Q4 2021 GDS Holdings Ltd Earnings Call
Hello, Ladies and gentlemen, thank you for standing by for G. T. S Holdings Limited's fourth quarter and full year 2021 earnings conference call.
At this time all participants all my listen only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded.
I'll now turn the call over to your host Ms. Laura Chen head of Investor Relations for the company. Please go ahead Laura.
Thank you Hello, everyone welcome to the fourth quarter and full year 2021 earnings conference call of GDS Holdings Ltd.
The company's results were issued via Newswire services earlier today and are posted online.
A summary presentation, which we will refer to during this conference call can be viewed and downloaded from our IR website at investors GDS. So this is bill com.
Leading today's call is Mr. William Huang GDS, founder Chairman and CEO , who will provide an overview of our business strategy and performance Mr. Dan Newman GDS CFO will then review the financial and operational results.
Jamie Cool our COO is also available to answer questions.
Before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Robert.
Litigation Reform Act of 1995.
Well, what's looking statements involve inherent risks and uncertainties.
As such the company's results maybe materially different from the views expressed today.
Further information regarding these and other risks and uncertainties, including an accomplice prospectus as filed with the U S. S E T.
The company does not assume any obligation to update any forward looking statements, except as required under applicable law.
We also note that Gds's earnings press release, and this conference call that includes discussion.
Gotcha, all unaudited GAAP financial information as well as unaudited non-GAAP financial measures.
GDS press release contains a reconciliation I'll be.
Unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.
Yeah.
Hello, everyone.
Thank you for joining us on today's call.
I'm delighted to report another year of strong financial results.
In 2022, we grew revenue by 36% and adjusted the EBITDA by 38% year over year.
Inline with our guidance.
At the same time, we've made significant progress in key business areas, which underpin our long term success.
Around a 120000 square meter.
New commitments.
From an increasingly diversified customer base.
This increasingly scarce resource, we will give us a competitive advantage for years to for the four years to come.
We've put in place the foundations for our Singapore class strategy with two complementary.
Our campuses in Malaysia, and Indonesia.
We increased our use of renewable to over 30%.
When completed Olga.
$2 6 billion of debt financing to ensure that our projects are fully financed on a sound basis.
Yeah, Vichy we'd raised over 600 million from private C b issue with strategic value add.
Our strategic market position is stronger than ever.
Despite a challenging operating.
The environment, we remain focused on executing our business improving our efficiency.
And the season key opportunities when they are right now right.
The whole country.
We booked a 23000 square meters of new commitments.
For the full year of 2021 .
We hit our sales target with 96000 square meter of organic bookings and 23000 square meter from acquisition.
Well 2022 we expect to achieve around the 90000 square meter of new organic commitments.
While there is some change change in the demand profile.
Yeah, Matt its Ed.
A similar level to last year.
As shown on slide six we want five Hyperscale order jewelry for Q2 1.
Yeah.
Hyperscale type typically means call and a larger internet.
Each of the past two quarters, one of our Hyperscale what from a financial institution.
Turning to slide seven.
During 2021 as a whole we saw a change in our new business mix.
This call accounting for 50% lodging together for 30% and I and the enterprise 420%.
Our sustained sell some momentum demonstrates the strength of our customer franchise across the demand spectrum.
Turning to slides eight and nine.
One of the key to our success is having the right capacity in the right place at the right time.
This enabled us to provide a more complete solution to our customers and the depreciations GDS from our competitors.
In tier one markets it has become increasingly difficult.
If not possible to obtain sustain.
[noise] suitable land for data Center development.
Together with the necessary power quota and assess to renewable.
Customer customers must be able to scale up yeah presents in tier one markets in order to satisfy the requirements for low latency and high availability.
This is a recognized in the government's use of data.
The compute computation concept for the data center industry.
During 2021 we accelerated our capacity sources in order to build up a sustainable subprime.
We acquired or entered into.
If it Nathan.
Definitive agreements for 16 data center projects.
Most of them located in the urban areas of Beijing in a syndrome, where new supply is limited.
We acquired and the purchase of land with energy quota in all the tier one market.
In total we added around 300000 square meter up too.
Our investment pipeline equivalent to over three yes, new bookings bookings at our current sales run rate.
