Q3 2022 Chindata Group Holdings Ltd Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Okay.
Good morning, and good evening, ladies and gentlemen, thank you for joining and welcome to the Chimp data Group Holdings Limited third quarter 2022 earnings conference call, we will be hosting a question and answer session. After management's prepared remarks. Please note that today's event is being recorded I will now turn.
The call over to your first speaker today, Mr. Darling, Joe from Investor Relations of Chin basically Pease go ahead dawn.
Thank you operator, Hello, everyone welcome to change out a good 2022 third quarter earnings conference call.
<unk> from Investor Relations on the company.
With us today are Mr. White Hall CEO , Mr. Nick Wang our CFO Ms. So each of our finance and Mr. Choi Chung our general counsel.
During this call Nick will take you through to cultivate review of our operational performance.
We will present, our financial results management team over 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.
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 Investor Daqing 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 for today's call without further Ado I'll now turn over the call to Nick Nick. Please go ahead.
Okay.
Thank you dawn.
Hello, everyone.
Thank you for joining the call again.
The company continued its solid business performance in the third quarter of 2022.
The close collaboration between our team in China, and Southeast Asia led to a record nine straight quarters of upbeat financial performance.
Revenue in the first nine months in 2022.
<unk> surpassed that of full year 2021.
And we are raising our full year guidance for the second time in a year.
With the increasing demand for digital infrastructure globally as well as the catalyst provided by the eastern data West computation policy.
Company sees its advantages in hyperscale business to be even more apparent.
We will continue to do the right thing in the correct manner.
Consistently build our capability.
To strengthen our research and development.
We enhanced our competitive power.
Cool.
Our operate our business in a prudent manner.
So as to create long term value for our clients partners and investors and other stakeholders in a sustainable way.
Now, let's start with some key highlights of the third quarter.
On slide four.
We added one new project or an additional 45 megawatts of new capacity in the third quarter.
Our total capacity to 821 megawatts.
And total number of data centers to 31.
We put three data centers into service.
Our total in service capacity to 579 megawatts, an increase of 68 megawatts during the quarter.
Demand and ramp up remains healthy and strong.
We received an additional clients a minimum of 49 megawatts in the third quarter.
Bringing our total contracted capacity.
Capacity to 700 megawatts.
Meeting to still a healthy client commitment rate of our total capacity at 85%.
And now the 53 megawatts was put into the elevation in the quarter.
Bringing our total utilized capacity to 454 megawatts and a solid utilization rate.
98%.
We continue to devote resources to innovation and our research and development for better data Center solution.
Our total approved and padding patterns by the end of the quarter reached 400.
Compare with 361 from the previous quarter last year.
Our consistent effort innovation is earning more recommendation.
Recently in November .
Our hybrid evaporated.
<unk> technology.
Catering to high computing power demand in data center.
Was awarded first price up datacenter science and technology achievements in CD Tuc National Summit.
Making 10 data the only third party data Center company that is winning such price about two straight years.
Financially our top and bottom line momentum remained strong and housing.
Revenue was RMB $1202 7 million for the quarter, which was up 52, 4% year over year growth.
Adjusted EBITDA was RMB $614 five.
5 million.
A 66, 8% year over year gross margin.
A margin of 51, 1%.
GAAP net income was RMB 241 million for the quarter.
Which is about 207, 4% year over year growth with a margin of 20% a new high.
Regarding our 2022 guidance, which was raised twice this year.
We currently expect our full year revenue to be in a range of $4 three three to 4.43 billion RMB.
Which is a 200 million RMB increase in midpoint compared with our previous guidance.
We expect our full year adjusted EBITDA to be in the range of 2.2 to 2.26 billion, which was a 90 million RMB increase in midpoint and compare with the previous guidance.
Now, let's go into the details of our product construction and delivery.
Slide seven.
Our deliberate is generally in line with the original schedule.
And we put three project into service in the third quarter.
With a total capacity of 68 megawatts.
Keep in 2014 and 18 located in all of a sudden sheet in Hebei Province.
Campus respectively.
Ah supporting the business of our anchor client.
B B Y zero, one the Indian project with a design capacity of 20 megawatts aims to support one of the key international clients.
