Q2 2021 Chindata Group Holdings Ltd Earnings Call

[music].

Good morning, and good evening, ladies and gentlemen, thank you and welcome to tune without Group Holdings Limited second quarter 2021 earnings Conference call, we will be hosting our question.

Session after management's remarks.

Today's event is being recorded I would now.

Turn the call over to D first because we believe so.

Don show from Investor Relations of <unk> Group B school he's done.

Hello, everyone welcome to the <unk>.

<unk> 2021 second quarter earnings Conference call. This is Don from Investor Relations team of the company.

With us today are Mr. Alex Chi our CEO, Mr. Nick Wang our CFO necessarily Zhang our finance, Vice President and Joy, Zhang Our General counsel.

Yeah.

Behalf of our CEO, Nick will take you through the quarterly review of our operation performance.

Oh, it will present, our financial results.

Alex Nick and though it will be here to answer your questions afterwards.

Now I'll quickly go over the safe Harbor some of the statements.

<unk> today regarding our business operations and financial performance may be considered forward looking and such statements involve a number of risks and uncertainties that could cause actual results to differ materially.

For more information please refer to the risk factors discussed in our filings.

We may SEC.

During this call we will present, both GAAP and non-GAAP financial measures a reconciliation of non-GAAP to GAAP measures is included in our earnings press release, which is distributed and available to the public through our Investor Relations website located at Investor.

With blockchain data group Dot com.

We have also updated our quarterly presentation on the company's Investor Relations website, which you can refer to the supplementary material on today's call.

Without further Ado I'll now turn over the call to Nick.

Thank you Larry.

Joining the call.

Now, let's first take a look at some key figures.

The highlights for the second quarter of 2021 on page four of the slide.

We continue to grow our capacity.

End of the second quarter, our total <unk> capacity and service reached three 300.

161 megawatts.

Representing an additional 24 megawatts compared with the previous quarter.

Our utilized capacity reached 251 megawatts representing <unk>.

13 megawatt increased comparable with the previous quarter.

Meanwhile, utilization ratio is stable.

<unk> at 70% by end of the quarter.

Our top and bottom line performance remained strong quarterly revenue was RMB $686 million with a 64% year over year growth.

GAAP net income stayed positive of two straight quarters at RMB $65 million.

With a nine 5% net margin.

Our adjusted EBITDA was RMB $338.5 million.

Is the 49, 3% margin.

Again, showcasing the efficiency of our business model.

Meanwhile, our business fundamentals received strong recognition from major.

Rating agencies as in July Fitch, and Moodys assigned respectively, a first time, BBB minus and VA to issuers rating for the company.

We remain fully committed to core capacity buildup.

Covering greenfield development integrated energy solution and widen.

Labeling on key digital infrastructure equipment.

Our total number of approved and pending pattern a good indicator of our in house design capability reached 256 at quarter end.

Compared with 231 by end of the first quarter.

Our comprehensive in house design capability.

Currently covers building power distribution cooling system server rack and covenants wiring and supporting structures et cetera.

We remain highly committed to energy efficiency and sustainable development.

Our year to date average PV by end of the second quarter was one.

Two 2% compared to the same figure in full year 2020.

Our year to date total power consumption was 797 million kilowatt hours.

Now, let's take a closer look at data center dynamics in the second quarter.

As you can see on slide five.

In China.

We continued our steady delivery and completed construction of 11, new product in northern China, adding.

Getting a total and service capacity about 24 megawatts in the second quarter.

For ramp up of our data center, we added around 13 megawatts utilized capacity in the quarter and increased our total utilized.

Its capacity from 238 megawatts in the first quarter to 251 megawatts in the second quarter.

<unk> contributed by the steady ramp up in projects, including CN 0608 seat in <unk>.

<unk> zero, one as well as the newly in surveys and <unk>.

Our under construction capacity shorter extended as we added three new under construction product.

<unk> three <unk> 14 <unk>.

In 2015 with a total capacity of 87 megawatts.

On client commitment off capacity, we added 60.

Six megawatts of new indications of interest capacity.

Mainly contributed by the inclusion of the three new under construction products.

Our new <unk> capacity with an existing client on product income.

We also added three megawatts contracted capacity, which is converted from existing <unk> capacity.

Passing on product CE zero, one in eastern China.

With the above mentioned, we have brought the total number of our in service.

Under construction data center to <unk>, 15, and <unk>, respectively.

261 megawatts and 270 megawatts.

Respectively.

Under our business model, we maintained strong control of our assets indicated by 95, 7% and 94% of cell phone capacity for in service and under construction data center respectively.

Now, let's take a more comprehensive view.

And our total assets on page six and page seven.

<unk> commitment remains hot take.

Taking idle capacity into consideration 496 megawatts out of our 578 megawatts of capacity contracted.

<unk>.

And 86% contracted ratio by the end of the second quarter.

Capacity and service has have contracted ratio 91%.

Utilization is healthy by end of the second quarter total utilized capacity is 251 megawatts.

Making that utilization rate.

<unk> of 70%.

Now, let's turn to some other recent developments of the company on slide eight.

Our effort continues in the pursuit of sustainable development.

EMEA phase one of the company's tie Horn mountain energy and inflammation.

<unk> technology Industrial campus was awarded first price and the carbon neutral datacenter devaluation pump 2021.

The evaluation was jointly organized by record the ultimate ambitions to promote a net zero carbon the development of the digital infrastructure industry.

Located.

In <unk> city of Shensi problems the tire Hong campus is now utilized 100% of its energy from renewable sources for two consecutive years starting in 2019.

We also motivate ourselves to stay in line with global practices and standards as we became the supporter of.

TC FD or the task force on climate related financial disclosure.

And joining the scientific carbon target initiatives in May and June respectively.

But the communist supporter of TC FTE, we expect two pursuant to the framework of <unk> FTE.

Consequently, improve the disclosure quality op environment climbing related inflammation.

Integrate with the inflammation disposal system of international capital market and enhanced the capital markets and understanding of the Companys sustainable development strategy in building new generation of Hyperscale digital infrastructure.

By joining the scientific carbon target initiatives and committed ourselves to the business ambition for one five degree Celsius campaign, we have become one of nine companies in China to commit to the campaign and well strive to make our carbon emission targets setting more in line with recommended standards.

Diving deeper into our first time issuers rating.

Moodys assigned a first time <unk> corporate family rating to the company with a stable outlook.

As Covid <unk>.

<unk> data SBA to CFR reflects the solid demand for the data center in China.

Asphalt as a company is predictable earning.

Earnings streak with adequate committed pre leasing moderate leverage and a relatively quick ramp up to a 90% occupancy rate for a newly completed data centers.

Fitch ratings assigned a company an issuer default rating of BBB.

Minus with a stable outlook.

Key leading drivers include recurring revenue and predictable earnings stream long term contracts strong asset ownership strategic location robust growth favorable industry dynamics cost leadership, and a stable EBITDA margin et cetera.

Ara.

Mr Waiting the company will further diversify our financing channel to support our long term development.

Several important regulation and industry policy what issues in the past few months named.

Namely the implementation plan of computing power hub of.

<unk> innovation system of National integrated Big data Center issued by National Development, and Reform Committee or NBRC in May.

Three year action plan for the development of our new data centers published by Ministry of industry and information technology.

In July.

And some updated regulation issued by local governments, such as Beijing Municipal government to further strengthen review on data center energy efficiency performance.

Key directions will pointed out for the future development of the industry.

We take a positive view on these policies.

And its impact on industry.

We believe that the way we understand our data center business and our past performance was generally in line with direction mentioned.

The development of digital economy in China is a long term prospects with less uncertainty.

The value of IDC inventory at key fundamental.

Fundamental infrastructure is being increasingly apparent.

Guidance by the understanding that our business is essentially to efficiently convert the electric power computing power couple.

Coupled with our confidence in house capability to do that to provide <unk> solution to realize such conversion.

Adding our early.

<unk> election in long term commitment of integrating renewable energy into our solution.

We think we are in good position with first mover advantage and we will continue to deliver value to our clients and contribute to the sustainable development Taco Society.

Regarding the Remodels the drop of Harbor security.

Security review matters, either diverse space of administration of China in July and a regulation on our security protection of critical information infrastructure REIT.

Currently expect limited impact on us given our business nature of lung in Boston or processing of any external data or information.

Meanwhile.

Meanwhile, multilayered internal security measures have been carefully implement implemented by the company to ensure a high level of cyber security and data privacy protection.

Eliminating any possibility of us or our employees accessing customers business data in any manner.

Going.

Forward the company will closely monitors such regulatory updates and take further necessary measures to compliant with any new or updated regulatory requirements. While the company may be subject to.

With that concludes our business update.

Now I'll turn all of our Brazilian our Etfs.

<unk> finance to go over our key financial results for the second quarter of 2021.

Be mindful of pilot.

Encourage our listeners to also refer to our earnings press release, which is posted online and increase our quarterly results along with other additional details.

Please note that all numbers today are in.

RMB terms and all comparison.

On a year over year basis, unless otherwise noted.

No.

Nice.

Our revenue has increased.

Q2 revenue grew by.

Kevin.

Quarter over quarter.

April earnings.

Yes over year to RMB engineered agency.

On an annualized capacity increase to 215 lifecycle that correctly.

Yes.

There are currently two megawatts in the same quarter last year.

Thank you.

77 client broker.

Linear growth.

Our call Center.

The structure of our currently.

We'll go last to keep hover.

No.

Moving over to <unk>.