It is a valuable asset, which underpins our ability to serve customers and create value for our shareholders going forward.
While assuring our position in mainland China, We also took.
Took significant steps to build up our presents in Hong Kong and Southeast Asia.
The Hong Kong, we now have a pipeline of hope public purpose built data centers.
Into service between 2022 and 2025.
Ensuring continuous supply we have a we have an anchor commitment for Hong Kong.
And I expect to have commitment for Hong Kong two in the second half of this year.
I have been in Singapore for the past few weeks I am very excited by the potential of our regional strategy.
We were initially construct construction.
Our South East Asia project in the next few months and until uptake our first anchor orders shortly thereafter.
Turning to the size 14.
A few months ago, we published our first ESG report and that's out of pocket to achieve carbon neutral neutrality by 2030.
In 2020 , one we achieved a 34% renewable energy usage.
Compared with the 22 in the prior years of 2021 .
Suddenly for our data centers, we are recognized by the government as the national data centers based based on their renewable energy usage and advanced and it and the advanced a green technologies in design and operation.
To conclude my part all the things that we have done up for long term business plan or the temporarily temporary.
Certainties in the macro.
Environments, I'm not going to impact our excuse me off business.
We are positioning ourself to be long term winner in the data center market.
Now I will hand over to Dan for the financial and operating review.
Thank you William.
Starting on slide 17, where we strip out the contribution from equipment sales.
Texas FX changes.
Okay, 21, Oh service revenue grew by six 1%.
Underlying adjusted gross profit grew by 6%.
Underlying adjusted EBITDA grew by six 7%.
Fourth quarter.
Our underlying adjusted EBITDA margin was 47 two.
2%.
Turning to slide 18 and 19.
Service revenue growth is driven mainly by the delivery of the committed backlog and closing of acquisitions.
Net additional area utilized during full through 'twenty one.
19000, 140000 square meters.
Excluding acquisitions move.
Moving at a similar level for the past five quarters.
The first quarter of each year is usually a seasonal low.
With Congress.
March moving it's also being affected by Covid related Lockdowns and a number of our markers.
Accordingly, we expect movement in <unk> 'twenty two.
To be slightly below the trend line.
However, we still believe the move in pace will pick up again once we see more certainty in the macro environment.
And it's all per square meter was almost flat for Q2 'twenty one.
Well of course.
For the full year 2021, and that's all declined by <unk>, 6%.
In 2022, we expect mfl's be calling.
Well at mid single digits in percentage terms.
The MSR dilution from edge apparel, and POC projects will continue into 2022.
So we expect them to call it to be more miles in 2023 and onwards.
Turning to slide 21, and 'twenty two.
While online adjusted gross profit margin was 52 point.
Before Q2 1, the same as in the process.
As a result of higher coal prices.
We have seen several parallel Paris increased by around 10% to 20% across tier one markets.
We have also won around the health of the increased cost to our customers. However, we estimate that temporarily elevated powered Paris.
Or a drag of around one to one five percentage points when appropriate ballroom that's here.
Okay.
Turning to slide 22.
During 2021 before 120000 square meters of new capacity into service.
Rising organic deposits of acquisitions, but excluding POC projects.
Over the past few quarters, we've adjusted the pace of our construction.
The current environment.
Accordingly in 2022.
To bring around 85000 square meter service.
A pre commitment rate remains at over 60%.
Assuming that all average voice besides the capacity attainable.
We currently have around 46000 square feet under construction.
Well not yet preconditions equip.
Equivalent to around two quarters new bookings.
Current sales run rate.
Turning to slide 23.
Capex for FY 'twenty one.
<unk> 13 7 billion RMB.
One 7 billion organic capex, Unfortunately, well acquisition consideration.
The organic Capex includes around 1 billion land banking is not categorized as acquisition for accounting purposes.
As at the end of the full 221, we had a lot Lucy around $2 1 billion R&D went up balance sheets.
That's a deferred and contingent consideration payable prior acquisitions, which had closed for the year.
Looking at our financial position on slide 24 at.
At the end of 'twenty, one we had 10 billion RMB, one 6 billion in U S dollars of cash on our balance sheet.
