Range Intelligent (300442) Report Interpretation

Overview

This first-take report reviews Range Intelligent's mixed 2Q26 results and management call. Goldman Sachs sees the EBITDA beat, disciplined AIDC investment approach, committed IDC capacity delivery and overseas plans as consistent with its Buy rating and Rmb117 target price.

Core views

Range Intelligent reported mixed 2Q26 results versus Goldman Sachs estimates. Adjusted EBITDA increased 84% year on year to Rmb1.43bn, 3% above the firm's estimate, helped by better-than-expected cash gross margin after adjusting for depreciation and lower operating expenses. Revenue grew 47% year on year to Rmb1.91bn, but fell 5% short of the estimate. Net profit rose 37% year on year to Rmb621mn, 3% below estimate because depreciation and amortization expense was higher than expected. The quarterly EBITDA margin reached 75%, up 5.8 percentage points sequentially and 15.3 percentage points year on year, while gross margin was 46.4%. In 1H26, total revenue rose 50% year on year to Rmb3.75bn and EBITDA rose 77% to Rmb2.71bn, 1% above Goldman Sachs estimates. IDC revenue increased 8% year on year and 13% half on half to Rmb1.75bn, 8% above estimate, with a 45.7% gross margin that was 4.3 percentage points above estimate. AIDC revenue grew 126% year on year and 23% half on half to Rmb2.0bn, reaching 53% of total revenue, but was 11% below estimate. Its 47.3% gross margin was 2.5 percentage points below estimate and 6.6 percentage points lower year on year, which management attributed to a high 2Q25 base for the computing-sales business under net accounting. Management identifies AIDC as the core growth engine. The business is supported by about 5,000 self-owned high-performance servers, an integrated supply chain and customer relationships. With GPU costs elevated in 1H26, the company is strengthening in-house capabilities in memory, optical modules, cooling, cables, networking, IT operations and support, while delaying incremental server purchases until GPU pricing normalizes. Although tight supply has raised GPUaaS pricing, management is prioritizing long-term contracted orders over potentially higher-margin but lower-quality orders. AIDC contracts are generally fixed-price, five-year agreements with stringent customer break-fee provisions. Management targets gross margin of about 45% for both AIDC and IDC. For the conventional IDC business, management expects capacity delivery to be concentrated later in the year, including 300MW in 3Q26. This capacity is already 100% committed, and 65% will use liquid cooling. The 220MW delivered in 2025 had reached an 80% utilization rate, which management views as evidence of rapid customer move-in. Management also sees IDC pricing recovering or rising slightly; liquid-cooled cabinets deliverable within two months have already reached the higher pricing level seen in 2020. It is prioritizing gross margin over order volume in IDC as AIDC remains the main growth focus. Overseas expansion is another long-term growth avenue. The company expects 60MW of capacity delivery in Batam in 4Q26, entirely using liquid cooling, and expects higher delivery in 2027 than in 2026. It targets roughly 600MW of mid-term capacity across Hong Kong and Batam. Range is using a people-and-asset investment export model, deploying an approximately 300-person operations team alongside domestic supply-chain resources and prefabricated modules. Management characterizes overseas IDC as a seller's market and expects stronger margins, citing 57% gross margin for a Hong Kong data-center operator and more than 50% for Southeast Asia. The trade-off is execution time: overseas capacity takes about eight months after land acquisition, compared with about three months domestically where buildings are pre-built. Goldman Sachs also highlights funding and shareholder-return capacity. Operating cash flow reached Rmb3.0bn in 1H26, up 31% year on year, and management expects Rmb6bn for the full year, sufficient to cover bank-loan repayment liabilities over the next four years. Funding sources include more than Rmb70bn in cumulative comprehensive inter-bank credit facilities, potential C-REIT asset-injection proceeds of close to Rmb10bn if approved by the CSRC and Shenzhen Stock Exchange, and a Rmb2.5bn convertible-bond issuance pending Shenzhen Stock Exchange approval. Management has committed to annual dividends of Rmb0.9bn-Rmb1bn. Goldman Sachs retains its Buy rating. Its long-term thesis rests on Range's 750MW of live capacity as of 2025, 6GW of reserved capacity with most power-quota approvals secured, full-stack AIDC capabilities, lower customer concentration, and diverse low-cost financing. The firm forecasts 2025-30E utilized IT-capacity and revenue CAGRs of 27% and 33%, respectively, and expects GPUaaS investment to add profitability in a favorable demand and pricing environment. The Rmb117 12-month target price uses an 18x 2030E EV/EBITDA multiple discounted to end-2026E at a 10% cost of equity; the 18x multiple is a weighted average of 25x for data-center operations EBITDA and 10x for GPUaaS EBITDA.