We are further expanding our capacity in the promising APAC emerging market as.
That's we put M Y zero six phase III.
A 43 megawatts Hyperscale project under construction.
Aiming to support our anchor clients overseas business.
The project is scheduled for delivery in 2024.
N Y zero six phase III.
And why is it all shakes out phase one and two.
We have previously disclosed.
It makes up a hyperscale data center campus up over 100 megawatts and Joel Malaysia.
Currently the largest overachieve campus of the company.
We used the above changes in the third quarter as you can see on slide eight.
We have brought our total capacity up by 45 megawatts.
Reaching 821 megawatts by the end of the third quarter.
579 megawatts in service and 242 megawatts under construction.
For the first nine months after 2022.
We have put a total off around the 139 megawatts into service.
Among the under construction capacity by quarter and we currently expect another 35 megawatts to be deliberate in the rest of 2022.
Our M Y there were three projects originally scheduled for delivery in this quarter is slightly delayed to the fourth quarter.
We expect another 164 megawatts to be delivered in 2023.
And that's 43 megawatts to be delivered in 2024.
Now, let's turn to our clients and demand on slide 10.
We continue to serve our existing clients and supporting their healthy growth as a trusted partner.
The momentum on the overall demand from our unique client base remains strong and healthy.
Our total client commitment increased by 50 megawatts in the third quarter, mainly contributed by two major projects that aim.
Aimed to support our core business of our existing clients.
Specifically.
We received 11 megawatts IOR from product suite the 19th.
Province.
Supporting the key international client.
And a 38 megawatt Iowa for products <unk> and 'twenty in our Shanghai campus supporting the anchor client.
Meanwhile, clean megawatts up by what was converted into contracts during the quarter on product CE zero, one in their own Youngs The River Delta region.
Supporting the key international clients.
For the first nine months in year 2022, we have received a total of around 110 megawatts of client commitment.
Representing a 19% increase from end of last year.
We therefore continue to maintain a very very healthy client commitment profile for our asset portfolio.
On slide 11.
For our existing 579 megawatts of in service capacity not.
96% of them are committed by clients either contract, Iowa in the third quarter.
Compare with 95% in previous quarter and 88% in the same quarter last year.
Our total capacity on slide 12.
85% of them were committed by clients by the end of the third quarter comp.
Comparable wisdom, 84% in the previous quarter and the same quarter last year.
In addition, the majority of specifically 85% of the existing contract of our contracted capacity remains to be in 10 years term.
And the weighted average remaining term per contract that megawatts by the end of the third quarter either around 827 years.
Our unique client base and such solid contract profile has driven our performance in the past.
As further providing strong visibility of our business into the future.
Now coming to customer moving on slide 13.
Our consistency in high quality and SaaS delivery combined with our healthy and a differentiated client base.
Another quarter of better than industry ramp up performance.
We added 53 megawatts I'll be utilized capacity in the third quarter.
Our total utilized capacity to 454 megawatts compared with 268 megawatts in the same quarter last year.
Which is 69, 3% of European World, and 13, 1% quarter over quarter increase.
Quarterly movement was mostly contributed by projects in our second campus in China.
The anchor client.
<unk> as the BB wiser, one Indian project for one of our key international clients.
A better sense of their faster than industry ramp up of our portfolio can be obtained.
We take a closer look at our ramp up data of summer product that we'll put into service in year 2022.
She and 11 feet reached over 90% utilization in less than four quarters.
<unk> reached a 90% utilization in three quarters.
She and her team took one quarter to reach 47% utilization.
And if we further look back at all of the Hyperscale projects of the company. The other one put into service since 2020.
It took on average two point 94 quarters, four contracted capacity to reach over 90% utilization.
Finally.
Our utilization rate by the end of the third quarter remained very healthy.
<unk> at 78% compared with 78% in the previous quarter and 72% in the same quarter last year.
Meanwhile, based on our existing client commitment.
We have 246 megawatts I'm client commitment unutilized by end of the third quarter, which is around 54% of our current utilized capacity.
Yeah.
Beyond the solid performance of our business in China.
We would also like to share the recent new milestone for our development in APAC emerging market.