And our net debt to last quarter annualized adjusted EBITDA ratio was six three times.
Our effective interest rate for the whole of 2021 was five 5%.
It was six 6% in 2020.
Gearing <unk> 22.
Successfully raised 620 million U S stores to the issue of convertible senior notes.
With a no 0.5% coupon and sudden chipset.
With all of the refinancing.
We have successfully extended the tenor about project debt.
Over the next 10 years.
Debt repayments at least around 2 billion RMB, Colorado.
Turning to slide 'twenty five 'twenty six.
How about the end of 2021 we had around 320000 square meters of area of your slides.
And around 235000 square meters.
Backlog.
Assuming we complete all.
The existing projects.
Deliver the backlog.
Set out with small amounts of remaining inventory.
Our revenue generating area with almost double that.
Over 600000 sleds.
This is without initiating.
Yes.
The cost to complete all the existing projects is around 13 billion RMB.
If we could finance with our existing resources.
Turning to slide 27.
For the full year 2022 weeks.
We expect total revenue to be in the range.
1000 320 million RMB.
9000 680 million RMB.
And adjusted EBITDA in the range of four.
1200 85 million RMB.
4000 450 million RMB.
Which employs a module around 46%.
Mid points, both revenue and EBITDA ranges.
We expect our capex to be around 12 billion RMB.
Out of which <unk> 6 billion is naturally organic capex.
Sure It is relates to regional expansion.
One 4 billion relates to the acquisition consideration plus land bank.
We would now like to open the call to questions operator.
Thank him if he would like to ask a question. Please press star one on your keypad and.
And if you'd like to cancel that request you compress the hash key.
For the benefit of all participants on today's call. Please limit yourself to two questions. If you have more questions. Please reenter the queue to once again that stall and one for questions.
Your first question today is from the line of Yang Liu from Morgan Stanley . Please go ahead.
The sense for the opportunity to ask two questions here. The first one is could you. Please share your latest observations on demand.
We see several new changes.
More.
I'll, probably call and the company is a coordinated care.
Listen to earnings.
And we also see a new round of Covid in China et cetera.
Or what is the incremental.
Change on the demand side.
For the fourth movie also.
Our new order for a new sales.
The second question.
The Chinese government to reduce the east coast.
Data West computation initiative, well would you.
What is the implication to GBS.
Especially they give them to be a cause of long term tier one market strategy.
Thank you.
Okay.
Let me answer your question.
Thank you.
What about the demand side I think the yeah as I just mentioned that demand still maintained at a similar level.
Last year.
Is this based on how well.
A market observation.
So but at the demand profile.
It's changed.
As I just mentioned in the last two quarter.
We mentioned that the man and will be shipped the profile was shipped from D. A logic call to a lot of the Internet age Internet and enterprises and finishing this institution.
Happening if you remember a couple quarters ago, we mentioned that the men were already.
<unk> told the market that they may have shipped but the demand level is still maintain that's our conclusion. So that's why I think if you if I just imagine how are the new all the booking profile is stopped.
Maintain a changing right. So this is a fact, what do we know which I tried to mention.
The second half.
Uh huh.
Second question is are moving right. The moving I think it's a it's early choose.
Talk about too aggressive to talk about it because we see these days because it's too too much macro and micro a impact to the customer.
Moving a condition like covey locked down and all of those supply chain issues skew the ear. So I think the.
It's a little bit too early to give this a positive way, but we still will see was some condition improved Ah I.
I think I believe the customer will catch up.
Because the demand is real and that they are just waiting for it.
Outside of conditions are improved I guess supply chain and a lockdown conditions.
Just a question another question.
Okay.
Okay. The second question, Yeah, So she shot right there.
Kevin.
These debates and west of compute computation.
It's good it's good news for US number one the government to.
Encourage at the new infrastructure right. So this is a good news.
And another good news for GDS is.
About we talk about visits we read it rather the government policy has two parts one is the <unk>.
Easter is the data right. So this is me government finally recognized.
Low latency product is very very necessary.
Right. So this is a this is a and.
That's means government.
No yeah, if that will continue.
Increase.
Increase in that.
Let's say chiller market low latency.
Product.
The other hand, we understand the government want to encourage you to people too.
To.
