Q2 2022 Chindata Group Holdings Ltd Earnings Call
Okay.
Good morning, and good evening, ladies and gentlemen, thank you and welcome to the Chimp data Group Holdings Limited second quarter 2022 earnings Conference call.
We will be hosting.
A question and answer session after management's prepared remarks.
Please note that today's conference is being recorded.
I would now like to turn it over to the first speaker for today, Mr. Dunja from Investor Relations of Gene data Group. Please go ahead dawn.
Thank you operator.
Hello, everyone and welcome to Ciena at Augusta, two thousands wanting to second quarter and half year earnings Conference call.
From Investor Relations team of the company are with US today are Mr Auto.
Oh, Mr. Nick Wang our CFO .
We draw our finance VP.
And Mr. Choi Chung our general counsel during this call Nick will take you through the quarterly review of our operational performance.
And though we will present our financial results.
Bachelor and team will be here to answer your questions afterwards.
Now 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 discussed in 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 change dot com.
We have also updated our quarterly presentation on the company's Investor Relations website.
You can refer to the supplementary material on today's call.
I've heard a deal.
Now I'll turn over the call to Nick Nick. Please go ahead.
Yeah.
Thank you dawn.
Hello, everyone and thank you for joining the call.
During the second quarter, our business continued to grow in a healthy manner.
Let's take a look at some key highlights first and we weren't sure.
Share more light on details afterwards.
On slide four.
The end of the second quarter, our total capacity expanded to 776 megawatts, an increase of 72 megawatts during the quarter. Thanks to the inclusion of two new under construction project.
We now have a total of 30 data centers and our asset portfolio.
We put one project into service.
Our total in service capacity to 511 megawatts.
Which is an increase of 13 megawatts.
We continue to see healthy demand from our clients.
Our total contracted and the indication of interest capacity increased by 32 megawatts during the quarter to 619 megawatts.
Leading to a still healthy commitment rate for our total capacity at 84%.
Ramp up remains strongly on track.
As another 57 megawatts was put into utilization in quarter.
Bringing our total utilized capacity to 401 megawatts.
And a solid utilization rate up 78%.
Our capacity buildup effort as constant as.
As we now have a total of about 361 approved and pending patents by end of the quarter.
Compared with 256 in the same quarter last year.
Meanwhile, recently in July the company released a new waterless cooling technology jointly with our partner.
And we would go into details about later.
Financially, our top and bottom line remained strong and healthy.
We believe we have delivered upbeat revenue and adjusted EBITDA results for eight straight quarters since IPO.
Revenue was RMB.
1000 <unk>.
38 1 million per quarter.
Which is a 51, 2% year over year growth.
Adjusted EBITDA was RMB $544 3 million.
We have 68% year over year worlds with a margin of 52, 4%.
GAAP net income was RMB $199 6 million for the quarter, which.
Which is about 200 at six 3% year over year worlds.
We've got historical high margin of 19, 2%.
Our 500 million USD syndication loan was officially closed in later June bring.
Bringing the company.
The necessary financing for further expansion.
Meanwhile, credit agencies have also reconfirmed our ratings with Fitch rating.
Reaffirming our triple B minus rating.
Investment grade with a stable outlook.
Moody's reaffirmed our rating SBA too with a stable outlook.
No.
Go to the details of our quarterly performance.
I would like to bring your attention first to our client commitment dynamics in the first quarter in the second quarter.
During the second quarter.
We received an additional 32 megawatts commitment from our client.
Including both new contracts as well as new indications of interest.
From our perspective, our general client base in particular, our anchor clients business remains very healthy.
A total of 45 megawatts.
Iowa high capacity products and zero nine.
And 11 C and <unk> 14 for the anchor client was fully converted into contracted.
Capacity in the quarter.
Well another 30 megawatts capacity was also contracted in the quarter on products <unk> and <unk> to support the anchor client.
With knees the aforementioned four projects four anchor clients are now 100% contracted.
In addition to our anchor clients. We have also received a three megawatts indication of interest.
On project E Zero, one and guaranteed River Delta region to support one of our key international clients.
With these changes the commitment status of our asset portfolio continue to look very healthy.
On slide eight we have a 95% contracted and <unk> ratio for our in service capacity.
A similar level compared to that of the previous quarter.
On slide nine.
Our total capacity.
The contract at the <unk> ratio by quarter end was 84% compared with 88% in the previous quarter.
The inclusion.
The two new under construction projects, which are under currently under discussion with potential clients on demand details.
Brought some dilution to the figure.
Essentially the competitiveness status for our total asset portfolio is generally healthy.
For your further reference by end of the second quarter over 90% of our contracts are 10 years contract.
