Morgan Stanley maintains century-linked overweight rating with a target price of 35 USD

Morgan Stanley to maintain the century interconnection overweight rating, the target price of 35 U.S. dollars SINA Science and technology, Beijing time September 12 Morning News, Morgan Stanley today released a study, The Century Interconnection (nasdaq:vnet) stock rating maintained in "overweight" (overweight) unchanged, and keep its target price unchanged at 35 dollars. The following is a summary of the report: After the century Internet management conference call to respond to the short report, we maintain its stock rating in "overweight" unchanged. We believe that the century's core data center business (worth 1 billion of dollars) is valuable and that cloud services may provide additional upward momentum, but we also believe that the century interconnection still has room for improvement in the cash management of accounts receivable and mergers and acquisitions. -The core data center business remains solid, and we value this business at $1 billion trillion, with USD 15 per share of US depository receipts. We believe that the short report says that the number of cabinets is reduced (since the number of cabinets is reduced by 8%, a 28% reduction in the number of cooperative cabinets is the result of a computational error, and the decrease in utilization as noted in the same report is due to differences in definitions because of the use of the daily weighted average for the century interconnect. We are still bullish on data from the Internet reported in the second quarter of 17,000 cabinets and 73.9% utilization, especially since the company plans to provide detailed data on the number and utilization of cabinets in each data center in the next few days. We expect that the number of interconnected cabinets in the century will be increased by 8000 units in 2014 and 2015 (management set targets of 10,000), thereby boosting its core hosting revenue (excluding content distribution networks and cloud services) by more than 40% per cent. We valued $1 billion per share of US depository receipts for the century interconnection core data center business, which meant that the company's free choice of cloud services would bring action to its share price. -but we also believe that the century interconnection still has room for improvement in the cash management of accounts receivable and mergers and acquisitions. Century internet sales settle period (DSO) significantly increased from 70-90 days in 2013 to 100-110 days in the first half of 2014. Management has attributed the increase in accounts receivable to the fact that key customers have been given better credit terms, while VAT reform is likely to bring an extension of receivables before the June implementation. August century, the internet received 150 million yuan of accounts receivable (in June, the proportion of the accounts receivable of 931 million yuan accounted for 16%), and is expected to sell the settle period will fall back to 80-90 days in the next few quarters. – In mergers and acquisitions, the century interconnection reiterated that 7 of the previous large-scale mergers and acquisitions were in alignment with the company's development strategy as a leading Internet infrastructure service provider in the Chinese market. We believe, however, that, based on the expected EBITDA of 2014 years (i.e. profits not credited to interest, tax, depreciation and amortization), the century Interconnection acquired April network transactions (peopleRMB 1.5 billion, about 250 million USD EBITDA (the ratio of corporate value to interest, tax, depreciation and amortization) is 12 times times, and tends to be overvalued. At the same time, the lingering suspicion of a number of related party exchanges linked to the century-linked takeover of Ijoy (RMB 97 million, about $16 million) may worry investors until management has fully answered the question. -We keep the target price of the century interconnection unchanged at 35 dollars, but the ability of the company to achieve this target price depends on the company's implementation of both the core data center business and the cloud business, as well as the improvement of cash management for future accounts receivable and mergers and acquisitions transactions. -Target price calculation method: Our 35 dollar target price set for the century interconnected stock is derived from our 10-year discounted cash flow model. Based on our economic forecasts, we assume that the weighted average capital cost (WACC) is 13%, the final growth rate is 4%, and the exchange rate is 5.83 yuan for each dollar as at June 15. -Target price implementation risk: 1 Growth of data center in China market, 2 competition and/or regulatory risk in the Internet industry sector, 3 bandwidth, property rents and/or energy cost growth, 4 risk of implementation of cloud business. (Tangfeng) Company Profile: Century Interconnection Data Center Co., Ltd. is an Internet infrastructure service provider, providing clients with server and network device hosting services, as well as managing network services (Managed,network,services), It is committed to helping customers transmit data faster and more reliably on the Internet through a wide range of data transmission networks and proprietary broadex® intelligent routing techniques.