Portable, let's say co data in our renewable energy.
Uh huh.
Location right has a lot of renewable.
How did you source so but we believe they are G. This is it.
Working closely with the government and our clients.
So I think you'd have to have the already dentistry, we have the capability to catch up on all kind of the opportunity in the future. So I think the.
Another another impact is I try to experience. It this new parties see it's already interested introduced one years ago, right, but not as a more of a pretty firm, but it is the guidance and the lead time and also I would say GDS.
It will not impact the impact of any of our resource, which we are already ahead.
So this is this is my understanding of the Ah Ah government policy.
Thank you.
Thank you. The next question is from the line of Tina Hu from Goldman Sachs. Please go ahead.
Alright. Thanks for your time I have two questions. The first one is in terms of let's say the next three years from 2023 to five where do we have.
And if our growth rate.
Is it more stabilizing at around like 20 something percent argue with me when all of these near term I'll start Keith or headwinds have has dissolved we can see an acceleration of our revenue growth as well as.
Martin situations are doing.
Maybe going forward.
Continuous margin improvement after a short term elasticity or a coke high inflation.
That's number one and the second question is regarding our M&A strategy. This year I noticed that management got it for a 19000 square meter all organic.
So just wondering if that's how our M&A strategy this year.
Okay.
I answered the question number wise Ah Ah Ah Ah.
Diego Sidney.
Got.
Yeah Yeah.
Yeah, I think we stepped up the pace up to let's say a every year.
We increased the new booking it's ironic 90.
<unk> thousand square meter this is organic right, we still consistent to.
Give the guidance on that and we have confidence for that but but this is a this is a you know in that in that in the end.
In the last 12 or 18 months, the macro environment, which is very.
Not very good but are we still confident to maintain this level of the goals right. This is our base. So of course, we don't estimate any we don't give the any upside on that but.
We believe <unk>.
Ft.
Government policy or macro in my mind are improved.
I think the market will.
Accelerated.
But now we are we are we are slightly let's see confidence for the future. It next five years next three years, because we see the central governments encourage you that.
Economy again right recently.
I'm, a vice president minutes Mr. Luca.
Relief very good a policy to the market and we think we believe this will encourage all the Internet company.
Company or enterprise company, well risk started their business plan right.
Yes.
This is our number one right so plenty.
About 20%.
Growth definitely is what base.
The second question and then he said yeah, M&A I mean as the tools.
Yeah, it's a it's a very important for us.
Large 2021 and we are.
We were just to mention that.
We are more folks how to use the M&A.
As a tools to acquire more valuable asset land.
Carbon quota with a carbon quota so because in the tier one market. We think we believe.
Because of the carbon neutral neutral policy is a it's a main policy so in the tier one market in the last few years.
Resource well getting more tied to them before so this but our customer demands and kill them market still very strong so in order to Uh huh.
Maintained it.
Gross profile.
Resource quantified resource.
Resource is much important than before.
To support our growth so that's why M&A in the last year, Yeah, we more focus on that.
The valuable asset and resource.
But now this year, we will more focus on the.
Some projects are.
Which have them more even more mature as well.
Folk song so MAA.
As we mentioned in the last couple of quarter GTS.
In the next 18 months 20 months.
Good opportunity for us to acquire more.
Small cap up even we are open to see all of the all kind of the opportunity to acquire.
I'll try that.
Project even platform. So this is a what I can what do we kind of gave the message to the market right now, but I think the we.
Follow up with watching the all the kind of the opportunity right now.
Our pipeline maintain very strong.
Thanks William.
Thank you. The next question is from the line of Jonathan Atkin's from RBC capital markets. Please go ahead.
Thank you for taking the question is for Lee on for John .
First of all I was wondering have you been seeing any changes in the customers decision process for leasing uptake and what impact are government actions, having on their I T. Just sunshine.
And then secondly, on Malaysia, and Indonesia, I'd be curious as to the puts and takes of customer interest given perhaps some customer specific challenges and the power of child, just as airports experiencing.
Okay.
Okay.
Finishing up T and this government decision.
Okay.
Hey, Danielle.
Sure.
Okay.
Sorry, I couldn't hear the first question.
He loves it.
Yeah.
