Q4 2024 GDS Holdings Ltd Earnings Call
Okay.
Operator: Hello ladies and gentlemen, thank you for standing by for the GDS Holdings Ltd's fourth quarter and full year 2024 earnings conference call. At this time all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded.
Speaker Change: Hello, Ladies and gentlemen, thank you for standing by for the GDS Holdings limited fourth quarter and full year 2024 and conference call.
At this time all participants are in a listen only mode.
Speaker Change: After managements prepared remarks, there will be a question and answer session.
Speaker Change: Today's conference call is being recorded I would now turn the call is that she will host the.
Laura Chen: I will now turn the call over to your host, Miss Laura Chen, Head of Investor Relations for the company.
Laura: <unk> head of Investor Relations for the company. Please go ahead Laura.
Operator: Please go ahead, Laura. Thank you.
Laura Chen: Hello, everyone. Welcome to the fourth quarter and full year 2024 earnings conference call of GDS Holdings Ltd. The company's results were issued via News File Services today and are posted online. A summary presentation, which we'll refer to during this conference call, can be viewed and downloaded from our IR website at investorsgdsservices.com.
Speaker Change: Thank you Hello, everyone welcome to the fourth quarter and full year 2024 earnings conference call of GDS Holdings limited. The company's results were issued their use cloud services today and are posted online a summary presentation, which we'll refer to during this conference call can be built and downloaded from our IR.
Speaker Change: Website at investors GDS services stuff call.
Laura Chen: Leading today's call is Mr William Huang, GDS Founder, Chairman of GDS Holdings Ltd, who will provide an overview of our business strategy and performance. Mr. Dan Newman, GDS CFO, will then review the financial and operating results.
Speaker Change: Leading today's call is well GDS channel.
Speaker Change: We will provide an overview of our business strategy and performance.
Dan Newman: Mr. Dan Newman GDS careful too badly.
Speaker Change: The financial and operating results.
Operator: Before we continue, please note that today's discussion will contain forward-looking statements made under safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the accomplished results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in accomplished prospectus as developed for the U.S. The company does not assume any obligation to update any forward-looking statements except as required under applicable law.
Speaker Change: We continue please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995 forward looking statements.
Speaker Change: Helix risks and uncertainties.
Speaker Change: Such accomplished results may be materially different from the views expressed today.
Speaker Change: Information regarding these and other risks and uncertainties is included in the company's prospectus as filed with the U S. SEC. The company does not assume any obligation to update any forward looking statements, except as required under applicable law.
Operator: Please also note that GDS earnings release and this conference call include discussions of unaudited debt financial information as well as unaudited non-debt financial measures. GDS press release contains a reconciliation of the unaudited non-GAP measures to the unaudited, most directly comparable GAP measures.
Speaker Change: Also note that GDS earnings release, and this conference call include discussions of the audited GAAP financial information.
Speaker Change: And also at Sunset Prudential measures GDS press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.
William Huang: I'll now turn the call over to GDS founder, chairman and CEO, William Huang. Please go ahead, William. Thank you, Laura. Hello, everyone. This is William. Thank you for joining us on today's call.
Speaker Change: I'll now turn the call over to GDS founder Chairman and CEO William Clark. Please go ahead with them.
Speaker Change: Hello, everyone. This is William Thank you for joining us on today's call.
William Huang: The race is on for AI in China. We saw the beginnings of it last year, when cloud and internet companies increased their capital. This led to an initial wave of demand for AI training in remote locations. Now the rate has gone to another level. with demand for AI inferencing in care work market. based on our dialogue with our customers. This type of demand could run into multiples of gigawatts over the next few years.
Speaker Change: The race is all for AI in China.
Speaker Change: We saw the beginnings of eight lots a year when cloud and the Internet companies increased GAAP capex.
Speaker Change: This led to an initial wave of demand for AI screening in remote locations.
Speaker Change: Now the race has gone to another level with demand for AI inferencing in tier one market.
Based on our dialogue with our customers.
Speaker Change: This type of demand because they're buying into multiples of gigawatts over the next few years.
William Huang: Looking at the opportunity for from GDS perspective, it is exciting times to be a data center company again. The opportunity in tier 1 markets pays to our strength. We are by far the best position in terms of land and power to fulfill this kind of demand. and the largest cloud and internet companies in China are all our largest customers.
