Vnet Group (VNET): A Data Center Milestone Comes With A Catch
On August 18, Vnet Group Inc. (NASDAQ:VNET) disclosed that its wholesale data center capacity surpassed 1 gigawatt for the first time, a milestone in the AI infrastructure race. Revenue surged 14.2% year over year to RMB2.78 billion, with wholesale IDC services generating nearly 40% of that total. The company's wholesale segment drove the quarter, with revenue increasing 29.3% to RMB1.10 billion and capacity in service rising 49.4% to 1,007 megawatts, surpassing the gigawatt mark.
Utilized capacity climbed 45.5% to 744 megawatts, indicating that new capacity is being put to use. The order book is robust, with 347 megawatts of new orders in the second quarter and total demand visibility exceeding 1.2 gigawatts. Management also revealed a strategic partnership with CATL to develop an integrated compute-energy ecosystem.
Adjusted EBITDA grew 25.4% to RMB918.3 million, and adjusted net income turned positive at RMB7.4 million. However, margins are narrowing due to higher utility costs, and the company is grappling with power availability and chip supply chain constraints. Net debt is at 4.6 times adjusted EBITDA, and capital expenditures are projected at RMB10 billion to RMB12 billion.
Despite this, Vnet's forward P/E ratio of 17.95 is not overly concerning given the strong growth guidance.
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