Continuing to grow adjusted EBITDA and adjusted.

Net income.

Looking into the detail of the cost.

Eitan.

Rigidity REIT Oppenheimer when the class eight.

<unk> revenue.

On other costs.

Could you have a question on the gasoline.

Absolute SG&A to kind of around.

14%.

Take a closer look at ever growing or stable profitability on slide 14, adjusted EBITDA in the second quarter periods was 65, 8% year over year or 10% quarter over quarter to RMB 338.5 million.

With our margin.

Nine.

Adjusted net income.

289% year over year.

The three 4% quarter over quarter to RMB 113 meeting adjusted and GAAP margin for the corridor.

5%.

Yeah.

Now, let's take a look at our cash and debt position and our Capex on slide 15.

In the second quarter was RMB 500 increased six two meeting we had a cash position.

With cash.

Cash cash equivalents keurig quickly.

RMB 7000 in Brazil that are needed.

Yes.

RMB 5100 brokerage firms.

Jim.

The cash position on slide 16.

Major contributors there.

RMB $285 eight leading personnel from operation are RMB 537 meeting materials from financing.

And next in RMB $816.2 million.

And then on cash flow and then left in R&D.

Canadian exchange rate effect.

Again.

With high quality, indicating our constant profit matching cash flow from operation.

Our healthy never use.

You can see on slide 17.

<unk>.

Corridor on the closest GAAP packaged duration.

Revenue for credit performance.

Where did that last month, we get to the EBITDA ratio.

For clarity our.

Our lost accounts monthly GAAP net loss adjustment interest ratio.

<unk>.

Both have been improving over the quarters.

Finally, let's take a look at the guidance, we have decided to update our 2021 full year guidance with revenue guidance REIT for the range of RMB, two seven space, leading to RMB two points.

<unk> eight 3 billion compared with the previous RMB, two seven leading to a RMB 278, leading indicating a midpoint increase of <unk>, 4%.

Guidance, while adjusted EBITDA is reduced to the range of RMB, three 5 billion to RMB.

RMB, one 4 billion compared with RMB 128 hundred 80 to RMB 133 billion.

Indicating a midpoint increase of five.

Five 4%.

This forecast reflects our current and preliminary views on the market and <unk>.

Operational condition.

That concludes our prepared remarks for today operator, we are now ready to take your questions.

Okay.

At this time to ask a question you will need to press star one oils for the food to withdraw your question press the <unk> office.

When asking your question to your question in Chinese.

Let me repeat your question to English for the coverages of everyone in the call.

One question at a time.

Your first question comes from Ken knew she from Morgan Stanley. Please ask your question.

Oh did you buy any time, you're going to be buying attention to our regular holiday is not where that wasn't kishore glad. He says you know you said it well.

Well me as having dollar Jacob coffee and poetry smaller fanion that you should be talking about.

And then in voting. Thank God, you don't call. It makes all sense, yeah plenty of time to reach a contingent until they do.

Yeah, well Shunyata, particularly Michelle if you go on the JV.

With me on the income no way it could be phased out thank the management for the opportunity to ask the question and congratulations on.

Strong results. My question is about the regulation so we'd see the NII has recently published the three year development plan.

Would appreciate if the management can share more REIT on this new policy, how it will impact the data center industry and she made us business. Thank you.

Very good thank.

Thank you.

This is Nick I'm happy to take this one.

I think from the companies be back in the day one of the funds.

As a company we all were aware that the the intersection of business energy and data is actually quite critical.

Absolutely our interpretation of a nature of IDC business mutual final wave.

Additionally, convert electric power, sometimes we empower to computing power. So based on this understanding of the nature, we think that the reason the policy.

It's a three years plan.

Please.

How do you see the very positive year over these policy and we believe that its potential impact on the industry will be better beneficial pool pump in like us.

And also if you read the newspapers.

Coming down to the detail keep direction as youre pointing out in these newspapers, including the like something like a more optimized layout.

We hold data centers.

Encouraging development in overseas market and also the policy also lumpy based on objective.

Trying to improve the national Internet linkage to support our totally up they also at the policy also.

Current larger scale more intelligent higher intensity data.

All through the support of various computing demand and obviously, most importantly, you know what the policy count requirements improved energy efficiency and we're going to encourage the development of the usage of the renewable or data center.

And in such a place we sell approximately to renewable power resources. So that's.

And actually the better contribute to our long term carbon neutrality objective set by the central government. So and also as I just mentioned on one I went through our earnings release deck.

While the company Jim data has always been doing is quite a lot has been in line with this key directions.

Again guided by the understanding of.

Our business is essentially to efficiently convert electric power computing power and coupled with our quite unique in house capability built up to provide <unk> solutions, including comprehensive solution to utilize such a conversion and if you also add our early site selection and long term commitments.

Integrating this kind of renewable energy into our solution. We think we're in a good position with first mover advantage and we will continue to deliver value to our clients and ultimately contribute to the sustainable development side. Thank you.

Okay.

Thank you. Your next question comes from Tina Hu from Goldman Sachs. Please ask your question.

Go ahead, Robert <unk>, and engineering that you got tissue, our timberland tissue grades and Jonathan.

Sure.

Thank you.

Not all of it is some of the loans Youre running it holds out to Joe Mccourt Judicious at me I'm not sure what.

Sure Ghansham Aon, though you said combined ratio side, you've got to go talk overdose outdoor I kind of commented on that.

We can't just shouldn't.

<unk>, let me answer it now.

<unk> Chicago Petulant now holding larger share women 13. Please tell me the IR, Doug I should say you guys from Russia.

I hope to wholesale.

Thanks, Tony.

Tony with outdoor too guys.

P J just your thinking changing jobs.

Okay.

Hello, <unk> so congrats.

Congratulations management on very strong result, and also raising your annual.

Your guidance. So my first question is around competition.

Among the recently won projects what is the competition landscape like so for example.

Who are the who are the competitors that we're bidding projects our projects against and what are the most important criteria customers are looking at is it pricing or something else.

So what is the IRR for our latest projects and lastly.

If management could share your views.

Around G.

<unk>, which is a new entrant into the market. Thanks.

Okay.

Thank you Peter this is Nick I'm happy to take this one again.

I think you are referring to the most recent project as we indicated in the under construction on a project there are 87 megawatts.

In total was 66 megawatts.

With a strong indication of interest from our clients.

And we actually believe this potential demand is based on our superior advantage lower cost sufficient resource MSR secured power supply and the solution.

Especially the potential for future renewable energy supply into these data centers, and obviously, our efficient and the maintenance and in our business model full stack model, which makes the customer completed worry free auto winning ticket because when the hard from these customers.

We did before.

With regards to the.

The competition I think you can you can interpret it recompete on cost efficiency not necessarily on price, although our price wont be the most of it.

Is among the most competitive in the marketplace in terms of who our competitors all of them essentially so I think we just emphasize our competencies our key advantage as I just mentioned and.

It's a full package that's been part of our customers.

In terms of customer criteria, we believe our customer our wholesale multi at a same thing.

Just to mention you know I repeat.

And advantage as a full stack model customer worried fee package low cost and operational efficiency.

And secured a resource empower and empower supply on the other side our pricing is not final yet because it's just the indication made interest, but we believe that that pricing our pricing price offering to the customer is going to be as competitive as appears if not lower.

As a result.

In terms.

Our biologic IR, we actually never and do not want to disclose the financials on a project level IRR, but I believe with the addition of this new project is quite big scale. We are very confident to maintain our current IR level for overall asset portfolio with the addition of these new products.

Terms of the last part is regarding the new management team Covid this industry like <unk>, we actually.

But we make a public comment on any specific appears but we know some of them, including some of the new entrants as you mentioned have some certainty, but leverage our land resources.

<unk>.

But in terms of our Hyperscale datacenter operational expertise track record.

Hansen of Shutterstock capability and also power solution side, we believe the chimp data have sustainable advantage over most of them in the tree peers because of our unique advantages just mentioned.

I hope I answered your question.

Yes. Thank you so much Nick.

Thank you.

Your next question comes from Arthur Lai from Citi. Please ask your question.

Sure.

Hi, She said I think a T Kearney chairman.

<unk> can now so.

So changes in 2000 and constantly constantly out there yet.

Your particular, Marty Marty, it's you're seeing a yo yo.

In this scenario a revised guidance assortments.

<unk> known where.

I wouldn't suggest it.

They call me and say Tao.

And when does it go.

Took a turn down the government does it more of a temporary downtime that youll reach you on windows 10 value will come towards the.

Concerts, I shouldn't have a way of life. So it's somewhere in the co.

<unk> because at that time machine and go kick.

That took a minute tens of atonement, especially when they go to <unk>.

Got it and just maintaining cash on.

As I highlighted this year.

Now taking the update now being like I said, it wasn't going to take a 10 center.

So that's the theme that we've been dosing them.

What do you think.

So I think the.

Investor was pleased to see the high quality growth. However on now so that.

When he came to understand what's the future development of a new client base. Thank you.

Okay.

Well I agree with all that.

Uh huh.

Email.

Yeah.

Played out.

Okay.

Okay on the channel in General Brian Gladden Shebang.

Uh huh.

Hello, everyone I'm doing something wrong.

Uh huh.

No change on them, putting them on public or who do you see in the corner.

That's awesome.

On a go at home.

This is a consumer one how are we tend to be more political more do you think kind of animosity.

Hi.

It's only a critical hurdle as long.

Cloud suite for her warm winter and a bigger program illicit attendees, how well I'm I'm sorry.