On slide 14.
Cobra twenties.
The company celebrated the Grand opening of the project and 106 in C band Mick Joe whole Malaysia.
The entire 106 project.
We just discussed holds a designed capacity over 100 megawatts.
Wage 19 megawatts has been recently put into service in October .
Leveraging on our company's innovative construction and design methodologies.
The construction of the 19 megawatts or M Y zero six phase one as disclosed was completed in a record time of around 11 miles since breaking ground in November 2021.
The completion of such product has also made British data center companies APAC subsidiaries.
First company with Malaysia digital status to complete the construction and handover to dismiss ready Hyperscale data center in 2022.
Excluding the deliberate deliberate.
106 phase one.
By end of the third quarter. The company has 40 megawatts in service capacity and another 120 megawatts under construction.
Pak emerging market as well as the tightened project to be further extended.
In addition to such we have a 65% of client committed ratio for these capacities.
Solid relations with existing client an existing project.
The local team and we have been actively engaging with existing and potential clients in China and our region for further cooperation opportunities in APAC and emerging markets.
We feel very confident that more can be achieved in the coming quarters.
In the future in this promising region.
Now, let's take a look at a snapshot of our asset portfolio by end of the third quarter.
Business in greater Beijing region remains a key engine of the company.
<unk>, 475% of our total capacity and 90 flat, 94% of our utilized capacity.
While enjoying the highest utilization ratio of 83% among all regions and we are operating.
APAC products are taking a larger share under construction pipelines accounting for 49% of our total construction capacity.
Our early judgment in site selections and a greater Beijing region, and our differentiated way of doing business is consistently generating healthy resources, which further enable the company to tap into different regions.
<unk> opportunities and to establish a more diversified business that play out.
All other aspects of our business on slide 16.
The company issued its latest ESG report on October 18th.
Which is the third annual ESG report of the company.
We have now set zero carbon as the company strategy.
D a DTA or data as our.
Esg's strategy ecosystem.
D represents de carbonization.
Implying our ongoing effort in adopting green energy towards zero carbon emission.
Eight represent alignments, indicating our stance.
With our industry and supply chain partners for our shared prosperity business ecosystem.
Key represents technology, which is a gene that'll we'll continue to drive the company to lead the innovation and development of the industry.
The last letter eight represent the advanced attitude taken by the company to consistently driven.
Sustainable development of the industry.
More information of the yet to report can be obtained from the Companys website.
Regarding other effort on sustainability.
Enter into a green loan agreement in September with a bank.
Project financing for our project in one of our Lubbock campuses.
The loan is aligned with Green loan principles to 121 addition was all known proceeds intended for Green building renewable energy and energy efficiency related to the project.
On slide 17.
Our effort.
<unk> and our research and development.
We are winning wider recognition for our technical solutions.
On November 9th the company's hybrid evaporated cooling technology.
Entering two data center high computing demand was awarded the first private data Center Science and technology achievement on China <unk> summit.
The award.
Authorized by National Office of Science and technology is recognized as a prestigious national level Award for data Center industry.
The company has been awarded first prize for two consecutive years.
Being the only third party data center company to have achieved such.
He technology, it's a perfect demonstration of our ongoing effort in pursuing the mission of efficiently converting electric power into computing power.
It almost 18 talents and its combination of numerous subs technology that leads to a result estimated 358 days up natural cooling per year.
Estimated annual Peewee up one point or one six and the best energy efficiency achievable for liquid cooling solutions.
With these I have concluded my part of our operating performance for Q3 2022.
I'll now turn it over to Don will detail, our financial performance and Zoe. Please.
Now, let me walk you through our quarterly financial performance, our financial remained healthy at Burlington.
Slides 10 to one revenue in the third quarter. It increased by 62, 4% year over year, all 15, 9% quarter over quarter to reach RMB 1002 has dragged on into two 7 million, which is in line with our steady red pepper.
Looking further down on slide 22.
Cost of revenue in the third quarter. It increased by 74, 2% to RMB $736 5 million from RMB 400, and 422 appointment meeting mixed in Perry.
2021, mainly driven by increases in utility costs, and depreciation and amortization expenses.