Speaker Change: Looking at the opportunity for from GDS perspective. It is an exciting time at times to be a data center company again.
Speaker Change: The opportunity in tier one markets plays to our strengths.
Speaker Change: We are by far the best the best positioned in terms of land and power to fulfill this kind of the demand.
Speaker Change: And that the largest crowd in the internet companies in China are all our largest customer.
William Huang: A key fact affecting the timing of customer deployments is the availability of chips. For deployments over the next few quarters, we do not see any significant risk and we are willing to commit to new business. However, for deployments further into the future. We think the right approach for us is to wait and see. The demand supply situations in tier 1 markets continues to improve, and we have the flexibility to decide when to move forward.
Speaker Change: A key factor affecting the timing of customer deployments is availability of chips.
Speaker Change: For deployment over the next few quarters, we do not see any significant risk and we are willing to commit to new business.
Speaker Change: However for deployment further into the future.
Speaker Change: We think the right approach.
Speaker Change: For us is to wait and see.
Speaker Change: The demand supply situations in tier one markets continues to improve and we have the flexibility to decide when to move forward.
William Huang: We just executed our first asset monetization transaction. From a financial perspective, this enables us to address immediate opportunities without deviating from our current path and the strict discipline. As our asset monetization program becomes fully established, we will have flexibility to do more while delivering on our commitment to shareholders.
Speaker Change: We just executed our first asset monetization transaction.
Speaker Change: From a financial perspective, this enable us to address immediately uplift opportunities without deviating from our parents of pets and the strict discipline.
Speaker Change: As our asset monetization program become 40 established we will have frankly ability to do more wireless.
Speaker Change: Delivering on our commitments to shareholders.
William Huang: Several years ago, we laid out a strategy to get GDS back on track with steady growth and a strong financial position. We remain firmly committed to this strategy. We focus on tier 1 markets where we can add most value. we prioritize delivering the backlog. We remain highly selective about new business. Pursuing orders which match our inventory and which have fast-moving schedules. We incur capex when needed with short lead time ahead of our customer moving. We recycle capital through asset monetization, which is repeatable and scalable. And we create additional value through our equity stake in day one, which is now a stand-alone business.
Speaker Change: Several years ago, we lay out our strategy to get the GDS back on track with steady growth and a strong financial position.
Speaker Change: We remain firmly committed to this strategy.
Speaker Change: We focused on tier one markets, where we can add the most value.
Speaker Change: We prioritize priorities altogether is delivering.
Speaker Change: Backlog.
Speaker Change: We remain highly.
Speaker Change: Highly selective.
Speaker Change: About new business pursuing orders, which match, our inventory and which have caused some moving schedule.
Speaker Change: We incurred capex when needed.
Speaker Change: Short lead time ahead of our customer movie.
Speaker Change: We have recycled capital through asset monetization, which is a repeatable and scalable.
Speaker Change: And then we create additional value through our equity stake in day, one which is now a stand alone business.
William Huang: Let's review our progress in implementing this strategy. Our growth moving during 2024 was 79,000 square meters, all organic and all in tailwind markets. This is the highest in our history. The moving rate picked up in 1Q24. and has stayed at a consistently high level into the currency year. The pick-up was due to a combination of backlog, delivery, and new orders was fast moving. As shown on slide 7, we started 2025 with 110,000 square meters of backlog for area in service. We expect to deliver over half of this during the current year. We ended 2024 with a utilization rate of 74%.
Speaker Change: Let's review our progress.
Speaker Change: The implementation teams.
Speaker Change: Our strategy.
Our gross.
Speaker Change: Got more moving during 2024 was at 17 9000 square meters.
Speaker Change: All organic and all in tier one markets. This is the highest in our history.
Speaker Change: The moving rates picked up in <unk> 'twenty 'twenty four.
Speaker Change: And it has stayed at a consistently high level, Inc to the currency yet.
Speaker Change: The pickup was due to do it yet.
Speaker Change: Emanation of backlog delivery and the new orders with faster movie.
Speaker Change: As shown on slide seven.
Speaker Change: We started 2025 with 110000 square meters of backlog for area in service.