Hum.

Pingo constantly pulled out because it seems.

It seems on income from the time because they are the ones. We talk on a license on a woman she said.

Which of your hand.

As you can go on but they are seeing or the mothership and universes.

But the people are getting somewhat million dollars per year.

Constant dollar revenue.

So that kind of argument you tell me the sooner closer.

Obviously, our current year lines into two patterns here too.

Cumulative to quit.

Alright.

Tony our young children were missing a small non core Europe.

Sure.

Would it be shadows future would you hope it sounds related pedal assistance.

Yeah.

He is the translation for Alexandra.

I've got a second question it.

It has confirmed that we have been.

That's C are very attractively.

<unk> ranked all of the global Internet later on if you collaborate and establish a very welcoming has that Oh go ahead Sir.

However, during the course of Bachelor still going at it.

By our hyper scale Greenfield.

And they.

They don't model on when the business concerns and also the collaboration all fit our on our business model and also our philosophy.

We are definitely.

Definitely going to take this off line if any opportunity that's presented in front of.

Hello.

Typically maybe sort of America for an acquisition.

And two it's about risk and more.

Diversifying our claim counts.

And then going back to the related to the first question on the overseas layout.

Go on.

First half constantly on expand and also penetrate the markets that we have already established our operations in Malaysia and India.

We are also very actively.

Actively looking into the opportunities in other soft REIT age or ATM.

Countries, such as Thailand, and Indonesia are we are also considering opportunities and got introduced to them.

I say, Vietnam, Macau et cetera.

Yes.

Thank you.

Yeah.

Your next question comes from James Wang from UBS.

Sure.

Got it.

Okay, and then you ask what's your reading of the things you said.

I think in English again, well sure what always require you to acting in somewhat debated seem quite a little kind of a.

Turned out to be quiet.

And 60 based on some of your base Jetblue icon shipper owned them a way to scale the agenda.

Okay.

You said once you strip out just so that you can enjoy at <unk>.

<unk>.

The airports you could've been few days yet.

So they.

Oh no.

Oh go on one line guidance.

Right.

My.

Sure.

Is around your pipeline is it getting more difficult to secure site with access to both renewable energy and fiber right now and in terms of the pipeline.

Can you maintain the same rate of growth assuming the demand at that thank you.

Yeah.

This is Nick again, thank you James.

Oh absolutely.

I just disclosed.

Have just added three additional projects.

Under construction.

How long of a total capacity of 87 megawatts each quarter located in northern Eastern part of China actually these new products are taken out of our reserve oil pipeline project.

In fact, we do have prepared ourselves.

Ah bound in the reserve for future development. So the answer to your first part of the question, Yes, we do.

<unk>.

Well good preparation for now, but we have always been american's revenue Conservative you probably.

Already.

<unk> seen the peso three quarter, one release, our earnings release and we only.

Only disclose further information when we believe there is adequate and the revenue.

Police certain intention of interest from our clients then we will report this kind of.

The new projects due to our disclosed.

Categories of capacity so in terms of our client base expansion and diversification, we have been in constant contact with a top tier declines.

Relative to China and overseas for potential strategic cooperation and would share with Merck is when it is time.

So it's not only the existing customers, there's a wider base of customers.

For the second part of the question in terms of more.

Competition in our resource.

We cannot.

Declines that we have advantage everywhere, but in certain key area. We believe is going to be most suitable for the development of hyperscale.

Energy and our Green energy in theaters of Green Energy Center and data Center, we believe that we do have well assess certain the first mover advantage on first et cetera advantage, especially in.

But China, where we beat our major Hyperscale data Center data Center campus.

Thank you.

Yeah.

Your next question comes from Albert <unk> from JP Morgan ask your question.

Some of our furniture.

So unfortunately.

The retail market.

Okay.

And in that setting.

Right.

I mean, it seems like the central of Monsanto and Copa and we ship.

It depends on mix and so on.

So I think Ah.

Capacity there.

And a quick one.

So on what kind of gets you to.

Just a quick one.

You May open Apis.

They go up.

Timeline.

Taking into APAC, Nicola and China Hutchison.

The SEC.

John that's correct.

Thanks, Chuck and minions.

Certainly, there's some incentive comp guidance.

Okay.

Okay got it.

I thought that that would be the same.

Wait.

Sure Kim.

I mean in the opinion that could be done since <unk> in good shape.

I just wanted him to other things I'll call it.

Okay.

So that was it into satisfying.

My question is about the demand outlook next year, although the market has concern over the common policy.

And at the highest I'm not seeing any slowdown in capacity. That's no question I think when I look at page seven in our presentation.

Eight.

Kiki flying megawatts next year versus only 100 megawatt late here. So how do you think about the ramp up schedule and utilization rates next year is it fair to train and did not have much more stronger of course outlook next year versus this year.

Capacity will have more impact in 2020.

Thank you.

So click over to your house.

In Ghana, we presume because or a guy who voted on this.

Two things on it.

It goes through the bond classes.

Woman glaucoma curriculum.

I know the Minister Jan.

Thank you Bob.

Clamor of course would have been done and I know what I mean, I know, we're running two concurrent woman go cohort or in the summer demand.

It wasn't I don't either Congolese women portends, a future price declines so geologically.

James cylinder.

And that's probably more of it because I'm a list.

But it's not someone else's tier in Congress is it.

Yeah.

And translation for Alex Schwartz.

And thank you for your question and ever.

Everyone can witness gene Davis growth has always been maintaining a very high steep.

Perfect.

And it isn't just about that next year, we can't also maintained a strong.

Yes.

This is based on our R&D public ili interests and also customer orders.

But half of that I still want to call everybody's attention.

Curve that we will still stick to our business model on Hyperscale and Greenfield development. So we are on strike to not only grow fast, but also annual very healthy stage. Thank you.

Yeah.

Sure.

Your next question comes from home.

Ask your question.

Oh, Glenn until I saw how ugly closer to that kind of how.

I know what the lung cancer.

Good God Magnolia, San Pedro de Saint Charles.

Uh huh.

Now who will now come to life.

Okay. Thanks, Bob.

<unk> just anything you can kind of show that sure.

Huntsville woman did you got <unk>.

That was down one day sales event.

Not that.

I mentioned earlier, you will find out eventually that Jonathan.

Now we're a critical thing.

So thanks management for taking my question I'll come back and congratulations on such good results.

And of course, youre raising the guidance.

Okay.

Hum.

So could management.

Our partnership with Tencent.

Including some details on what kind of.

Our business will tend to put out data center and one mattress GAAP pension that you'll note on this collaboration thank you.

Yes.

She didn't go empty.

Uh huh.

Well the total thing over to Glen <unk> women's cities honest with them.

Although the problems you've had in soil.

So there are putting them on poker cuckoo.

We're going to do to jump at the first one is on a go at home.

Women can do the figures, which endorses our routes out there for two of her from Piper Jaffrey.

This overburden it sounds you can go through.

What are the liberal.

Uh huh.

We are going to use as a former guns. The vehicle will go through the polluter to where that goes whether it goes on to Luna.

There's lots of income a good glass, even a woman loses of envelope on combo, because theres nothing wrong.

Uh huh.

Two of them the data path.

Yeah, So deep Oklahoma.

So this along with a host.

Okay.

Yeah for sure.

Yeah.

So translation for Alex Schwartz.

As we attack on our in our interests.

With me.

And so we have been constantly in touch with the Tokyo signs, including Tencent in China, and overseas, where the potential collaborations.

In a strategic way so the communion Acacia has always been continue.

And in June.

We publish.

In our news on the potential or.

Kind of a template that collaborations are.

Going to be more focused on the strategic and of the ecosystem collaboration.

Okay.

We can see that.

Florida potential collaboration, especially within China.

China.

We are definitely being valued by our capabilities, especially our capability of ours in.

Related to the renewable energy our capabilities in the Greenfield experience and also in the equipment or possible equipment.

Equipment intelligence manufacturing.

I think this is ashish.

Achievements that put an hour drive our growth and is it also witnessed that market as well.

Thank you.

Your next fresher income.

Churn from.

So curtains.

Your question.

Hi, Nathan.

Oh no no.

Good article.

You said that your module.

That's just.

Not just sure Uhm woman that should help with some of you have it on me gentlemen that is all and sometimes not.

Do you want to watch it for you.

The highlight here, which you did mention that actually it's a lot of feet on the website.

David I'm not sure you'll channels on <unk> no.

Although we have seen that that you are mostly within the customer base tends to enter into the cloud computing market.

It means that we can see some are just on Instagram.

Chris.

Dr Fischer.

In addition, Doug electricals, albeit doses or state business.

Therefore, a corresponding opportunities plus thank you.

What else it doesn't guarantee goose will go along with the food, they're telling him or her bosses eval some either.

Oh, sorry realized something so either one of them where it turns out most of the sound economy the tissue bump.

Two women highlighting.

Uh huh.

On a go Oklahoma Tucson Kool Trans.

So until they get it.

Yeah.

[noise].

Thank you for your question.

So looking back our collaboration was signed and in the past has been very successful.

And we have achieved with very high quality delivery and our clients are very happy.

And so looking forward with our content capability building.

Adding up and also the person layout in overseas market. We believe that we are fully capable of.

Supporting the development of our crane businesses in China and beyond.

Okay.

Your next question comes.

Strong coverage from Morgan Stanley.

To your question.

Oh, that's okay right now that they are the ones you're sure glad here because they want me it kind of all Shanghai, a thoughtful and say Hey, you know Jake I know Howard you know.