Customer interest in Southeast Asia.
Crossed about Malaysia and Indonesia.
Can you tell us.
About that.
Okay.
Let's see.
Yeah.
Yes.
Okay.
Yeah, but as I just mentioned.
Big in Singapore.
There's almost a one month's because up to you Keith.
The Baptist this region's business.
Uh huh.
Frankly speaking I'm very excited about the whole our momentum in this region.
It's very active.
I've met a lot of private equity guys and I loved the AR our customer here.
The reason because I met a lot of private everybody because they are very encourage your meat because they think it is a more unique in this reading is happening right now and all that I had that our customer our installed based customer I met a lot of debt visited people in this region.
Or increase their business in this region.
Difficultly in the next few years.
So that means the future demand in this region are definitely will.
I encourage us to more aggressive in this region.
So our customers demand it.
Turns out that a real demand rise in short term I have to say, we definitely will get some results in the in the in the short term and at a second quarter or second half of this year.
Verbally, we already get a couple of the customer.
Ah Ah commitment in this region.
Or can you. Please repeat your first question.
Sure. So I was wondering if you've been seeing any changes in the customer decision process for taking up policing and then what impact are government actions, having on your customers I T decision.
Sure.
Right.
I think it definitely our customer they have their own I Kid logic right. This is it.
Even if you look at the last a couple of.
The last couple of years.
Our customers they have their own philosophy and the logic there.
And not be checked in short term right. So.
I think the so that's why GDS always followup, our customer criteria for us and our customer our logic.
In terms of the debt business logic and geologic so I think the of course, we also believe a carbon neutral what will be the future, but our customer very smart they know how to separate he did that.
Very coldest days to remote places, which they really do it right. So I think that this will not change our customer behave a lot.
It's naturally when the eye cheek gross more data coming at.
We still believe the tier one market low latency market demand is still very strong on the other hand.
Did the Colgate will significantly increase.
As well. So this is a different product different demand. So neither the difference our products to response so that means.
That's my that's my understanding.
Great. Thank you.
Thank you. The next question is from the line of Joe <unk> from Nomura. Please go ahead.
Yeah.
Thank you for taking my question. So I have two questions. The first one is as we talking about a lot about M&A as a law. So I would like to understand what is the funding position at this moment and do you actually need more capital and how do we raise the money in future. The second one is about the margin guidance I think the major reason, Florida.
Slightly weaker margin gross Oh, sorry, EBITDA was compared to revenue is about the new stricter cost anything else rather than the utility can we see potential risk for the module side. This year and also like you know if any extra cost for the green energy sorry about what happened. Thank you.
Yeah Yeah.
Oh, yes.
Yes, Hi, Joel Oh.
Few questions first of all on.
Yeah.
Yeah.
But if you do have.
Losses.
I'll just make a general comment.
Yes, if there is an opportunity which is good enough.
We will most definitely find.
Training for natural resources, if you look.
What we've done historically.
Raised capital in a variety of different ways.
Sovereign wealth funds and <unk>.
Programmatic joint ventures, we worked with Chinese private equity bonds CPE.
It just takes a certain project developments.
Recently, we raised.
Capital privately from Sequoia, China infrastructure.
And from a sovereign wealth fund and also put out.
With the support from our long standing large shareholder C. T. G D C.
I think the interest.
Private capital providers and working with <unk> is.
He is very high.
And.
So those dialogues are going well.
So I really don't think the access to capital in any way that would be a constraint.
Yes.
What we wanted to do what we think makes strategic sense.
Yeah, Yeah, Yeah, yeah, yeah, there's some color on that.
In midterm, we don't worry about it our capital we have enough capital to grow our business plan.
Gotta hand, if some good good things happen, let's say, we need the capital we have never worry about that we have a different way to access the AR, we have the capability to access.
Access to different types of capital.
We already damaged street, we have this kind of capability in a lawsuit.
Six or seven years, we could go to the market and raise money when we.
Believe can create value for our customers.
We've added for our shareholder.
So we just we just issue a private notes a CB I kept a few weeks ago, there's already damage with EMA in the this.
Uh huh.
We still can access easily right. So I think it is it is not the issue for us so excess ft. We do have to send the big deal tied to do we.
