GDS Plans to Invest RMB 30-50 Billion in Data Centers Over Three Years, Raises Full-Year Sales Target to 1 GW
Nashnova编辑部
GDS Holdings (09698.HK) booked a record 260 MW in new contracts in Q2 and raised its full-year sales target to 1 GW, while committing RMB 30–50 billion over three years to data-center expansion — a heavy-asset bet on China's surging AI compute demand.
How much did Q2 actually earn?
Q2 net revenue reached RMB 3.088 billion, up 6.5% year-on-year; net profit attributable to shareholders hit RMB 838 million, a 27.1% net margin.
Adjusted EBITDA — the key metric for how much cash a data center truly generates — came in at RMB 1.406 billion, up 2.5% YoY, but the EBITDA margin slipped 1.8 percentage points to 45.5%.
This means → revenue is growing, but utility costs are growing faster. Gross margin fell 2.3 pp to 21.5%, eating into profit gains.
How strong are the new orders?
Q2 alone added 260 MW of new contracted capacity; the H1 total reached 470 MW — both all-time highs.
The committed backlog stands at 757 MW, mostly under take-or-pay contracts — meaning clients pay whether or not they use the capacity. This means → revenue visibility on these orders is unusually high.
Pre-commitment rates for projects under construction hit 89.2%, up 14.5 pp YoY. In plain terms = nearly nine-tenths of capacity still being built is already spoken for.
How much did the full-year guidance rise?
Full-year net revenue guidance was lifted to RMB 12.7–13.0 billion, implying 11.1%–13.7% YoY growth; adjusted EBITDA guidance to RMB 5.9–6.1 billion, or 9.2%–12.9% growth.
Capex guidance rose from roughly RMB 9 billion to RMB 10 billion, directly reflecting the accelerated build-out.
Chairman and CEO William Huang said on the earnings call: "This year's total sales bookings are on track to set a record, well above our original target."
Where will the RMB 30–50 billion come from?
Data centers are a capital-heavy business — a single large facility can cost billions of yuan and takes years to pay back. GDS has built a diversified funding toolkit: ABS securitization (packaging future rental income from completed facilities and selling it to investors for upfront cash) and an inaugural infrastructure REIT in 2025; a USD 300 million convertible preferred stock issue to Huatai Capital in early 2026.
Cash and equivalents stood at RMB 14.927 billion at quarter-end, up 13.7% YoY; the debt-to-asset ratio fell 6.44 pp to 61.25%. This means → the balance sheet has room for the planned expansion.
Q2 also booked RMB 960 million in equity-method investment income; if those funds are repatriated, they will support domestic project construction.
Why build in western China?
GDS runs a dual-track model: facilities in Beijing-Tianjin-Hebei, the Yangtze Delta, the Greater Bay Area, and Chengdu-Chongqing handle low-latency workloads such as financial trading and real-time inference. Nodes in Ulanqab, Zhongwei, and Horinger — national "East Data, West Computing" hubs — host large-scale offline training for foundation models.
In June 2026 the company signed a strategic pact with the Ulanqab municipal government to invest over RMB 30 billion over five years, building a gigawatt-scale, zero-carbon AI compute cluster.
In plain terms = western China has cheap wind and solar power plus large electricity quotas. Training foundation models is extremely power-hungry; moving those workloads west cuts long-term costs and satisfies hyperscaler clients' rising green-energy procurement mandates.
How did the stock react, and what is the key risk?
The day after results, GDS shares in Hong Kong gapped sharply higher, touching HKD 35.16 intraday for a peak gain of 13.3% — a short-term vote of confidence from the market.
This reflects investor focus on the order surge and guidance raise, rather than the modest margin compression in Q2.
The central question going forward: can RMB 30–50 billion of heavy-asset spending over three years convert into stable operating cash flow? Orders have locked in revenue expectations — the real test lies in delivery and collection.
Content is for reference only, not financial advice.