The weighted average remaining terms of our contracted megawatts is around eight years old to be specific 826 years.
No.
Let's look at our deliberate schedule starting from slide 10.
We have put one project in service in the quarter, which is a 13 megawatt hyperscale lease project. That's a portion of business off the Chinese cloud service provider clients in their campus in Tianjin.
We also added two new under construction project into our asset portfolio with a total capacity of 73 megawatts.
This tool hyperscale projects located in Hebei, Shaanxi Campbell's respectively.
Each with a capacity of 26 megawatts and 47 megawatts.
Scheduled for delivery in 2023.
These projects are expected to support our existing clients and the demand details are currently under discussion.
Looking at our delivery schedule on slide 11.
We now have a total end of construction capacity up 265 megawatts by the end of the second quarter.
Among which 93 megawatts are expected to be delivered in year 2022 and.
And another 172 megawatts to be delivered in 2023.
Our India project, which is BBY Darrell one was slightly delayed into the third quarter. This year.
While we expect other products to stay in line with our original schedule.
You can refer to the slides 12, and 13 for a design profile of some of our selected and the construction projects.
Now coming to customer will begin on slide 14.
Thanks to our clients excellent business performance.
We're able to keep a steady and healthy ramp up pace.
We added 57 megawatts of utilized the capacity in the second quarter.
Bringing our total utilized capacity to 401 megawatts compared with 251 megawatts in the same quarter last year.
Which is on 59, 6% year over year World at 16, 6% quarter over quarter increase.
Additional moving was mostly contributed by project and our northern China Shaanxi and.
Campus supporting the anchor client.
As well as in clients' campus in Tianjin supporting one of the Chinese cloud service provider clients.
And then in our Malaysia campus supporting one of our key international clients.
With the steady ramp up our utilization ratio by end of the second quarter remained very healthy.
Danny.
78%.
Compare it with the 69% in the previous quarter and in.
Average of 71% since the listing of the company.
Okay.
We used a quarterly dynamics mentioned above.
Now, let's take a general look at our capacity geographically.
By the end of the second quarter, our APAC emerging market capacity deployment now accounts for around 15% of our total capacity.
Well, 89% of these capacity in APAC emerging market is committed by clients.
For the current and in construction capacity 36 of them rest in APAC emerging markets.
And more than half of the recite in greater Beijing area.
Again, showcasing our advanced lay out in and committed commitment to the APAC emerging market as well as our further effort in strengthening our foothold in our own key existing campus in China.
<unk> East data West computation policy.
We will also like to share some key recent lately recent developments of the company.
As set forth by the management team previously.
The company will formulate further game plan around east data West commutation policy.
To further strengthen our foothold in our existing campus in key regions of the policy.
At the same time through leveraging our differentiated advantage in technology and it was the effort of building a business partnership ecosystem to gain access to more business opportunity in new key hub regions under the policy.
The game client is gratulate working.
Okay.
In terms of further strengthening our foothold in existing campus.
Slide 19.
The company recently entered into agreement with local government in Downhole Shanxi Province on August 19th to.
To further expand our existing capacity that on campus.
According to a such a.
Company will build up a total of over 500 megawatts capacity in our existing downhole campus going forward.
Which is around two times.
Our existing capacity in the region.
Once completed.
Campus is expected to become the single largest IDC campus.
For Asia.
On July 20th tables on slide 20.
The company entered into a strategic cooperation with tight computer co limited.
One of the leading player in your environment Smart City.
Industrial Internet in China.
We have established corporation relationship with Taiji back in year 2017, when the company was working on its Beijing project <unk>.
We believe such strategic Corporation has brought more vitality to the company's existing business ecosystem.
And together with our partner, we seek to better utilize differentiated advantage of each party to expand service to more potential industry customers under the new National policy.
Yeah.
The company also remains very committed to innovation.
Research and development to drive growth of our high quality business.
On slide 21.
We have recently come up with more technical.
Turning to data center industry to better accommodate their energy performance to diversify natural conditions and different readers.
So as to achieve improved the resource consumption of data center.
On July 29, the company at.
And it's a technical partner virtue of technology.
<unk> released a new waterless cooling technology X cooling.
The solution was the integration of control and sensing technology.
Cooling system capable of automatically adjusting itself to variables such as outdoor environment workload various operation mode.
So as to run with optimized energy and water efficiency performance.
Under the testing in the company's data center in Hebei Province.
The solution yielded a PEO performance of less than one point of one.
And the W. E a water utilization efficiency performance of zero.
Indicating a potential shape of one 2 million pounds of water per year for a 100 megawatt data center in a real world scenario.
