How did VNET's Q4 2024 EPS performance surprise investors?

VNET's Q4 2024 EPS performance fell short of investor expectations, reflecting challenges in the retail IDC business and overall profitability. Here's a detailed analysis: 1. **EPS Surprise**: VNET's reported EPS for Q4 2024 was -0.04, which marked a significant decline from the same period the previous year, when the company reported EPS of CNY-15.88. This unexpected negative EPS underscored a challenging quarter for the company. |code|Ticker|Name|Date|EPS Surprise YoY|EPS Surprise|market_code| |---|---|---|---|---|---|---| |VNET|VNET.O|VNET Group|20240331|-166.66666666666669|-0.1|185| |VNET|VNET.O|VNET Group|20240630|163.1578947368421|0.12|185| |VNET|VNET.O|VNET Group|20240930|199.99999999999994|0.03|185| |VNET|VNET.O|VNET Group|20241231|86.66666666666667|-0.04|185| 2. **Revenue Growth**: Despite the setback in profitability, VNET achieved a 12.4% year-over-year increase in net revenues, reaching CNY2.12 billion. This growth was primarily driven by the wholesale IDC business, which saw a remarkable 86.4% revenue growth year-over-year. 3. **Wholesale IDC Business Strength**: The wholesale IDC business continued to thrive, with six new orders totaling 84 MW. Notably, VNET secured a significant 32 MW wholesale order from an internet customer at its Huailai IDC Campus. This expansion underscored the strong demand for VNET's wholesale IDC services. 4. **Retail IDC Business Stability**: The retail IDC business maintained stable capacity and utilization rates, indicating limited growth in this segment compared to wholesale. This stability contrasted with the robust growth in the wholesale segment, suggesting that the retail business faced more subdued demand. 5. **Market Position and Strategic Plans**: VNET's strategic focus on developing high-performance data centers and green business initiatives reflects its commitment to meeting market demand sustainably. The company's strong cash position and unused credit line supported its operations and future development plans. In conclusion, while VNET's Q4 2024 performance showed strength in its wholesale IDC business and overall revenue growth, the negative EPS surprise indicated challenges in profitability. The company's strategic expansions and market positioning are positive signs, but they may take time to fully capitalize on and overcome the current profitability hurdles.