Movement Alert|GDS Holdings-SW Falls 5.53% in Regular Trading, Q1 Earnings Quality Dispute and Massive Capex Plan Continue to Weigh

Market Focus06-11

On June 11, GDS Holdings-SW fell 5.53% in regular trading, trading at HK$32.58/share, with trading volume of HK$6.82 million.

On the news front, the company's Q1 net profit of RMB 2.652 billion has come under scrutiny as over 80% stemmed from a one-time investment gain of RMB 2.136 billion related to the DayOne equity operation. Excluding this non-recurring item, core business revenue growth decelerated to single digits, fueling ongoing concerns about earnings quality. Meanwhile, management reaffirmed a massive capital expenditure plan of RMB 30-50 billion over the next three years, compounding pressure from shrinking operating cash flow, total liabilities of RMB 51.693 billion, and a debt-to-asset ratio of 61.4%. The high-leverage profile and uncertain return timeline continue to suppress valuation. Within the Internet Services and Infrastructure sector, peer KINGSOFT CLOUD declined 1.02%, while SUNEVISION traded flat, indicating broader sector weakness.

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