Such solution has offered favorable evidence for a massive application of the solution going forward.
Financing the.
The company has 500 million in syndication loan was officially closed in late June .
Which is offering more resorts broad capacity expansion going forward.
At the same time Fitch and Moody's have all re affirmed their existing credit rating for the company.
With Fitch reaffirming.
Investment grade Triple B minus with stable outlook.
Moodys <unk>.
Reaffirming its b <unk> with stable outlook.
We believe.
<unk> reaffirmed <unk> off our credit rating has kept all options for the company should we decide on future financing activities.
Therefore, safeguarding our business development.
With knees I have concluded my part of business update.
And I will now turn it over to Zoe for detailed in our financial performance.
Zoe please.
Thank you Anita now let me walk you through today's financial performance, our financials remained healthy momentum on slide 10-Q, three revenue in the second quarter increased by 51, 2% year over year or.
8% quarter over quarter to reach RMB 1000.
<unk> meeting, which is in line with our steady win.
Looking further down on slide 24 total cost of revenue in the second quarter increased by 47, 7% to RMB 602 claim to meeting from RMB 476, meaning in the same period 2021.
Are they driven by increases in utility costs, and depreciation and amortization expenses.
Selling and marketing expenses in the second quarter of 2018 due to decreased by 33, 5% year over year to RMB 15 play install meeting primarily due to net share based compensation expenses.
Less marketing activity as the company went through almost one month John work from home mode in <unk>.
During the months of May due to city wide COVID-19 related to administration.
General and administrative expenses in the second quarter of 2022 increased by five 3% year over year to RMB 91 when needed.
I'm really due to the increase.
Personnel costs as the company grew its business with me.
<unk> income in the second quarter of 2000, and <unk> increased by 189, 2% year over year to RMB 310 meeting with our margin.
79, 9%.
Net income in the second quarter of 2022 increased by 236, 3% year over year to RMB $199 six minute with a historic high net margin of 19, 2%.
Jeremy.
<unk> level during the second quarter.
First quarter as indicated by the similar revenue percentage that we see.
Maintenance and other costs due to the recognition of one of those is not.
The provided to our customer in the quarter, we are seeing increase in these cost items.
In this specific item, although maintaining at the other cost intensity is generally in line with our past performance.
Adjusted SG&A also slightly decreased both year over year in Q quarter over quarter basis due to the region regions that we just introduced.
With me on Slide 24, our non-GAAP profitability remains healthy adjusted EBITDA in the second quarter of 2022 increased by 68% to RMB 544, 3 million from RMB 300.
38, five meeting in the same period of 2021 adjusted EBITDA margin in the second quarter was 52, 4% slightly lower than the previous quarter.
Adjusted net income increased by 114.1% year over year to RMB $241 9 million eating a historic high margin at 23, 3%.
In our GAAP to non-GAAP reconciliation of EBITDA and net income could be available in our 6K filing are the appendix in our IR ppt.
Now, let's take a look at our cash and debt position.
Our Capex slide 27.
We continue to look in our business expansion to meet the increasing demand from our cross connect.
Tmall catheter into our under construction data center type.
Capex in the second quarter was RMB 1007 blamed eight meeting and the Capex in the first half of 2022 added up to RMB $2232 seven needed.
We have successfully closed this indication alone we have seen our cash and debt positions. Both went up to RMB $5763 9 million and RMB 7468 meeting by end of second quarter, respectively.
Up in the net debt position of RMB $1758 8 million cash dynamic during the quarter was contributed by our net operating cash flow of RMB 475, 5 million net financing cash flow.
RMB $1819 7 million offset by RMB 907 until full climbed eight meeting investing cash outflow.
Now, let's take a look at some key leverage and coverage ratios.
<unk>.
By the end of the quarter with the close of this indication alone.
Total debt to capital ratio increased to 41, 6% compared to 35 Christian in the previous quarter.
As to EBITDA related to the ratio <unk> Wow. The interest coverage ratio continued to improve with last 12 months adjusted EBITDA to interest ratio went up two from six one to 627.
With the above and take into consideration of relative exactly.
We are reiterating our 2022 full year revenue and adjusted EBITDA guidance.
By the end of the second quarter, our half year revenue and adjusted EBITDA is around 47% to 49% of our full year guidance.
Blank.
This concludes our prepared remarks for today.
We're now ready to take questions.
Thank you.
As a reminder to ask a question you will need to slowly Presto, one and then one on your telephone and wait for your name to be announced.
Once again, it's still one and then one on your telephone and wait for your name to be announced.
Please stand by while we compile the Q&A roster. This will take a few moments.
