Jefferies released a research report stating that on Friday (12th), the National Development and Reform Commission issued an updated "Notice on Further Improving the Normalized Declaration and Recommendation of Real Estate Investment Trusts (REITs) in the Infrastructure Sector" to accelerate the IPO process and expand the market. Newly listed REITs can apply for asset injection six months after IPO, meaning any acquisitions (earliest 12 months post-IPO) can be accelerated. This has incremental positive impact on both GDS-SW (09698, GDS.US) and VNET Group (VNET.US).

Jefferies favors both companies but prefers VNET Group. The firm believes that due to the mainland government's enthusiasm for seeing rapid growth in REIT scale in the stock market, GDS Holdings Ltd's REIT initial asset acquisition will be larger. For VNET Group, its REIT application is still being processed, and this new policy is believed to help accelerate the process. However, Jefferies understands that VNET Group will pursue private REITs in parallel over the next 12 months to hedge against the risk of the public REIT process taking longer than expected.

Jefferies remains optimistic about the fundamental outlook for both GDS Holdings Ltd and VNET Group. Based on the SOTP method, it sets a US stock target price of $67.12 for GDS Holdings Ltd, implying 22.7x reported EV/EBITDA.