2025-05-28-Jefferies-万国数据（VNET）_2025年第一季度业绩超预期；被低估的增长故事仍在继续_14页_4mb

VNET Group 1Q25 Summary and Analysis

Core Content

VNET reported a 18% revenue growth in 1Q25, exceeding both the JEFe (5.6%) and consensus (2.1%). The adjusted EBITDA grew by 26%, outperforming the JEFe (14.6%) and consensus (8.0%). The wholesale revenue was the main driver of this performance, with an 87% YoY increase, attributed to a 3.6ppt rise in utilization rate (UTR) to 76.2% and no price erosion. VNET signed 61MW of wholesale contracts (with 55MW disclosed in the previous quarter) and 4MW of retail contracts, while retail MRR increased by 1.8% YoY and 1.2% QoQ, likely due to the adoption of AI-driven models by customers.

The company's EBITDA margin improved to 30.4%, up 1.9ppt YoY, and cash generation from operations increased to 43.1%. Despite this, VNET maintains its 2025 revenue and EBITDA guidance, and the current forecasts are slightly above this guidance.

Key Financial Highlights

• Revenue Growth: 18% YoY, 6% above JEFe, 2% above consensus
• Adjusted EBITDA Growth: 26% YoY, 14.6% above JEFe, 8.0% above consensus
• Wholesale Revenue Growth: 87% YoY, 24% above JEFe
• Utilization Rate: 76.2% (up 3.6ppt QoQ)
• Retail MRR (per cabinet): 1.8% YoY increase, likely due to AI adoption
• EBITDA Margin: 30.4% (up 1.9ppt YoY)
• Cash GM: 43.1% (up 3.1ppt YoY)

Management Outlook and Investor Concerns

• Management remains confident in demand, stating that the H20 ban caused only a temporary disruption to large CSP/Internet players, and their plans are now back on track.
• The chip shortage is not expected to be a headwind for data center demand in China, as NVDA may introduce a downgraded version of H20 in July/Aug, which could drive IDC demand in 2H25.
• Large CSP/Internet players have sufficient chip inventories to support demand into 1H26.

Valuation and Target Price

• VNET is currently trading at ~11x 2025 EV/EBITDA, with a 28% CAGR.
• The target multiple has been reduced to 20x 2025 EV/EBITDA, resulting in a new price target (PT) of US$15.81, which is below the DCF value of US$22.94.
• The equity value per ADS is US$15.81, representing a +182% upside from the prior trading day's closing price of US$5.60.

Investment Thesis

• VNET is a provincial SOE with a US$300m investment from its largest shareholder.
• The company has secured more power resources and recycled capital by selling a 49% stake in its wholesale project at 10x 2026E EV/EBITDA.
• Accelerating demand in the wholesale sector, driven by AI and industry consolidation, allows VNET to capture more market share.
• Retail revenue is expected to recover due to SMEs' efforts to develop AI applications using low-cost, powerful local models.

Key Assumptions and Projections

• Wholesale contracts: 400MW in 2025E, 450MW in 2026E
• Retail MRR per cabinet: Expected to rise to ~RMB 8,962 by 2030E
• Ulanqab Wholesale MRR: Expected to rise from ~RMB 4,200 in 2024 to ~RMB 5,226 in 2030E
• Utilization rate: Expected to reach 64% by 2030E
• EBITDA margin: Projected to rise to 38.8% by 2030E

Risk and Reward Scenarios

• Base Case: PT of US$15.81, +182% from current price
• Upside Scenario: PT of US$30.24, +440% from current price
• Downside Scenario: PT of US$3.25, -42% from current price

Sustainability and ESG Focus

• Carbon neutrality through a "4C" pathway: Carbon Avoidance, Carbon Reduction, Carbon Offset, and Carbon Empowerment.
• ESG Targets:
  1. 100% renewable energy use by 2030
  2. Operational carbon neutrality in Scope 1 and Scope 2 emissions by 2030
  3. Reliable encryption methods and compliance with regulations to ensure data security
• Key Questions for Management:
  1. Investment required to reduce PUE of older IDCs
  2. Impact of renewable energy investment on capex and returns

Catalysts

• Additional retail or wholesale contracts or customers
• HK IPO announcement, which could reduce geopolitical risks

Financial Tables Summary

Valuation Summary

Conclusion

VNET has demonstrated strong growth in 1Q25, driven by wholesale demand and margin improvement. Despite some challenges, the company remains bullish on demand, especially in the AI and data center sectors. The price target has been adjusted to US$15.81, reflecting a 20x 2025 EV/EBITDA multiple. VNET's sustainability efforts and ESG focus are also highlighted, with a clear path to carbon neutrality and renewable energy adoption. The investment thesis remains strong, with positive outlooks on future growth and revenue diversification.