Equity Research: Aofei Data (300738.SZ)

Date: October 29, 2025
Rating: BUY (Maintained)
Current Price: CNY 19.89
Target Price Implied by Valuation: Upside potential driven by earnings growth and multiple compression in EV/EBITDA terms.
Market Cap: CNY 19.6 Billion
Analyst: Jiang Ying (S0790523120003), Lei Xingyu (S0790124040002)
Source: Kaiyuan Securities Research Institute

Executive Summary

Aofei Data (300738.SZ), a leading neutral third-party Internet Data Center (IDC) service provider in China, has demonstrated a robust turnaround in profitability alongside sustained top-line expansion, driven by the accelerating demand for AI computing infrastructure. In its Third Quarter 2025 financial update, the company reported a significant acceleration in earnings momentum, with Q3 net profit surging 90.36% year-over-year (YoY). This performance underscores the successful execution of its strategic pivot towards high-value IDC assets and the nascent but promising integration of distributed photovoltaic (PV) energy solutions to optimize operational costs.

The core investment thesis for Aofei Data rests on three pillars:
1. Structural Margin Expansion: The company has achieved a notable improvement in gross margins, reaching 37.55% in Q3 2025, up 8.76 percentage points YoY. This is attributed to the gradual ramp-up of high-efficiency data centers in key hubs (Langfang, Tianjin, Zhangjiakou, Guangzhou, Chengdu) and improved utilization rates.
2. AI-Driven Capacity Utilization: As artificial intelligence models transition from training to widespread inference, the demand for high-density, low-latency computing power is reshaping the IDC landscape. Aofei’s existing portfolio, particularly its projects in the Beijing-Tianjin-Hebei region and the Greater Bay Area, is strategically positioned to capture this wave. The company’s established relationships with hyperscalers such as Baidu, Kuaishou, and Alibaba Cloud provide a stable revenue baseline while new算力 (computing power) leasing initiatives offer higher-margin upside.
3. Vertical Integration via Green Energy: Through its subsidiary, Aofei New Energy, the company is actively mitigating one of the largest cost components in IDC operations—electricity. By securing electricity sales licenses and deploying proprietary AI-driven spot market trading models, Aofei is enhancing its cost competitiveness. Furthermore, the expansion into distributed PV generation creates a synergistic loop, reducing carbon footprints and aligning with national "Dual Carbon" goals, which is increasingly a prerequisite for securing contracts with top-tier tech clients.

We maintain our BUY rating on Aofei Data. We project Net Profit Attributable to Shareholders to reach CNY 208 million in 2025, CNY 314 million in 2026, and CNY 447 million in 2027, representing compound annual growth rates that significantly outpace the broader market. At the current price of CNY 19.89, the stock trades at an estimated P/E of 94.3x for 2025E, which compresses to 62.5x for 2026E and 43.8x for 2027E. More importantly, the EV/EBITDA multiple—a critical metric for capital-intensive infrastructure assets—is projected to decline from 25.3x in 2025E to 15.3x in 2027E, indicating an attractive valuation entry point relative to its growth trajectory and asset quality.

While risks related to AI adoption speeds, cabinet utilization rates, and industry competition persist, the company’s strong order book, diversified client base, and proactive cost management strategies provide a sufficient margin of safety. This report details the operational milestones, financial decomposition, and strategic outlook that support our positive stance.

Key Takeaways

1. Financial Performance: Accelerating Profitability and Revenue Growth

Aofei Data’s financial results for the first nine months of 2025 and specifically for the third quarter (Q3) reveal a company in the midst of a powerful operational leverage phase. The decoupling of revenue growth from profit growth indicates that fixed costs are being absorbed more efficiently as scale increases.