And asking a question. Please state your question in Chinese first then repeat your question in English for the convenience of everyone in the call.
And please ask one question at that time.
Thank you.
We are going to proceed with the first question.
We have the first question is coming from the line of Yang Liu from Morgan Stanley . Please ask your question.
Okay.
Well Julien.
Great.
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Archie due to the partial.
I don't know if at all.
On the whole.
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For sure all of a sudden and tragic loss because you know.
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Goldman concerns or some of that to Chicago cohort sometime ago.
Great idea I talked about.
<unk> Sandra agenda, Johnny has to do with sugar.
As regard to normalized I should point about share.
Yes.
I will translate my question into English.
My question is regarding the retransmission rates.
Oh, right I understand that.
Most of the data center.
<unk> built a customer commitments.
Moving to <unk>.
Mature stage within nine months of actually the.
The.
Ramp up excluding faster than that and what is the outlook for this.
Should we expect some normalization or should we expect that this faster due.
To sustain going into second half this year. Thank you.
Thank you.
I think I can.
Can answer this question and quick better.
I think.
The accelerated faster movie and reflect the strong business demand from our customer and also show that that Theyre a momentum business.
<unk> really really strong.
But the company is to our company and Stella is really conservative so moving forward, we still put that roughly on average nine months are moving right into our entire forecast. Thank.
Thank you.
Okay. Thank you.
We are going to proceed with the next question. Please standby.
Okay.
The next questions come from the line of Tina Hu from Goldman Sachs. Please ask your question. Your line is open.
Okay.
Alright.
Great.
Okay.
Or do they all go into <unk>.
Nowadays.
Yes sure.
Yeah into how do you help with that.
Gotcha.
Ken Please.
Jbs Joshi Tula.
We are the Docker would you, Ohio, Melanie yet she taught me a long shot that cohort.
Okay.
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Got holding larger share.
Hi, This is Rob Myers Josh.
Jean Juncker.
Okay.
Thank you Joe Greg you shouldn't be out there.
No not yet.
Thank you Dorothy.
<unk>.
Does the Eagle Lindsay juggling ships jellies, Alicia Booth Archie Golden Pike, you didn't tell me if that's all you will nail.
Doug I should keep me honest way more downhaul.
Moving to slide 13.
Sure Hi, Dan.
Uh huh.
Sure.
Matt.
Okay I'll I'll translate my question. After the first one is regarding the Aussie market because we see you got 10 data has already had several campuses in Malaysia as well as in India.
Wondering.
Besides our anchor customer or is there any other.
Potential customers spreads are pretty significant demand that we are in the progress of that.
Like trying to win orders and also in terms of the competitive landscape in the Aussie market, who are some of the other data center companies globally that have already had some footprint or are preparing to enter this market and.
And then the second question is regarding the strategic partnership with tight computer wondering if there is any quantitative targets from this partnership any several like number of projects already under discussion.
There is a need a quantitative targets, we can get that would be very helpful. Thank you.
Thank you Tina I think for the overseas a related question I can't answer that and I'm going to refer to your second part of our questions to my onto our CEO Mr. <unk>. Okay.
So we're starting to answer your first questions about your ourselves and used our Asia market.
We have a very very bullish view about the opportunity themselves in eastern Asia market potentially in the future in the foreseeable future.
We think that the demand and supply actually will be a pretty balanced.
And then Doug.
I think the oversupply situation Youll see currently in China may happen some years later.
And also I think the fast growing digital economy, driven by the population by the economy grows while drive up.
The Hyperscale data center demand from all major global Internet High Tech players.
On top of the Chinese Internet companies that go into that region.
And we have every confidence that wont be calm.
<unk>.
The key I think hyperscale leader in the marketplace.
And all these international Internet of high Tech players will become our key targeted customers as well on top of all of those domestic customers are going to the region. As we currently have as a <unk>.
Matter of fact.
And data is setup, a clear growth strategy in South East Asia market two years ago much earlier than anybody else.
As of the second quarter of this year as we complete.
Repetitively introduced we already have a 117 megawatts capacity either in service or under constructor in the in the in the region in reality.
A significant portion are used to serve international customer such as <unk>.
Microsoft and Google and we are in the process of landing more capacity with international customers.
We will do proper disclosure.
In a proper manner in the near future.
Now I'm going to refer that the second part of question to our CEO Mr. Huang.
While bundle.
Thank you.
So the use of two hikes would you say.
So I don't think I wanted to ask machine J E T.
Sidoti R&D Yokohama, you feed off of that.
Thank you.
So one question.
Thanks, John and thank you for <unk> HIFU.
Lisa.
After the summer that's already provided.
What chance on Wednesday.
