{"text":[[{"start":8.8,"text":"This article only represents the author's own views."}],[{"start":12.65,"text":"As the AI explosion accelerates, some of the best-positioned companies to capitalize from the boom are ones that can not only generate revenue from the business, but also possesses the financial capacity to develop the technology and supporting infrastructure."}],[{"start":28.25,"text":"That financial strength and strategic capital deployment were key highlights in the first-quarter financial report for GDS Holdings Ltd. (GDS.US; 9698.HK), released on May 20, which showcased the company’s strong and diversified capital structure to support its capital-intensive data center expansion. The report showed the company, China’s largest independent data center (IDC) operator, is using its financial resources to aggressively add new capacity to tap booming demand from clients running AI applications. Such applications consume huge amounts of computing power and electricity, which data centers excel at providing."}],[{"start":68.6,"text":"Its latest report showed GDS’ core business continues to grow at double-digit rates. Reflecting that, the company said it expects its revenue will grow to between 12.4 billion yuan ($1.83 billion) and 12.9 billion yuan this year, up about 11% at the midpoint from the 11.4 billion yuan it reported a year earlier."}],[{"start":90.05,"text":"The company is building momentum based on booming new orders from China’s largest tech companies racing to set up and operate powerful AI applications. Among China’s biggest tech names, Alibaba has announced it will invest over 380 billion yuan in cloud and AI infrastructure over the next three years. And TikTok owner ByteDance has said it plans to spend over 200 billion yuan on capital expenditures this year, about 65% of that domestically."}],[{"start":118,"text":"That strategic investment is driving exponential growth in usage of tokens, which are the main way that AI applications are consumed. Daily token usage in China reached more than 140 trillion in March this year, up 40% from just three months earlier, according to the National Statistics Bureau."}],[{"start":136.25,"text":"“Over the past few quarters, we have seen an unprecedented growth in data center demand driven by AI,” said GDS Chairman William Huang on the company’s latest earnings call. “We believe this is the beginning of a multiyear growth story, supported by increasing availability of domestic chips. Customers are planning their future deployments at unprecedented scale with a high degree of conviction.”"}],[{"start":158.65,"text":"The surging demand was reflected throughout GDS’ report, led by about 200 MW in new bookings during the three-month period, a quarterly record. The business has continued to boom, with new bookings this year reaching more than 340 MW as of late May. That flood of interest has driven the company’s backlog to almost 600 MW, executives said on the call."}],[{"start":181.9,"text":"“As these commitments materialize, our growth will start to accelerate,” Huang said. “AI in China is a transformational opportunity. We are super motivated to support this development and we will commit all the resource requirement to the expansion of our AI infrastructure platform.”"}],[{"start":198.75,"text":"Accelerated infrastructure investment"}],[{"start":201.35,"text":"To capture the big demand, GDS has committed to investing between 30 billion yuan and 50 billion on capex over the next three years, which would represent the largest investment program in the company’s 25-year history. The company plans to spend about 9 billion yuan this year, which is already more than double the 4.3 billion yuan for 2025. The 2026 spending plan implies an additional 21 billion yuan to 41 billion yuan in capex for 2027 and 2028 combined, reflecting GDS’ sustained commitment to scaling its AI infrastructure platform."}],[{"start":242.45,"text":"The company has initiated construction of 100,000 square meters of new space with 400 MW of capacity over the last 15 months alone, with almost all of that pre-committed, Huang said."}],[{"start":256.5,"text":"The strategic expansion is supported by a well-structured capital plan, including prudent debt, and GDS reported short-term debt of 9.37 billion yuan at the end of March, roughly double the 4.74 billion yuan it had a year ago. Its long-term debt was more stable, falling slightly to 36.5 billion yuan at the end of March from 37.8 billion yuan a year earlier."}],[{"start":284.05,"text":"The company also strengthened its equity base through a convertible preferred share sale during the quarter that raised 2.1 billion yuan. It has also strategically raised funds through a $385 million transaction from the sale of equity in its investment in DayOne, previously its international arm and now an independently operated entity. Following the transaction, GDS retains approximately 19.9% equity in DayOne, with the remaining stake valued at over $2.2 billion based on the C-round pricing, suggesting potential upside for future capital gains."}],[{"start":320.85,"text":"GDS also optimized its capital structure by monetizing its China real estate assets into a publicly traded real estate investment trust (REIT) last year. In addition, it has leveraged asset-backed securities (ABS) to enhance financing flexibility, including one such issue last year."}],[{"start":340,"text":"Strengthened by these strategic capital initiatives, the company’s cash and cash equivalents roughly doubled to 14.8 billion yuan by the end of March from 7.58 billion yuan a year earlier. On the earnings call, the company said it now has over 19 billion yuan in cash and time deposits, calling it “an ideal situation to be in as we prepare for a new growth phase.”"}],[{"start":364.35,"text":"The big AI buildup came as GDS continued to report steady growth for its existing data center business during the first quarter. Its revenue grew by a strong 23.6% during the quarter year-on-year to 3.37 billion yuan. Excluding one-time items, underlying growth remained healthy at 7.9%, reflecting steady core business expansion. Its total committed and pre-committed area rose 11.7% year-on-year to 725,485 square meters, while its utilized area rose 12.7% to 520,929 square meters. Excluding the one-time items, its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 8% year-on-year to 1.43 billion yuan."}],[{"start":415.35,"text":"The company’s shares have gained 20% over the last year building on the strong momentum in data center stocks driven by AI potential. The stock currently trades at a relatively high price-to-sales (P/S) ratio of just over 4, showing investors remain confident in its position to reap rewards as China’s leading independent data center operator in the coming AI boom."}],[{"start":449.45,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1780482802_3387.mp3"}