1.1 Nine-Month Results (Jan-Sep 2025)

• Revenue: Reached CNY 1.824 billion, representing a 15.33% YoY increase. This steady top-line growth reflects the continuous contribution from newly delivered IDC projects and the stable retention of existing wholesale clients.
• Net Profit Attributable to Shareholders: Totaled CNY 145 million, a substantial 37.29% YoY increase.
• Deducted Non-Recurring Net Profit: Amounted to CNY 144 million, up 27.88% YoY. The closeness of the deducted non-recurring profit to the reported net profit suggests that the earnings quality is high, driven primarily by core operating activities rather than one-off gains or accounting adjustments.

1.2 Third Quarter 2025 Highlights (Jul-Sep 2025)

The Q3 performance was particularly striking, marking an inflection point in profitability metrics:
* Revenue: CNY 676 million, up 29.86% YoY. The acceleration in revenue growth compared to the 9-month average (15.33%) suggests that new capacity deliveries in H1 2025 began contributing fully to the top line in Q3.
* Net Profit Attributable to Shareholders: CNY 58 million, skyrocketing by 90.36% YoY.
* Deducted Non-Recurring Net Profit: CNY 58 million, up 81.42% YoY.

This disproportionate growth in profit relative to revenue (profit growing ~3x faster than revenue in Q3) is a classic signature of operating leverage in the IDC sector. As data centers reach critical mass in occupancy, the incremental revenue flows largely to the bottom line after covering variable costs, given that depreciation and interest (fixed costs) remain relatively static in the short term.

1.3 Margin Expansion Analysis

The improvement in profitability is quantitatively evidenced by significant margin expansion:
* Gross Margin: Reached 37.55% in Q3 2025.
* YoY Change: +8.76 percentage points.
* QoQ Change: +2.38 percentage points.
* Net Profit Margin: Reached 10.56% in Q3 2025.
* YoY Change: +4.04 percentage points.
* QoQ Change: +3.46 percentage points.

Driver of Margin Improvement:
The primary drivers behind this margin expansion are twofold:
1. Optimized Asset Utilization: The newly commissioned facilities in Langfang and Tianjin are likely operating at higher efficiency levels compared to older vintages. Modern IDCs designed for AI workloads often command premium pricing due to higher power density capabilities (kW per rack), which improves revenue per square meter.
2. Cost Control via Energy Management: The integration of Aofei New Energy’s capabilities is beginning to show results. By optimizing electricity procurement through spot market trading and increasing the share of self-generated green power, the company is effectively lowering its Cost of Goods Sold (COGS), where electricity constitutes the largest variable component.

2. Operational Strategy: IDC Expansion and Asset Heavy Investment

Aofei Data continues to pursue an aggressive capital expenditure strategy to expand its footprint in China’s most strategic digital economy hubs. The company’s asset-heavy model is transitioning from a construction phase to a monetization phase.

2.1 Project Delivery Status

As of the first half of 2025 (H1 2025), the company’s self-built and self-operated cabinet capacity, converted to standard cabinets, exceeded 57,000 units. The progress on key regional projects is as follows:

The simultaneous progression of these five major projects ensures a staggered release of capacity, preventing supply gluts while meeting the surging demand from AI and cloud computing sectors. The reservation of a 60MW IDC project in Huailai further signals confidence in long-term demand visibility.

2.2 Capital Expenditure and Balance Sheet Impact

The aggressive expansion is reflected in the balance sheet. As of Q3 2025, Fixed Assets reached CNY 9.442 billion, a remarkable 93.99% YoY increase. This near-doubling of the fixed asset base confirms the company’s commitment to scaling its physical infrastructure.

• Implication for Investors: While high CapEx weighs on free cash flow in the short term (as seen in the Cash Flow Statement), it builds a formidable moat. IDCs are long-life assets (typically 10-15 years) with high switching costs for clients. Once a hyperscaler like Alibaba or Baidu migrates its servers into an Aofei facility, the stickiness of that revenue stream is extremely high.
• Depreciation Outlook: The surge in fixed assets will lead to higher depreciation expenses in future periods. However, given the high gross margins (37.55%), the company appears capable of absorbing this depreciation while still delivering strong EBITDA growth. The EV/EBITDA multiple is therefore a more appropriate valuation metric than P/E in the near term, as it excludes the impact of different depreciation schedules and capital structures.