Analysis framework

Goldman Sachs first compares reported quarterly and first-half revenue, EBITDA, profit and margins with its estimates. It then assesses management's commentary on AIDC investment, IDC capacity utilization and pricing, overseas delivery plans, financing and dividends, before linking these operating drivers to a long-term capacity and revenue-growth thesis and a discounted EV/EBITDA valuation.

Methodology notes

• Valuation methodsEV/EBITDA valuation

  Discounted EV/EBITDA valuation

  Goldman Sachs values the company using a 2030E EV/EBITDA multiple, discounted back to end-2026E at a 10% cost of equity. It applies different multiples to data-center operations and GPUaaS before deriving the weighted average.

• Industry AnalysisSupply-demand framework

  Data-center capacity, utilization and GPU supply-demand assessment

  The report evaluates growth through available and committed capacity, move-in and utilization rates, GPU cost and supply conditions, pricing, and the timing of domestic and overseas capacity delivery.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Range Intelligent (300442.SZ)

  Primary covered company; a China data-center operator with IDC, AIDC and GPUaaS exposure.

  Strengths

  Large capacity reserves, self-owned high-performance servers, integrated supply chain, customer relationships, committed 3Q26 capacity delivery and diversified funding access.

  Weaknesses

  2Q26 revenue and 1H26 AIDC revenue were below Goldman Sachs estimates; AIDC gross margin was below estimate.

  Comparison

  Management cited higher overseas data-center margins, including 57% for a Hong Kong operator and more than 50% in Southeast Asia.

  Risks

  Order wins, utilization ramp-up, pricing, overseas execution, chip availability, domestic capacity delivery and financing could disappoint.

Key data

• 2Q26 revenueRmb1.91bnUp 47% year on year and 4% quarter on quarter; 5% below Goldman Sachs estimates.
• 2Q26 EBITDARmb1.43bnUp 84% year on year and 12% quarter on quarter; 3% above Goldman Sachs estimates.
• 2Q26 net profitRmb621mnUp 37% year on year; 3% below estimate due to higher-than-expected depreciation and amortization.
• 1H26 AIDC revenueRmb2.0bnUp 126% year on year and 23% half on half; 53% of total revenue and 11% below estimate.
• 1H26 IDC revenueRmb1.75bnUp 8% year on year and 13% half on half; 8% above estimate.
• 3Q26 IDC capacity delivery300MWAlready 100% committed; 65% expected to use liquid cooling.
• 12-month target priceRmb117.00Based on an 18x 2030E EV/EBITDA multiple discounted to end-2026E at a 10% cost of equity.

Impact & implications

The report argues that the EBITDA beat and improving operational execution support the long-term AIDC-led growth case despite the revenue miss. Disciplined server spending may protect investment quality while GPU costs remain high, while committed IDC capacity, overseas expansion and diversified financing are intended to support future capacity growth.

Risks

• Lower-than-expected order wins amid a competitive environment.
• Slower-than-expected utilization-rate ramp-up.
• Greater-than-expected pricing pressure.
• Worse-than-expected execution in overseas expansion.
• Chip-availability changes caused by regulatory changes or delays in domestic capacity ramp-up.
• Difficulties in financing.

What to watch

• Delivery and customer move-in for the 300MW of 3Q26 IDC capacity, including liquid-cooling adoption.
• GPU pricing normalization and the timing of additional AIDC server investment.
• AIDC order quality, growth and progress toward the approximately 45% gross-margin target.
• Batam's planned 60MW 4Q26 delivery and the build-out of Hong Kong and Batam capacity.
• Progress on the potential C-REIT asset injection and Rmb2.5bn convertible-bond issuance.