Selling and marketing expenses in the third quarter of 2020 decreased by 43, 7% year over year to RMB 15, Cleveland, meaning primarily due to less share based compensation expense and less marketing activity general and administrative.
In the third quarter of 2013 due to increased by 36, 1% year over year to RMB 116, 1 million, primarily due to higher share based compensation and professional fees incurred during the period with me.
Operating income in the third quarter of 2022 increased by 72, 2% year over year to RMB 317.5 meetings with a margin of 26, 4% net.
Net income in the quarter.
In the third quarter of 2022 increased by 274% year over year to RMB 241 million with a historical high net margin of 10, 2%.
So for that breakdown of coal cost and expense items on slide 23 regarding your tentative cost its record it at 97, 3% year over year growth faster than revenue and accounted for 32, 8% of total.
Revenue in the third quarter.
The increase was mostly due to a combination of increase in Europe .
It's a unique car you could be tempered as a result of that.
Adjustments.
Two coaster fee charging mechanics.
Leading to a higher floor of irritated you cost as we have disclosed in last quarter and a higher revenue proportion country boutique Mesolimbic campus as the majority of the additional utilize the capacity in the quarter came from the projects in this region.
Maintenance and other costs and adjusted SG&A expense was well maintained within a reasonable range.
Result of the economy of scale of our business model as well as the stringent cost control effort of the company.
With this <unk>.
Plentiful our non-GAAP profitability remains healthy adjusted EBITDA in the third quarter of 2022 increased by 66.8% year over year to RMB 600, and a 14.5 meeting from RMB.
<unk> hundred 68 clinical meeting in the same period of <unk>.
2021.
The mix in utility cost has led to a slightly lower adjusted EBITDA margin in the third quarter, but it's still over 50% at 51, 1% adjusted.
Adjusted net income increased by 162, 8% year over year to RMB $294 3 million at hitting our historical high margin at 24, 5%.
The terrorists in the GAAP to non-GAAP reconciliation on the EBITDA and net income would be available in our 6K filing are the appendix C. I R. P. P T.
Now, let's take a look at our attention that that position and our capex on slide 25.
We continue to work in our business expansion to meet the increasing demand from our customers by investing more capital into our under construction data Center care.
Capex in the third quarter was RMB, 1000% to 325% fall need it and the Capex in the first nine months of 2022.
Up to RMB 3000 to 558, Cleveland made it almost at the level of year 2021.
Financing channels remain open and the secure debt for the company and we continue to drill down financing for our project development ending up in a total debt position in the third quarter of RMB 8416 play one made at.
Generally speaking, we don't have major loan a debt facility to mature in 2023 or two without the attentive pool only minor life based on some of our projects loan payback amortization schedule.
Regarding the cash flow dynamics in the third quarter on slide 26.
One of delay in payment collection due to cry he turned over system upgrade and COVID-19, Lockdown issue leads to a negative cash flow from operations in the quarter.
[noise] weeks has mostly recover.
At the end of the third quarter.
Totally I mean November already.
And that type of cash flow from operation, coupled with RMB $1433 six needing cash flow from investing offsetting by RMB 700 under $26 9 million cash flow from financing and the effects of exchange rate.
Changes of RMB 100, and the full class six medium.
That's to a lower cash position by end of quarter at RMB.
<unk> thousand 960.
Six to $87 9 million and our net debt provision of RMB 3380 4 million.
Now, let's take a look at some key leverage and coverage ratios on slide 27.
Our leverage ratio net debt to last a tough month adjusted EBITDA ratio stood at one six compared with one in the previous quarter.
Similarly increase can be moderated if we ex COVID-19 effect from the one off payment collection issue.
While the total debt to last 12 months adjusted EBITDA remains at four per watt a similar level.
With the previous quarter.
How about coverage ratios continue to improve as we maintained our strong profitability with our last 12 months adjusted EBITDA to interest ratio rising to.
Eight compared with $6 seven in the previous quarter.
We maintained a healthy capital structure under the current challenging market environment with our total debt to capital ratio standing at.
44, 1% compared with 41, 6% in the previous quarter.