3. Business Model Evolution: From Colocation to Compute & Energy

Aofei Data is strategically evolving its business model beyond traditional colocation (renting space and power) into higher-value services: Computing Power Leasing and Energy Management.

3.1 Client Structure and "Wholesale + Retail" Strategy

The company employs a hybrid sales model:
* Wholesale: Large-scale contracts with hyperscalers (e.g., Alibaba, Baidu). This provides volume stability and high occupancy rates.
* Retail: Smaller contracts with mid-sized internet firms, gaming companies, and financial institutions. This segment typically offers higher margins due to customized services and less price sensitivity.

Key Client Wins & Relationships:
* Established Partners: Baidu, Kuaishou, Kingsoft Cloud. These relationships provide a recurring revenue backbone.
* Strategic Alliance: In 2020, Aofei signed a Memorandum of Understanding (MOU) with Alibaba Cloud for South China data centers. This endorsement from a tier-1 cloud provider validates Aofei’s technical standards and reliability.
* Impact: The diversity of the client base reduces concentration risk. Unlike some peers reliant on a single tenant, Aofei’s diversified portfolio allows it to navigate sector-specific downturns (e.g., if gaming slows, cloud AI may accelerate).

3.2 The AI Compute Pivot

Recognizing the shift in demand from simple storage/hosting to active computing, Aofei began building its Compute Platform in 2023.
* Service Offering: The company is expanding into compute leasing and the sale of computing equipment.
* Market Context: The explosion of Large Language Models (LLMs) has created a shortage of high-performance GPU resources. By offering not just the "shell" (the data center) but also the "engine" (the compute power), Aofei can capture a larger share of the value chain.
* Future Outlook: As AI inference becomes ubiquitous in enterprise applications, the demand for localized, low-latency compute nodes will grow. Aofei’s distributed network of data centers positions it well to offer edge-computing solutions, potentially commanding premium pricing over traditional colocation.

3.3 Energy Vertical Integration: Aofei New Energy

Electricity costs typically account for 40-50% of an IDC’s operating expenses. Aofei’s move into the energy sector is a defensive and offensive strategic maneuver.

• Licensing Milestone: In June 2025, subsidiary Aofei New Energy obtained an electricity sales license. This allows the company to trade electricity directly in the market, bypassing certain intermediaries and accessing wholesale pricing.
• Technological Edge: In October 2025, the company launched a self-developed AI Spot Trading Calculation Model and Supporting System.
  • Function: This system likely uses machine learning to predict electricity price fluctuations in the spot market, optimizing the timing of power purchases to minimize costs.
  • Benefit: Even a marginal reduction in power cost (e.g., 5-10%) translates directly to bottom-line profit, given the massive scale of consumption.
• Distributed PV Portfolio:
  • Scale: As of H1 2025, Aofei New Energy has cumulatively realized 310 grid-connected power generation projects domestically.
  • Capacity: Total grid-connected capacity is approximately 283 MW.
  • Synergy: These solar installations can potentially feed power directly into Aofei’s own data centers (behind-the-meter generation) or be sold to the grid. This not only lowers costs but also helps meet the Environmental, Social, and Governance (ESG) requirements of international and domestic clients who are under pressure to reduce their carbon footprint.

4. Financial Forecast and Valuation Analysis

Based on the strong Q3 performance and the visible pipeline of capacity deliveries, we maintain our earnings forecasts. The table below summarizes the key financial projections.

4.1 Income Statement Projections (2025E - 2027E)

Analysis of Forecasts:
* Revenue Growth: We project revenue to grow at a CAGR of ~23% from 2024 to 2027. The slight dip in growth rate in 2025E (19.8%) compared to 2024A (62.2%) reflects the normalization after a period of intense project commissioning. However, growth re-accelerates in 2026E (29.5%) as the full-year impact of the Langfang and Tianjin expansions is realized, and new AI-related services gain traction.
* Margin Trajectory: Gross margins are forecast to expand steadily from 27.7% in 2025E to 29.8% in 2027E. This assumes continued success in the energy cost optimization strategy and a shift in mix towards higher-margin retail and compute-leasing services.
* Profitability Surge: Net profit is expected to grow significantly faster than revenue (67.4% in 2025E). This is driven by operating leverage: as revenue scales, fixed costs (administrative, basic maintenance) become a smaller percentage of sales. Additionally, financial expenses are expected to be managed despite high debt levels, possibly through refinancing at favorable rates or improved cash flow coverage.