A lot of a lot of the capital what help us too.
To create the value for our shareholders right, it's not a it's not an issue.
Yeah.
Your question about.
Okay.
It's really.
Yeah the biggest.
Revenue growth was just move it.
One.
The dry bulk which is not within our control right because customers have flexibility on the move and that's part of the.
The way that we work with customers and part of the value proposition.
All of our backlog is absolutely rock solid.
The data center capacity as.
Is there.
Capacity in tier one markets.
And it's really just a matter.
Yeah.
Some quarterly fluctuation in terms of the music, but yeah, we're also making a forecast about huston.
Customers likely move if you go to the next few quarters as is.
It is difficult right.
It was very conservative on that one assumption because it is.
Outside of our control.
So yeah.
Yeah.
It takes it up a few English I hope, it's a conservative view.
I'll move it and that's what refreshes in the revenue.
On the margin side, yeah, we see an interruption to our trend.
Many quarters is a marquee improvements I mean, the biggest factor.
Is the power of towers.
It's the I believe it's a temporary factor.
Last October .
The government.
Liberalized power tariffs in China.
So kind of why the brain right.
And floats.
So you got liberalized.
Also.
Hello markets.
At that time and until now.
Coal prices.
It's just that reflected there.
All right.
Okay.
Well, just sort of more of the market.
Mark It is.
Is it.
It's still ongoing and will be put at least this year maybe next year.
In different places so eventually I think.
He's liberalization.
Lower power tariffs because.
It will enable us to exercise out.
And Powell.
Large.
And so in all the locations.
Hi.
High school so.
So the neat.
But.
Once again, we took the view that for this year.
Alright.
Elevated that that really is the.
The major factor behind the.
Awesome.
Yeah, I can add a little bit of color on that number what about movie. If you look at a loss of six yes.
Yeah.
In a normal time, our customer a movie it's a.
Quite a normal and all.
Hum on top and that in and as I, just mentioned lots of 18 months.
All of the macro and my macro or micro environment. It has a impact on our customer definitely so so that's up too much but.
Uncertainty condition impacted our customer business. So in general I think the.
If you look at the Latin point of view, they skew that that's the I cheat SKU growth the digitalization not message change. So I think this is in our view is a short term. So we believe if the macro condition getting pool.
Our customers are still will execute at the origin of visit the pet.
Even even better.
You can see all of you moving.
Uh huh.
Moving is there is there is a short term issue right, but we.
We will see we hope everything will be improved in a in a in a in a in a in the next 12 months and.
We believe see its getting better.
Got it thank you.
Thank you and due to time limits. It. Please ask that you limit yourself to one question per pass and say the next is from the line of Michael <unk> from Cowen and company. Please go ahead.
Great. Thanks for taking my questions.
So just really quickly we've seen some volatility in the Chinese market just wondering in terms of the private market valuations Youre seeing for data center assets have you seen any changes there and then also I know you've mentioned that you have different ways to finance M&A to the extent you wanted to move forward with that but.
Just as we think about your leverage could you give us a sense of what the upper bound of what the maximum leverage you would be able to put on the more willing to put on the businesses. Thank you.
Okay.
Okay.
Okay.
Okay.
Yeah.
That might be.
What was acquisition.
Uh huh.
Uh huh.
They were good ones.
Yeah, I'd say, the private market valuations have come down.
We will sell those words.
Argued that the public market multiples should be ignored because they're going to go back up right.
We hope and expect that they will but.
Uh huh.
The private market, who is gonna be priced relative to the public market multiples.
There is still.
There are other buyers.
There is still competition.
Please.
These opportunities but.
We've been very selective there is very clear what we were looking for primarily.
At the center project in Beijing and Shenzhen.
With energy quotes and surrounding areas.
Tier one.
Markets.
And.
We're able to.
Close the deals.
It entered into definitive agreements for those for those deals.
On.
Mid to high single digit multiple so talking about the acquisition price plus the cost to complete of Dubai.
Right.
Our stabilized EBITDA.
The question about leverage.
Okay.
We would find itself updated census, with project finance.
So our first objective is to.
Out of tapes.
Cash.
Capitalized data center projects.
And then it's put in place.
Project Finance.
