21Vianet Group Inc (NASDAQ: VNET) stock fell over 3.1% in the pre market session of March 5th, 2019 (Source: Google finance) after the company reported net loss attributable to ordinary shareholders in the fourth quarter of 2018 of RMB114.1 million (US$16.6 million) compared to a net profit of RMB798.6 million in the same period of 2017 and a net loss of RMB29.6 million in the third quarter of 2018. Net revenues grew by 17.8% to RMB901.9 million (US$131.2 million) in the fourth quarter of 2018 from RMB765.8 million in the same period of 2017 and increased by 3.7% from RMB870.1 million in the third quarter of 2018. The increase was primarily attributable to the growing demand for data centers and cloud services in the domestic market.
During the quarter, the company had added around 250 cabinets to the network, ending 2018, with a total of 30,654 cabinets. Further, the company had observed an increase in demand for geographic expansion beyond the existing Tier 1 cities. The company are excited to extend our geographic footprint, to Chengdu, a core network hub of Southwest China. This is the first acquisition since 2014 and it will add over 500 cabinets to the sales pipeline.
On the VPN front, the company’s subsidiary DYX joined the first batch of companies on the government’s compliance whitelist. As a result, VNET are witnessing a gradual recovery of customer inquiries and orders. Going into 2019, despite macro headwinds, the company remain optimistic about conquer technical nature of the business. On policy side, the government has introduced stricter requirements on data center power usage efficiency. This will increase entry barriers to the industry and a need to more attractive industry consolidation.
For the first quarter of 2019, the company expect net revenue in the range of RMB860 million to RMB880 million and adjusted EBITDA in the range of RMB230 million to RMB250 million. For the full year of 2019, the company expects the net revenues to be in the range of RMB3.76 billion to RMB3.86 billion and adjusted EBITDA in the range of RMB1 billion to RMB1.1 billion. The midpoint of the guidance ranges indicate year-over-year increase of 12% in revenue and 14% in adjusted EBITDA respectively. The capital expenditure for full year 2019 is expected to be in the range of RMB700 million to RMB900 million for around 5,000 to 7000 cabinets. The CapEx, including the construction cost and the equipment cost as well as the land and building purchase consideration for the Shanghai Pingxiang (ph) projects.