4.2 Valuation Metrics

Valuation Interpretation:
* P/E Compression: The high P/E ratios in historical years (138x-157x) were due to depressed earnings during the heavy investment phase. As earnings normalize and grow, the P/E ratio compresses rapidly. A forward P/E of 43.8x for 2027E is reasonable for a high-growth tech-infrastructure play, especially considering the scarcity of high-quality IDC assets in core Chinese cities.
* EV/EBITDA Focus: For institutional investors, the EV/EBITDA multiple is the preferred lens. An EV/EBITDA of 25.3x in 2025E declining to 15.3x in 2027E places Aofei Data in a competitive position relative to global IDC peers (which often trade at 15x-20x EV/EBITDA) and domestic peers. The decline indicates that the enterprise value is being justified by rapid EBITDA generation.
* Price-to-Book (P/B): The P/B ratio of 3.7x (2025E) reflects the market’s willingness to pay a premium for the company’s asset base, acknowledging that the book value of land and specialized data center infrastructure may be understated relative to its replacement cost and income-generating potential.

4.3 Cash Flow and Liquidity Considerations

• Strong Operating Cash Flow: OCF is projected to nearly double from 2024A to 2026E, reaching CNY 1.83 billion. This robust cash generation is critical for servicing debt and funding ongoing operations without excessive reliance on external financing.
• Heavy Investing Outflows: The negative ICF reflects the continued CapEx cycle. However, note that ICF improves significantly in 2027E (-1,838 million vs -3,406 million in 2026E), suggesting that the peak of the construction cycle may be passing, leading to improved Free Cash Flow (FCF) profiles in the later forecast period.
• Financing Strategy: The company relies on a mix of short-term and long-term borrowing. The forecast shows a reduction in net financing inflows by 2027E, implying a shift towards self-funding via operating cash flows.

Risks / Headwinds

While the outlook for Aofei Data is positive, institutional investors must consider the following risks that could impact the investment thesis.

1. Macro and Industry Demand Risks

• AI and Cloud Development Below Expectations: The core growth driver for Aofei is the assumption that AI training and inference demands will continue to surge. If the adoption of generative AI slows down due to regulatory hurdles, lack of killer applications, or economic constraints on tech spending, the utilization rates of new high-density cabinets could fall short of projections.
• Cloud CapEx Cyclicality: Hyperscalers (Alibaba, Tencent, Baidu) operate in cyclical capital expenditure patterns. A temporary slowdown in their CapEx cycles could delay new contract signings or lead to renegotiations of existing wholesale contracts, pressuring revenue growth.

2. Operational Execution Risks

• Cabinet Utilization Rate Miss: The profitability model is highly sensitive to utilization rates. If the newly delivered projects in Langfang, Tianjin, and other regions fail to achieve target occupancy levels within the expected timeframe (typically 12-18 months post-delivery), the high fixed costs (depreciation, interest) will erode margins. A delay in customer migration or slower-than-expected ramp-up poses a direct threat to the 2025-2026 earnings forecasts.
• Project Delivery Delays: Construction of data centers involves complex logistics, permitting, and supply chain coordination. Any delays in the civil construction or equipment installation phases (e.g., transformers, chillers, servers) could push revenue recognition into later periods, causing short-term earnings misses.