As possible so that project is 45 minutes.
Capital allocated to that.
And as I've mentioned before we find that sort of organic projects say it.
60.
60%, so it's appropriate cost for that project.
Is stabilized.
It will translate into something like three to four times.
Treat adult.
Pleasure.
The net level.
Of course before then the test has been cuts and EBIT, though is generated.
Uh huh.
So the consolidated net debt to EBITDAR.
Target is the outcome is the sum of all the projects some of them are stabilized.
Net debt to EBITDAR around three times.
So rocketing up pretty I Miss it.
They are on a journey to the same end result, right now they might be.
You know very high leverage because.
The test has been incurred but we haven't yet reached.
<unk> EBITDA and then of course, we've got getting could pool.
Our projects under construction where the.
Whether it's also a very quiet pre commitment rate is about 60% the important thing is that.
All of these projects in tier one markets.
I've been derisked with pre commitments.
And Oh their stage of development, which will end up in the same place, which is highly cash generative Hartlepool.
Our consolidated net debt to EBITDA, it does fluctuate up and down it was down after the phone call I P. M. It's up now because we made a decision strategically to allocate capital.
To securing a lot of.
Pipeline.
I mean, if you want to.
And back to the value of our development pipeline, if you were to adjust out.
I'm surprised that you can say, it's a hidden asset here.
Our net debt to EBITDA would be somewhat less than that.
And it appears I guess, yeah yep.
Yep.
Okay. That's good.
With people keeping all of that.
So we all somewhat sensitive because we appreciate that equity.
For the investors look at this but whatever.
Whatever the last six or seven.
Seven times.
It is very comfortable because what I said, just the outcome of a whole series of projects, which was found to be part of that.
With all the capital out.
At a pace in the reserve.
On the project finance secured and in place.
Thank you I appreciate the color.
Thank you. The next question is from the line of Edison Lee from Jefferies. Please go ahead.
Alright, thank you.
Thank you management for letting me ask a question. So my question is about the organic growth going forward. I think you guys have guided to 85000 square feet for 2022.
And I remember previously Uh huh.
Some of you were talking about 100000 per year. So I just wanted to get a.
Better clarity as to what is the full going forward. It will still be around 100000 or 85 is the more reasonable number.
And why would 2022 85 versus the previous expectation.
Thank you.
Okay.
One of them.
Okay.
Okay.
Yeah, I think that we still are I think at this.
This level, it's a it's always a we forecast are.
Always use a very very solid way and the concept of weight to focus case, if the market is number one I think the not just to save 90 90000 square metre SKU.
Is that what.
Our guidance.
Around a 19000 square meter but it.
Because of this.
This year, we will more folks on the Ah Ha High court diversify our customer is number one number two we also will focus on to get.
Get selectively customer to get them more high priced customer is that some of which we talked to our cells. So let them give them the reasonable target, but we tried to get it diversify our more diversified our customer profile.
This is always our target to to pursue to diverse diversified diversified what customers as always our consistent strategy Kosmos strategy.
Typically in a current environment right.
Yeah.
May I follow up to ask a question.
What will be the old retail versus wholesale mix.
Incremental capacity in 2022, well that would be very difficult before.
Okay.
Yeah.
Yeah, I think that's I.
Which is a shoe lots of two quarter, we already get it at a profile mix a little bit church, and we think it's a healthy and then we also will we still will focus on this strategy right retail enterprise type customer now.
More parts at the end of our expectation, which we think is good.
So retail customer still will increase.
Yeah.
Okay. Thank you.
Is there a mix that you can share.
We target on the mix between the two for this year.
Laughter.
Thanks.
Yeah, I think a lot last quarter, it's 20% right it's mix at retail it represents 20%.
Yeah, I think it will accelerate and are we talking is the 30%.
Sorry is that just for 2022.
Yes.
Okay, great. Thank you very much.
Yeah.
Thank you. The next question is from the line of Frank Louthan from Raymond James. Please go ahead.
Great. Thank you.
Dan you mentioned that power was impacting your margins can you discuss any other inflationary items pressuring margins and and how easily are you able to pass on inflationary cost to customers from new builds and so forth and what sort of pushback are you seeing from from from customers on that thank you.
