SDIC Securities (International) has released a research report stating that the ADO business of Wasion Holdings (03393) is entering a period of rapid growth, driven by strong demand from data centers, and is becoming a significant engine for the Group's overall business growth. The firm maintains a "Buy" rating and has raised the target price to HK$19.58 based on a peer valuation comparison method. The main points from SDIC Securities (International) are as follows:
Wasion Holdings recently announced that its non-wholly owned ADO business subsidiary, Weiyuan Energy, has introduced strategic investor Boyu Investment. According to the capital increase agreement, Boyu Investment will subscribe for 48.81 million new shares in Weiyuan Energy for a total consideration of RMB 380 million, representing approximately 8% of its enlarged share capital, valuing Weiyuan Energy at approximately RMB 4.75 billion. It is expected that Weiyuan Energy and Boyu Investment will collaborate on capital and industrial resources. Leveraging Boyu's extensive presence in data centers, technology, new energy, and its cross-border investment experience, this partnership is anticipated to effectively empower the company's business expansion, enhance market competitiveness, and accelerate its global footprint.
Demand in the data center business is entering an explosive phase, propelling Wasion Holdings' ADO business into a period of rapid growth. The ADO business is operated by Wasion Holdings' non-wholly owned subsidiary, Weiyuan Energy, in which Wasion Holdings holds approximately 65%. The ADO business primarily includes domestic power distribution services for State Grid and China Southern Power Grid, power supply services for base stations and data centers of China's three major telecom operators and leading internet companies, as well as overseas data center business, power distribution services, and a small amount of energy storage business. Benefiting from the explosive growth of AI, demand for data centers both domestically and overseas is surging. The company has already secured orders from strategic customers such as GDS and ByteDance and is actively pursuing large clients. Orders for data centers secured for 2025 have already reached RMB 2.3 billion, with approximately RMB 1 billion expected to be recognized as revenue this year. There is potential for the company's data center business orders and revenue to double next year. The ADO business is entering a phase of explosive growth.
Wasion Holdings' collaboration with Boyu Investment represents a powerful alliance to accelerate business development. Wasion Holdings has introduced strategic shareholder Boyu Investment into its ADO-operating subsidiary, Weiyuan Energy. The report expects that the strong combination of Wasion Holdings and Boyu Investment will lead to cooperation in areas such as industrial resources and cross-border expansion. Founded in 2011, Boyu Investment is an alternative asset management firm deeply rooted in China with a global footprint. With offices in Hong Kong, Beijing, Shanghai, and Singapore, Boyu has invested in over 200 companies, building a diversified investment management platform covering private equity, public markets, infrastructure, and venture capital. Boyu's portfolio includes leading enterprises across various sectors such as consumer retail, technology innovation, healthcare, and new energy, possessing extensive industrial resources to provide capital and strategic support to industrial companies.
Earnings Forecast: Based on the firm's earnings forecast, the company's net profit growth rate for both 2025 and 2026 is expected to exceed 30%. Considering that data center business demand is driving the company's overall strong performance, and given that data center power supply and distribution business is highly correlated with AI development, the firm believes the company's valuation has greater upside potential compared to traditional meter business valuations, and thus should command a higher valuation than peer meter companies. According to public information, the ADO business subsidiary Weiyuan Energy is also advancing towards an A-share listing. The firm believes that a successful listing would further unlock the company's value.
Risk Warning: The pace of data center business implementation may be slower than expected; the growth rate of overseas market business may be slower than expected; the volume and price of centralized procurement tenders from State Grid and China Southern Power Grid may fall short of expectations; and market competition may intensify.
Comments