Our prudent financing policy healthy cash generation as saturated and the profitability have together made this possible.
A better sense of the companies to return profile can be referred to on slide 28.
78% capacity utilization ratio of the company by the end of the third quarter.
Year to date, our pretax R. I C of 16, 5% compared with 17% in the previous quarter and 15, 3% in the same quarter last year.
Finally, our 2022 full year guidance.
Strong business momentum the company raised its 2022 full year guidance, which is the secondary during the year full year revenue guidance is raised by RMB 200 meeting at midpoint.
A full 0.8% increase compared with the previous guidance now in the range of RMB four kind of three 3 billion to RMB Portland bulk draped beat it.
Full year adjusted EBITDA guidance is raised by RMB 19 meeting at midpoint of 14, 2% increase compared with the previous guidance now in the range of RMB, two 2 billion to RMB 226 beat it.
This concludes our prepared remarks for today operator, we are now ready to take questions.
Thank you to ask a question you will need to press star one on one on your telephone and wait for your name to be announced when asking a question. Please state. Your question in Chinese first then repeat your question in English for the convenience of everyone in Nicole.
Please ask one question at a time once again to ask a question. Please press star one and one.
Yeah.
We will go to our first question.
One moment please.
And your first question comes from <unk> from Morgan Stanley . Please go ahead.
Oh gosh, it's so.
So same question.
Oh Gee, Daniel when tissue is.
Sure sure.
She is retiring Charlie open them again.
Hum.
Hong Kong.
Okay.
Sure.
Two girls Carlyle can and should be or shouldn't you, maybe there's kind of a stretch goal.
Terrorist mature to figure out how much of a shift where you'll start with other.
Just to ensure that our children and choice you've got German car count.
Sure sure sure that you've got.
Sure Chongqing garnering from.
San Diego, China, Sorry June question Charles.
And wash on kind of the same cross shoppers grew up with home.
Let me translate my questions first I would like to congratulate all of us.
And then my question.
Demand outlook.
I imagine when the previous they indicate that that's per year 120 to 115 megawatts.
And your addition of a new order should be a reasonable target, but actually.
Companies have been pretty strong demand and I would like to ask whether it's sustainable or whether there's any pull forward of future demand.
How children.
The new bookings in the next few years.
Especially I want to.
Hear more color, that's whether the demand in China.
Overseas market at different thank you.
Thank you yeah.
This is Eric I think yes.
Before our CEO , Paul Peng Tripping and answer your question and also logic behind our judgment I can assure you that there is no absolutely no pull forward about future demand into this year and also our.
Our forecast into the future, which are which are in in the mid term one in 'twenty to wonder if 15 megawatts increase of capacity on a per year basis is going to be a sustainable number two years, Okay I'm gonna tolerable to hop on to give you the logic behind our expectation on the demand side and on the supply.
Most China and overseas popping please.
And I'll give you a place yeah Clinical's T shirt.
Steve I'm going to use all of them.
And other times equal.
Shale cope with the cornea, where it's easier to PEO wants it.
Duncan buffet.
Sure and translations corporates work.
So we will divide the question into two aspects for the short term demand to answer your question, we can see that.
Either from China or from our Oh.
Foreign overseas clients the demand has been very strong.
But I can tell you how I would change from Coors light.
People thought they will exacerbate essentially puts you set up what you're being asked what Jay said it yet.
Gentlemen.
Thank you <unk>.
From a long term perspective.
First talking about China. So we will first coupons leverage our current advantage incubate and shouldn't see where our campus art.
We will first week to keep on making investment in rock up more resources, especially the very soon as efficient as the power supply Green power and also the energy quota.
Total emitter pointing towards that but I don't find that.
Hello.
We're also keeping an eye on the critical resource allocations in the east and South part of China.
J J, how element wait so cheap.
The Chase agreement and she will get tissue disorders.
Today, It will you need type whether it be to Asia, Jim mentioned, the digital downloads where diplomat accordingly.
Jesus.
You also that you're going to get into the volume predictions, Georgia.
And as you watch that.
Probably more than what we actually did.
For our overseas market, we will continue to secure sourcing with you around our current major campuses.
