Goldman Sachs SUNeVision Holdings (1686.HK): Positive Read-Across From Accelerating Data Center Power Consumption Growth and Enhanced Cross-Region Connectivity in Hong Kong; Buy
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Goldman Sachs maintains a Buy rating on SUNeVision Holdings (1686.HK), citing powerful structural tailwinds from accelerating data center power consumption and enhanced cross-region network connectivity in Hong Kong. As the region's premier data center operator, SUNeVision operates approximately one million square feet of critical white space, positioning it as the primary beneficiary of surging enterprise demand. Hong Kong's data center electricity usage grew 12% year-over-year in 2023, and Goldman Sachs projects this momentum will accelerate to a 15% compound annual growth rate through 2026.
Furthermore, continuous improvements in submarine cable infrastructure and cross-border network connectivity between Hong Kong, mainland China, and international markets significantly bolster the city's appeal as a critical regional data hub. This enhanced connectivity organically drives demand for premium colocation facilities. SUNeVision boasts a highly resilient customer base comprising top-tier global cloud service providers and major financial institutions. Leveraging these operational advantages, Goldman Sachs forecasts a 10% revenue CAGR and a 12% EBITDA CAGR for the company between 2024 and 2026. Despite this robust growth trajectory, the stock currently trades at an attractive discount, valued at 12 times 2024 forecast EV/EBITDA, well below its historical average of 15 times. The firm sets a target price of HK$5.50, based on 14 times 2024 forecast EV/EBITDA. Primary downside risks encompass potential regional power supply constraints and intensifying competitive pressures.
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