A couple of years, what can I get what you're saying.

She's on Geos talks about the pinch out.

No I don't think longtime gradually roll month with enthusiasm.

Hum.

Yeah, Yeah, and you've addressed challenging got it.

No.

Thank you management and my second question is about the.

Power quota allocation Shanghai, a recent new batch happening.

Passed a few months, so could management share a little bit more REIT on this on what would be the implications are on the industry and the future grants Chen Thank you.

With all the government tone also go to that's only total football.

Yeah.

Do you do with Gen. Two could you talk a bit more young shoes, you'd be kind of out of Illinois shoot.

A woman to other when she will die why are you seeing some shadows over here.

So instead of them seem to be all variables that are really designed.

Terrific.

Yes.

Translations house with him.

From the company's strategic view, we have been again adopting the hearing to our Hyperscale model.

On the Greenfield development supported by Us with the acceleration in comprehensive income in house capabilities.

So our model.

I think the fact that our contracted the ash is derived from the Coca Cola inefficiency.

And were less impacted by such policies and their tier one city and they believe that Armando can provide us greater buffer when it comes to.

The competition dynamic thinking.

<unk> is totally hook, which I'll go through their families Jody Miller, which is going to Trump a hershey already do chairman for Rudolph will shoot you won't lose sooner.

Without the boots on the REIT that's all good.

Okay.

So we are looking to do the children and encourage you to go through those in a little sandbox.

On the <unk>.

Quick ones you don't use it.

Yeah.

And complement our on the top of the answer just now so our business model.

Have shaped that we are.

We are shaping our compare.

Impressive strength through the cost and the efficiency and the total solution.

So.

No matter, where the competition landscape can it become we think we can handle that properly. Thank you.

Your next question comes from the home.

In the second.

Please ask your question.

Your line is all of the other lung tissue quality Richard showed you a chance that that will should listen the Dianne go Dr. John <unk>.

Great.

So I'm glad he's hungry I thought I should you don't seem to take a higher lifetime.

But two hotels, you shouldnt be able to use that relationship holding why does your total woman. That's we all cool that kind of Hawk, Paul Simon Gutman seem to like T shirts, yano tending to Jacobs with EMEA on kind of assistance.

Oh.

Just translate so my second question is regarding the.

Data security laws and regulations, what kind of impact both in the near term and in the long term with this half of on the data center industry also when we were talking to our anchor customer recently.

Is there a view on the data security law. Thanks.

This is Nick I'm happy to take this one but the $3 three is actually the current assessment from gene data is actually we expect this new policy.

Net income to the company and the industry.

Curious what holes in the near term or near term.

The near term and long term and because I would like to I would also.

I would like to walk you through some several important tax explaining why first of all our business in the data center target.

Based on all the large corporation is that of individual end users.

Our servers do not involve the ownership.

<unk>.

Thing of any external data or information, we only provide.

Good where infrastructure level service, such as a co location service, including the deployment of our customers of servers and other equipment in our properties and at the same time, we are providing on power electricity cooling and other relevant.

Rather than the utility and.

So basically infrastructural facility service to our clients.

And as all servers are owned and independently managed monitored by our customers.

Our employees have no access I believe the other IDC company's law.

No access to any of such.

Such customer data and our primary focus of the securities licensing physical security rather than virtual ones, which are typically at a key focus of our large customers.

Secondly.

Our Hyperscale datacenters.

Data Center services in China strictly restricted for domestic use without any cross border transfer.

Ada information, therefore, varian zero risk of potential overseas data make it so the customers and the impact on our customers by international customer working overseas domestic customers are working in China. So there won't be a mix up effect. So we didn't think the.

The customer demand is going to be.

Moreover, we have from.

From the company itself, especially the June data, we have taken all necessary internal matter can promote high level or separate security and data privacy privacy protection basically eliminated any possibility of our employees to access and manipulate.

Really the customers' business.

Any manner okay.

However, we do so with the understanding that such relevant the lowest regulation a SKU at a relatively preliminary stages on the stipulation we will closely monitor such regulatory updates and then taken undertake further necessary measures to comply.

With any new or updated regulatory requirement.

Companies are maybe subjective.

Thank you.

Okay.

Yeah.

Your next question.

James Wang from UBS. Please ask your question.

Okay.

Yeah, the only issue.

Just anything that doesn't make what kind of guidance.

Got it.

Can I say I can touch on the financing.

Okay, I won't push any real talking about it you go from here.

Even after accounting for 20 years and I'm sure you hope.

Without those you don't.

Just a couple things.

The web address.

So my question is around the uncertainty uncertainties associated with the Chinese companies with the Ie structure.

So how do you manage this risk and where this will affect your ability to REIT funds.

Port your future expansion plans.

Oh this is.

Nick Thank you for your questions and I think that's probably one of the most of the color you're asking us to push himself, but any.

Any of the.

Participants are in a couple of markets.

But the board attempted his board and management.

Have also been closely.

Following this kind of issues.

As far as.

We understand our interpretation on this.

This policy.

Yes.

Yes.

It's actually quite small and all this.

A rumor on the street and we reported the potential risks will have a limited impact on us.

The specific VA requirement.

<unk> intended for those to be listed in the U S market as a listed company we have been in compliance and our <unk> related information is already disclosed in a very proper manner in our previous filings submitted two hasn't you'd see we're closing to monitor.

The whole situation and don't forget in the future, we always have the option and flexibility.

To consider other kind of listing and outside the U S.

Thank you.

Your next question.

Comes from Albert hung from Jpmorgan. Please ask your question.

Sure.

Sounds good.

This is Dan thanks for highlighting that.

Carl.

They are changing.

Thanks, John.

Great.

And that project, so could you kind of detail.

Sure.

<unk>.

Current dependent.

Thank you.

I just saw profit sometimes.

Sometimes it all.

Wendy.

So a follow up question on pricing.

<unk> ratio for testing for all of their cost structure is quite high.

The pricing has not been finalized by now how is the pricing dynamics on their direct engagement with clients for new partners.

Any deterioration of pricing or the pricing dynamics has been quite stable.

Thank you.

Although work with I think a <unk> course.

So the fact that most who.

Talking about our lead compound <unk> China.

I'll answer the Congo neighborhood on either buying or selling a woman does sanyo to occur.

No.

Telling you.

How are you seeing them for you.

So.

<unk> most of that in Europe.

Perry Queen patents are on time charter or your emphasis so revenue.

Oh man.

The number in front of Congress will be the time that they need to ship.

And translation to add right.

Sure.

First.

And we adopt our Hyperscale Greenfield development model, which is our most advantaged and under this model.

We have been constantly building.

Our in house Clark of authority and to integrate and streamline our supply chain efficiency and profitability on based on guidance we interpret.

Pricing trend or pricing pressure more into a model our business model.

Doctor.

Not on.

And.

So based on that the competition for US is more like a competition in the business model and not a competition in the pricing.

And touch on the pricing.

Never going to be the first.

Influencing factor and make them better facing the competition in the pricing and also surrounding high market.

Okay.

Thank you.

Yes.

Your next question comes from June June turned from.

The proteins you ask your question.

Well that the island.

Thanks, John.

Bob.

Culturally and what not what kind of azure, especially some of those other otas that shine is on shutdown plants in Michigan.

China.

Jonathan.

So you're closer to allow us to overtime.

Pingo <unk> chocolate ice cold I don't see engine okay.

Okay.

Repeat the messaging in either issue still.

So Ken sure means Sunshine stemming from Michele Fischer developmental path in China is another.

Oh, well adopt a marker of course.

Part of its strategy to a customer at a resource requirements and sticky.

Oh cool.

Seasonally.

I'm on my the toilet paper.

<unk> come to the part that down to.

T people in total agreement with them.

Do you still kind of on the list to close or sell them their cool, if you're going to see their food and what was it.

She's honestly, Tim conquer quite sort of ends up well. He is who he took the logical thing sometimes all of them.

She does hang in there too right.

No based on revenue and keep all the time now to use on Pilatus M C.

And we conduct formal agreements on CT Gov.

Or it's even harder to sort of wrong.

So the Q2 order season tends to fill out our programming analysis.

Excuse me.

Okay.

Thank you.

Generally speaking as we look.

Before M&A opportunity, we need to align it with our strategy interesting followed our fundamental havent felt it yourself and full stack development model.

And to pursue a GAAP had healthy and high quality better.

Under such a precondition, we're constantly looking for M&A opportunities.

Looking and younger with Rick Alka and also acquiring railroad.

The Pearl River Delta region.

As for our development in the Yangtze River Delta region. In particular, we are further expanding our scale and our fitness by adding up a new 30 megawatts under construction capacity.

Keep on EMEA CEO three following the previous project. Thank you.

Thank you I'll now hand, the call over to manage spread for closing remarks.

Good morning.

Okay.

Thank you, ladies and gentlemen for participating this up to the earnings release.

Inc.

There is a lot of challenges you're laying in its Kevin mountain today by the company I believe.

What we are doing is the right way of doing things is at ETP industry, We got a century.

Our business.

All around health will find the most efficiently efficient way to convert electric power.

In particular Green electric power to the computing power and we think we're going to stick new business deployment and.

Better serving our clients and ultimately contribute.

Beauty to the society and thank you very much.

No.

Ladies and gentlemen that does conclude our conference for today. Thank you for participating you may now disconnect your lines.

Okay.

Thanks.