Speaker Change: We expect to deliver over half of this during the current figure.
Speaker Change: We ended it we ended at 2024 with a utilization rate of 74%.
William Huang: We expect utilization to increase to a high 70% by end of 2025. Our gross additional area committed during 2024 was 49,000 square meters. similar to the past two years, in line with our strategy. We targeted new business to absorb in inventory.
Speaker Change: We expect utilization to increase to high <unk>.
Speaker Change: 17% by end of 2025.
Speaker Change: Our gross our gross additional area committed during 2024.
Speaker Change: 49000 square meters.
Speaker Change: Similar to the past two years in line with our strategy with.
Speaker Change: We targeted new business to absorb in inventory.
William Huang: A good illustration is the three new order which we want in 4Q24, or related capacity in service, or and Construction. During 1Q25 We won a massive new order with the existing hyperscale customer for around 40,000 m2 or 152 MW. split across two sides in Langfang and Changshu. It is the largest single order in our history in China. This new order requires us to deliver data center within six months. The customer committed to moving fully within the following six months. The whole cycle from obtaining the new order to full utilization is about one year. This is a high-quality AI-driven new business with no chip supply risk.
Speaker Change: Good illustration is the extreme new order, which we won in.
Speaker Change: The <unk> 24 all related.
Speaker Change: Capacity in service.
Speaker Change: And the construction.
Speaker Change: During 125.
We won the massive new order with an existing hyperscale customer.
Speaker Change: Customer for around a 40000 square meters or 152 megawatts.
Speaker Change: Spread across.
Speaker Change: Two sites in long Fong and the council. It is the largest single order in our history in China.
Speaker Change: This new order required us to deliver data center within six months.
Speaker Change: The customer committed to moving fully within the following six months.
Speaker Change: Whole cycle from obtaining the new order to full utilization is about one year.
Speaker Change: This is a high quality of the AI, driven new business with no chip supply risk it a fully satisfied.
William Huang: It fully satisfies all of our criteria for CAPEX with a short lead time, fast moving and long counter tenancy. Furthermore, the sites are existing campuses where we already invested in past years. As a result, we only need to incur the cost to complete and we are able to meet the deadline for rapid delivery. For air influencing in tailwind markets, hyperscale customers typically require sites with at least 15 megawatts of available capacity deliverable within a short period of time. Fortunately, we are very, very well placed in this regard. We have multiple sites suitable for AI inferencing around Beijing, Shanghai, and Shenzhen, Guangzhou.
Speaker Change: All of our criteria for Capex with the short lead time fast moving and the lung counter tenor.
Speaker Change: Yeah.
Speaker Change: Furthermore.
Speaker Change: The sites.
Speaker Change: Existing campuses, where we already invest in past years as a result, we only need to incur the cost to complete and we are able to meet the deadline for rapid delivery.
Speaker Change: Well, yeah infancy in tier one markets hyperscale customers typically require required sites with a lot with the at least 15 megawatts of available capacity deliverable within a short period of time.
Speaker Change: Fortunately, we are very very well pace in this regard.
Speaker Change: We have multiple sites suitable for AI inferencing around a Beijing citizen.
Speaker Change: Beijing, Shanghai Shenzhen Guangzhou.
William Huang: After completing the 152 MW new order, we will still have around 900 MW of developable capacity. As demand continues to grow, there are fewer and fewer sites in Tier 1. Tailwind Markets with the necessary skill and the time to market. This should benefit, this should benefit us.
Speaker Change: After completing that 152 megawatts, new order, we will still have a camp around 900 megawatts of debatable capacity.
Speaker Change: As demand continues continues to growth they are up to feel.
Speaker Change: Fewer sites in tier one.
Speaker Change: Tier one markets with the necessary scale and a time to market.
Speaker Change: This should benefit deals should benefit.
Speaker Change: Yes.
William Huang: Turning to slide 13.
Speaker Change: Turning to slide seven.
Speaker Change: 13.
William Huang: I would like to share some operating updates for day one, which became our equity investing upon closing of its Series B equity rate. In 2024, they will accomplish a historical 340 megawatts of new commitment. They ended 2024 with 467 megawatts of total IT power committed. most of which will be available within the next two years. Daewon's sales pipeline is highly visible and strong.