Sometimes you see agenda.
So again cannot to speak to that.
Ohio.
Okay.
Jim over to put that.
Okay.
An astonishing Jonathan.
When I play types and so.
Yes.
Translation for five months worth.
Sure our collaboration with tidy cat, taking each other take advantage and motor to the biggest add on for.
For our company, we are very Lon add Tom technology innovation.
On data center, construction and operation and support hygiene.
In China their clientele are mostly focused on the governmental.
Smart city et cetera. So this becomes our basis recommendation for our collaboration.
Currently we are having some specific projects in discussion.
We'll report.
The progress through the market when it comes to you we do set up a <unk>.
Frequent sure article.
Communications system, and we believe this commitment.
Communication system and also the entire collaboration well taken us to a further longer win win situation.
Yeah.
Thank you, yes, I will just get back into the queue for another question.
We are going to proceed with the next question.
We have the next question is coming from the line of Mangrum Lee from CLSA. Please ask your question. Your line is open.
Okay great.
Well Julien Vishal.
Sure Glenn Engel.
Some initiatives you guys potentially.
No.
Welcome ladies on data toggle that genre.
G suite from J&J.
J&J pilot by.
Nick Clegg confirm Nicole this is Paul Cheng from Bianca.
Todd will reshape guang.
Sorry, John Colson.
Just looks at Archie sure Sean.
Okay.
I will translate my question.
Hi, guys. Thanks for your time and I have two questions. Here. My first question is regarding the expansion plan of Kansas City.
Battle and the total I think is now complete.
To reach 500 megawatts going forward. So can you give us more color about the delivery schedule.
The demand profile here.
And my second question is regarding that you'd tell us cost.
<unk> share more detail about the field kicks in.
Are the costs.
Different corn close like.
Thanks.
Thank you.
So the first question our invite our CEO Bob home to answer.
I believe so you're going to answer a question about the original power to refuse.
Please go ahead Mr <unk>.
Thank you Todd.
In simplest TJ and thoughts on the currency.
Chip.
And is it a similar financial shield.
Associated with finishing just.
Just a year with Jim kind of a quarter.
Installation for reference words.
Our agreement with certain government was a positive gesture F mutual understanding on future collaborations we aim to secure the resources for future development in the area through these efforts.
Thank you definitely have seen that key distinction until 18 Guadalajara Suzanne.
Looking at it.
Okay.
And the Datong City is also after its own government efforts applying for the second batch key.
Experimental.
Under the National labs to less.
These data with compute and national policy.
Till the CTO found yet.
You see an element that we can see on the J&J put animals.
Yes.
Yes.
<unk> right. Thank you gentlemen, John Cleese issued just over one year.
Cool.
That's helpful.
On the demand side.
General purpose, we have been communicating with our clients and to every critical points along the product development process, we would expect our projects and got on with continuously support the needs of our key clients in other potential one.
Okay.
Okay. So I will take your second question as we all know that recently some.
Regions in China. For example is north South part of China. There is a power supply shortage well you know that gene data is data centers are mainly located in areas with.
Resource supply or is sufficient.
So.
The power supply of the Companys main campus.
A relatively a decrease.
And also since July we noted a certain degree of utility cost increase in some areas due to the power policy adjustment amount part of all of our campuses for this part.
We have considered the potential impact already in the previous quarter released our full year guidance.
And also Meanwhile, the company has taken some initiatives to optimize the datacenter power design infrastructure, which aims to hedge some utility costs increased to a certain extent.
So all in all.
Although we have outpaced the market consensus for the first half of this year, but the companies do you maintain the full year revenue and adjusted EBITDA guidance range not changed in a very prudent way. Thank you.
<unk>.
Thank you very clear.
We are going to proceed with the next question.
The next question is come from the line of Sara Wang from UBS. Please ask your question. Your line is open.
Joe over to you John .
Douglas Elliman thoughtful not to go to the events you Elias.
Glenn It's also articles will come to a halt close Seattle did that July is element that most adults will Douglas.
So we don't have answers guys in size not yet.
Gentle, yes, Alex your lines are one is home to Danielle <unk>.
<unk>, let's say P J I'll dial with yourself quite a ways off.
<unk> somebody cycles yet.
Oh, let me just lay myself.
I understand that the RBC context to the beauty <unk> home will be one of the largest <unk>.
Asia. So just wondering if <unk> seen data has any agreement with the government and when do we expect the completion of its IDC campus and my Thank you question. The quick one is there any update on our Hong Kong listing plan. Thank you.
Thank you Sarah.
I think.
I'm going to announce or don't keep I'll start a question. So like maybe theres about home at all our addressable question on second.
