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GDS Holdings Delivers Mixed Q2 Results; Shares Fall 5%
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GDS Holdings Delivers Mixed Q2 Results; Shares Fall 5%

GDS Holdings (GDS) delivered mixed second-quarter results. Following the news, shares fell almost 5% to close at $53.16 on Tuesday.

The operator of high-performance data centers in China added several first-time orders and inked deals with hyperscale customers during the quarter.

Revenue was up 38.9% from the same quarter last year to RMB1.86 billion ($288.7 million), slightly below consensus estimates of RMB1.87 billion. Additionally, service revenue was up 39.6% year-over-year to RMB1.86 billion ($288.5 million).

Furthermore, the company delivered a diluted net loss of $0.28 per ADS (RMB1.79 per ADS), better than an expected net loss of $0.56.

GDS CEO William Huang stated, “We took the first step in our regionalization plan to expand our platform to South East Asia, laying the groundwork for capturing incremental growth opportunities in one of the world’s fastest developing digital regions.” (See GDS Holdings stock charts on TipRanks)

GDS Holdings has reiterated its full-year guidance and expects revenues to range between RMB7.7 billion and RMB8.0 billion. Adjusted EBITDA is expected to range between RMB3.66 – RMB3.8 billion.

In other news, GDS Holdings is in the process of acquiring a greenfield site in the Nusajaya Tech Park, Johor, Malaysia, where it plans to develop a data center campus. It has also completed the acquisition of a target company that owns a major data center site in Beijing.

The company has also entered into a joint venture with a local partner to acquire a site in Macau that it plans to develop into a data center. Additionally, it has inked a deal to acquire an industrial building in Kwai Chung, Hong Kong, where it also plans to set up a data center.

In response to the Q2 results, Goldman Sachs analyst Tina Hou reiterated a Buy rating on the stock and raised the price target to $113.1 from $111.7, implying 112.75% upside potential to current levels.

Consensus among analysts is a Strong Buy based on 6 Buys and 2 Holds. The average GDS Holdings price target of $99.30 implies 86.79% upside potential to current levels.

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