Speaker Change: I would like to share some operating updates for day, one would you became our equity investees.
Speaker Change: Closing up its series B equity rates.
Speaker Change: In 2020 before they will accomplish that historical 340 megawatts of new commitments.
Speaker Change: <unk> ended 2024.
Speaker Change: 467 megawatts of total power committed.
Speaker Change: Most of which will be.
Speaker Change: Billable within the next two years.
Speaker Change: <unk> top of that pipeline.
Speaker Change: Pipeline is highly visible and a strong gateway is confident of doing over 250 megawatts of new commitments during 2025.
William Huang: Daewon is confident of doing over 250 megawatts of new commitments during 2025 and remains on track to hit 1 gigawatt of total IT power committed in less than 3 years.
Speaker Change: And that remains on track to hit one gigawatts of total power commit commit committed in less than three years.
Daniel Newman: I will now pass on to Dan for financial and operating review. Thank you, William.
Speaker Change: I will now pass onto their four financial and operating review.
Speaker Change: Thank you William.
Daniel Newman: A1 Trade Centers, previously known as GDS International or GDSI Completed and closed its Series B equity raise on December 31st, 2024. At closing, GDS' equity interest in Day One was diluted from 52.7% to 35.6%. Accordingly, GDS deconsolidated Day One as a subsidiary and recognized Day One as an equity investee. And the consolidated financial statements for the quarter and year ended December 31st, 2024. Day One's operational results and cash flows have been excluded from the company's financial results from continuing operation. and have been separately itemized under discontinued operation. Retrospective adjustments to the historical statement of operations and cash flows have also been made to provide a consistent basis of comparison for the financial results.
Speaker Change: So he wants trade centers.
Speaker Change: Obviously known as GDS International OTT DSI.
Speaker Change: <unk> closed its series B equity raise on December 31, 2024.
Speaker Change: At closing.
GDS is equity interests in day one.
Speaker Change: Diluted from 52, 7% to 35, 6%.
Speaker Change: Accordingly, GDS deconsolidation day, one as a subsidiary and recognized stay one equity investing.
Speaker Change: And the consolidated financial statements for the quarter and year ended December 31 2024.
Speaker Change: <unk> operational results and cash flows.
Speaker Change: Excluded from the company's financial results from continuing operations.
Speaker Change: I've have been separately itemized under discontinued operations.
Speaker Change: Retrospective adjustments to the historical statement of operations and cash flows have also been made to provide a consistent basis of comparison for the financial results.
Daniel Newman: Furthermore, retrospective adjustments were also made to categorize day one's assets and liabilities as assets and liabilities of discontinued operations on balance sheets for the comparison.
Speaker Change: Furthermore, retrospective adjustments were also made to categorize day one's assets and liabilities.
Speaker Change: Assets and liabilities of discontinued operations on balance sheets for the comparative periods.
Daniel Newman: From the first quarter of 2025 onwards. Day 1 will appear in our financials as a single line in our income statement and a single line in our balance sheet. However, in our earnings presentations going forward, we intend to continue disclosing key financial and operating information for Day 1, similar to what we disclosed when Day 1 was a segment of GDS. so that investors can keep track of Day One's performance and the value of our equity investments.
Speaker Change: From the first quarter of 2025 onwards.
Speaker Change: Day, one will appear in our financials as a single line in our income statement in a single line in our balance sheet.
Speaker Change: However.
Speaker Change: Our earnings presentations going forward.
Speaker Change: We intend to continue disclosing key financial and operating information today, one similar to what we disclosed when day one was the segment with GDS.
Speaker Change: So that investors can keep track of day one's performance and the value of our equity investments.
Daniel Newman: Although we will no longer present GDS and Day One on a consolidated basis, We did provide guidance on a consolidated basis for 2024. I would highlight that our pro forma consolidated adjusted EBITDA for 2024 was above the top end of our guidance range.
Speaker Change: Although we will no longer present GDS in day, one on a consolidated basis, we did provide guidance on a consolidated basis for 2024.
Speaker Change: I would highlight that our pro forma consolidated adjusted EBITDA for 2024 was above the top end of our guidance range.
