Q2 2023 Chindata Group Holdings Limited Earnings Call
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Good morning and good evening, ladies and gentlemen. Thank you for joining, and welcome to Teen Data Group Holding Limited second quarter 2020 free earnings conference call.
Good morning, and good evening, ladies and gentlemen, thank you for joining and welcome to chain data group holding limited second quarter 2023 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. And I'll turn the call over to the first speaker today, Mr. Don Zhou from Investor Relations of Chain Data Group. Please go ahead, Don.
We will be hosting a question and answer session. After management's prepared remarks. Please note that today's event is being recorded.
I'll now turn the call over to your first speaker today, Mr. Don Joe from Investor Relations of two data group seats go ahead dawn.
Thank you, Amber. Hello, everyone, and welcome to Tringada Group's 2023 second quarter earnings conference call. This is Dom from Investor Relations team of the company. With us today are Mr. Nick Wong, our CFO , and Ms. Zoe Zhuang, our Senior Vice President of Finance. And during this call, Nick will take you through the quarterly review of our operation performance, and Zoe will present our financial results. Management team will be here to answer your questions after what.
Thank you Amber Hello, everyone and welcome to the group's 2023 second quarter earnings Conference call. This is Tom from Investor Relations team of the company.
With us today are Mr. Nick Wang our CFO and Mississauga drunk.
Senior Vice President Finance.
During this call Nick will take you through the quarterly review of our operational performance.
And as always we will present, our financial results management team will be here to answer your questions. Afterwards.
Now I will 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.
Now I will quickly go over the safe Harbor some of the statesman instead, we make today regarding our business operations and financial performance, maybe 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.
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.chaindatagroup.com. We have also updated our quarterly presentation on the company's investor relations website, which you can refer to as the supplementary material for today's call.
During this call we will present, both GAAP and non-GAAP financial measures.
Conciliation 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 investors that you can get a good dot com.
We have also updated our quarterly presentation on the company's Investor Relations website, which you can refer to as a supplementary materials for today's call.
Without further ado, I'll now turn over the call to Nick. Nick, please go ahead.
Without further Ado I'll now turn over the call to Nick Nick. Please go ahead.
Thank you, Dal. Hello, everyone. And thanks for joining the call.
Thank you Bill.
Hello, everyone and thanks for joining the call.
Concurrently with the ongoing progress of privatization of the company, the management and entire team continue to work diligently on our ability to
Concurrently with the ongoing progress of privatization of the company.
The management and the entire team continued to work diligently on our business.
delivering another strong quarterly performance in the second quarter of this year.
Delivering another strong quarterly performance in the second quarter of this year.
As a quick summary for our quarterly performance, we adhered to our demanding schedule and delivery was on time.
Here's a quick summary of our quarterly performance, we adhere to our commanding schedule and deliberate was on time.
demand from our existing clients remains satisfied.
Demand from our existing clients remain satisfied with.
with demand in the Southeast Asia market being a key driver during the second quarter. Grand pub.
With demand in southeast Asia market being a key driver during the second quarter.
Ramp up once you roll as always with overall single project level utilization ratio in good shape.
with overall and single project level utilization ratio in good shape. And we continue to build our partnership and invest it in research and development to prepare ourselves for the further AIGC era and patiently waiting for any signals on recovery of the market.
And we continue to build our partnership.
And have invested in research and development to.
To prepare ourself for the further AIG Sierra.
And patiently waiting for any signals of recovery of the market.
Okay.
To start with some key highlights for the second quarter.
On slide four.
Two new projects were put under construction in the second quarter.
Total capacity increased by 47 megawatts to 945 megawatts. And total number of data...
Total capacity increased by 47 megawatts to 945 megawatts.
And total number of data centers was 35.
Two hyperscale data centers were put into service in our Daotong campuses in Shanxi and Johor campuses in Malaysia.
Two hyperscale data centers will put into service and our thoughtful and campuses in Shanxi and youll campuses in Malaysia.
brining our total in-service capacity to 730 megawatts, an increase of 91.
Brining, our total in service capacity to 730 megawatts an.
An increase of 91 megawatts during the quarter.
Total client demand increased by 34 megawatts in the second quarter, bringing our total contracted and IOI capacity to 850 megs.
Total client demand increased by 34 megawatts in the second quarter.
Bringing our total contracted in IRI capacity to 850 megawatts.
with total client commitment rate remaining at a healthy level of 90.
With total client commitment rate remaining at a healthy level of 90%.
REM-POP was strong as we added 48 megawatts of utilized capacity in quarter.
Ramp up was strong as we added 48 megawatts I'll be utilized capacity in the quarter.
Graining our total utilized capacity to 585 MW. E involved.
Our total utilized capacity to 585 megawatts.
With a solid utilization rate of 80%.
financials remain under healthy momentum and in high quality.
Financials remain under healthy momentum any high quality.
Dravenil in the second quarter was RMB 1,553.8.
Revenue in the second quarter was RMB $1553 8 million.
representing 49.7% year over year.
Representing 49, 7% a year over year growth.
Adjusted EBITA grew by 49.9% year-over-year to RMB 816.1 million, which adjusted EBITA margin remained well about 50%, and 52.5% in a second.
Adjusted EBITDA grew by 49, 9% year over year to RMB $816 1 million.
Adjusted EBITDA margin remained well above 50% and 50.
<unk> 52, 5% in the second quarter.
That income grew by 9.8% year over year to RMB 219.2 million, with a net margin of 14.1%.
Net income grew by nine 8% year over year to RMB $219 2 million with a net margin of 14, 1%.
With the current business momentum, we reiterated our full year guidance.
With the current business momentum.
We reiterated our full year guidance range with revenue in the range of RMB 5.88 to 6.08 billion.
with revenue in the range of RMB $5.88 to $6.08 billion, and adjusted EBITDA in the range of RMB $3.1 to $3.22 billion. No.
And adjusted EBITDA in the range of RMB 31232 2 billion.
No.
and first take a closer look at project delivery and construction on slide 7 to 9.
Let's go into details and first take a closer look and project delivery and construction on slide Kevin Tonight.
We continue to work on the highly demanding schedules to ensure timely delivery, especially for
We continue to work on the highly demanding schedules to ensure timely delivery.
Especially for our Malaysia business.
In a second quarter, we put two projects into service with a total capacity.
In our second quarter.
We put two projects into service.
With a total capacity of 91 megawatts.
CN20, a 49 megawatts hyperscale project in our Datong campus, Shanxi province, was delivered as originally scheduled.
Seat and $28 49 megawatts Hyperscale project and are taught on campus Shanxi Province was delivered as originally scheduled.
The project supports the anchor clients and is currently 100% committed by the client.
The project supports the anchor clients and is currently 100% committed by the client.
My06 phase 2 in Johor, Malaysia was also delivered as scheduled.
Okay.
And why there was six phase III in Joel Malaysia was also delivered as scheduled.
The 42-megawatt project supports the anchor client as well and was already running at the 76% utilization ratio in the first quarter since operation.
The 42 megawatt project supports the anchor client as well.
And it was already running at 76% utilization ratio in the first quarter it seems operation.
Two new under construction product.
Our flagship MY06 product saw further capacity expansion in the second quarter with the inclusion of MY06 phase 4, a 12 megawatts new hyperscale product.
Our flagship and why zero six product. So further capacity expansion in the second quarter with conclusion and Wilder of six phase for a 12 megawatts new Hyperscale project it.
It is scheduled for delivery starting from the first quarter of 2024 and was 100% committed.
It is scheduled for delivery starting from the first quarter of 2024 and was 100% committed.
CN23, the other new under construction project, is located in one of the Changjiaqao campuses in Hebei.
<unk> and 'twenty three.
The new under construction project is located in one of our chunky alcohol campuses in Kobe.
The 26 megawatts hyperscale project is intended for one of our key international clients and is scheduled for delivery starting from the first quarter of 2025. The product is curteous one size not all transportation someday.
The 26 megawatt Hyperscale project is intended for one of our key international clients and is scheduled for delivery starting from the first quarter of 2025.
The project is currently 49% contracted.
Furthermore, thanks to the healthy momentum of our clients in Southeast Asia market,
Furthermore, thanks to the healthy momentum of our clients in South East Asia market.
Our existing MY06 phase 3 project was further expanded by 10 megawatts in the second quarter, now reaching 53 megawatts.
Our existing <unk> Euro six phase III project was further expanded Bob 10 megawatts in the second quarter.
Now, reaching 53 megawatts.
The project is currently 100% committed.
with the above changes during the quarter, as you can see on slide nine.
With the above changes during the quarter.
You can see on slide nine.
We have brought our total capacity up by 47 megawatt-
We have brought our total capacity up by 47 megawatts.
reaching 945 MW by the end of the second quarter.
Reaching 945 megawatts by the end of the second quarter.
with 730 megawatts in service and 214 megawatts in their country.
