
Beta (1Y)1.58
Revenue Growth9.42%
EPS Growth99.84%
CountryUS
Employees2,276
SectorTechnology
Sector Strength82
IndustryInformation Technology Services
Share Statistics
EPS (TTM)0.06
Shares Outstanding188,948,820
10 Day Avg. Volume2,953,778
30 Day Avg. Volume2,090,022
Financial Highlights & Ratios
PEG Ratio-0.01
Price to Book (P/B)0.59
Price to Sales (P/S)0.00
P/FCF Ratio-2.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$38.68Price Target Upside47.75% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
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 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 Earnings Call Summary
Earnings Call Date:May 20, 2025
(Q1-2025)
| % Change Since: -3.32%|
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 shows strong recovery with positive revenue and net income growth, improved profitability metrics, and a healthier balance sheet with reduced leverage. However, high debt levels and ongoing negative free cash flow remain concerns.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.76
Positive
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.70
Positive
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.62
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 | 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
Positive
26.18
Price Trends
24.65
Positive
28.06
Negative
24.30
Positive
Market Momentum
-0.17
Positive
51.45
Neutral
70.75
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 26.18 is below the 20-day moving average (MA) of 26.30, above the 50-day MA of 24.65, and above the 200-day MA of 24.30, indicating a neutral trend. The MACD of -0.17 indicates Positive momentum. The RSI at 51.45 is Neutral, neither overbought nor oversold. The STOCH value of 70.75 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 (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $4.69B | ― | -6.85% | ― | 20.46% | 39.37% | |
66 Neutral | $2.61B | 26.52 | -41.63% | ― | 13.21% | 109.61% | |
65 Neutral | $5.14B | ― | 0.74% | ― | 9.42% | 99.84% | |
64 Neutral | $3.15B | ― | -2.75% | ― | 13.39% | 16.12% | |
62 Neutral | $11.90B | 10.64 | -7.50% | 2.90% | 7.41% | -8.19% | |
58 Neutral | $1.63B | 103.06 | 2.28% | ― | 13.93% | ― | |
49 Neutral | $3.36B | ― | -33.09% | ― | 13.85% | 3.47% |
* Technology Sector Average
Performance Comparison
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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.