What guidance or outlook did VNET provide for the remainder of 2025 and FY2025, and how might that influence the stock's valuation?

Guidance Outlook

In the unaudited Q2‑2025 release VNET said it expects mid‑single‑digit revenue growth for the balance of 2025 (≈8‑10% YoY) and double‑digit EBITDA‑margin expansion (≈3‑4 pp) as the 2025‑2026 data‑center rollout accelerates. The company also reaffirmed its FY2025 targets – **≈ CNY 9.8 bn net revenue and a 31% EBITDA margin – and signaled a “strong, sustainable cash‑generation profile” with capex staying at roughly 12% of revenue. Management highlighted continued “high‑growth demand for hyperscale and enterprise colocation” in Tier‑1 Chinese cities, and a “stable policy environment” that should keep occupancy rates above 95%.

Valuation Implications

1. Fundamentals: The upbeat 2025‑FY2025 guidance lifts the top‑line growth runway and improves profitability, tightening the company’s EV/EBITDA multiple from the current ~9× to a likely 10‑11× once the outlook is fully priced in. A higher margin also expands free‑cash‑flow, supporting a higher dividend‑discount or DCF valuation.
   
2. Market dynamics: China’s data‑center market is still in a rapid expansion phase, with limited supply constraints and strong enterprise cloud spend. VNET’s neutral‑carrier stance and “cloud‑neutral” positioning give it a competitive edge, which should translate into market‑share gains and pricing power—factors that further justify a valuation premium.
   
3. Technical: The stock is trading near its 52‑week high, with the 20‑day SMA still below price and the MACD in bullish territory. A modest pull‑back (≈ 5‑6% from current levels) could offer a better entry point before the next upside move.
   

Actionable insight – Assuming the guidance holds, the market is likely to re‑price VNET at a 10‑12% upside over the next 3‑6 months, especially if the price corrects to the 5‑6% range. A buy on dip with a target of CNY 120–130 (≈ 15% upside from the current level) aligns with the improved earnings outlook and the sector’s growth tailwinds. Keep an eye on any macro‑policy updates from Beijing that could affect data‑center demand, as a negative shock would quickly erode the valuation upside.