Well in Indonesia, and Thailand were going to make moderate jumping in for the land resources in this area.
And.
Wheeler.
So I'm sorry.
As a general principle will only make it substantially less demand when we see clear committed demands from our clients.
Well my highest Louise Silliman.
But again you are talking about.
She's a tender.
We will still maintain a gross at day 120 to 115 megawatts gross pace.
Thank you my pleasure.
Thank you.
Once again to ask a question. Please press star one on your telephone. Please state. Your question in Chinese first then repeat your question in English for convenience of everyone and Nicole.
We will now go to our next question.
One moment please.
Okay.
And your next question comes from Tina Hu from Goldman Sachs. Please go ahead.
One is how much it is.
Officials cornfields at home.
Yeah Yeah.
Oh, it'll when tissue Guangzhou Sugar C J.
And I'll send you to I don't know Andrew.
So josh or will that be trailing Joshua Pete I'll call. It a bedroom essential tool. So you sound you all when is that though.
And just on EMEA.
Core ne Josh and I kind of law to men, which handle your cultural shifts, Utah, Patricia <unk> chicken chicken kind of fascism younger holding what you said.
Gotcha.
Yea eating a gating jingle a couple week I shouldn't move in la So recently.
C J.
<unk>, Utah.
<unk>. Please go ahead without D C O N E.
Oh, let me translate so thank you management for your time and congrats on the very strong result, my question is about the electricity cost.
So where you've seen that in the third quarter. It has become north of 30% as a percentage of revenue. So just want into the fourth quarter and into 2023.
What is management fee in terms of the electricity price trend and then as a percentage of revenue what kind of ratio should we expect also related to this.
We already delivered our first Malaysia.
Not first our Malaysia project in the third quarter as well. So just wondering in terms of the electric utility expense as a percentage of revenue how does that compare to the China part of the business. Thank you.
Thank you Tina and I believe my colleague, our VP of finance Zoe draw.
First one to address those questions. So please yeah.
Thank you Gena for relocation and 3 million last earnings call we have disclosed this.
Mccann is of the unit cost of charging that change already. So this has been fully reflected in our third quarter financial statements already and which reads out the energy cost to total revenue ratio around 3.8, or three 5% quarter over.
However, as we always highlight that our China data center campus located in areas with a bonded power supply power is sauce and nobody is relatively cost advantage as well. So we estimate that in the near term on neither to them the power price will be relatively steady.
In the near future and if there is any power shortage across China I think that's too detailed resolve a location advantage will be leased or less impacted compared with other regions in China, either the power supply all the power cost and the second question is <unk>.
Guarding for Malaysia, a four hour I'll I'll oversee project. It takes different model. The power is the power cost is a pass through model. So there. So if there is any fluctuation in the power cost there will be no impact on the EBITDA margin on the EBITDA side. Thank.
Thank you.
Thank you Greg.
So I go to the next question.
Thank you.
Your.
We will now take your next question one moment please.
Please.
Your next question comes from the line of mainland Lee from C. I C. C. Please go ahead.
Uh huh.
Sure.
She took a core genre.
So she doesn't want to myself on mute.
Well, maybe pretty true to the sound with Shanghai E.
<unk> gone through some loyalty when they come out to eastern Canada.
Sure sure.
The Whitehall extends out Copel should go to college.
I know Hershey Catalonian junkets in Macau casino floor.
Fusion coordinator will go away and be it weigh on total thank you.
Oh, let me translate myself correctly.
Thanks for taking my questions. My question regarding the move in rate and the Malaysia project will open in October and the revenue contribution from overseas in the next few years.
Considering the strong demand profile could you give us more color on the expansion plan for next year.
The capex mix between domestic and overseas.
<unk>.
Yeah.
Thank you Michael.
I think the first part of your question so our overseas projects, especially the milestone 106 phase one since we're already delivered in October it looks like that the ramp up rate is a very very fast essentially and also through the through the better I would think a reasonable contract arrangement. We can act.
Collect the fees or the revenue portion are much quicker than the normal contract we had in China. So at the moment I think.
The operation is really running smoothly.
I think Tony can answer the question about the ERP.