And third.
Okay.
Yes.
<unk>.
Yes.
We will now be a toggle let hilla.
Okay.
Yes.
Somewhat junior inaccuracy that Joe at the audience.
Well.
Alright, Thank you guys.
Th anymore.
Jean <unk>.
Gina or Joan.
Andrew.
Yes to your first question, we estimated that.
And in 2025 are that home campaign will have a total capacity over 500 megawatts now we have several projects and in the same Comcast and our construction and they will be delivered.
For this year and next year gradually.
We estimated that.
For a single counted by a single campus it will be the legacy nature. Thank you.
Okay.
On the Capex related questions is pretty simple and straightforward I think as we've previously.
<unk> market. This year, so we forecast to spend the capex in a range of around $4 5 billion RMB and moving forward given that the very strong pipeline project.
That's right.
Project Capex needs, we forecast out for the foreseeable future.
Future.
Capex spending cannot be in the same range between $4 5 billion RMB.
So and your third question regarding our Hong Kong listing.
There is some progress.
First of all there has been a.
Very strong consensus among the accompanying management.
<unk> and our key shareholders that the Hong Kong <unk> itself will bring clear benefit to all stakeholders concerned.
Especially it can effectively mitigate potential delisting risk.
Brought by this potential act of law holds pouring tons ball accountable asked legislation against the Chinese companies listed in U S.
But we have a pretty positive view about the development of this legislation and our current assessment is that the HFF.
HFC legislation is more likely to be effective in 2024, instead of 2023 and the acceleration scenario.
And also the latest development in what we heard from the market is that there is also a big chance that the U S and China government can reach an agreement later this year.
But nevertheless, we still think that that we should start to internal processing now.
Including setting up internal task force.
Performing some pre one consultation.
And also a further assessment of some of our listing options for example primary or secondary listing.
Or by offering or by introduction Macerich.
And we also in the process of.
In the preparation of the preliminary documentation and data room as well.
So if everything goes as eggs.
Our currently expected.
The external work screen may start in as early as October .
And we will then work with external parties to do proper preparation, while external filings potentially.
Potentially in Q1 2023.
And after we submit a one pass to hearing of Hong Kong. So you see those.
The lifting will likely take place in early April 2023.
Obviously, all this kickoff of external work work work stream.
Q filing.
<unk> listing.
Requires the authorization from our board.
And we will make proper disclosure to the market once we reach that stage hope I can answer your question on this.
Thank you.
You.
We're going to proceed with the next question.
The next question comes from the line of Edison Lee from Jefferies. Please ask your question. Your line is open.
Okay. Thank you.
Okay.
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Tune in to the tier two.
Sure.
<unk>.
Sure.
Sheldon do JV homeowners Freedonia Shlomo.
Two questions. The first one is about power cost and I found that in the <unk>.
Second quarter of this year your power cost actually grew faster than your revenue.
I want to know for the next few quarters, what is the outlook and number two is on the tax rate because I think that in the second quarter your tax rate.
Lower than for <unk>.
Second quarter last year as far as the first quarter of this year, so I want to know what.
What kind of drivers behind just tax rate volatility. Thank you.
Thank you Edison.
I'm going to refer to my colleague Zoe trying to answer your two questions.
So Hello Edison.
I'll answer the first question. So as we mentioned in the script that if we compare the second quarter with the first quarter on the utility cost Judy total revenue percentage is roughly for the second quarter is around 29% in the first quarter is around 10, 8%.
Almost on the same cost level and also if you are referring to our adjusted EBITDA margin.
For the first quarter and second quarter is in the range of 52 of the fifth street, but for the full year guidance.
This is slightly than the first half that is the reason we have already take effect for the potential utility cost increase in certain areas in some in some of our campuses and so I think this will.
So all of your question first question and second one is on the tax issue.
We have tax.
Next question we have.
The accretion in different countries, we can apply to different tax rates and also sold certain intention. There is does some tax policy or which you can use if you have a prior loss now can be offset for your future revenue future profit.
So this is like in China, we have this tax policy. So that just the reason why you can see previous speech to group net income has been gradually from net to.
Two almost balanced NAND to the positive. So this is <unk>.
The effect of different tension in conjunction with the tax policy is a different country. Thank you.
Yes.
Thank you Sean.
And good luck guys. Thanks Felicia.
No.
Just wanted to know for the <unk>.
Full year of 2022, what is the reasonable tax rate I wish you good luck.
So the tax rate is all compounded rate, which will be also like to take the odd.
Net net EBITDA factors net depreciation and also share based compensation. So the tax rates will be fluctuated based under real tax policies. So there's not like.