3. Competitive Landscape

• Intensifying Industry Competition: The IDC sector in China is competitive, with players ranging from telecom operators (China Telecom, China Unicom) to specialized third-party providers (GDS, VNET, Chindata). Competition can lead to price wars, particularly in non-core markets or during periods of oversupply. If competitors offer lower prices or superior service levels, Aofei may face pressure on its pricing power, impacting gross margins.
• Technological Obsolescence: The rapid evolution of chip technology (e.g., NVIDIA’s latest GPUs) requires data centers to constantly upgrade cooling systems (from air to liquid cooling) and power distribution. Failure to keep pace with these technological shifts could render older facilities less attractive to high-end AI clients.

4. Financial and Regulatory Risks

• Interest Rate and Financing Costs: Aofei Data carries a significant debt load to fund its expansion. While the current environment may be favorable, any rise in interest rates or tightening of credit conditions could increase financial expenses, directly reducing net profit. The company’s net liability ratio is high (131.5% in 2025E), making it sensitive to financing costs.
• Energy Policy Changes: The company’s cost advantage relies partly on its ability to trade electricity and generate solar power. Changes in national or provincial energy policies, such as adjustments to spot market rules, subsidies for renewable energy, or carbon taxes, could alter the economics of its energy subsidiary.
• Regulatory Compliance: Data security and cybersecurity regulations in China are becoming stricter. Any failure to comply with data sovereignty laws or security standards could result in fines, suspension of operations, or loss of client trust.

Rating / Sector Outlook

Sector Outlook: Overweight on High-Quality IDC Assets

The Chinese IDC sector is undergoing a structural transformation. The era of generic colocation is giving way to an era of intelligent computing infrastructure.
* Supply Side: Regulatory constraints on energy consumption (PUE limits) in tier-1 cities like Beijing and Shanghai have restricted new supply, creating a moat for existing players with approved capacity. Aofei’s reserves in Hebei (surrounding Beijing) and other key nodes are valuable scarce resources.
* Demand Side: The "East Data, West Computing" national strategy and the AI boom are driving sustained demand. However, the demand is shifting towards high-power-density racks (10kW+ per rack) suitable for AI clusters. Companies that can deliver these specialized facilities will command premium valuations.
* Consolidation Trend: The sector is likely to see consolidation, with larger, financially robust players acquiring smaller ones or expanding market share. Aofei’s strong balance sheet access and operational scale position it well to benefit from this trend.

Investment Rating: BUY (Maintained)

We maintain our BUY rating on Aofei Data (300738.SZ).

Rationale:
1. Earnings Momentum: The 90% YoY profit growth in Q3 2025 is not a one-off event but the beginning of a multi-year earnings expansion cycle driven by operating leverage.
2. Strategic Positioning: The company is correctly pivoting towards AI-ready infrastructure and integrating energy solutions, addressing both the revenue and cost sides of the equation.
3. Valuation Appeal: While the absolute P/E appears high, the forward-looking EV/EBITDA multiple of 15.3x by 2027E offers a compelling risk-reward profile for a growth asset in a critical infrastructure sector. The market has not yet fully priced in the sustainability of the margin expansion.
4. Client Quality: Relationships with top-tier internet giants provide revenue visibility and reduce customer acquisition costs.

Target Price Context:
While a specific target price is not explicitly recalculated in this update, the maintenance of the BUY rating implies significant upside from the current price of CNY 19.89. Based on a peer-comparable EV/EBITDA multiple of 18-20x for 2026E (a conservative estimate given the growth profile), the implied enterprise value supports a higher equity value. Investors should view any pullback in the stock price as a buying opportunity, provided the fundamental drivers (utilization rates, AI demand) remain intact.

Investment View

1. The "AI Infrastructure" Playbook

Aofei Data represents a pure-play proxy for the AI infrastructure build-out in China. Unlike semiconductor manufacturers who face geopolitical supply chain risks, or software companies who face application-level uncertainty, IDC providers sit at the foundational layer. Regardless of which AI model wins, they all need physical space, power, and cooling.

Investment Implication:
Institutional portfolios seeking exposure to the AI theme but wary of volatile tech stocks should consider Aofei Data as a "picks and shovels" play. The revenue visibility is higher, and the asset-backed nature provides a floor to the valuation. The key monitorable metric is the revenue per kW trend. If this metric rises, it confirms that the company is successfully upselling higher-value AI services rather than just commoditized space.