The revenue contribution and also capex allocation barrels overseas business. So can you. Please okay. So oversee business has always been our focus.
Financial year 2021.
You can see from the financial statements that oversee business revenue accounted for around 5% of total revenue.
But by the end of the first nine months of this year. The oversea data centers accounted for around 19% of the total capacity and total iwai intention of the customer to oversee a computer for near near around 15% and the most important.
And their construction capacity nearly 50% of the capacity from our oversea regions from overseas countries.
As expected, we will have higher growth rate of oversea revenue and the current estimated with the graduate delivery of Malaysia, and India campus. The percentage of oversea revenue to the total group revenue will significantly increase next year, which we.
Estimate will be around in the range of over 10% and I think he can oh, yes, probably it will keep the increasing trend and the second question is regarding the capex.
The capital expenditure at a corporate level effects either to be at a similar level as in.
This year compared with this year and next year.
Both China and overseas.
Our capex has competitive advantage, but apparently they oversee project capex will be slightly higher than the Chinese project. So we expect that the proportion will be also a larger.
Larger than the Oh, they're sedan to Chinese CRO Jack.
Thank you I'm sorry.
Thank you.
Thank you.
We will now go to our next question.
Please.
And your next question comes from the line of Edison Lee from Jefferies. Please go ahead.
Okay. Thank you.
Quantifying it.
So for example.
Two it she wants resort so we ought to work here.
Well only do country by country to want to do it.
Besides he too soon for sure Andy Miller EBITDA, she called country chicken, but let me assure you sell a pushout.
Consequently entry of quantity.
So when you take a couple of things here she shared attrition you mentioned.
So I shot it gets you to a tricky issue because you go because you're just seeing the.
Seem to sell more tissue <unk> and fish actual funfair, Brett how would you file again couple about Tenda Chicopee decentralized Takashi Bushnell.
While content demons, Kinder 60 inch one entity and to Taco Chi PCT towards EBITDA EBITDA would be.
Well you can see we've dealt with so you took a sure thing.
But she should be helped by <unk>.
Okay. My question is mainly surrounding the power cost and also gross margin.
Because I.
So other than three kill your gross margin actually is down Q on Q and year on year, while EBITDA margin was actually up Q on Q and year on year. So.
I would like to know maybe you can explain again.
Power costs.
Calculations for you all heard me projects and what is the proportion of your projects that a CRO power cost versus those that do not include power cost and also found that based on your mix.
One of your new guidance.
Full year that implies that your fourth quarter EBITDA margin will drop on a Q on Q basis, So I wonder whether thats because you are cognizance conservative what are there any other regions. Thank you.
Yeah.
Thank you Allison I think are both of those.
And our answer is question and the multiple ways, but oh.
Well, Robert that's all you to stay some facts for our Q3 utility costs increase police strike.
Okay. So thank you for your attention I'll question as.
As we explained that the.
Energy closer to the total revenue you raised around three 8% quarter over quarter, I mean, this quarter compared with last quarter, but if we look at EBITDA margin that with fate at 51, 1% this quarter compared with last call. There is only I think over 1% a difference of this is offset.
With other expenses like the maintenance cost and the other calls as well and this is offset by the economies of scale.
The reason for this is in the Hebei province and stuff.
In the third quarter, there is a electricity cost to increase around I think 15% in that region and this has been a really this is due to that the state's great has changed that they're charging system charging mechanism.
This has been reflected in our full year guidance already so.
This is your first this is the first question and second question is regarding the full year guidance. We took a very prudent way. So you can see that as the company has always been we have hit the record heat the market consensus for nine consecutive quarters. So for the full year guidance with you would take very consistent.
And as I recurred into very conservative estimate and also for the full.
Full year guidance, there is a new substation supposed to be on life, but go on a lot about the considering car into China, a COVID-19, lockdown situation and we think there might be some post CT. So we all we also it takes me.
Is the takeaway.
This factor into consideration so on so the full year guidance is very conservative, but anyway. The company the management team and the delivery team. We will try all the best to ensure the substation will be on life.
Go onto life timely and if that will be the case I think the performance will be a little bit better than our forecast.
Yeah, and it's the one thing I want to add is actually the Q4 expected construction.