730 megawatts in service and 214 megawatts under construction.
Of the under construction capacity by quarter end, we currently expect another 50 megawatts to be delivered in 2023, and our teams in China and overseas are working diligently to ensure our supply readiness.
Under construction at <unk> by quarter, and we currently expect another 50 megawatts to be delivered in 2023, and our teams in China and overseas are working diligently to ensure our supply readiness.
Now regarding demand on slide 10.
We continue to receive additional demand on existing and new projects. With overseas business contributed meaning-
We continue to receive additional demand on existing and new projects with overseas business contributed meaningfully.
We received a total amount of 34 MW, new demand in the second quarter, among which 22 MW of additional demand were received from our anchor line, following the expansion of the MY06 project.
We received a total amount of 34 megawatts new demand in the second quarter.
Among which 22 megawatts of additional demand were received from our anchor client following the expansion of <unk> there were six projects at.
And another 12 megawatts new demand received from one of the key international clients on a business under construction project in Zhangjiaq.
And another 12 megawatts new demand received from one of the key international clients on our business and our construction products in John alcohol.
Meanwhile, contracted capacity increased by 60 MW in a quarter.
Meanwhile.
Contracted capacity increased by 60 megawatts in the quarter.
including 16 megawatts of IOI conversion from CE02, CN12, and CN23, supporting one of the key international clients, and 45 megawatts IOI conversion and newly contracted capacity on project MY06 phase 3 for the anchor climb.
Including 16 megawatts of IRI conversion from CE zero, two C 12, and C. In 'twenty three supporting one of the key international clients.
45 megawatts IRI conversion and newly contracted capacity on product wise here of six phase III for the anchor client.
In general, we are optimistic about opportunities in the Southeast Asia market.
In general we are optimistic about opportunities in the southeast Asia market.
The additional demand that we received during the quarter, Father Stranson, our review.
The additional demand that we received during the quarter further strengthened our view.
and a company have been devoting dedicated internal resources.
And the company has been devoting dedicated internal resources.
between Shoreing Timely Project Delivery while securing necessary resource for future development in its...
Two ensuring timely project delivery, while securing necessary resource for future development in advance.
Regarding the market in China, we are patiently watching the involvement of the market condition, waiting for further signals of recovery to emerge.
Regarding the market in China, we are patiently watching the involvement of the market condition waiting for further signals of recovery to emerge.
While we continue to build our partner ecosystem, to lay the foundation for future opportunities.
While we continue to build our partner ecosystem to lay the foundation for future opportunities.
We believe our our houses business and financial profile as well as our continued effort in research and development will be the key fundamentals for the company to win more opportunities as the market gradually recover and to compete in AIGC era.
We believe our <unk> business and financial profile as well as our continued effort in research and development will be the key fundamentals for the company to win more opportunities as the market gradually recover and to compete in Aig's era.
With the dynamics of demand in the quarter the.
The commitment status of our AFP photo continues to look healthy.
The commitment status of our asset portfolio continues to look healthy.
On slide 12.
For our existing 730 megawatts of in-service capacity, 95% was committed by clients in either contract or IOI by the end of the second quarter.
Foreign existing 730 megawatts in service capacity, 95% was committed by clients either contract or.
By the end of the second quarter.
The same proportion as in the previous quarter and in the same quarter of last year.
The same proportion as in the previous quarter and in the same quarter of last year.
For our total capacity on slide 13.
The commitment ratio was 90% at the end of the second quarter, compared with 91% in the previous quarter, and 84% in the same quarter.
The commitment ratio was 90% at the end of the second quarter compared with 91% in the previous quarter and 84% in the same quarter last year.
the visibility of our business remains there. As by the end of the second quarter, over 95% of our contracts were for 10 years term or longer.
The visibility of our business remains mirror.
<unk> by the end of the second quarter over 95% of our contracts were for 10 years term or longer.
leading to a weighted average remaining term of a current contract capacity of 8.6 years.
Leading to a weighted average remaining term of off of current contract capacity of eight six years.
And we expect less than 4% of our existing contract capacity to expire by the end of 2020.
And we expect less than 4% of our existing contract capacity to expire by the end of 2027.
Now, coming to customer move in on slide 14.
Now coming to a customer moving on slide 14.
Our ramp up remains healthy and in line with our schedule. With overseas projects.
Our ramp up remains healthy and in line with our schedule.
With overseas project as the key driver.
We added 48 MW of utilized capacity in a second quarter.
We added 48 megawatts are utilized capacity in the second quarter.
bringing our total utilized capacity to 585 megawatts, compared with the 401 megawatts in the same quarter last year. This represents 45...
Our total utilized capacity to 585 megawatts compared with 401 megawatts in the same quarter last year.
This represented 45, 9% a year over year growth.
Cornerland Movement was contributed by projects in our Northern China camp.
Quarterly move in was contributed by projects in our Northern China campus.
supporting the anchor client and the Chinese client cloud cloud client as well by our overseas project in India and Malaysia supporting the anchor client and one of the key international
Supporting the anchor client and in Chinese client call cloud client.
Well by our overseas projects in India and Malaysia.
According to anchor client and one of the key international clients.
MY06 Phase 2 is 76% utilized in the first quarter following its opening. Indicating
<unk> zero six phase two is 76% utilized in the first quarter for its opening.
Indicating a strong overseas demand.
These quarterly dynamics lead to a quarter-end utilization ratio of 80%. Compared with 78% in the same quarter-lawn.
These quarterly dynamics lead to a quarter end utilization ratio of 80% compared with 78% in the same quarter last year.
On a quarter over quarter basis, utilization ratio is 4% lower, mainly due to the inclusion of the 49 MW new in-service project.
On a quarter over quarter basis.
Realization ratio is 4% lower.
Mainly due to the inclusion of the 49 megawatts in service project that was just starting to ramp up.
looking at the utilization ratio at single project level.
Looking at the utilization ratio and single project level <unk>.
16 out of the existing 27 in service projects or 59% of them are over 90% of you know
16 out of the existing 27 in service projects.
Or 59% of them are over 90% utilized.
Geographically, with the fast ramp up of our Joe Hall projects, overseas business now contributed to 14% of total utilized capacity during and by the quarter.
Geographically, which they're faster ramp up of our Joe hold projects overseas business now contributed to a 14% of total utilized capacity.
And by quarter end.
and some other aspects of Disney development of slide 16.
Some other aspects of business development on slide 16.
We released our 2022 ESD report on July 24, 2020.
We released our 2022 ESG report on July 24, 2023.
We continue to run our business in an energy efficient way.
We continue to run our business and energy efficient that way.
with a total power consumption of 3.032 billion kilowatts per hour in the year 2022.
The total power consumption up 3.032 billion.
Kilowatt hour in the year 2022.
We managed to keep the annual PUE for our Chinese business at 1.21. We remarkably lower that industry average.
We managed to keep the annual view for our Chinese business at one point to one.
Remarkably lower than industry average.
We reinforced our safe ESD strategy. That was set forth in the year 2021, while committing ourselves to the mission of a ship efficiently converting electricity into high quality, computational power in the stable, eco-friendly, and high quality methods.
We have reinforced our safe.
<unk> strategy that was set forth in a year or 2021.
While committing ourselves to the mission operation efficiently converting electricity into high quality computer rotational power in the stable equal friendly and high quality manner.
thereby increasing operational stability, enhancing partner confidence and building a more sustainable brand.
Thereby increasing operational stability and enhancing partner confidence in building a more sustainable brand.
More information can be referred to in our EFT report.
More information can be referred to in our ESG report.
On slide 17, as a first mover in executing energy abounding lower tier region layout strategy, our years of operation in Hwade County, Tungwaco, city of Hubei province, is getting more recognition.
Yeah.
On slide 17.
First mover and executing energy are bound in lower tier regions lay out strategy our years of operation aquatic counting <unk> city of Hebei Province is getting more recognition.
Columbia Wildlife.
?BRC, Excuse me, it subsetally of chindataington
So up a tick acquire excuse me a subsidiary option data.
has earned a place on a national list of specialized and innovative little giant.
Has earned a place on our national list of specialized and innovative little giant enterprises.
This accolade is the bestowed upon companies that focused on niche markets, demonstrate strong innovation, maintain a significant market share.
This accolade is bestowed upon companies that focus on niche markets.
<unk> strong innovation maintained a significant market share.
master court technologies and attain remarkable levels of quality and efficiency.
<unk> core technologies, and maintain remarkable levels of quality and efficiency.
We are the first data center enterprise in Hebei to earn this esteemed recognition.
We are the first data center enterprise inhibited to earn business team recognition.
Our four campuses layout in White Lake County is now well established.
Our four campuses lay out in wireline counting is now well established with our IC capacity, surpassing 300 megawatts and a server deployments scale consistent constituting 80% of the total in <unk> County.
with our IT capacity surpassing 300 megawatts and a server deployment skill constituting 80% of the total in Hualai County.