<unk>.
So it really is or the.
Paolo there's power in growth right.
And Paul I think is a temporary one.
I think we mentioned before that.
If you look at our contract portfolio.
Around 65% of the capacity is with contracts where.
There is no set.
Separate power.
Building metering and billing.
Which of course can fluctuate.
Is that too with the with the terrorists.
But if you look at the area, which is actually revenue generating today available.
More like 50% is what we put on bundles and 50%.
Okay.
The situation is very dynamic.
In the process of agreeing power purchase agreements and so fixing tariffs.
With with the grid companies and with the power generators in.
So different locations.
And.
Power tariffs changing quite a lot.
It's a really complicated exercise to pass this on to customers because operationally, it's complex and it requires a lot of reconciliation.
Yeah.
<unk> and confirmation with with customers.
Yeah, we.
We don't tossing it overall.
To some extent, we'd make a decision to absorb it in the medium term.
Maybe he is after one year.
Where we start to see the benefit about purchasing power this whole dynamic with us.
Lower coal prices as well.
In which case we can.
Benefit so we didn't want to.
Disrupt too much the.
Arrangement with the customers because you know you win some and you lose some bright right now we lose a bit longer term it may work.
It may work the other way.
Okay, great. Thank you very much.
Thank you. The next question is from the line of G. Lee from C. ICC. Please go ahead.
Hi management, just a quick follow up on the M&A question, because about 30% of Capex in 2021 wishes for M&A. So.
Just curious in 2022 how much of that Chomsky alien contact.
Okay.
M&A opportunities. Thank you.
Yeah.
Yes, I think I think I said around four billions and and if you as at the end of <unk>.
2021.
We had some.
Consideration relating to.
Prior year's acquisitions, we have not yet been paid because we always try to structure.
The acquisition consideration with as much deferral as possible and some of it is contingent milestones and so on so I think we got about.
2 billion on our balance sheet that was deferred and all contingent from prior acquisitions and then.
There's some acquisitions, which we did it was one in particular, we did in the first quarter.
So this year. So I think we're looking at about <unk>.
About 4 billion.
Uh huh.
6 billion I think.
But I hope it is.
<unk>.
And in 2022 per acquisition consideration.
Yeah, I I have to I added some color on that I think they are ours.
Revenue guidance, not a not assume any acquisition right. It can bring more revenue out of that.
We of course, we have a reserved capital to do some acquisition, but does not assume.
Is there a revenue.
Uh huh.
[noise] bring from the acquisition right. So there's still a lot of opportunity right. So so if they pick a big opportunity coming are definitely we we just mentioned we have the different ways. We have lots of a lot of option to to access to capital to.
Get a deal done.
Yes.
Okay. Thank you.
Thank you. The next question is from the line of Albert Hung from J P. Morgan. Please go ahead.
Oh, Thanks for taking my question I'm asking question on behalf of Goldcorp. The Council Lounge, a case square meter project acquisition May I know, what's the pawn line for conversion from minority tumor I'm trying to think how much of the 100 K square meter is developed but it's already also.
Consideration price. Thank you.
Okay.
Okay.
So it's a complex transaction because it involves a portfolio.
With.
A number of different locations.
Each which is a separate approval separate energy quota.
Separately situation in terms of Orlando.
The real estate and Theyre all.
Performance conditions, which attached to two each of them.
I think that it may take.
The good part of this year.
This year when they rolled out into next year.
Before all the conditions are satisfied.
For us too.
Mood for minorities, so majority of.
It could be sooner I mean, we were working.
Very collaborative.
Collaborative way with the with.
As a seller.
To support them.
Where appropriate.
Try to get the things the things Don.
<unk>.
Yep.
Part of the.
Yeah.
Is it a couple of billion.
Out of consideration related to the remainder of that acquisition because it is very very large.
Portfolio is tremendously valuable.
Thanks Chi.
As there are no further questions I'd like to now turn the call back over to the company for closing remarks.
Thank you all once again for joining US today. If you have further questions. Please feel free to contact GDS Investor relations through the contact information on our web site or the P&C group Investor Relations. Thank you all bye.
Yeah.
This concludes this conference call you May now disconnect. Your line. Thank you.
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