220.
Kilo voltage substation is the only one type of one time, you're in fact, and that's only the potential in the possible one time effect.
So there are some more upper side on our previous guidance that you saw in our Pud pool put.
Put into style, we always demonstrate but the reason for building that 220 kilowatts I want to emphasize.
He has for the future protection of the capacity.
Because as the previous quarter as we disclosed we have so far are signed up to 500 megawatts 500 megawatts total capacity in the <unk> region right now we have 25th roughly 250, and we're gonna be.
250, more capacity and as <unk> rightly pointed out the early we can lock in our resources in Missouri Energy group on a region to early the early we have secured all the necessary infrastructure to bear.
Chance, we'll get from the future orders and big quarter from our anchor customer. So we think that move to build a larger scale substation is absolutely a necessity for us and we want to make it happen SaaS that's possible. Thank you.
Thank you.
To ask a question you will need to press star one on your telephone and wait for your name to be announced when asking a question. Please state. Your question in Chinese first then repeat your question in English for the convenience of everyone. In Nicole once again that is star one on one if you would like to ask a question.
We will now go to our next question.
One moment please.
And your next question comes from Tina <unk> from Goldman Sachs. Please go ahead.
And this is your line is huh.
Oh and D Salinger triggers you're glad you Amanda.
Well Jacob <unk>.
So it isn't always that that go in there to acquire Alabama Shelley.
You too.
Oh, it's home to alcohol would you be in Idaho at home from your switching Gunter Chen you'll mail rounds of Appeals with shipyard shipping Oh, you know what.
All women Jacob.
Well, you know I'm watching central Idaho hardening of changing the MAGE Awash Java teaching English sheep adoption one each year.
Now they are a good Joe how should what your clock does it sound more logical Colgate woman switching guns Vornado, She English miano shaping and just kind of want them until invoicing nausea, all of that data.
I don't see it switching those ratings.
Okay. So thank you for the chance to ask a question again on my second question is regarding the rental price. So first of all in the domestic market I'm wondering a what is over the past two quarters that say what is the new contract pricing versus historical level.
And then also for.
Offshore projects in Malaysia from arc anchor customer Oh, what is the rental price level versus the domestic market. Thank you.
Thank you Tina do you want to go ahead or.
Oh I'm sorry.
Maybe maybe you have a better answer than the first.
So okay I'll answer first and Oh, sorry, our two questions first one news regarding D D.
Okay.
Good.
The silver price has been very stable for us and especially for the domestic of projects. We don't see any change. So far. So this is the answer for your first question. The second question is regarding the overseas sales price are they us to oversee a so.
So this model is the difference with the domestic domestic modal.
The power is a pass through model and so in each location.
The prices are very competitive and this is a this other hyperscale data centers and as you know the.
Zero six phase one newswoman uncle customer so I'm not in a position here to disclose the specific price here. Thank you.
Yeah.
And generally the overseas price level. There is a two part one service related the other ones are related so if we need because power is a password I don't want to comment on it but the service related it's higher than China.
I can give you about any potential.
You very much.
Thank you.
I will now hand, the call back for closing remarks.
And thank you everyone for attending this conference call and you can see that the.
We probably have a little bit come through here I would say the pistol momentum undergoing in three ways our moving.
Very healthy and strong our current under construction development projects are very strong.
One time and some of them even got deliberate earlier some of the requests from the customer.
The third very important our.
Our future demand as you can see from the answers.
So although medicine will be ongoing very strong and we anticipate that our.
Initial strategy.
Find the most efficient way of converting electric power to computing power going to continue to play out in the future and to bring the highest profitability not just the operating profitability I want to emphasize bump.
Return on capital return on the asset, which is still historically speaking at a high teen levels, there's absolutely more meaningful two oldest stakeholders and concerns including both equity investors and also creditors. So that's all I wanted to say and that the company can.
Focusing on the efficiency people focusing on the Hyperscale business skill and keep focusing our balanced investment versus return in the foreseeable future.
Thank you for the time.
Ladies and gentlemen that concludes our conference for today. Thank you for participating you may now disconnect.
Thank you.
Okay.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Yeah.
Okay.
[music].