D a.
Utility costs the percentage to revenue in the Big story.
One thing I want to add is obviously instead of looking at a tax rate or the tax burdens or whatever but that you should look at we have achieved the historical band margins. So we're probably about leading profitability profile.
IDT companies go listed them overseas. So please focus on that point as well. Thank you.
Okay. Thank you Susan.
We are going to proceed with the next question.
Yes.
We have the next question is coming from the line of Albert hung from J P. Morgan. Please ask your question. Your line is open.
Thank you Sir.
No one at <unk>.
Hey, guys good morning.
Yes.
Actual change in bidding and so on.
It's not as meaningful in the past from Cowen <unk> co.
I'm talking here.
Yes.
Hello, He is talking about.
Scott Kirk sampling and kind of trying to even get Telecom council. Thanks.
Again, some achieved Kendall.
Against it.
Sure.
<unk> neutral.
Thank you Jason Thanks, Shannon so.
It seems like and it makes sense.
Got it okay.
I assume some integration.
That's helpful.
Hi, Jason.
That's helpful. Thanks, John It sounds like 2014.
Pete I'll answer that.
Michael.
So what you have been sent to you Alan.
Jim will go.
Jason Thompson with Colgate Triple play entitled way sort of what.
Let me translate my question.
My first question it's about.
Our customer diversification GDS has revised full year guidance estimate.
Due to the Hyperscale server and as long as Kevin kind of macro things.
Radically lesser impact bearing penchant for other customers due to supply chain diversification how does J&J.
And my second question is could you share some colors on the reason duration.
Market, making we mentioned Tom going deals last time.
Is there any update on that.
Hi.
And it becomes a target for either for others.
Men or shareholder initial take Alex Thank you.
I will refer thank you and I'll refer your first part of the question to our CEO , Mr. Paul and <unk>.
Ill address your second question.
Please go ahead.
Okay.
Yes sure.
Elements of course Shanghai.
I would say, yes, it isn't at hydro.
You want the EEG.
Can you sort out the stockholder Thunder, if you follow that hung in and done this season and as usual.
As fuel prices.
In Tenda.
And then the EG.
Hey, Josh.
So that Joseph.
Here with me are used to pay it.
Watson Health initiative.
So you can touch on the other.
Two quick.
Cool.
So Q1 is usually a bit on Ken.
We're malaise Sushi Genesis, Egypt, Canada. When you couple those important Ken kind of couple of data on how to Cuba.
Thank you.
Now question not an option.
You called out Asia.
No.
EMEA one goes up.
Hum.
D G to the connecting you cannot buy the ambitions one.
So as you know <unk>.
Got it.
Insulation from Hudson Square.
From the company's perspective, we have been communicating our forecast treated market in a very cautious manner and that's why we have been able to live up to or updating the market expectation along the way.
As Hugh comparing to our peers probably.
They adjust their expectation of forecast because the methodologies and making their forecast is basically rely on the industrial trend.
We actually making our forecast by adding up the actual commitment or the actual confirmed order from our clients.
We add them up and then making a concrete and cautious.
Conclusion.
So probably the difference come.
From different methodologies.
From our perspective, we believe that the market can also share the view with our historical performance at our key client has been making health healthy demand cough and it may be.
Believe that it will stay it will stay so in the near future.
And from the industry, if it's not cap the platform economy has hit.
What was hit in the past two years, but we have witnessed some positives.
Positive decorator rate movement.
Youth in the region.
News as well.
We will keep on watching for more market opportunities and promote our diversification strategy.
Thank you.
Thank you I'll hop on and enjoy it.
The questions related to merger acquisitions, I think first of all I wanted to lay out some context I think.
As you probably know about the June data is our business model.
Our business grows as a quite a different different from the rest of the peers. Our business model on growth is primarily through organic growth Greenfield development projects and.
And we believe this gives us a huge advantage and will keep providing this advantage in the future on a sustainable basis in terms of.
Efficiency in terms of our cost and in terms of power and other relevant IDC infrastructure integrations.
This is why you will see that our financial performance in terms of.
Operating resolved in terms of a project IRR.
<unk> whatever metric you were talking about is pretty good it's actually better than.
The industry average for sure.
Having said that though we also keep this.
Merchant acquisition as the good alternative but not core.
And we also keep a very close eye on what happens in the marketplace.
So far this quarter second quarter compared to the previous quarter, we have not observed a significant pick up off of merger acquisition activities. Therefore, the price.
Based on our observation has not changed compared to a quarter ago.
For the previously mentioned merger acquisition cases, we are still working on them and we have also made some further progresses hopefully I'll have more to tell you next time.