Furthermore, in this region, as we mentioned previously, we continue to build our partner ecosystem to lay the foundation for future opportunities.
Furthermore, in this region as we mentioned previously we continued to build our partner ecosystem to lay the foundation for future opportunities.
On slide 18, on July 28, we entered into a 10-year strategic corporation agreements with starting in films at the whim of the
On slide 18.
On July 28, we entered into a 10 year strategic cooperation agreements with <unk> construction investment group.
This local Soe.
boosts a wealth of experience and capabilities in asset management, capital operation, resource development, and industrial
Boasts a wealth of experience and.
Capabilities and asset management capital operation resource development and industrial investments.
Through the partnership, both parties would engage in deep corporation in land and water resource development, energy development, data center collaboration and operation.
Through the partnership both parties fully engaged in deep Corporation, <unk> land and water resource development.
<unk> development.
Data center collaboration in operation.
and integrated products of source grade load storage. And further explore other collaborative opportunities in the big data industry chain.
The integrated products of source grid load storage and further explore other collaborative opportunities in the big in the big data industry chain.
This partnership signifies the continued commitment of chin data in Hwai Lai, Gangya Kho to further strengthen and optimize the local digital economy. With...
This partnership signifies the continued commitment option data waialae Cheung the alcohol to further strengthen and optimize our local digital economy.
With that I've concluded my part.
Operator: Good morning and good evening ladies and gentlemen. Thank you for joining and welcome to Team Data Group holding limited second quarter to 2023 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.
And I will turn to Zoe for the details of our financial performance. Zoe, please.
Ill turn to Zoe for the details of our financial performance Zoe. Please.
Thank you, Nick. Now let me walk you through our quarterly financial performance. Generally speaking, we have maintained a very healthy financial momentum in the second quarter of year 2023.
Thank you need now.
Now let me walk you through the other call today's financial performance generally speaking we have maintained a very healthy financial momentum in the second quarter of 2023.
Amber: And I'll turn the call over to the first speaker today, Mr. Dong Zhou from investor relations of changeator group. Please go ahead, Dong. Oh, thank you, Amber.
A revenue gross in the second quarter remains healthy, recording of 49.7% year-over-year gross to reach RMB 1,553.8 million, which is in line with the 45.9% year-over-year increase in utilized capacity.
Our revenue growth in the second quarter remained healthy recording 49, 7% year over year growth to reach RMB $1553 eight.
Dong Zhou: Hello, everyone, and welcome to Tringata Group's 2022 second quarter earnings conference call. This is Dong from investor relations team of the company. With us today, I'm Mr. Nick Wang of CFO and Ms. Zoe Zhuang, our senior vice president finance. And during this call, Nick will take you through the quarterly review of our operation performance. And Zoe will present our financial results. Management team will be here to answer your questions afterwards.
Which is in line with the 45, 9% year over year increase utilized capacity.
overseas business contributed to 14% of total utilized capacity in the second quarter, up from around 9% in the previous quarter.
Overseas business continuity to 214% arbiter to utilize capacity in the second quarter.
Up from around 9% in the previous quarter.
Looking further down on flight 25, total cost of revenue in the second quarter increased by 51.3% to R&B 912 million, from R&B 600 to 0.2 million in the same period of 2022, mainly driven by increase in utility costs and depreciation and arbitration expenses.
Looking further down on slide <unk> total cost of revenue in the second quarter increased by 51, 3% to RMB 911, 2 million from RMB 602 tier meetings in the same sharing of 2022.
Dong Zhou: Now I will quickly go over the safe harbor. Some of the statements that we make today regarding our business operations and financial performance may be considered for looking in such statements involve our 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 findings with the SEC. During this call, we will present both gap and on-gap financial measures.
Mainly driven by an increase in it.
Additive costs and depreciation and amortization expenses.
Total operating expenses in the second quarter of 2023 increased by 56.9% year-over-year to RMB 197.6 million primarily due to more marketing activities conducted by the company, higher professional service fee, increase in research and development personnel, and higher share-based compensation expenses.
Total operating expenses in the second quarter of 2023 increased by 59.
Dong Zhou: A reconciliation of non-gap to gap measures is included in our earnings press release, which is distributed and available to the public through our investor relations website located at investor.chingatorgroup.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.
<unk>, 9% year over year to RMB 197, six meeting primarily due to lower marketing activities conducted by the company higher professional service fee increase in research and development personnel and the higher share based compensation expenses.
specifically selling the market expenses in the second quarter of 2022 increased by 4.1% year over year to R&B 16.1 million.
Dong Zhou: Without further ado, I'll now turn off the call to Nick. Nick, please go ahead. Thank you, Dal. Hello, everyone. And thanks for joining the call.
Specifically selling and marketing expenses in the second quarter of 2023 increased by 41% year over year to RMB 16, <unk> meeting general and administrative expenses in the second quarter of 2023 increased by six.
General and administrative expenses in the second quarter of 2023 increased by 69.6 year-over-year to RMB 154.5 million.
Nick Wang: Concurrently with the ongoing progress of privatization of the company, the management and the entire team continue to work diligently on our business, delivering another strong quarterly performance in the second quarter of this year. As a quick summary for our quarterly performance, we adhered to our demanding schedule and delivery was on time. Demand from our existing clients remained satisfying with demand in Southeast Asia market being a key driver during the second quarter.
Nine six year over year to RMB 154, five meeting research and development expenses in the second quarter of 2023 increased by 39, 3% year over year to RMB 27 meeting.
research and investment expenses in the second quarter of 2023 increased by 39.3% year-over-year to RMB 27 million.
As a result of this, operating income in the second quarter of 2023 increased by 43.5% to RMB $445 million, recorded an operating income margin of 28.6%. That income in the second quarter of 2023 increased by 43.5% to RMB $305 million, recorded an operating income margin of 28.6%.
A result of the operating income in the second quarter of 2023 increased by 43, 5% to RMB 445 meeting recorded operating income margin.
Nick Wang: Rem Pub was usual as always with overall and single project level utilization ratio in good shape. And we continue to build our partnership and invested in research and development to prepare ourselves for a further AIGZ era and patiently waiting for any signals of recovery of the market.
98, 6% net.
Net income in the second quarter of.
of 2023 increased by 9.8% year-over-year to RMB 200, 19.2 million with a net margin of 14.1% compared with 19.2% in the same period of 2025 and 17.5% in the first quarter of this year.
2023 increased by nine 8% year over year to RMB $219 2 million with net margin of 14, 1% compared with 19, 2% in the same period of 2025.
Nick Wang: To start with some key highlights for the second quarter on slide four, two new projects were put under construction in the second quarter. Total capacity increased by 47 megawatts to 945 megawatts. And total number of data centers was 35. To hyperscale data centers were put into service in our doubt on campuses in Shanxi and your whole campuses in Malaysia. Yang Liu. Braining our total in service capacity to 730 MW, an increase of 91 MW during the quarter.
17, 5% in the first quarter this year.
The year-over-year change in the net margin was mostly contributed by increase in interest expenses.
Year over year change in the net margin was mostly contributed by increase in interest expenses.
for breakdown of call, cost, and expense items on slide 26.
For a breakdown of coal cost and expense items on slide 26, with the growth of our business. We continue to maintain our adjusted EBITDA margin at about 50% level.
With the growth of our business, we continue to maintain our adjusted EBDA margins at about 50% level.
Maintenance and other costs was 7.5% of revenue in the second quarter, compared with 6.6% in the previous quarter. Adjusted FGNA was 9.7% of revenue, compared with 6.8% in the previous quarter.
Nick Wang: Total client demand increased by 34 MW in the second quarter. Braining our total contracted and IOI capacity to 850 MW. With total client commitment rate remaining at a healthy level of 90%. RENPOP was strong as we added 48 MW of utilized capacity in quarter. Grining our total utilized capacity to 585 MW, with a solid utilization rate of 80%.
<unk> and other costs was seven 5% of revenue in the second quarter comparison.
<unk>, 6% in the previous quarter adjusted SG&A was nine 7% of revenue compared with six 8% in the previous quarter.
On quarter-over-quarter basis, utility price did not see material fluctuations across the region in which we operate, leading to stable utility cost percentage points of revenue at 31.2% in the second quarter. Similarly, similar to the previous quarter.
On a quarter over quarter basis.
Energy price is not see material fluctuation across the regions you rates, we operate leading to a stable utility cost a percentage point of revenue.
Nick Wang: Financials remain under healthy momentum and in high quality. Bravenue in the second quarter was RMB 1,553.8 minutes, representing 49.7% in Europe-year growth. Adjusted EBDA grew by 49.9% in Europe-year to RMB 816.1 million, with adjusted EBDA margin remained well about 50% and 52.5% in the second quarter. That income grew by 9.8% in Europe-year to RMB 219.2 million, with a net margin of 14.1%.