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Good morning, angry evening, ladies and gentlemen, thank you and welcome to <unk> Group Holdings Limited second quarter 2021 earnings Conference call.

We will be hosting a question and answer session after management's remarks.

Today's event is being recorded I will now turn the call over to the first speaker today.

Dog Chow from Investor Relations of Ching Tao Group. Please go ahead dawn.

Hello, everyone. Welcome to <unk> 2021 second quarter earnings Conference call. This is Don from Investor Relations team of the company.

With us today are Mr. Alex <unk>, our CEO, Mr. Nick Wang our CFO.

Joey Zhang our finance Vice President.

And Joy Zhang our general counsel.

Half of our CEO, Nick will take you through the quarterly review of our operational performance and some of it will present our financial results.

Nick and though he will be here to answer your questions afterwards.

I'll quickly go over the Safe Harbor.

Some of the statements that we make today regarding our business operations and financial performance may be considered forward looking and such statements involve a number of risks and uncertainties that could cause actual results to differ materially.

For more information please refer to the risk factors.

And our filings with the SEC.

During this call we will present, both GAAP and non-GAAP financial measures a reconciliation of non-GAAP to GAAP measures is included in our earnings press release, which is distributed and available to the public through our Investor Relations website.

Located at <unk> Dot Chimp data group Dot com.

We have also updated our quarterly presentation on the company's Investor Relations website, which you can refer to as a supplementary material on today's call.

Without further Ado I'll now turn over the call to Nick.

Thank you everyone for joining the call.

Now let's.

Take a look at some key figures will summarize the highlights for the second quarter of 2021 on page four of the slide.

We continue to grow our capacity.

End of the second quarter, our total Iot capacity and service reached.

361 megawatts, representing an additional 24 megawatt compare with the previous quarter.

Our utilized capacity reached 251 megawatts representing <unk>.

13 megawatts increased comparable with the previous quarter.

Meanwhile, utilization ratio.

A stable at 70% and our performance.

Our top and bottom line performance remained strong quarterly revenue was RMB $686 million with a 64% year over year growth GAAP.

GAAP net income stayed positive of two straight quarters at RMB 65.

It was a nine 5% net margin.

Our adjusted EBITDA was RMB $338.5 million.

49, 3% margin again, showcasing the efficiency of our business model.

Well our business fundamentals received strong recognition from major.

Rating agencies as in July Fitch, and Moodys assigned respectively, a firsthand BBB minus and VA to issuers rating for the company.

We remain fully committed to core capacity buildup.

Covering greenfield development integrated energy solution and widely.

Key digital infrastructure equipment.

Our total number of approved and pending patents.

Good indicator of our in house design capability reached 256 at quarter end.

Compare it with 231 by end of the first quarter.

Our comprehensive in house design capability.

Currently covered building power distribution cooling system server rack and covenants wiring and supporting structures et cetera.

We remain highly committed to energy efficiency and sustainable development.

Our year to date average.

The end of the second quarter was one.

Labor compared to the same figure into year 2020.

Our year to date total power consumption was 797 million kilowatt hours.

Now, let's take a closer look at data center dynamics in the second quarter.

You can see on slide five.

In China.

We continued our steady delivery and completed construction of 11, new product in northern China.

In total we service capacity, we got 24 megawatts in the second quarter.

For ramp up of our data center, we added around 13 megawatts utilize capacity in the quarter and increased our total.

Two types of capacity from 238 megawatts in the first quarter to 251 megawatts from the second quarter.

<unk> contributed to steady ramp up in projects, including <unk> 0608 seat and the remaining CE zero, one as well as the newly inserted in Europe.

<unk>.

So you'd have our under construction capacity shorter extended as we added three new under construction products.

<unk> III and.

2014.

In 2014 with a total capacity of 87 megawatts.

On client commitments of capacity, we added 60.

Megawatt of new indication of an insurance capacity.

Mainly contributed by the inclusion of the three under construction products.

Our new <unk> capacity with an existing client on projects to income.

We also added three megawatts contracted capacity, which is converted from existing <unk> capacity.

Same home product CE tier one in eastern China.

With the above mentioned, we have brought the total number of our in service and under construction data center to 15 and my respectively.

Or 361 megawatts and 270 megawatts plus.

<unk>.

Under our business model, we maintained strong control of our assets indicated by 95, 7% and 94% of cell phones in housing or in service.

Construction data center, respectively.

Now, let's take a more comprehensive view.

And our total assets on page six and page seven.

Flying commitments that may take.

Taking idle capacity into consideration 496 megawatts out of our 578 megawatts of capacity contracted.

Risk up 86% contracted ratio by end of the second quarter.

Capacity and service is the contract that ratio 91%.

Utilization is healthy by end of the second quarter total utilized capacity is 251 megawatts.

Making our utilization rate.

And 70%.

Now, let's turn to some other recent developments of the company on slide eight.

Our efforts continue in the pursuit of sustainable development.

In May phase one of the company's tie Horn mountain <unk> and inflammation.

I will now that the industrial campus was awarded the first price and the carbon neutral data center evaluation of 2021.

The evaluation was jointly organized by retrofits optimizations to promote a net zero carbon and development of the digital infrastructure industry.

Located.

<unk> City of Shanxi Province, and tire hung campus is now utilize the 100% of its energy from renewable sources are two consecutive years starting in 2019.

We also motivate ourselves to stay in line with global practice since standards as we began this quarter of.

DSD or the task force on climate related financial disclosure.

And joining the scientific carbon target initiatives in May and June respectively.

The communist supporter of PUC FTE, we expect two pursuant to the framework of QC ft.

<unk> constantly improve the disclosure quality op environment employment related inflammation.

Integrate with the inflammation disposal system of international capital marketing and enhanced capital markets understanding of the Companys sustainable development strategy and building new generation of Hyperscale digital infrastructure.

By joining the scientific carbon target initiatives and committed ourselves to the business ambition, a one five degree Celsius and pain, we have become one of nine companies in China to commit to the campaign and well strive to make our carbon emission targets setting more in line with recommended standards.

Diving deeper into our first time issuer trading.

Moodys assigned a first time <unk> corporate Daimler railing to the company with a stable outlook.

As Covid chimp data SBA to fr reflects the solid demands when a data center in China.

Asphalt as a company is predictable.

Earnings peak with adequate committed pre leasing moderate leverage and relatively quick ramp up to a 90% occupancy rate for its newly completed data centers.

Fitch rating of nine a company an issuer default rating of BBB.

Minus with a stable outlook.

Key drivers include recurring revenue and predictable earnings stream.

Long term contracts strong asset ownership.

<unk> location robust growth favorable industry dynamics cost leadership, and a stable EBITDA margin et cetera.

We are still waiting the company will further diversify our financing channel to support our long term development.

Several important alkylation and industry policy issues in the past few months, namely the implementation plan of computing power hub of collaborated.

Innovation system of National integrated data center issued by National Development, and Reform Commission or NBRC EMEA.

Three year action plan for the development of our new data centers published by Ministry of industry and information technology.

Iot.

In July.

And some updated regulation issued by local governments, such as Beijing Municipal government to further strengthen review on data center energy efficiency performance.

Key directions will pointed out for the future development of the industry.

We take a positive view on these policies.

And its impact on the industry.

We believe that the way, we understand our data center business and our past performance will generally in line with direction mentioned.

The development of digital economy in China is a long term prospect with less uncertainty.

The value of IDC inventory at key.

Our infrastructure is being increasingly apparent.

Guidance side understanding that our business is essentially to efficiently convert the electric power for computer Power Cup.

Coupled with our constant in house capability build up and provide a full stack solution to realize such conversion.

Adding our early.

Fundamental action and long term commitment of integrating renewable energy into our solution.

We think we are in good position with first mover advantage and we will continue to deliver value to our clients and contribute to the sustainable development office in siding.

Regarding the remark to drop of cyber security.

Security review of matters, either Cyberspace administration of China in July and a regulation on our security and protection of critical information infrastructure.

We currently expect limited impact on us given our efficient nature of lung in Boston or processing of any external data or information.

Meanwhile.

Meanwhile, multilayered internal security measures have been carefully implement implemented by the company.

We ensure a high level of cyber security and data privacy protection.

Eliminating any possibility of us or our employees access and customers' business data in any manner.

Going.

The company will closely monitors such regulatory updates and take further necessary measures to compliant with any new or updated regulatory requirements. While the company may be subject to.

With that concludes our business update I will now turn it over to Joey.

<unk> <unk>.

For <unk> to go over key financial results for the second quarter of 2021.

Be mindful of pilot I encourage our listeners to also refer to our earnings press release, which is posted online and improves our quarterly results along with other additional details.

Please note that all numbers today are in.

<unk> turns.

And that all comparison.

On a year over year basis, unless otherwise noted.

<unk>.

Nice plant.

Our revenue has increased at a utilize the capacity in Q2 and likely the revenue grew by six 7%.

Quarter over quarter.

April 22% year over year to RMB 286, principal meaning neutralize the capacity increased to 215 megawatts at quarter end.

142 megawatts in the same quarter last year and the <unk>.

<unk>.

RMB 77 critical.

Revenue growth.

I would call.

Secretary of approval.

Mobile App could you Pavel.

And then within.

Moving to <unk>.

Now continuing.

And to grow adjusted EBITDA.

Hum.

Looking into the eating the cost and expense items on slide 13 utility cost mid afternoon around.

<unk> continually 80% above our revenue <unk> and other costs to turnaround the 10% to 12% and adjusted SG&A to go around.

GAAP to 14%.