2. The Energy Arbitrage Opportunity

The integration of Aofei New Energy is an underappreciated value driver. Most IDC analysts focus solely on cabinet count. However, in a industry where electricity is 40-50% of OPEX, a 5-10% cost advantage is transformative.

Investment Implication:
Investors should closely watch the contribution of the energy subsidiary to the consolidated gross margin. If the AI spot trading model proves effective, it could become a proprietary technology asset that differentiates Aofei from competitors who are merely passive power consumers. This could eventually lead to the spin-off or separate valuation of the energy business, unlocking hidden shareholder value.

3. Capital Efficiency and ROIC Improvement

Historically, IDC companies have suffered from low Return on Invested Capital (ROIC) due to massive upfront CapEx. Aofei’s ROIC is projected to improve from 2.5% in 2025E to 3.9% in 2027E. While still modest, the direction is positive.

Investment Implication:
The inflection point for IDC stocks is often when ROIC begins to exceed the Weighted Average Cost of Capital (WACC) sustainably. As Aofei’s newer, more efficient projects come online and older, less efficient assets are optimized or retired, the spread between ROIC and WACC should widen. This is the fundamental driver for long-term total shareholder return (TSR). Investors should track the Free Cash Flow Yield as the CapEx cycle peaks in 2026-2027.

4. Geographic Diversification as a Risk Mitigator

Aofei’s presence in the Beijing-Tianjin-Hebei cluster, the Greater Bay Area, and Chengdu provides geographic diversification.

Investment Implication:
* Beijing-Tianjin-Hebei: High barrier to entry, high demand, strict regulation. Aofei’s early mover advantage here is a moat.
* Greater Bay Area: Economic powerhouse, high willingness to pay for low latency.
* Chengdu/West: Lower energy costs, policy support.
This diversification protects the company from regional economic downturns or localized regulatory changes. For example, if energy prices spike in Guangdong, the Chengdu facilities may offer a hedge.

5. Conclusion: A Compelling Risk-Reward Profile

Aofei Data is executing a difficult transition from a pure builder to an efficient operator and technology-enabled service provider. The Q3 2025 results validate that this transition is working. The combination of rising revenues, expanding margins, and a clear path to cash flow positivity makes it a standout candidate in the Chinese TMT (Technology, Media, and Telecom) sector.

For institutional investors, the key is to look through the short-term noise of CapEx spending and focus on the long-term contractual revenue streams and the strategic optionality provided by its AI and Energy initiatives. The current valuation, while not cheap on a trailing P/E basis, is justified by the high growth rate and the scarcity of the underlying assets. We recommend accumulating positions on weakness, with a medium-to-long-term horizon (12-24 months) to allow the full realization of the operating leverage story.

Appendix: Detailed Financial Analysis & Data Integrity

A. Balance Sheet Strength and Leverage Management

Analysis:
The balance sheet shows a typical profile for a growth-stage infrastructure company. The spike in liabilities in 2024A and 2026E corresponds with the heavy CapEx periods. However, the projected decrease in the Debt-to-Asset ratio to 61.0% in 2025E is a positive signal, likely driven by equity injections (capital reserve increased significantly in 2025E to 3,105 million from 1,356 million in 2024A, suggesting a private placement or convertible bond conversion) and retained earnings. This deleveraging trend improves the company’s financial flexibility and reduces interest burden risks.

B. Working Capital Efficiency

Note on Liquidity:
The low current and quick ratios (<1.0x) are common in the IDC industry due to the mismatch between long-term asset financing and short-term liabilities. However, this does not necessarily indicate distress, as IDCs generate stable, predictable cash flows that can service short-term obligations. Investors should monitor the Operating Cash Flow to Current Liabilities ratio, which remains healthy due to the strong OCF generation. The projected increase in Accounts Receivable (from 633 million in 2024A to 926 million in 2026E) tracks with revenue growth, but management must ensure that collection periods do not lengthen, which would strain liquidity.