31, 2% in the second quarter seemingly similar to the previous quarter.
On the year-over-year basis, utility costs of revenue rose by roughly 2%
On a year over year basis utility cost of revenue rose by roughly two percentage points.
With this, on slide 27, adjusted EBITDA recorded 49.9% year-over-year growth, or 0.3% quarter-over-quarter growth to reach R&B 816.1 million, and a margin of 52.5%.
With this on slide 27, adjusted EBITDA recorded a 49, 9% year over year growth.
0.3% quarter over quarter growth to reach RMB, $816 9 million and a margin of 52, 5% adjust.
adjusted net income increased by 6.7% year-over-year in the second quarter to RMB 258.2 million at a margin of 16.6%.
Adjusted net income increased by six 7% year over year in the second quarter to RMB 258 tier meeting at a margin of 16, 6%.
Nick Wang: With the current business momentum, we reiterated our full-year guidance range with revenue in the range of RMB 5.8A to 6.08 billion, and adjusted EBDA in the range of RMB 3.1 to 3.22 billion.
Details in the gap to net gap reconciliation on EBITDA and net income would be available in our 6K filing or the appendix in our IRPPT.
Detailed in the GAAP to non-GAAP reconciliation of EBITDA and net income were to be available in our 6K filing are the appendix in our IR team.
On slide 28, given the highly demanding delivery schedule, we continue to incur similar level of CATX during the quarter that we covered existing under construction projects, as well as some initial investments in potential pipeline projects with good certainty.
Nick Wang: Now, let's go into details and first take a closer look at project delivery and construction of slide 7 to 9. We continue to work on the highly demanding schedules to ensure timely delivery, especially for our Malaysia business. In the second quarter, we put two projects into service with a total capacity of 91 MW. C in 20, a 49 MW hyper-scale project in our Datoon campus, Shanxi Province, was delivered as originally scheduled.
On slide 28, given the highly demanding delivery schedule, we continue to incur a similar level of capex during the quarter.
Over the existing under construction projects as well.
As some initial investment.
Potential pipeline project with good certainty.
PEPAX in the second quarter was RMB 120054.6 million, compared with RMB 160053.9 million in the previous quarter.
Capex in the second quarter was RMB $1254, six meeting compared with RMB $1653 9 million in the previous quarter.
On slide 29, our operating cash flow continued to recover and improve following the COVID-19 epidemic in 2022, and the completion of client-system upgrades.
On slide 29 of operating cash flow continue to recover and improve for you.
Nick Wang: The project supports the anchor clients and is currently 100% committed by the client. NY06 Phase 2 in Johor, Malaysia, was also delivered as scheduled. The 42 MW project supports the anchor client as well, and was already running at the 76.1% Datoon ratio in the first quarter of the operations. Two new under-construction project was added. Our flagship NY06 project saw further capacity expansion in the second quarter with the inclusion of NY06 Phase 4, a 12 MW new hyper-scale project.
Following the COVID-19 epidemic in 2022, and the completion of climbed the system upgrade.
operating cash flow in the second quarter was RMB 1,186.8 million, which is around 145% of our adjusted EBDA. Compared with RMB 693.3 million in the first quarter of 2023.
Operating cash flow in the second quarter was RMB 1186 eight.
We achieved around 145% of our adjusted EBITDA compared with RMB $693 3 million in the first quarter of 2023.
Such improvement of operating cash flow is also in line with such substantial lower value of our account receivables by Quotet Air.
Such improvement of operating cash flow is also in line with such a substantial lower value.
Our accounts receivable by quarter end.
Financing cash flow was RMB 259.1 million in the second quarter, with another RMB 1396.4 million investment cash flow.
Nick Wang: It is scheduled for delivery starting from the first quarter of 2024 and was 100% committed. C in 23, the other new under-construction project is located in one of the Jiangjiaco campuses in Hebei. The 26 MW hyper-scale project is intended for one of our key international clients and is scheduled for delivery starting from the first quarter of 2025. Wang. The project is currently 49% contracted. For the more, thanks to the healthy momentum of our clients in Southeast Asia market, our existing NY06 Phase III project was further expanded by 10 megawatts in a second quarter, now reaching 53 megawatts. The project is currently 11% committed.
Financing cash flow was RMB $259 million in the second quarter with another RMB $1396 four meeting investing cash flow.
We ended up with a higher total cash position of R&B, 5,915.3 million by quarter-end, and a net-dead position of R&B, 5,569.3 million.
We ended up with a higher our total cash position of RMB $5915 3 million by quarter end.
Our net debt position of RMB.
5000.
<unk> hundred $69 3 million.
on leverage and the coverage ratios remain in the reasonable and healthy range. On slide 30, key leverage ratios do not see much fluctuation quarter over quarter. Neither are key coverage ratios. On slide 31, asset return continues to improve in the second quarter.
Leverage and coverage ratios remain reasonable and healthy rates.
<unk>.
Key leverage ratios.
Now see much fluctuation quarter over quarter, neither our key coverage ratios.
On slide 31, as such we intend to continue to improve in the second quarter.
Nick Wang: With the above changes during the quarter, as you can see on slide 9, we have brought our total capacity up by 47 megawatts, reaching 945 megawatts by the end of the second quarter, with 730 megawatts in service and 214 megawatts in their construction. Of the under construction capacity by quarter end, we currently expect another 50 megawatts to be delivered in 2023, and our teams in China and overseas are working diligently to ensure our supply readiness.
with an overall utilization ratio of our total in-service capacity at 80%. When staying in the company defines the pre-tax RIC, further writes to 19.3%, compared with 18.7% in the previous quarter and 17% in the same quarter last year.
With the overall utilization ratio of our total in service capacity at 80%. We are seeing the company defined the pretax RAC further rise to a 19, 3% compared with 18, 7% in the previous quarter and 17% in the same quarter last year.
Finally, based on the company's current and preliminary views on the market and operational conditions,
Finally based on the Companys current and the preliminary views on the market and operational conditions.
It is rated 2,023 revenue guidance in the range of R&B, 5,880 to R&B 6000, 80 million and adjusted EBITDA guidance in the range of R&B 3,100, 2,220 million. This reflects
<unk> 2000, <unk> revenue guidance in the range of RMB 5880 to RMB six.
Nick Wang: Now, regarding demand on slide 10, we continue to receive additional demand on existing and new projects, with overseas business contributed meaningfully. We received the total amount of 34 megawatts, new demand in the second quarter, among which 22 megawatts of additional demand were received from our end concline, following the expansion of the NY06 project, and another 12 megawatts new demand received from one of the key international clients on the business and construction project in Jiangdiakuo.
<unk> thousand 80 meeting.
<unk> adjusted EBITDA guidance in the range of RMB 300.
102 to 3000 $220 million.
This reflects.
The company's preliminary reviews, which are subject to change. This concludes our prepared remarks for today. Operator, we are now ready to take questions.
The company's preliminary views, which are subject to change. This concludes our prepared remarks for today operator, we are now ready to take questions.
Thank you. We will now begin the question and answer session.
Yes.
Thank you we will now begin the question and answer session.
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Nick Wang: Meanwhile, contracted capacity increased by 60 megawatts in the quarter, including 16 megawatts of IOI conversion from CE02, CN12, and CN23, supporting one of the key international clients in 45 megawatts IOI conversion and newly contracted capacity on NY06 phase 3 for the end concline. In general, we are optimistic about opportunities in the Southeast Asia market. The additional demand that we received during the quarter, further strengthen our review, and the company has been devoting dedicated internal resources to ensuring timely project delivery while securing necessary resources for future development in advance.
To withdraw your question, please press the one one again. When asking the question, please state your question in Chinese first, then repeat your question in English for the convenience of everyone in the call. Please ask one question at a time.
<unk> of everyone in the call.
Please ask one question at a time.
Please stand by while we compile the Q&A roster once again, the Stau 111 for Qu-
Please standby, while we compile the Q&A roster once again Thats star one one more question.
Office question comes from the line of Yang Liu from Morgan Stanley . Please go ahead Yang.
Our first question comes from the line of young from Morgan Stanley . Please go ahead yeah.
Hello.
Was going. He also ch the AG orship ender when he applying. I also run down your downch Chi to EDG need.
<unk> will also.
Chinese imports have been.
You're playing with ongoing awards for Dell to churn Joshua.
Nick Wang: Regarding the market in China, we are patiently watching the involvement of the market condition, waiting for further signals of recovery to emerge, while we continue to build our partner ecosystem to lay the foundation for future opportunities. We believe our healthy business and financial profile, as well as our continued effort in research and development will be the key fundamentals for the company to win more opportunities as the market gradually recover and to compete in AIGC era.
<unk>.
Through do ING now going through your hundred dollar J D the drning issue now thingsa center going to the D them that gy cowhole angor customer. Where going through the, the global?
Launching.
<unk> Jake.