Take a closer look at ever growing or stable profitability on slide 14, adjusted EBITDA in the second quarter inquiries with 65, 8% year over year or 10% quarter over quarter to RMB 338.5 million.

With a margin of 49, 3%.

Lastly, net income increased 289, 6% year over year, all three 4% quarter over quarter to RMB 113 meeting adjusted net margin for the quarter was 16.

One 5%.

Now, let's take a look at our attention that position and Capex on slide 15.

In the second quarter was RMB 500 increase they just going to need it we had a cash position.

<unk>, which include cash cash equivalents and the restricted cash of RMB $7084.7 million by end of the quarter recover quicker than we had RMB $5154.4 million.

As of June and positive cash.

In addition on slide 16.

The major contributor was the RMB 285, H, leading cash flow from operation are RMB 537 meeting cash flow from financing offset by a negative RMB $616.2 million.

Cause cash flow and then negative RMB 65, two leading foreign exchange rate effect.

Again.

<unk> with high quality indicated by our constant profit matching cash flow from operation and our healthy leverage.

As you can see on slide 17.

<unk> second quarter, our total debt to capital ratio was 34, 2% of liquids or debt to last 12 months. Adjusted EBITDA ratio was four six I'll allow for 12 months of adjusted EBITDA loss of 10 months interest ratio was five three.

Both have been improving over the quarters.

Finally, let's take a look at the guidance, we have decided to update our 2021 full year guidance with revenue guidance REIT for the range of RMB 207 space buildings were RMB two one.

And the $3 billion compared with the previous RMB, seven leading to a RMB 278, leading indicating a midpoint increase of <unk>, 4%.

Guidance, while adjusted EBITDA.

The range of RMB <unk>, three 5 billion to RMB.

RMB, one 4 billion compared with RMB 128 hundred 80 to RMB, one to $3.3 billion.

Indicating a midpoint increase of five.

Five 4%.

This forecast reflects our current and the preliminary views on the market and <unk>.

Operational position.

This concludes our prepared remarks for today.

Peter we are now ready to take questions.

Okay.

At this time to ask a question you will need to press star one or LTV food to withdraw your question press the powerful team.

Rent asking your question to your question in Chinese.

Can you repeat your questions in English for the coverages of everyone in the call.

One question for enterprise.

Your first question comes from Kevin Liu from.

From Morgan Stanley. Please ask your question.

Oh, just about any time, you're going to save on country of origin mahogany.

I want to issue guidance.

Davidson.

EMEA geography, involuntary smaller Danielle Jones, who will be joining the call.

Got that.

And with Novo T J Gotcha got chronic profit, though again.

I can tell you Jay contingent door.

Well, Jim Young children, Michele and J Goldman the JV.

And the other income.

Thank you management for the opportunity to ask the question and congratulations on the very.

As a result my question is about the regulation. So we see that in my I T has recently published a three year development flat are we would appreciate if management could share more REIT on this new policy, how it will impact the data center industry and she made us business. Thank you.

Thank you Carl.

I'm happy to take this one.

I think from the companies.

Back in the day, one of the funding of the company, we all were aware of that.

The intersection of business energy and data is actually quite critical to IDC business.

We already interpretation about the nature of IDC business.

Are you still find a way to efficiently convert electric power, sometimes we empower the computing power. So based on this understanding of the nature, we think that the recent policy. It's a suite. This is a three years plan actually we hold a very positive.

Although these policy and we believe that its potential impact on the industry will be better beneficial pool pumping like ups.

And also if you read the newspapers.

Coming down to the detail keep direction as youre pointing out in these newspapers, including.

Like something like a more optimized the layoff data center.

Well encouraging development in overseas market and also the policy also want to be sure.

We're trying to improve the national Internet linkage to support telehealth.

They also have the policy also.

Encourage lager scale more intelligent higher intensity of data center to support.

<unk> various computing demand and obviously most importantly, the policies that are required to improve energy efficiency and the kind of encourage the development of the usage of the renewable by data center.

And in such a place we saw approximately two renewable power resources. So.

Actually the better.

Important to people, who are long term carbon neutrality objective.

Set by the Central government, So and also as I just mentioned when I went through our earnings release SEC water.

Company Gene data has always been doing is quite a lot has been in line with these key directions.

Again guided by the understanding of our business.

Better potentially to efficiently convert electric power to computing power and coupled with our quite unique in house capability built up to provide a full stack solution, including comprehensive solution to utilize such a conversion and if you also add our early site selection on long term commitments of integral.

Integrating this kind of renewable energy into our solution. We think we're in a good position with first mover advantage and we will continue to deliver value to our clients and ultimately contribute to the sustainable development of society.

Yes.

Okay.

Thank you. Your next question comes from Tina Hu from Goldman Sachs. Please ask your question.

Yeah, Yeah of course, the Euribor and Sterling.

Sure.

Even though you got tissue or tailwind you sure Jonathan.

Joe shorthand that a woman.

Thank you.

Not all of it is some with Ohio law.

Let me apologize to Joe Mccourt juices that round up the usual.

Sure Ghansham Aon, though you said in gold ratio side can be I'll now cover those outdoor I kind of commented on that.

We can't just shouldn't be that you're going to make my own shipyard.

<unk>, She said Chicago Petulancy, holding Roger Sugarman, 13 system with the IR, Doug I should say you guys shaping the wholesale wholesale.

I'll, let Tom Tony with outdoor too guys.

G L. P. J S just thinking changing jobs layout.

Okay.

Hello <unk>.

So congrats.

Congratulations management on a very strong result, and also raising your annual our annual guidance.

So my first question is around competition among the recently won projects.

What is the competition landscape like so.

For example, who are the who are the competitors that we're bidding projects our projects against and what's important criteria customers are looking at is it pricing or something else.

So what is the IRR for our latest projects and lastly.

If management could share your.

Our views around <unk>.

<unk>, which is a new entrant into the market. Thanks.

Okay.

Thank you Peter this is Nick I'm happy to take this one again.

I think you are referring to the most of the recent project as we indicated in the under construction on a project and there are 87 Vega.

<unk> was roughly in total was 66 megawatts.

With a strong indication of interest from our clients.

And we actually believe this potential demand is based on our superior advantage of lower cost sufficient resource MSR secured power supply solution.

Especially the potential for future renewable energy supply into these data centers, and obviously only efficiently and maintenance.

Our business model full stack model, which makes the customer completed a worry free auto winning ticket up when the hard from these customers.

As we did before.

In regards.

First with the competition I think you can you can interpreted we compete on cost efficiency not necessarily on price, although our price will be the most comfort is.

Among the most competitive in the marketplace in terms of who our competitors all of them essentially so I think we just emphasize our competencies. Our key advantage is that just mission and.

Is the full package has been part of our customers.

In terms of our customer criteria. We believe our customer are also looking at a same thing.

As I just mentioned.

To repeat our advantage as a full stack model customer worthy.

Package low cost and operational efficiency.

<unk> abundant and secured a resource empower and beat our supply on the other side our pricing is not final yet because it's just the indication may interest, but we believe that that.

Price of oil pricing price offering to the customer is going to be as competitive as appears if not lower.

The result.

In terms of project IRR, we actually never and do not want to disclose the financial foam product level IRR, but I believe with the addition of this new project is quite big scale. We are very confident to maintain our current IR level. So overall asset portfolio with the addition of these new products.

The last part is regarding the new entrant into the kidney instrument <unk>, we actually.

One of them make a public comments or any specific appears but we know some of them, including some of the new entrants as you mentioned have some certainty.

Average Orlando resources in selected.

Selected tier one cities, but in terms of our Hyperscale data center operational expertise.

Record.

<unk> comprehensive and <unk> capability and also power solution side, we believe the chimp data have sustainable advantage over most of them did pre peers because of our unique advantage in case you mentioned.

I hope I answered your question.

Yes. Thank you so much Nick.

Thank you.

Your next question comes from Arthur Lai from Citi. Please ask your question.

Hi, it's just that I think are cheap funding.

I guess, Jim in a hole.

So changes in Freetown constantly constantly under your T G.

Did you say, you'll take a multi multi year T SEC all Yo Yo to go.

Now your revised guidance now that has all been think of season <unk>, where it wouldn't you just did.

He found me and pulled the dances baytown.

She wanted them and does it cause it.

Took a turn down the government that is it more of a tender with downtime that youre way. She wants to go 10 value will come towards the bonuses I shouldn't the whole way like Oh, we're telling them to co op in Chile, because at that time machine and go.

T Goldman does it go.

Sometimes I told them, that's very nimble English and Bonnie just mentioned China.

Why did they hit a button.

The whole taking the update now being what I just said when we got into the 10 sector send more credit to the team that Luca milk endorsing that means.

Oh wait.

If I need help with the wind so.

The.

Investor was pleased to see the high quality growth. However on the hours. So maybe came to understand what's the future development of the new client base. Thank you.

Sure.

Well when I play bomber cause Oh, I'm going to go find email.

Yeah.

Played out.

Yeah.

There's only one team are doing okay.

Okay. Okay.

And when she was hey, Megan.

Belong to the lumpy one time revenue.

He won't eat them.

When I said one of them.

Chenzhou put them on pump a crew who continues to.

Awesome titanium I'm Gonna go at home.

That's what it is it goes to the Aloha region seem to be more political more do you think kind of animals.

Hey.

I don't think we'll do is I'll pass it slow them down and I think I thought that most of the attendees, how well known so great coffee homegrown.

Single honestly, when I pulled out my career move.