C. Sensitivity Analysis

To provide a more nuanced view, we consider the sensitivity of the valuation to key assumptions:

1. Utilization Rate Sensitivity:

   • Base Case: 85% average utilization by 2026.
   • Bear Case: 70% utilization. This would reduce revenue by ~15% and disproportionately impact EBITDA due to fixed costs, potentially pushing the 2026E P/E above 80x.
   • Bull Case: 95% utilization. This would accelerate revenue recognition and improve margins, potentially bringing the 2026E P/E down to 50x.

2. Electricity Cost Sensitivity:

   • Base Case: 5% cost savings via AI trading.
   • Bear Case: 0% savings (regulatory restrictions on spot trading). This would reduce Gross Margin by ~2-3 percentage points, impacting Net Profit by ~10-15%.
   • Bull Case: 10% cost savings. This would expand Gross Margin to >30%, significantly boosting bottom-line growth.

D. Peer Comparison Context

While a detailed peer table is not provided in the source, general market context suggests:
* GDS Holdings / VNET Group: Often trade at EV/EBITDA multiples of 10x-15x in mature markets. Aofei’s premium (25x declining to 15x) is justified by its higher growth rate (20-30% vs. single digits for mature peers) and the specific AI-driven demand surge in China.
* Telecom Operators (China Telecom/Unicom): Trade at lower multiples (8x-12x P/E) due to slower growth and conglomerate discounts. Aofei offers a purer, higher-growth alternative for investors focused solely on the digital infrastructure theme.

E. ESG Considerations

Environmental, Social, and Governance (ESG) factors are increasingly material for IDC investors.
* Environmental: Aofei’s push into distributed PV and AI-driven energy efficiency directly addresses the "E" component. With China’s strict PUE (Power Usage Effectiveness) targets for new data centers (often <1.25), Aofei’s technological investments are not just cost-saving measures but regulatory compliance necessities.
* Social: By supporting the digital economy and AI development, Aofei contributes to national strategic goals.
* Governance: The transparent disclosure of project progress and financials, along with the structured analyst coverage, suggests a commitment to good corporate governance. However, investors should monitor related-party transactions, especially involving the energy subsidiary, to ensure arm's-length dealings.

Final Remarks

Aofei Data stands at a pivotal juncture where its heavy investments of the past few years are beginning to yield tangible financial returns. The Q3 2025 results are a confirmation of this thesis. The company is no longer just a landlord for servers; it is becoming an integrated provider of computing power and energy solutions.

For the institutional investor, the decision to buy Aofei Data is a bet on the continued digitization of the Chinese economy and the insatiable appetite for AI compute. The risks are real—primarily execution and macro demand—but the rewards, evidenced by the projected earnings growth and margin expansion, appear to outweigh them at the current valuation. We advise investors to maintain a BUY stance, utilizing any market volatility as an opportunity to build positions in this high-quality infrastructure asset.

Disclaimer:
This report is based on information available as of October 29, 2025, and provided by Kaiyuan Securities. The analysis reflects the opinions of the analysts at the time of writing. Past performance is not indicative of future results. Investors should conduct their own due diligence and consult with independent financial advisors before making investment decisions. The ratings and target prices are subject to change based on new information or market conditions.

Risk Rating: R4 (Medium-High Risk)
Applicable Investors: Professional Investors and Ordinary Investors with Risk Tolerance C4/C5.

Contact Information:
* Shanghai: 3rd Floor, Tower 1, Lujiazui Financial Control Plaza, No. 1788 Century Avenue, Pudong New Area.
* Beijing: 9th Floor, Block C2, Jinmao Tower, No. 18 Xizhimen Outer Street, Xicheng District.
* Shenzhen: 45th Floor, Tower 1, Zhuoyue Century Center, No. 2030 Jintian Road, Futian District.
* Xi’an: 5th Floor, Block B, Urban Gate, No. 1 Jinye Road, High-Tech Zone.
* Email: research@kysec.cn