Jim on the journey of tissue.
Our teams are some tack ons for the.
Let's take a cohort of anchor customer.
Hold on to that for that global customer.
Firmly enough, we generated McGuinti API, so he used locality to create functionality Thank you.
Uh huh.
Yes.
So as we've seen prices come down.
Just I'll try to ask.
Four quarters.
Nick Wang: With the dynamics of the demand in the quarter, the commitment status of our asset portfolio continues to look healthy. On slide 12, borrowed existing STEM 130 megawatts of in-service capacity, 95% was committed by clients in either contract or I.O.I, by the end of the second quarter. The same proportion as in the previous quarter and in the same quarter of last year. For our total capacity on slide 13, the commitment ratio was 90% at the end of the second quarter, compared with 91% in the previous quarter and 84% in the same quarter last year.
So now, let's just loose yet.
So alike, one of the important challenges is for individuals to Wake up or serve on one of the machines to register with groups of rahat
Mr Susquehanna Angola sure.
Sure.
Two children.
Yellow quadrex ultrashape genre researches will create vehicles with CERN yoga.
Hum.
Or the T cell.
I will translate my question in English. My question is related with the patent on cooling technology supporting the AIGC future demand.
I will translate my question in English My question was that there was a patent on the cooling.
Cooling technology supporting with AIG.
Future demand, we noticed that she made other Walter patent assertion liquid cooling.
We noticed that Trin data has a lot of their patent in emission liquid cooling and the cool state liquid cooling, et cetera. And I would like to ask you what is your customers' acceptance, especially ankle customer and global cloud customers' acceptance of such kind of technology route in AIGC related computing and hosting.
Two more quick putting et cetera.
Nick Wang: The visibility of our business remains there as by the end of the second quarter, over 95% of our contract were for 10 years term or longer, leading to a weighted average remaining term of a current contract capacity of 8.6 years, and we expect less than 4% of our existing contract capacity to expire by the end of 2027.
I would like to ask what is your.
Customers acceptance anchor customer a global cloud customers acceptance of such kind of technology.
AIG C.
The nature of the computing hosting.
And a related question is whether such kind of technology can increase the efficiency of our IC of the company.
A related question.
And whether such kind of stuff.
Okay increased.
Nick Wang: Now coming to customer moving on slide 14, our ramp up remains healthy and in line with our schedule, with overseas project as the key driver. We added 48 megawatts of utilized capacity in a second quarter, draining our total utilized capacity to 585 megawatts, compared with a 401 megawatts in the same quarter last year. This represents 45.9% in year-over-year growth. Quarterly moving was contributed by projects in our Northern China campus supporting the anchor client, and the Chinese cloud client, as well by our overseas project in India and Malaysia, supporting the anchor client and one of the key international clients.
This is how I see of the company.
Thank you, Mr. Liu Yang.
Alright, thank you.
Mr Young.
I think the reason why we think that from our anchor clients and the future customer will be very willing to accept.
I think the reason why.
We think that the.
Our anchor client in the future customer well be very willing to accept our diversified coding solution is simply because we were operating in such a diversified geography, especially if you compare our north China.
our diversified according solution is simply because we are operated in such a diversified geography, especially if you compare our North China campus versus our Southeast Asia, Joe whole campuses, the weather conditions, humidity conditions, and also temperature and complete addition. So you need to have a lot of tools, you know, teeth to box.
Our campus versus our southeast Asia, Joe Hall campuses to weather conditions committed of conditions.
And also temperature and confusion on completely different so.
You need to have a lot of tools to boxes, so when the customer wanted different conditions or the or.
So when the customer, when the different conditions or the demand, from technical perspective, given the AIGC, more requirements on the air flowing and also cooling requirements.
Nick Wang: MY06 phase 2 is 76% utilized in the first quarter following its opening, indicating strong overseas demand. These quarterly dynamics lead to a quarter-end utilization ratio of 80%, compared with 78% in the same quarter last year. On a quarter-over-quarter basis, utilization ratio is 4% lower, mainly due to the inclusion of the 49 megawatts new in service project, that was just starting to ramp up. Looking at the utilization ratio at single project level, 16 out of the existing 27 in service projects, or 59% of them are over 90% utilized. Geographically, with the fastest ramp up of our jojo projects, overseas business now contributed to 14% of total utilized capacity during and by the quarter-end.
The demand technique from a technical perspective, given the <unk> route more requirements on both are flowing and also a cooling requirements.
you need to be ready. So therefore we are very confident with all those technology patterns in their health.
You will need to be ready. So therefore, we are very confident with all this technology.
Patterns in their house.
And most importantly, with our, the talents pool in-house leading by our CTO, Mr. Zhang Bien-Pua, we are very confident that all this liquid cooling patterns and technology and solutions will co-play the cooling solutions will be well accepted by our customer. And actually, as a matter of fact, some of them already been applied in our campus in China as well as in China.
And most importantly with our.
The talent pool in the house meeting by our CTO. Mr. <unk>, we are very confident that.
All of this liquid cooling talents and technology and solution while co played.
The cooling solutions will be well accepted well accepted by our customer and actually as a matter of fact, some of them already to be applied in the in our campus in China as well as overseas.
In terms of financial return, yes, there will be a marginal, I will say, the ROIC improvement, especially if you look at the full life cycle of this solution application. There are going to be a requirement and more investment, but there are going to be a cost saving later, especially on energy saving part. So overall, I think our study shows that the ROIC is going to be improved marginally. Thank you.
In terms of our financial return, yes, there will be a marginal.
I will say that ROIC improvement, especially if you look at our full lifecycle of the of this solution application, they're going to require a little bit more investment, but theyre going to be a cost savings later, especially on energy saving part. So overall I think our study shows ALPA.
Nick Wang: On some other aspects of business development, on slide 16, we released our 2022 ESD report on July 24, 2023. We continue to run our business in an energy efficient way, with a total power consumption of 3.032 billion kilowatt-hour in the year 2022. We managed to keep the annual PUE for our Chinese business at 1.21, remarkably lower than industry average. We reinforced our safe ESD strategy, that was set forth in the year 2021, while committing ourselves to the mission of a efficiently converting electricity into high-quality computer educational power in the stable, eco-friendly, and high-quality business.
Or ROIC.
Improved marginally.
Thank you.
Okay.
Okay.
Alright. Thank you. Thank you.
Thank you. Our next question comes from the line of Sarah Wong from UBS. Please ask your question Sarah.
Thank you our next.
Our next question comes from the line of Sara Wang from UBS. Please ask your question Sara.
Thank you for the opportunity to ask a question. I have a question for you to ask. Because according to the latest FACC funding, the capital of the year 2023 is expected to be in the US. So I want to ask you, because this data is still higher, so I want to ask you, what is the driver of this car?
Thank you for the opportunity to ask a question.
<unk> does not by any fall your way.
Jason.
Our SEC filings.
Civil Eileen Osborn.
<unk> you may begin.
Or is that <unk> has shared these I'll call constantly.
Nick Wang: Wang, Zhou, Chindata Grp[inaudible] Markable levels of quality and efficiency We are the first data center enterprise in Hubei to earn this esteemed recognition Our four campuses layout in Hualai County is now well established With our IT capacity surpassing 300 megawatts And the server deployment skill constituting 80% of the total in Hualai County Furthermore, in this region, as we mentioned previously, we continue to build our partner ecosystem to lay the foundation for future opportunities On slide 18, on July 28, we entered into a 10-year strategic corporation agreements with Jiangyao Construction Investment Group This local SOE boosts a wealth of experience and capabilities in asset management, capital operation, resource development, and industrial investments Through the partnership, both parties would engage in deep corporation in land and water resource development, energy development, data center collaboration and operation And integrated products of source grade load storage and further explore other collaborative opportunities in the big data industry chain This partnership signifies the continued commitment of Chen data in Hualai, Jiangyao, to further strengthen and optimize the local digital economy With that, I have concluded my part and I will turn to Zoe for the details of our financial performance. Zoe, please Thank you, Nick.
Capex for two other driver assist remark so according to the latest SEC filing is since the 2020 Capex is estimated at 1.3 U S.
So according to the latest SEC filing, it seems the 2023 tap has is estimated at $1.3 billion, so just wondering what's the key driver of the tap for this year. Thank you.
Bill in U S dollars. So just wondering what the key driver of the Capex for this year. Thank you.
Thank you, Sarah. I think that you are referring to the documents.
Thank you Sara I think you are referring to would be.
or whatever failing we already filed to SCSE regarding the privatization issue.
The documents.
Or whatever felling, we already filed to ask Youll see regarding the privatization issue right, So thats, where youll see it as a $1 3 billion in U S. Dollar I would tell you that first of all about thoughtfully.
So that's where you see this 1.3 billion US dollars. I would say that first of all, that's actually the part of the work prepared by city group. Who is the advisor to our special committee who reviewed the whole process. So for any, I would recommend for any evaluation and also the financial forecast as part of the evaluation process, methodology, you'd better ask the city. But from our side, we only focus in.
