Key takeaway

The company secured scarce core infrastructure resources, including land, energy consumption quotas, and power capacity, near tier-one cities at an early stage. It currently operates nine data center campuses worldwide, with a combined planned capacity of 6 GW, maintaining industry leadership. The company has achieved notable results in expanding its AIDC market presence. Rapid growth in its intelligent computing services business has driven strong revenue growth. The company will further increase resource investment in AIDC to expand its market share. Meanwhile, after establishing an integrated computing power center network in China, the company launched its global strategy and has now implemented projects in Hong Kong and Indonesia. Currently, the global market remains in a phase with “strong AI demand and tight computing power supply,” and the company’s AIDC business and global expansion are expected to continue to benefit.

Event

The company released its 1H 26 earnings results. In 1H26, the company recorded revenue of RMB3.746bn, up 50.05% YoY; net profit attributable to the parent company of RMB1.203bn, up 36.43% YoY; net profit attributable to the parent company excluding non-recurring gains and losses of RMB1.206bn, up 37.34% YoY; and net cash flow from operating activities of RMB2.958bn, up 30.78% YoY.

Quick Take

1. Recurring performance continued to grow QoQ, with the AIDC computing power business becoming the core growth engine.

In 1H26, the company recorded operating revenue of RMB3.746bn, up 50.05% YoY; net profit attributable to the parent company was RMB1.203bn, up 36.43% YoY. Including the financial results of the assets in the REIT's initial offering, net profit attributable to the parent company would have reached RMB1.32bn, up 50% YoY. Net profit attributable to the parent company excluding non-recurring gains and losses was RMB1.206bn, up 37.34% YoY; net cash flow from operating activities was RMB2.958bn, up 30.78% YoY. The company expects net cash flow from operating activities to exceed RMB6bn in 2026. In 2Q26, the company generated operating revenue of RMB1.906bn, up 46.83% YoY and 3.62% QoQ. Net profit attributable to the parent company was RMB621mn, up 37.45% YoY and 6.70% QoQ. Net profit attributable to the parent company excluding non-recurring gains and losses was RMB624mn, up 38.69% YoY and 7.20% QoQ. Since 2025, the company's net profit attributable to the parent company excluding non-recurring gains and losses has increased QoQ in every quarter, mainly driven by higher utilization rates at newly delivered computing power centers and incremental contributions from the growth of its AIDC computing power business.

In 1H26, the company's AIDC computing power business generated revenue of RMB1.995bn, up 126.24% YoY and accounting for 53.26% of the company's operating revenue. The company has established a robust supply chain covering core hardware such as servers, memory, transceivers, and switches. Its fleet of self-owned highperformance servers ranks among the largest in the industry. In only about three years, the computing power business has surpassed the cabinet business, which has operated for 17 years, across all key metrics and be come the company's core growth engine.

2. New deliveries reached a record high in 2025 and are expected to increase further in 2026.

The company has deployed nine artificial intelligence infrastructure clusters worldwide, with planned aggregate computing capacity of approximately 6 GW. Domestic footprint: The company has planned and established seven artificial intelligence infrastructure clusters across six core regions in China: Langfang in the Beijing- Tianjin-Hebei region, Pinghu in the Yangtze River Delta, Foshan and Huizhou in the Greater Bay Area, Chongqing in the Chengdu-Chongqing Economic Circle, Lanzhou in Gansu, and Danzhou in Hainan. The clusters have a total planned computing power capacity of approximately 5.4 GW, largely completing the domestic framework for an “integrated computing power center system.” Overseas expansion: In 2026, the company adopted a dual approach of expanding its workforce services and asset investment overseas. Through both greenfield development and acquisition, it rapidly established two core overseas hubs in Sha Ling, Hong Kong, and Batam, Indonesia. Their combined planned computing capacity is approximately 600 MW in the short to medium term, while the Batam campus can ultimately be expanded to GW scale.

In 2025, the company delivered a cumulative 220 MW of computing power centers, nearly all of which have achieved utilization rates of over 80%. In 2026, the company expects to deliver more than 300 MW of new capacity in China, including a standalone 200 MW intelligent computing center at the Langfang campus, 50 MW at the Chongqing campus, and 40 MW at the Huizhou campus. Delivery volume will reach a record high again. Meanwhile, 60 MW at the Batam campus in Indonesia will also be delivered this year.

3. Earnings forecast and investment recommendation

The company secured scarce core infrastructure resources, including land, energy consumption quotas, and power capacity, near tier-one cities at an early stage. It currently operates nine data center campuses worldwide, with a combined planned capacity of 6 GW, maintaining industry leadership. The company has achieved notable results in expanding its AIDC market presence. Rapid growth in its intelligent computing services business has driven strong revenue growth. The company will further increase resource investment in AIDC to expand its market share. Meanwhile, after establishing an integrated computing power center network in China, the company launched its global strategy and has now implemented projects in Hong Kong and Indonesia. Currently, the global market remains in a phase with “strong AI demand and tight computing power supply,” and the company’s AIDC business and global expansion are expected to continue to benefit. We forecast its net profit attributable to the parent company of RMB3.187bn, RMB3.922bn, and RMB4.905bn for 2026-2028, respectively, implying P/E of 33.5x, 27.2x, and 21.8x based on the current market cap. Maintain “Buy” rating.

4. Risks:

Potential delays in IDC project construction and delivery. Should the IDC project construction encounter unforeseen delays for various reasons, the subsequent postponement in project delivery may weigh on the company's future revenue growth.

Intensifying market competition. IDC cabinet rents are dictated by market forces, and an escalation in the overall supply could tip the balance towards oversupply. Such a scenario may drive down cabinet rental prices, thereby putting pressure on both revenue streams and profit margins for the company.

Market demand may fall short of expectations. Customers pay rent once cabinets are deployed. If future AI business development for customers is subpar, it will lead to a slower deployment pace for the cabinets, thereby resulting in slower revenue growth for the company.

Risk of changes in national energy conservation policies. In December 2021, the Hebei Provincial Development and Reform Commission issued a policy notice stating that by 2025, large and ultra -large existing data centers with a Power Usage Effectiveness (PUE) above 1.3 must be decommissioned or shut down in accordance with regulations. Currently, the design PUE for the company's data centers under delivery or construction has been reduced to below 1.3, and the actual PUE of most operational data centers has also dropped below 1.3. However, the final PUE values still require inspection and certification by relevant authorities. There remains a risk that actual operational performance may not meet the sub-1.3 requirement, or that the government may introduce even stricter energy-saving policies in the future, which could lead to operational risks or economic losses for the company.