Two things on that curve listen to what.

And what they are going to ease off on license out woman. She said I'm with you.

That said she was income of one of them and they're sitting over there myself Ben universes.

On the people and some of them are going down you know.

Hum Sonoma Champs is non callable, if I remember you telling.

Oh, so nicols.

So even without kind of you're likely to see patterns here what you.

Two quick.

Oh no.

Yeah, you until I'm honestly, I'm not going to come into the cause of what it used to have those future what's it going to play sounds good labor ketones resistance.

Yeah.

If the translation for Alexandra I'm, sorry, the second question. It has confirmed that we have been.

Tony or their attack probably are in touch with all of the global Internet leader until collaborate and establish a very welcome thing has that Oh go ahead Sir.

However, during the course of back we're still gonna invest in standby our Hyperscale Greenfield.

And it's a 10 day don't model on when the business concerns and also the collaborations.

Fifth our.

Is this model and also our philosophy.

We are definitely.

Definitely going to take this as any opportunities that are presented in front of us.

Specifically, maybe to America and acquisition.

And to establish a more.

Diversifying our clientele.

And then going back to there related to the first question on the overseas lay out.

Go on.

I am constantly on expand.

And also and also penetrate the markets that we have already established our operations in Malaysia and India.

We're also very.

Actively looking into the opportunities in other southeast Asian or ACI.

We had countries such as Thailand, and Indonesia are we are also considering opportunities and got introduced her mom I say Vietnam Macau in ketchup.

Yes.

Thank you.

Your next question comes from James Huang from UBS.

Not really.

And you ask what are you reading the things you said.

But kind of getting your dinner she again.

Well sure what it was just what are you going to do it again, so much debate it seemed quite a bit what kind of a.

Turned out quite well.

Based on this it's almost like Jetblue icon should Goldman <unk> agenda.

So baidu will should guarantee which we've done.

Okay.

For Q2 call you shouldn't be visually is $10 it would be.

Fortunately you could've been teenagers.

So this.

Okay.

One one life guided at all.

Got it.

My question.

Is around your pipeline is it getting more difficult to secure sites with access to both renewable energy and fiber right now.

And in terms of the pipeline.

Can you maintain the same rate of growth for screening.

Thank you.

Yeah.

This is Nick again, thank you James.

Oh absolutely.

I just disclosed.

Have just added three additional.

Projects.

Under construction.

How long of a total comparison of 87 megawatts each quarter located in more than the eastern part of China actually these new credit or taken out of our reserve old pipeline project.

In fact, we do prepare ourself.

Abound in reserve for future development. So the answer to your first part of the question, Yes, we do.

<unk>.

Good preparation for that but we have always been America's revenue.

But as you probably are.

Already you've been noticing the pencil through quarter, one release, our earnings release and we only.

Only disclose further information when we believe there is adequate and the revenue.

Relatively certain intention of interest from our clients then we will report this kind of.

The new projects into our disclosed.

Categories of capacity so in terms of our client base expansion and diversification, we have been in constant contact with a top tier declining.

Declines in China, and overseas for potential strategic cooperation and would share with Merck is when it is time.

So it's not only the existing customers there isn't a wider base of customers.

Customers.

For the second part of the question in terms of a more competition on our resource.

We cannot see.

Say that but we have advantage everywhere, but in certain key area. We believe is going to be most suitable for the government of hyperscale.

Energy.

<unk> energy in theaters Green Energy Center and data Center, we believe that we do have box beside a certain a first mover.

Vantage will first accelerate advantage just virtually.

Some part of the China, where we built our major Hyperscale datacenter Peterson on campus.

Thank you.

Okay.

Your next question comes from Albert Hung from JP Morgan ask your question.

I need to find them.

She can cancel when considering.

All of the results our team to win do you see them kind of minions.

She comes to the.

That seems like a central St. Thomas Cook, we sure are.

$10.

So I think.

Capacity.

That's great.

So on what kind of the.

Here, the you can't quite fast and that doesn't mean Nielsen data, but it's possible.

Take a 10 minute thinking.

Thinking if I make a lot tighter hutchison.

Yes.

That's great color, thanks, Chuck sending them because.

So I mean, it sounds seem to trunk club.

Tend to be you won't be minions two months ago.

I think there is going to sit and wait.

Sure team like that opinion opinion could be desktop.

TNMP check now.

So the other thing to ask how long you can shut it down.

So that was going to say if I understand.

My question is about the demand outlook for next year, although the market has content over the common policy do you think.

That changes the highest not seeing any slowdown in capacity in basketball Quentin I think when I look at page seven in our presentation.

Eight.

Wow.

What's next year versus only 100 megawatt late here. So how did you think about the ramp up schedule and utilization rate next year is it fair to slate changes I'll have much more stronger gross outlook next year versus this year or.

The income.

Bob will have more impact in 2020.

Thank you.

So think of a deer Hunter was a great honor.

Cause or Oh go ahead go to Don This is oh.

Two things on that.

I'm classes, a woman's had WOMAC routine amendments again.

What are your thoughts.

Upon the close of the thing that and I know many of you know.

They're running two concurrent woman go cohort in December being done.

Uh huh.

These are women.

So tomorrow so to Europe.

Well I can't remember.

And what do you do kind of I'm always just so you know I'm assuming.

But it's not something else he's here in Congress.

Yeah.

The translation for Alex Schwartz.

Thank you for your question and then.

Everyone can thickness gene Davis Graham tends to always be maintaining at a very high <unk>.

And it is first of all that next year, we can't also maintained its strong growers.

This is based on our already public ili interests and also customer orders on but on top of bed I still winder call everybody's attention.

With that we will still stick to our business model on Hyperscale and Greenfield development. So we are a strike to not only grow fast and also annual very healthy stage. Thank you.

Yeah.

Uh huh.

Your next question comes from home.

Ask your question.

Oh go ahead until I saw her Argos with answer to that I think all I have.

I know what that one piece of glass.

Ah well Magnolia San Pedro.

Thanks, Joshua and good luck.

Yeah.

And also taught now who don't milk on doing searches that dog food, so bulk or just anything you can kind of sure I saw about 10 men have Joel woman there Jade.

But with them what do you see all she has done.

Not hotel that I should know there you will find out that she was only thing.

No well I still think that.

Sounds good Thanks management for taking my question I'll come back and congratulations on such good results.

And of course, you're raising that guidance.

Okay.

Hum.

So could management.

My name is Deborah Tencent.

Including some details on what kind of.

Our business will tend to put out data center and one mattress that cause I didn't note on this collaboration thank you.

Sure.

Uh huh.

Well the total control, but like when do you think you'd ironwoman cities honestly Quinn.

Over the coming few months either soils are central to who don't want Pooh Pooh Pooh Pooh Pooh their D. G HN, but who are doing so on a go at home.

When we go do the things that she received endorsement to only use out there for two of Hudson's IPO Apis a woman a chance you can do there to go.

Okay.

Oh no excuses they are willing to use as a former going through vehicle who'll go through all the pollutants that cause.

Go come down given the woman Huntington Pelican, glancing warmth and on each of them.

Both of them, though because there's something on your own.

Uh huh.

Do you think the.

Uh huh.

Oh Gee it seems as if Oklahoma.

Hello. This is my hometown of homestead.

The decrease in disease for which you can do for sure.

Yeah.

Their translation for other sports.

As a REIT tacked on our in our interests.

With me.

Joe we have been constantly in touch with the top tier clients, including Tencent in China and overseas, where the potential collaborations.

In the strategic way so the communication has always been continued.

<unk>.

In June.

As we publish.

In non U.

The potential or contemplated collaboration are going.

Going to be more focused on the strategic and also ecosystem collaboration.

And also.

We can see that.

What are the potential collaboration, especially within China.

China.

We are definitely being valued by our capabilities, especially the capabilities of us in <unk>.

Related to the renewable energy our capabilities in the Greenfield experience and also in the equipment or possible equipment.

Intelligence manufacturing.

I think this is it.

<unk>, that's putting our drive our growth and is it also witnessed that market as well.

Thank you.

Your next for sure income.

Churn from two six.

So curtains.

The real question.

Oh.

No.

So do you get out a couple of technology isn't that your margin would also into the tumor.

And you ask yourself.

Not just sure Uli told me that she does make somebody happy on each other that was all done John.

Do you want to watch it for you.

The highlight you know what you are taking to manage its been down quite a bit with Nashville, Siobhan China's on Kiwi Oh, no. It didn't have any child. It wouldn't it would have seemed out of Europe, mostly within the customer.

It tends to enter into the cloud computing market.

It means that we can see some that's almost neglected.

I'll take place in New York.

Dr Fischer.

In addition, does electricals, albeit doses or SAP business also said for a corresponding opportunity for us.

Yeah.

Well I don't think I have to go on to Oh go along to do the Telemundo crosses some either.

So I realize it sounds to me and she's a woman.

Well this is John people need to just you talked about the deal on the highway.

The second one is that when we kind of go go harder to kind of cool Yeah library until they get it.

Yeah.

[noise].

Oh. Thank you for your question I'm, sorry, I was looking back our collaboration with Biogen and the path has been very successful and we have achieved with very high quality delivery and our clients are very happy.

And so looking forward with our content capability building.

Being up and also the perfect layout in overseas market. We believe that we are fully capable of.

Supporting the development of her crying sensors in China and beyond thank you.

Yes.

Yeah.

Your next pressure income.

Strong coverage from Morgan Stanley.

Your question.