The part of the <unk>.
Org prepared by Citigroup, who is the who.
Who is the advisor.
Our special Committee, who will review the whole process, so or any.
Command for any evaluation.
And also on our financial forecast as part of the evaluation process methodology.
To better ask a city, but from our side, we only focusing on the business.
especially we only focus on our business of progress, deliver schedule and obviously the future pipeline on potential project, not only the project we did scope to the market place.
Especially we only forecasting our business our progress delivery schedule and obviously.
The future pipeline potential project not only the project would be scaled to the marketplace. So having said that that we used in the previous conference call. We used to estimate our full year Capex number is going to be around the 5% to seven 1 billion RMB now I would say that.
So having said that that we use in the previous outcomes call, we used to estimate our whole year catapax number going to be around the five to seven billion, you know, R&B. Now I would say that this number for the whole year, two, 23 going to be in the range of a seven to nine billion from the latest internal estimate for the whole year, two, 23. Now we already have the first year you see the number. We already spend like three billion.
The number for the whole year of 2023 kind of be in the range of 72 9 billion from the latest internal estimates for the whole year 2023, now we already have the first year you see the number we under spent like 3 billion now the cash outflow on Capex rate itself on a second half that are going to be probably going to spend.
you know, the cash outflow on the cash-related stuff. So on the second half, they're gonna be, we're probably gonna spend four or six billion, you know, further. I think, I think we think that this potential upside or increased spending will be a good news for everybody. Why is good news? Because this is driven by the progress of some incremental pipeline project, new project which company is optimistic to obtain in the second half of the month.
And the four 6 billion.
Further.
I think I think we think that this potential upside increased spending.
I'll be a good news for everybody why is good news because this is driven by the progress of some incremental pipeline project, New project, which company is optimistic to obtain in the second half of this year.
And these pipeline projects may bring better revenue and imita for future years, not necessarily this year, 2023, but future year, 2024 and 25. BR, you know, the BR previous.
And these pipeline projects may bring better revenue and EBITDA for future years, not necessarily this year in 2023 by future in 2024 and 'twenty five.
Art.
The IPR.
Previous estimate.
In addition, you know, and a large port significant portion of this incremental pipeline project. Again, not the product we have this goals, you know, some least product actually driven by our overseas
In addition.
Large porch significant portion of this incremental pipeline project again, not the product we have VIX calls so.
Lease product.
Nick Wang: Now let me walk you through our quarterly financial performance Generally speaking, we have maintained a very healthy financial momentum in the second quarter of year 2023 Our revenue growth in the second quarter remains healthy, recording 49.7% year-over-year growth to reach RMB1553.18, which is in line with the 45.9% year-over-year increase in utilized capacity over 6 business contributed to 14% of total utilized capacity in the second quarter, up from around 9% in the previous quarter. Looking further down on flight 25, total cost of revenue in the second quarter increased by 51.3% to R&B 911.2 million from R&B 600 to 0.2 million in the same period of 2022, mainly driven by increase in utility costs and depreciation and arbitration expenses.
Actually driven by our overseas business in other words overseas project will have a larger than expected shares.
In other words, overseas project will have a larger than expected shares. And that basically means the increase of the unit cap has a quarter.
That basically means for increase off of that.
The unit Capex accordingly.
So obviously, you know, the timing of the spending may vary around late 2023 or start of beginning of 2024. So part of the 1.3 billion you saw those with privatization documents and there's more part of it, maybe a category over in 2024 to spend. But on an aggregate level, if you combined 2023 and 2024, campus together, issues stay the same.
Obviously, the timing of the spending variance around late 2023 or start off up beginning of 2024. So part of the $1 3 billion you saw those privatization documents.
A small part of it may be carried over to slide 24 to spend.
But on an aggregate level. It can combine 2023 and 2024 Capex together issue stay the same.
So yeah, that's hopefully I'm answering questions. It's a video is actually, you know.
So.
Yes, hopefully.
Im answering questions is it good news actually.
Yes, very clear thank you.
Thank you.
Elinix question comes from the line of Min Ran Lee from CICC. Please ask your question, Ming-Rez.
Our next question comes from the line of men ran Li from CIC.
Please ask your question Lehman.
Okay.
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Michelle go ahead with this ongoing event.
Nick Wang: Total operating expenses in the second quarter of 2023 increased by 56.9% year over year to R&B 177.6 million, primarily due to more market activities conducted by the company. Higher professional service fee increased in research and investment personnel and higher share-based compensation expenses. Specifically, selling the market expenses in the second quarter of 2023 increased by 4.1% year over year to R&B 16.1 million. General and administrative expenses in the second quarter of 2023 increased by 69.6 year over year to R&B 154.5 million.
I will now go to Paul <unk>.
Thanks, Rob.
I'm going to Sue Chung.
So it seems like.
Just a normal you ladies and gentlemen.
Additional deal closes on July one whole milk.
And Todd Cooper as it matures.
Money way C ment come out. You look, I is and I had you think insurge it. I'm going to you on two Val on me, on the only Sur it. It's acquiire is Tru has to show what they really outpos about that. A location that you those, she compeposition TR.
Welcome to Aqua.
Thank you Sir.
So I'm gonna yet.
Thank you if I may on <unk>.
How should show up.
Just a co location that yes.
Does your competition.
Let me translate myself. I want to ask about more color about the AI related demands, like what percentage is new capacity during this year is AI related. And beside our end-contestment, even in the client's new AI demand you're saying, listen.
Let me translate myself.
I want to ask about more color about the AI related demand.
What percentage of new deposits are using this year.
<unk>.
And beside our anchor customer is there any more claims with new demand Youre seeing recently.
Nick Wang: Research and investment expenses in the second quarter of 2023 increased by 39.3% year over year to R&B 27 million. As a result of this, operating income in the second quarter of 2023 increased by 43.5% to R&B 445 million, recorded an operating income margin of 28.6%. That income in the second quarter of 2023 increased by 9.8% year over year to R&B 200 19.2 million with a net margin of 14.1% compared with 19.2% in the same period of 2025 and 17.5% in the first quarter of this year.
And also, if they found domestic, ISA peers decided to buy their own GPUs to start computing infrastructure business. Do you have any plan or strategy about this, or you just want to focus on our collocation service because your demand is strong? Thank you.
And also I'd say from the Labcorp <unk> decided to buy their own Gpus to Scott computing infrastructure business.
Do you have one or two other geos.
Just wanted to focus on our Colocation service because demand is strong.
Sure.
Alright, Thank you Amanda.
<unk>.
Actually, the client doesn't tell us, you know, when they install the server into our IDC centers and how many of them is AI related. So we can guess, right? But so based on the application and the utilization of the high density cabinets.
Actually declined to them tell us.
When they install the server into our ITC centers and how many of them.
AI related so we but.
But we can guess right, but so based on the application and the utilization of the high density cabinets and based on the servers type they put in our data center, we think.
and based on the servers type, they put in our data center, we think that the AI portion, the AI related servers, probably account for around 5% of our current overall capacity.
It'd be at the AI portion the AI related.
Related to Cerberus <unk> account for around 5% of our current overall capacity.
Nick Wang: The year over year change in the net margin was mostly contributed by increase in interest expenses. For breakdown of call costs and expense items on flight 26 with the growth of our business, we continue to maintain our adjusted EBDA margin at about 50% level. Maintenance and other costs was 7.5% of revenue in the second quarter compared with 6.6% in the previous quarter. Adjusted at GNA was 9.7% of revenue compared with 6.8% in the previous quarter.
On an incremental basis, we are still under some serious discussion with them about incremental orders and projects. And I believe it's going to be a higher portion of them. It's going to be a T.C. related, for sure.
On an incremental basis, we're still.
Under some serious discussion with them about fall incremental.
Orders and projects and I believe.
Kind of be higher portion of the.
B G.
<unk> related pressure.
And also, you probably heard the same thing, you know, as myself from the Marcus Street, that simply one of our and the customers have the biggest to reserve or inventory of the AIG is really related to GPU units or chips or service in China. For both their China business and also.
And also you probably heard the same thing.
As myself from the market Street that from the street that simply.
One of our anchor customers have the biggest a reserve or inventory.
Aig's.
Related that GPU units on chips all service in.
In China for both their China business and also.
Nick Wang: On quarter over quarter basis utility price did not see material fluctuations across the region in which we operate, leading to stable utility cost percentage points of revenue at 31.2% in the second quarter. Similarly similar to the previous quarter. On a year-over-year basis, utility cost of revenue rose by roughly two percentage points. With this, on slide 27, adjusted EBITDA recorded of 49.9% year-over-year gross, or 0.3% quarter-over-quarter gross to reach RMB 816.1 million and a margin of 52.5% adjusted net income increased by 6.7% year-over-year in a second quarter to RMB 258.2 million at a margin of 16.6%.
you know, they're overseas business. So hopefully that we can get a significant share out of the one that considered the IDC partners for their future.
