VNET Group, Inc. Sponsored ADR (VNET) AI Stock Analysis

• Market Cap: $2.33B
• Dividend Yield: N/A
• Average Volume (3M): 5.35M
• Price to Earnings (P/E): 444.1
• Beta (1Y): 1.44
• Revenue Growth: 18.00%
• EPS Growth: N/A
• Country: US
• Employees: 2,581
• Sector: Technology
• Sector Strength: 87
• Industry: Information Technology Services
• EPS (TTM): >-0.01
• Shares Outstanding: 263,895,600
• 10 Day Avg. Volume: 6,672,619
• 30 Day Avg. Volume: 5,345,380
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 2.06
• Enterprise Value/Revenue: 0.53
• Enterprise Value/Gross Profit: 2.28
• Enterprise Value/Ebitda: 2.31
• 1Y Price Target: $15.04
• Price Target Upside: 73.67% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

• Rating: 55 Neutral
• Price Target: $8.00 ▼(-7.62% Downside)

VNET's overall stock score is driven by strong earnings call results, indicating robust growth and operational efficiency. However, financial performance is hampered by high leverage and cash flow issues, and the stock appears overvalued based on its P/E ratio. Technical indicators show moderate momentum, contributing to a balanced outlook.

Positive Factors

Financial Performance

VNET reported revenue increased 22% YoY to Rmb2.43bn with adj. EBITDA growing 28% YoY, indicating strong financial performance.

New Orders

Potential new orders from the tendering and the 66MW order renegotiation present upside potential.

Shareholder Returns

The company announced its US$50 million share repurchase program, which should provide share-price support.

Negative Factors

Financial Constraints

No orders in 2Q25 was a result of financial constraints as more capacity delivery in 2025 could further increase its leverage ratio.

Retail IDC Performance

Retail IDC revenue mildly declined 1% YoY, indicating a slight downturn in this segment.

VNET Group, Inc. Sponsored ADR Business Overview & Revenue Model

Company Description

VNET Group, Inc., an investment holding company, provides hosting and related services in China. It offers managed hosting services consisting of managed retail services, such as colocation services that dedicate data center space to house customers' servers and networking equipment, as well as allow customers to lease partial or entire cabinets for their servers; server administration services; interconnectivity services that allow customers to connect their servers; value-added services, including hybrid IT, bare metal, firewall, server load balancing, data backup and recovery, data center management, server management, and backup server services; cloud services that allow customers to run applications over the internet using IT infrastructure; VPN Services that extend customers' private networks by setting up connections through the public internet. The company also provides operating system support and assistance with updates, server monitoring, server backup and restoration, server security evaluation, firewall services, and disaster recovery services; site selection, planning, design, and construction services for wholesale and retail data centers. It serves information technology and cloud services, communications and social networking, gaming and entertainment, e-commerce, automobile, financial services, and blue-chip and small-to-mid-sized enterprises; government agencies; individuals; and telecommunication carriers. As of December 31, 2021, it operated 40 self-built data centers and 64 partnered data centers with 78,540 cabinets under management. The company was formerly known as 21Vianet Group, Inc. and changed its name to VNET Group, Inc. in October 2021. VNET Group, Inc. was founded in 1999 and is headquartered in Beijing, the People's Republic of China.

How the Company Makes Money

VNET generates revenue primarily through its data center services, which include colocation, managed hosting, and cloud computing solutions. The company charges customers based on the amount of rack space, power consumption, and additional services utilized. Key revenue streams include recurring fees from long-term contracts with enterprises and government clients, as well as one-time project fees for setup and installation. VNET also benefits from partnerships with major technology firms, which enhance its service offerings and expand its customer base. Additionally, the increasing demand for digital transformation and cloud-based services amid the growth of the internet economy in China significantly contributes to its earnings.

VNET Group, Inc. Sponsored ADR Financial Statement Overview

Summary

VNET demonstrates consistent revenue growth and improved operational efficiency, but faces challenges with profitability due to high expenses and leverage. The balance sheet is heavily leveraged, increasing financial risk, and cash flow issues highlight potential liquidity concerns.

Income Statement

VNET has shown consistent revenue growth over the years, with a TTM growth rate of 5.12%. The gross profit margin has improved slightly to 23.32% in the TTM, indicating better cost management. However, the net profit margin remains low at 0.63%, suggesting challenges in converting revenue into profit. The EBIT and EBITDA margins have improved, reflecting operational efficiency gains, but the overall profitability is still constrained by high expenses.

Balance Sheet

The company's debt-to-equity ratio has increased to 3.94 in the TTM, indicating a high level of leverage, which could pose financial risks. The return on equity is low at 0.91%, reflecting limited profitability relative to shareholder equity. The equity ratio is stable, but the high debt levels overshadow the balance sheet's strength.

Cash Flow

VNET's cash flow situation is concerning, with negative free cash flow growth and a free cash flow to net income ratio of -1.30, indicating that the company is not generating sufficient cash to cover its net income. The operating cash flow to net income ratio is low, suggesting potential liquidity issues.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	9.05B	8.26B	7.41B	7.07B	6.19B	4.83B
Gross Profit	2.11B	1.83B	1.29B	1.36B	1.44B	1.08B
EBITDA	2.08B	2.22B	-366.56M	1.24B	2.27B	-1.21B
Net Income	56.99M	183.20M	-2.64B	-763.92M	500.10M	-2.69B
Balance Sheet
Total Assets	39.71B	32.36B	30.39B	26.95B	23.10B	19.37B
Cash, Cash Equivalents and Short-Term Investments	4.16B	1.55B	2.60B	7.66M	100.02M	3.00B
Total Debt	24.34B	18.09B	17.17B	14.76B	11.12B	8.25B
Total Liabilities	32.09B	25.44B	23.87B	19.97B	15.49B	12.48B
Stockholders Equity	6.17B	6.37B	6.01B	6.61B	7.24B	6.56B
Cash Flow
Free Cash Flow	-2.55B	-3.12B	-997.15M	-450.61M	-1.35B	-1.79B
Operating Cash Flow	1.97B	2.01B	2.06B	2.60B	1.39B	714.24M
Investing Cash Flow	-6.65B	-4.39B	-3.91B	-3.56B	-3.77B	-3.89B
Financing Cash Flow	1.90B	-627.65M	3.94B	2.30B	967.58M	4.16B

VNET Group, Inc. Sponsored ADR Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 8.66
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VNET, the sentiment is Positive. The current price of 8.66 is above the 20-day moving average (MA) of 7.96, above the 50-day MA of 7.72, and above the 200-day MA of 7.01, indicating a bullish trend. The MACD of 0.12 indicates Negative momentum. The RSI at 59.64 is Neutral, neither overbought nor oversold. The STOCH value of 65.79 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VNET.

VNET Group, Inc. Sponsored ADR Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
INFY	75 Outperform	$69.23B	21.75	30.46%	3.02%	4.52%	-0.22%
IBM	70 Outperform	$226.82B	39.49	22.73%	2.75%	2.69%	-31.73%
DXC	68 Neutral	$2.59B	7.04	12.60%	―	-4.93%	497.03%
GDS	68 Neutral	$7.15B	2,383.45	1.40%	―	7.29%	―
Sector *	61 Neutral	$35.48B	7.63	-10.11%	1.88%	8.73%	-9.23%
VNET	55 Neutral	$2.33B	444.10	1.02%	―	18.00%	―
BBAI	42 Neutral	$1.88B	―	-222.48%	―	3.46%	-74.21%