I don't think that right now that they are the ones you sure glad here I think they only have kind of all Shanghai, a popular thinking and Tina James Garner hardship yeah, no single Fabulous deals all can I get a whole education on the Geos toss out the pinch out now.

And I guess, what I'm, saying is I'm glad I believe all bundled into that decision.

Hum.

But oh, yeah, I mean, you got to ensure challenging got it sounds like no.

Thank you management and my second question is about the.

How quota allocation Shanghai AR, the recent new batch I'm happy I may not.

Passed a few months, so could management share a little bit more read on this on what would be the implications are on the industry and that our digital growth trend. Thank you.

Okay that was it a little too cold goes with the tonnage of the sofa.

Oh you do.

Attune foods could you put up in Williams, you you'd be coming out of Europe will shoot.

What's your own women's rather than shoot those oh, well have you seen some sort of joke here.

The Simpsons within them seem to be all go through the year, we usually ship.

Sure Jim.

Yeah.

Translation for hours worked.

I'm from the Concord strategic view, we have been again, a drop here and you're hearing to our Hyperscale model.

On the Greenfield development supported by our full stack solution and comprehensive cost in house capabilities.

So our model.

The fact that our competitive edge is derived round, the clock and garnering efficiencies AR and AR were less impacted by such policies and their tier one city and we believe that our motto going provide us greater buffer when it comes to.

The competition dynamic.

Obviously, we'll control.

So those imo's nature of the mobile which is going to Trump a whole show these huge demand for all our questions.

It.

It goes without people on the telephone.

We along with Lilly with children.

Okay.

Most of it goes in a row.

On the root cause.

Because once you have children.

Yeah.

And a complement.

On the top of the answer just now so our business model have shape that we are we.

We are shaping our.

Its strength through the cost and efficiency and the cocoa solution.

So.

No matter, where the competition landscape can it become we think we can handle that correctly. Thank you.

Your next question comes from the home from Goldman Sachs. Please ask your question.

Oh go on tissue.

Sure Scott.

So I should say from the <unk> John Chandler Parkway.

So I'm glad he's hungry I thought they should you don't seem to take a higher lifetime.

They won't see hotels human data you sound question Shlomo hold anyway, because your total woman. That's we all cool that kind of Oh someone going down on Q2 guidance you should see all coming through at Chico's sheets of mankind.

Oh I'm just trying to sleep. So my second question is regarding on the.

Data security laws and regulation, what kind of impact in the near term and in the long term with this half off on the data center industry also who are talking to our anchor customer recently.

Is their view on the data security at all thanks.

Yeah.

This is Nick I'm happy to take this one but the $3 three is actually the permanent assessment from <unk> data is actually we expect this new policy.

The impact to the company and the industry as well as in the near term near term.

The near term and the long term and because I would like to I'd also.

She will walk you through several important facts and swing one first of all boil all of those pieces of data center on target.

The thesis and auto although a large corporation.

Individual end users are actually our service not involved the ownership.

All those.

Like any external data or information, we only provide the.

Where do fresh our level of service such as the polo patient service, including the deployment of our customers of servers and other equipment in our property and at the same time, we are providing the power electricity cooling and other relevant.

Liquidity and so.

So basically infrastructural facilities, serving smaller clients.

And as all servers are owned and independently managed monitored by our customers. We are not all employees have no taxes I believe the other IDC companies well.

No offense to any of them.

Relevant from a data and our primary focus of the security life in physical security rather than virtual ones, which are typically at a key focus all the large customers.

Secondly, you know our Hyperscale data Center data Center service in China strictly restricted for domestic use without any cross border transfer of.

Such confirmation, therefore bearing zero risk of potential overseas.

So the customers and the impact on customers by international customer working overseas domestic customers working in China. So there won't be a mix up effect. So we don't think are.

The customer demand.

Incremental Moreover, we have.

From the company itself, especially the chimp data, we have taken all necessary internal matter can promote a high level or separate securities.

Data privacy privacy protection basically eliminated any possibility at all of our employees.

Taxes are manipulated.

The customer is sufficient.

Any manner okay.

However, we do so with the understanding that such relevant the lowest regulation is still at a relatively preliminary stage stimulation. We will closely monitor such regulatory update and then taken undertake further necessary measures to comply.

With any new or updated regulatory requirement of income.

So maybe some of that too.

<unk>.

Uh huh.

Yeah.

Your next question.

James Huang.

Yes. Please ask your question.

Okay.

That was one issue.

I hear you say that it doesn't make much sense.

Got it.

I think I would say I think they found it pretty easy.

And I think I've also said, we're going to come back to the flu season.

Irrelevant.

Differently.

So that's kind of halfway up at all.

I'm sure she believes.

So my question is around the uncertainty uncertainties associated with U S listed Chinese companies.

Structured so how do you manage this risk and where this will affect your ability to REIT fund to support your feature expansion plans. Thank you.

This is.

Nick Thank you for your questions I think that's probably one of the most commonly asked US the question tough, but any any.

The participant BMO capital market.

But the board attended his board and management.

We have also been closely following this kind of issues.

As far as.

We understand our interpretations on doing.

This is Paula this is a risk.

It's actually quite small and all this.

The rumor on the Street and battery reported the potential risks will have a limited impact on us.

Specific VA.

Requirement more intended those to be listed in the U S market.

As a listed company, we have been in compliance and our <unk> related inflammation is already it is closed in a very proper manner in our previous filings submitted to SEC work closely to monitor the whole situation and don't forget.

Again in the future, we always have the option and flexibility.

Two to consider other kind of listing and outside of the U S.

Yeah.

Thank you.

Your next question comes from Albert.

From Jpmorgan. Please ask your question.

Sure.

When do you see them kind of chocolate name them and take them to the gas into it I wanted to.

Oh I'm sorry.

Checking.

Oh based on kind of two big time, they just seem to pocket.

But at the end of it than somebody else.

Kind of just talked.

On the income of the bandwidth.

I just saw something so oh.

Got it.

So a follow up question on pricing the ratio for testing.

The cost structure is quite high although the pricing has not been finalized my email how is the pricing dynamics under their engagement with clients for new partners. We just think that any deterioration of pricing or the pricing dynamics has been quite stable.

Okay.

We don't have to go into your since you are closer to the fact that most of them.

<unk> talked about already the type of thing is where most of the summer.

Allowances homegrown label neither claimed.

You sound a woman does sanyo to occur.

I'm not telling you.

Thank you Tito.

Yeah.

And I saw a good Lewis is most of the dividend.

Very soon how much you want to talk about your emphasis so nothing's unusual woman.

The number you kind of how those will be the time that they didn't move tissue.

Okay.

Translation.

The math work.

Sure.

First and we adopt our Hyperscale Greenfield development model, which is our most advantaged and under this model and we have been constantly building up our in house.

<unk> core capabilities, and integrate and streamline our supply chain or efficiency and profitability.

And so based on that we interpret the pricing trend or pricing pressure more into.

<unk> model.

Our business model banker.

<unk> not on.

As a I think so.

Based on that the competition for US is more like a competition in the business model and not a competition in the pricing.

And is that on the pricing is never going to be done.

First influencing factor and we can better facing the competition in the pricing and also surrounding high market.

Okay.

Thank you.

Your next question.

I'm sorry from June June turned from city approaches you ask your question.

Well, that's the only way.

Yeah.

I don't need to do.

Not really kind of gives them that yourself and those are the keys that xiaomi. They don't shut down plants in Michigan was a triple chocolate in China don't guarantee.

And so at a wholesale level sure with target.

He was on Pingo 'twenty eat chocolate ice cold I don't see I don't want you okay.

The messaging in English so.

Yes, Jeremy Sunshine, So somebody from Michele Fischer developmental path in salaries in the area.

Without a question.

And out of it.

Okay.

Oh boy customer at our resource requirement to stick.

Yeah.

Oh your ankles who's already.

My mother told you to consider all the time to do it.

Key people in total grew more than I do so soon.

Some of them their crew, who will keep on sometimes pseudo who horses.

Hong for quite citizens out well he is.

Who do you think the articles and sometimes its full time jobs in dogs, having that you quit.

They are based on revenue.

Keep up the telephone lines he's home people listening to this is Pat.

Luckily more quicker.

In New York, or it's even harder piece of zone.

So the two of them it seem from a central fill out our programming now says we need an excuse me.

Yeah.

Thank you.

Generally speaking as we're looking for M&A.

The community needs to align it with our strategy, which is to follow their fundamental how does Dow Russo.

So Andrew Scott development model.

And to pursue a healthy and high quality, it's about under such a precondition, we're constantly looking for M&A opportunities and younger wave.

I figured Delta and also acquired a robot Pearl River Delta region.

As for our development in the Yenisei River Delta region. In particular, we are further expanding our scale and goodness.

I, adding up a new 30 megawatts under construction capacity, namely.

L. Three following the previous project. Thank you.

Thank you I'll now hand, the call over to management for closing remarks.

Good morning.

Yeah.

Thank you, ladies and gentlemen for participating this Q2 earnings release.

Uh huh.

There's a lot of challenges you're laying in a kind of a market today, if the company belief.

What we are doing is the right way of doing things is how do you see industry, we're gonna centering our business.

All around how to find the most efficiently efficient way to convert electric power.

In particular Green electric power to the computing power.

We're going to stick with it as a big plan and.

Better serving our clients and ultimately contribute to the society.

And thank you very much.

Ladies and gentlemen that does conclude our conference for today. Thank you for participating you may now disconnect your lines.