I'll see D on the issue of CD.
Being the potential acquisition target.
I don't want to be honest I don't think the management here anybody here in the position can be in a position to comment a lot, but we all think.
We all think that given the company's strong fundamental and prospect, we believe our stock price is way undervalued and a lot of the market participants I'm player are holding but Stan deal.
And also we heard that there have been quite a few speculate of interest.
<unk> data.
Incorporation emerging I wish or whatever but I don't have knowledge at the moment about any material development out of these.
Speculated insurance, but we will do the proper material disclosure one may become material. Thank you.
We are going to proceed with the next question.
The next question comes from the line of <unk> <unk> from Morgan Stanley . Please ask your question.
Gotcha.
No.
Okay.
So let me now conduct sorry.
Can I take that Sundar.
And I can see it.
With higher gestures.
Now I wish I wasn't sure to acquire Concentrix assurance from illness and shirts.
Sure.
Sure.
Hey, Jamie.
If someone does hydro.
This is Joe.
Sure.
Do the translation, we noticed that too.
Youre talking.
Talking about the total campus machine data will be with him.
Energy or solar or wind farm.
So could the management update obsolete.
What is the format between vis vis kind of a JV or.
Yes.
The farm yourself.
What is it related capex for that thank you.
Thank you.
Im referred to Mr. Polin will answer your questions on doubtful okay.
Spain.
Those with us.
So when you see us doing it.
And then talking to them and they.
They seem to end up.
Yeah.
So I don't know that that's all elements, you've only got Genesis I'm, telling you.
New York is a finance up with.
So as you that.
Sure.
Yeah.
So Tony's and then Jonathan will quake or towards that day.
Q2.
Putting towards it.
Josh the Ito and Cordoba, who don't want Julien Donkey I assume thats in that.
Tim.
R&D this year.
T J.
All of that system.
Translation from Barclays work.
Joe on the Green power generation and development Okay.
That's actually in line with our consistent wind power development strategy for our group.
For this specific that home projects, we actually going to focus on collaboration with our partners on the ecological power development.
We will be.
We will be the consumption side.
Particularly in this project, but we're not going to make extensive fixed asset investment into this project that we're all focused on bridging the government.
Utilize our local resources for the future collaboration.
Okay.
We will now proceed with the next question.
The next question is come from the line of Dana Hu from Goldman Sachs. Please ask a question.
It does yes.
Okay.
Hmm.
I'm Glenn <unk>.
So it's just that my own Colo ex cooling.
<unk> uses that you didn't need.
Hi, Angela otherwise showing two pillars.
Still gong to virtually the only thing of UE that actually that you got.
So you guys.
You guys should go down.
Again.
That should normalize quickly it'll show up at our Jackup fleet.
So it's I mean, you may want to avoid that.
Particular chandos Keith.
Let's see.
Well, John cash reloading doses.
Should we see it or will it be down.
Plating.
Cooling degree.
Sure.
Oh geez.
We're inclusive.
I'll, let me translate for myself.
So.
We saw that the ex cooling technology, obviously going to be very energy efficient and bringing down the P. E below one one.
So just wondering have you done any analysis.
Full lifecycle analysis of adopting this kind of what excluding.
<unk> technology.
On the one hand, we think it's going to save me electricity expense, but on the other hand, it might be more expensive than the <unk>.
Traditionally our existing recruiting equipment. So just wondering if you have any plans to.
Youre welcome.
Thank you.
And the large going forward. Thank you.
Thank you Tahira.
Yes, I can answer those questions I think.
So first of all I think this tomo technology when we when we do the internal research and development, we actually always find the balance between the cost the capex cost and also savings on the potential operating costs I can tell you about on this technology. The balance is very very good. Okay. So there won't be seeking.
I can't pick up of the cost is not a reduction that's number one number two I think it will save.
Power assumption in the consumption in the future, but most importantly, it's also going to save the water and so in the region, we operate in especially in North North part of China I think the water consumption is also closely monitored by the government and relative agency. So with this technology, we can save tons of water, which actually further provide.
Our.
Thanks, dependability, and upscale a bit scale up potential saying that future.
And what might not think I want to correct.
Previously I think we always communicated our corporate wide.
A wide average.
<unk> is standing has been standing at one point to one one to one to one.
Our number and it's actually we think industry leading positions.
And moving forward with this technology.
Applied in more places and more project, we anticipate this number going further now.
Thank you very much.
As there are no further questions at this time, ladies and gentlemen that does conclude our conference for today. Thank you for participating you may now disconnect. Your lines. Thank you and have a good day.
Everyone. Thank you for your time.
Yeah.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Okay.
Sure.
[music].