21Vianet Group has seen its share price increase by more than 35% this year as of its closing price last Friday. The company which operates data centers and provides carrier-neutral internet in China has done remarkably well in a year that has seen many Chinese free dropshippers stocks being beaten down with the benchmark Shanghai Composite Index being down nearly 20% year-to-date.

The company saw a 29% YoY growth of its adjusted EBITDA in Q2 2018 with adjusted EBITDA margins expanding to 26.7% compared to the same quarter in 2017. The company’s improved performance comes after it divested from its 2 unprofitable businesses in the managed network services (MNS) segment, choosing instead to focus on its core hosting and related services businesses such as cloud, VPN services and Inter-Domain Controller (IDC) services.

The company is currently estimated to turn in USD 123.78 million in revenues for the third quarter, an increase of 14% after adjusting for the revenues generated from its MNS businesses which it has now divested from.

21Vianet continues to see increasing demand for its data centers fueled by organizations who are seeking enhanced connectivity and scalable solutions for their expanding businesses. The data center market in China is expected to grow at a compound annual growth rate (CAGR) of 13% over the next four years from 2018 to 2022.

21Vianet is already getting ready to take advantage of this growing demand, completing an agreement for 1,000 additional cabinets in their Shanghai facility in the second half this year as well as a new location in Beijing which will have a capacity of 3,000 to 4,000 cabinets. The company has already obtained the relevant power and fire safety approvals for the expansion of its Shanghai facility and has submitted the relevant documents to the Beijing authorities for approval of its Beijing facility.

In addition, 21Vianet has also entered into 2 joint ventures (JVs) with global private equity firm Warburg Pincus for the further expansion of its data centers. The JV will see 21Vianet holding a 49% stake and Warburg holding a 51% stake with both parties providing funds. 21Vianet will also have the option of acquiring an additional 2% stake on each project giving them the right to consolidate some of the projects under the JV into 21Vianet Group.

The company also has plans to expand into other segments such as the wholesale drop shipping companies usa and its market and the cloud service provider market. According to CEO Alvin Wang, the company has since put together a team to target the wholesale market and has also won multiple projects in the cloud services segment with top public cloud providers. These projects should lead to future gains for the company. Given the company’s currently strong cash position of more than USD 380 million in cash and short-term investments, the completion of these pipeline projects should not pose a problem for the company in the near term.

Last but not least, given the current backdrop of the Sino-U.S. trade war and a falling yuan which threaten to break past the psychological level of 7, the company is also employing prudent FX hedging policies to manage currency risks. This include using an offshore subsidiary to invest paid-in capital to an onshore subsidiary and taking capital loans from an offshore subsidiary to its onshore subsidiary.

Given the management’s prudent and efficient policies, the company has become leaner and more efficient, placing it in a position to continue generating growth in the future.

21Vianet will be releasing its Q3 earnings results on Tuesday.