GDS-SW (09698.HK) opened 8.09% lower this morning (21st), hitting an intraday trough of HKD32.72. It was last at HKD34.18, down 13.6%, with turnover of 14.9607 million shares, involving HKD515 million.

Goldman Sachs’ research report covered GDS-SW, of which 1Q revenue was 1-2% below the broker’s and the market’s expectations, while adjusted EBITDA was broadly in line. The broker noted that the weak share price post-results was mainly due to lower actual move-ins in 1Q, delivery miss, and a slim decline in MSR per sqm.

Goldman Sachs expected the portfolio’s adjusted gross profit yield to remain within the 10-11% range as new orders are delivered. Assuming a six-year investment cycle, the broker estimated incremental investments could generate a 20% ROE. It maintained a Buy rating on GDS-SW, with a 12-month TP of HKD54 for its H shares and USD55 for GDS Holdings Limited (GDS.US).

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Daiwa released a research report on GDS-SW too. The company's core 1Q results met market expectations. Robust AI demand drove new bookings to a record high for a single quarter, but the earnings inflection point will be lagged considerably. Excluding one-off items, 1Q revenue was RMB2.9 billion and adjusted EBITDA was RMB1.4 billion, both up 8% YoY.

GDS-SW recorded net new bookings of about 200MW in 1Q, marking the highest single-quarter level on record. Since 2Q, it has secured a further 138MW of new orders from Shaoguan and Ulanqab, implying YTD bookings of over 340MW. Daiwa believed the full-year target of 500MW is achievable and could even surpass 800MW. However, as orders must go through approval, construction and ramp-up phases, initial revenue contribution typically takes around four quarters, with full impact requiring six to eight quarters, the broker expected 1Q orders will not make more meaningful contributions until in 2H27.
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