The overseas business, so hopefully that.
We can get.
Significant share out of them when they considered.
How do you see partners about their future projects and also on top of the existing clients. We do these days, we do accommodate a lot of visits from quite a number of other customers.
And also on top of the existing client, we do these days, we do accommodate a lot of visits from quite a number of other AI customers, small and media sites these days, particularly to our overseas campus. And we believe the portion would be...
Customers small and medium sized these states, particularly.
Particularly to our overseas campus.
We believe the portion of it will be higher moving forward.
as regard to our future strategy on the computing power service.
Yeah.
As regard to our future strategy the computing power service.
We will focus on collocation only, collocation service only. That is our current plan. And I haven't heard anything further about we're gonna provide the computing powered business to our clients.
We will focus on Colocation or co location service only.
That is our current plan and I haven't heard anything.
Anything further about are we going to provide a computing power business to our clients.
Although we are doing, as everybody knows, we're doing the best job of converting the electric power to the computing power of this.
We are doing as everybody knows we're doing the best job of.
Converting the electric power to computing power business.
but we will not offer the computing powers for now and I believe in the future as well.
Nick Wang: Details in the gap to nine gap reconciliation on EBITDA and net income would be available in our 6K filing or the PEMDICS in our IRPPT. On slide 28, given the highlighted mounting delivery schedule, we continue to incur similar levels of CAPEX during the quarter that recovered existing as the construction projects, as well as some initial investments in potential pipeline projects with good certainty. CAPEX in the second quarter was RMB 1,254.6 million compared with RMB 1,653.9 million in the previous quarter.
But we will not offer.
<unk> empowers.
Now and I believe.
In the near future as well.
Very clear thank you.
Thank you.
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Nick Cicaphalop, question from the line of Yang Liu from Morgan Stanley . Please ask a question, Yang.
Next is a follow up question from the line of young from Morgan Stanley . Please ask your question Yale.
Li Su, but my son is concerned about how much serious he wants to be, and the positive impact of his performance by helping with the journalists this time will only focus on shooting and watching more and more his schedules or comments on this disease.
Yes.
The question is asked for Q&A.
<unk> Macquarie.
Jim joined up.
Thank you Sundar.
Lino a quick one on <unk>.
Nick Wang: On slide 29, our operating cash flow continued to recover and improve following the COVID-19 epidemic in 2022 and the completion of client-system upgrade. Operating cash flow in the second quarter was RMB 1,186.8 million, which is around 145% of our adjusted EBITDA, compared with RMB 693.3 million in the first quarter of 2023. Such improvement of operating cash flow is also in line with such substantial lower value of our account receivables by quarter-end.
Gina.
Pushing towards the pipeline beyond that.
So as you mentioned.
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Jonathan go ahead Tom.
Jonathan.
I will now ask this.
G notion cautious.
I will translate my question. We recently observed that the end customer from the present time will be another data center player and a data center pool. You can see the poor. Also that panel also initiated a new project in Jehovah as well. At the same time, she did also get a sizable new book and a new author from the end customer. So we would love to ask about the achievement dynamic
I will translate my question.
Observe that.
Anchor customers.
While data center play up.
Based on the approval in Singapore.
Nick Wang: Financing cash flow was RMB 259.1 million in the second quarter, with another RMB 1,396.4 million investing cash flow. We ended up with a higher total cash position of RMB 5,915.3 million by quarter-end, and a net debt position of RMB 5,569.3 million. On leverage and coverage ratios remain in the reasonable and healthy range. On slide 30, key leverage ratios do not see much fluctuation quarter over quarter. Neither are key coverage ratios. On slide 31, asset return continued to improve in the second quarter, with an overall utilization ratio of our total in-service capacity at 80%.
<unk> also initiated a new project seemed to hold up well.
At the same havent seen it also got sizable.
New orders from the anchor customer.
I'd like to ask about that.
Got it.
Thanks.
Southeast Asia market.
Thank you.
Thank you, Lu Yang. I think we come back to the issue of...
Thank you Louie I think we've come back to the issue of <unk>.
Whether we want whether we want a smaller shear off the bigger pie or bigger pie out the smaller Bigger shear off the smaller pie
What are we want whenever we want to smaller share of the bigger pie or bigger pie office marsh bigger share of the smaller pie.
But the Southeast Asia market, hopefully our goal is to get both. So essentially, so you know, the Southeast Asia offers a better perspective in terms of all IDC demands than China over the course of next three years. That's our belief.
Also used the Asia market hopefully our goal is to get both so essentially saw.
Southeast Asia, all sorts of better prospective markets in terms of overall IDT demand in China over the course of the next three years, that's our belief.
And we believe that with our competence in the efficiency in terms of delivery and operation and the economy of scale, which sooner rather than later gonna turn it into a huge cost advantage. As well as the credit, the track record, we demonstrate to our clients in China and in our JOHO project.
And we believe that with our competence and the efficiency in terms of delivery and operation and economy of scale, which kind of sooner rather than later and then turn it into a huge cost advantage as well as our the credit.
Nick Wang: When staying in the company defines the pre-tax RIC further rise to 19.3%, compared with 18.7% in the previous quarter, and 17% in the same quarter last year. Finally, based on the company's current and preliminary reviews on the market and operational conditions, it rated 2,023 revenue guidance in the range of R&B, 5,880 to R&B 6,000, 80 million, and adjusted EBITDA guidance in the range of R&B 3,100 to 3,220 million. This reflects the company's preliminary reviews which are subject to change.
The track record, we demonstrate to our clients in China and in our Joe Hall project.
We will get a bigger pie than everybody anticipated in the future.
Look at a bigger part bigger.
Bigger pie.
<unk> anticipated in the future.
So, about, you know, the other reality we have to face is actually from day one, when we had a conversation about our chance in Southeast Asian market, I said, I keep saying that it's open to the competition.
About.
The other reality, we have to face is actually from day, one when we had a conversation about our chance.
Southeast Asia market.
Keith.
I have been keep saying that his opening open field competition. So you need to show all your hands or what you have in the.
So you need to show all your hands, all what you have in your pocket, in terms of all cooling solutions, your supply chain, in power supply chain solution from China all the way to Southeast Asia market, your talent pool, and your capital power, your power knows all these. You've got to actually show much more than you have been doing in China to recline in order to win bigger shares out of this figure.
Pocket in terms of our coding solutions.
Your supply chain entire supply chain solution from China, all the way to the southeast Asia market your talent pool.
Capital power.
Power knows now all these you've got actually so much more than you have been doing in China to a client.
Operator: This concludes our prepared remarks for today. Operator, we are now ready to take questions. Thank you. We will now begin the question and answer session. To ask a question, please press star 11 on your telephone keypad. You wouldn't hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. When asking the question, please state your question in Chinese first, then repeat your question in English for the convenience of everyone in the call. Please ask one question at a time. Please stand by while we compile the Q&A roster once again, the star 11 for questions.
We are bigger bigger shares out of this figure pie.
Okay.
May be, there is a big 2018
Okay <unk>.
Cerro Moro.
Current geopolitical song.
A particular <unk>.
The follow-up question is that do you have any sense on what is the worry-share for the chain data in this anchor customers demand in in reference to these plastic and zinc, they help range the chains and einzige
Some of them.
As a follow up question is that do you have any sense.
What he is a watershed fall.
Cindi tighten those anchor customers demand.
The Asia market.
We're striving to get over 50% of the overall, you know, overall shares.
We're striving to get over 50%.
The auto overall authorized shares.
Yang Liu: Our first question comes from the line of Yang Liu from Morgan Stanley. Please go ahead, Yang. The first question is very powerful.
And we believe with all the solutions, you know, we put on table and all the good performing will put on table. Now we have a fair good chance to get it.
And we believe.
With all the solutions.
Put on table and.
Good performance will put on the table now do we have a fair a good chance to get it.
And overall, objective of the overseas business as a share of our overall portfolio gonna be around 30% probably by the end of the month.
And our overall objective.
Yang Liu: The question I have here is related to the development of the company. This is the support of the AIGC. There are a lot of professional technologies in the company. I would like to listen to the main point of the company. The global customer and the company's service. The development technology and the ability of the company to do so, whether they are willing to do so, or whether they are willing to do so.
The overseas business as a share of our overall portfolio going to be around 30%.
Probably by the end of 2025.
Okay.
Okay. Thank you.
Thank you.
Once again, through us a question, please press the DAL11 on your telephone keypad.
Once again to ask a question. Please press star one one on your telephone keypad.
I am showing no further questions. Thank you very much for all your questions. And now turn to conference factor to company for any closing comments.
I am showing no further questions. Thank you very much for all your questions I'll now turn the conference back to the company for any closing comments.
