10 Chinese Penny Stocks to Buy According to Analysts

4. VNET Group, Inc. (NASDAQ:VNET)

Share Price (As of December 17): $3.86

Analysts Upside: 40.13%

VNET Group, Inc. (NASDAQ:VNET) is a hyperscale internet data center services provider. The company offers a wide range of internet data services which include hosting customer servers and networking equipment, managed network services through data transmission network and smart routing technology, and hosting-related value-added services.

VNET Group, Inc. (NASDAQ:VNET) has been spending its capital with CapEx expected to reach the high end of guidance at RMB 5.5 billion, reflecting significant capital expenditure requirements. However, there is still a lot of room for improvement in the company’s wholesale business despite strong growth. The utilization rate for VNET’s wholesale business stands at 78%, indicating room for further optimization. In addition to that, the company can also improve its retail IDC business, which has shown stable capacity and utilization rates.

VNET Group, Inc. has partnered with Dajia Investment Holding Company Ltd. to form a pre-REITs fund to invest in hyperscale data centers in China. Through the fund, VNET will assist in the development of China’s data center sector, which indicates the growing demand for infrastructure projects in China.

During the third quarter of 2024, VNET Group, Inc. (NASDAQ:VNET) posted a net revenue of RMB 2.12 billion, up by 12.4% year-over-year, driven by its wholesale IDC business. The wholesale business segment was the major driver with the segment’s revenue soaring by 86.4% from a year ago. The company obtained six new orders during Q3, reflecting strong customer demand and market position. The company has maintained a solid cash position, which is key to supporting its current operations and future development plans.