Yes.
Oh, thank you. I think everybody has been focusing on the chain data and which we highly appreciate it. And also we highly appreciate all the investors and allies of analysts, you know, the friends of your support for the company in the past two or three years since we become the things to IPO.
Hello, Thank you.
I think everybody has.
Being focusing a.
Chimp data, which were highly I appreciate it.
And also how do you I appreciate all the investors and Alex.
Yang Liu: I would translate my question in English. My question is related to the way the patent on the cooling technology supporting the AIGC, the future development of the company. I would like to ask you what is your customer's acceptance? An ankle customer and a global cloud customer's acceptance of such technology in AIGC related to computing. A related question is whether such technology can increase the risk of AIGC of the company.
Analyst.
The French out your support for the company in the past two or three years since we become that since the IPO.
While there is a private evasion process of a company is going on, we can assure you that the management and an entire team will continue to work very hard delivering our decisions.
There is a privatization process of the company is going on well, we can assure you that the management and our entire team will continue to work very hard.
Delivering our business.
sticking to our original mission of converting, efficiently converting electric power to computing power. And again, striving to become the best IDT leader in the Pan-Asia Pacific region.
Sticking to our original mission of converting.
Efficiently converting electric power computing power and again, it's driving to become the best IDT leader.
In the Asia Pacific regions.
Thank you.
Ladies and gentlemen, we conclude our conference for today. Thank you for participating. You may now disconnect your line.
Ladies and gentlemen, we conclude our conference for today. Thank you for slotting.
You may now disconnect your lines.
Nick Wang: Thank you, Mr. Liu Yang. I think the reason why, you know, we think that on our anchor client and the future customer will be very willing to accept our diversified, according solution is simply because we are operated in a structure a diversified geography, especially if you compare our North China campus versus our Southeast Asia, jojo campuses, the weather conditions, humidity conditions, and also temperature and temperature and complete the difference. So you need to have a lot of two, you know, tea two boxes.
Okay.
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Yeah.
Okay.
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Nick Wang: So when the customer, when the different conditions, all the demand, techniques from technical perspective, given the AIGT, more requirements on the air flowing and also cooling requirements, you know, you need to be ready. So therefore we are very confident with all this technology patterns in their house and most importantly with our, the talent pool in house, leading by our CTO, Mr. Zhang, we are very confident that all this liquid cooling patterns and technology and solutions will co-play the cooling solutions will be well accepted and by our customer.
Nick Wang: And actually, as a matter of fact, some of them are going to be applied in our campus in China as well as overseas. In terms of what an actual return, yes, there will be a marginal, I will say, to ROIC improvement, especially if you look at a full-life cycle of the, of this solution application, there are going to be a requirement and more investment, but there are going to be a cost saving later, especially on energy saving part. So overall, I think our study shows that, or ROIC is going to improve marginally.
Nick Wang: Thank you. Right.
Nick Wang: Thank you.
Sarah Wang: Next question comes from the line of Sarah Wang from UBS. Please ask your question, Sarah. Thank you for the opportunity to ask a question. You know, you go and[inaudible] the cash outflow on cash-related stuff. So, on the second half, we're probably going to spend four or six billion, you know, further. I think we think that this potential upside or increased spending will be a good news for everybody. Why is good news?
Sarah Wang: Because this is driven by the progress of some incremental pipeline project, new project, which company is optimistic to obtain in the second half of this year. And these pipeline projects may bring better revenue and EBITDA for future years, not necessarily this year, 2023, but future year, 2024, and 25, BR, you know, the BR, previous estimate. In addition, you know, and a large port, they've been important of this incremental pipeline project. Again, not the project we have disclosed, you know, these projects are actually driven by our overseas business.
Sarah Wang: In other words, overseas project will have a larger than expected shares. And that basically means the increase of the per the unit capital accordingly. So, obviously, you know, the timing of the spending may vary it around late 2023 or start off beginning of 2024. So, part of the 1.3 billion you saw those with privatization documents. And there's more part of them, maybe over 2024 to spend. But on aggregate level, if you combined 2023 and 2024, campus together issues stay the same. So, yeah, that's, hopefully, I'm answering questions. Is it been news, actually? Yes, very clear.
Sarah Wang: Thank you.
Mingran Li: Our next question comes from the line of Ben Ran Lee from CIC, Lisa, your question, Ming Ran.
Mingran Li: I want to ask about more color about the AI-related demands, like what percentage is new capacity you bring this year is AI-related. And beside our end-contestment, even in the clients that's new, AI-demand, you're saying recently. And also, we say from the message, I was decided to buy their own GPUs to start computing infrastructure business. Do you have any plan or strategy about this? Or do you just want to focus on our co-location service because the demand is strong?
Nick Wang: Thank you. Thank you, Mingran. Actually, the client doesn't tell us, you know, when they install the server into our IDC centers and how many of them is AI related. So we can guess, right? But so based on the application and the utilization of the high density cabinets and based on the servers type, they put in our data center, we think that the AI portion, the AI related the servers, probably account for around, you know, 5% of our current overall capacity.
Nick Wang: On an incremental basis, we are still in under some serious discussion with them about some incremental, you know, orders and projects. And I believe going to be a higher portion of them, going to be AI GC related for sure. And also, you probably heard the same thing, you know, as myself, from the market street, that from the street, that's simply one of our anchor customers have the biggest to reserve for inventory of the AI GC related to GPU units or chips or service in China, for both their China business and also, you know, their overseas business.
Nick Wang: So hopefully that we can get a significant share out of them when they consider the IDC partners for their future project. And also, on top of the existing client, we do these days, we do accommodate a lot of visits from quite a number of other AI customers, small and media size these days, particularly to our overseas campus. And we believe the portion will be higher moving forward.
Nick Wang: As regards to our future strategy on the computing power service, we will focus on co-location only, co-location service only. That is our current plan. And I haven't heard anything further about we're going to provide the computing powered business to our clients. Although we are doing, as everybody knows, we're doing the best job of converting the electric power to computing power business. But we will not offer the computing powers. For now, and I believe in the future as well.
Nick Wang: Very clear. Thank you.
Operator: As a reminder to us a question, please press down one on your telephone keypad.
Yang Liu: Next is the full up question from the line of Yang Liu from Morgan Stanley. Please ask your question, Yang.
Yang Liu: [inaudible] I will translate my question and we will introduce ourselves at the end of customer service in the end of the day to sign the play, and it's a good thing to put you in Singapore. Also, the panel also initiated a new project in Juhua as well. At the same time, Chindata also got a sizable newcomer, new author from the end of customer. So we would like to ask about the completion of the event in the Southeast Asian market. Thank you. Thank you, Lu Yang.
Nick Wang: I think we come back to the issue of whether we want whether we want a smaller share of the bigger pie or bigger pie of the smaller, bigger share of the smaller pie. The Southeast Asian market, hopefully our goal is to get both, essentially. So, you know, the Southeast Asia offers a better perspective in terms of all IDC demands than China over the course of next three years. That's our belief. And we believe that with our confidence in the efficiency in terms of delivery and operation and the economy of scale, which kind of sooner or later than turning into a huge cost advantage, as well as our credit, the track record we demonstrate to our clients in China and in our Juhua project. We will get a bigger, bigger pie than everybody anticipated in the future.
Nick Wang: So about, you know, the other reality we have to face is actually from day one, when we had a conversation about our chance in the Southeast Asian market. I said, I keep saying that it's open field competition. So you need to show all your hands or what do you have in your pocket in terms of all coding solutions, you know, your supply chain in power supply chain solution from China all the way to Southeast Asia market, your talent pool.
Nick Wang: And your capital power, your power knows all these, you've got to actually show much more than you have been doing in China through a client in order to win a bigger, bigger shares out of this bigger pie.
Nick Wang: And the follow-up question is that do you have any sense what is the wallet share for the chain data in this anchor customers demand in Southeast Asian market? We're striving to get over 50% of the overall, you know, overall shares. And we believe with all the solutions, you know, we put on table and all the good performance will put on table now that we have a fair good chance to get it, you know, and our overall objective of the overseas business as a share of our overall portfolio, going to be around 30%, by the end of 2025. Thank you.
Operator: Once again, if you ask a question, please press star 11 on your telephone keypad. I am showing you no further questions. Thank you very much for all your questions.
Nick Wang: And now turn to conference back to the company for any closing comments. Oh, thank you. I think everybody has been focusing on Chindata, which we highly appreciated. And also we highly appreciate all the investors and analysts, you know, the friends you are support for the company in the past two or three years since we become the IPO. While there is a privatization process of the company is going on, we can assure you that the management and an entire team will continue to work very hard delivering our business, sticking to our original mission of converting efficiently, converting electric power to computing power. And again, striving to become the best IDT leader in the pan-Asia Pacific regions. Thank you.
Operator: Ladies and gentlemen, we conclude our conference for today.
Operator: Thank you for