Daniel Newman: From now on, I'm talking about GDS continuum operation. starting on slide 17. In 4Q24, revenue increased by 9.1% and adjusted EBITDA increased by 13.9% year-on-year. In 2024, revenue increased by 5.5% and adjusted EBITDA increased by 3% year-on-year. If we normalize the numbers by excluding one-time items in 2023, and reversing the BO projects transfer in 2024. Our revenue and adjusted EBITDA would have grown by 7.9% and 7.7% respectively. MSR per square meter declined 2.3% in 4Q24 compared with 4Q23, in line with our expectations. Looking forward, we expect MSR to decline slightly over the next year. and we assume that power towers remain at current level.
Speaker Change: From now on I'm talking about GDS continuing operations.
Speaker Change: Starting on slide 17.
Speaker Change: And <unk> 24 revenue increased by nine 1% and.
Speaker Change: And adjusted EBITDA increased by 13, 9% year on year.
Speaker Change: In 2024 revenue increased by five 5%.
Speaker Change: Adjusted EBITA increased by 3% year on year.
Speaker Change: If we normalize the numbers by excluding onetime items in 2023.
Speaker Change: And reversing the beer projects transfer in 2024.
Speaker Change: Our revenue and adjusted EBITDA would have grown by seven 9% and seven 7% respectfully respectively.
Speaker Change: MSR per square meter declined two 3% and <unk> 24, compared with <unk> 23 in line with our expectations.
Speaker Change: Looking forward, we expect MSR to decline slightly over the next year.
Speaker Change: And we assume that power tariffs remain at current levels.
Daniel Newman: Adjusted EBITDA margin for 2024 was 47.2%. compared with 48.4% in 2023 or compared with 47.8% in 2023, excluding the one-time item. This implies that on a normalized basis, EBITDA margins were flat. For 2024, our CapEx totaled 3 billion RMB in line with our revised guidance. Our base case CAPEX for 2025 was 2.5 billion RMB. However, we will incur an additional 2.3 billion RMB. as the cost to complete and deliver the 152 MW new order. Offsetting this increase, we expect to receive 500 million RMB first installment of cash proceeds from the ABS transaction.
Speaker Change: Adjusted EBITDA margin for 2024.
Speaker Change: 47, 2%.
Speaker Change: Compared with 48, 4% in 2023.
Speaker Change: Compared with 47, 8% in 2023, excluding the one time items. This implies that on a normalized basis EBITDA margins were flat.
Speaker Change: For 2024 hour Capex totaled 3 billion RMB in line with our revised guidance.
Speaker Change: Sure.
Speaker Change: Our base case Capex for 2025 was $2 5 billion RMB.
Speaker Change: However, we will incur an additional $2 3 billion RMB.
Speaker Change: As the cost to complete and deliver the 152 megawatts new order.
Speaker Change: Offsetting this increase we expect to receive 500 million RMB first installment of cash proceeds from the ABS transaction.
Daniel Newman: In sum, we are giving guidance for around 4.3 billion of CAPEX in 2025. Please note that this does not take account of the balance of proceeds from the ABS, further mega new orders or the proceeds of further asset monetization transactions in the current year. For the full year of 2024, our cash flow before financing is positive 379 million RMB. Once again, this is in line with our financial targets. In 2025, with additional CAPEX for the for the 152 megawatt new order Cash flow before financing will be negative. However, if we factor in debt deconsolidation... and the Deferred Cash Proceeds from the ABS transaction.
Speaker Change: In sum, we are giving guidance to around $4 3 billion of Capex in 2025.
Speaker Change: Please note that.
Speaker Change: This does not take account of the balance of the proceeds from the ABS further mega new orders or the proceeds so further asset monetization transactions in the current year.
Speaker Change: Yeah.
Speaker Change: For the full year of 2024, our cash flow before financing is positive 379 million RMB.
Speaker Change: Once again this is in line with our financial targets.
Speaker Change: In 2025 with additional Capex for the for the 152 megawatt new order.
Speaker Change: Cash flow before financing will be negative.
Speaker Change: If we factor in debt deconsolidation and the deferred cash proceeds from the ABS transaction, we would still see no increase in our net debt I'll come back to this point in a minute.
Daniel Newman: we would still see no increase in our net debt. I'll come back to this point in a minute.
Daniel Newman: As shown on slide 24, at year-end 2024, the cash balance was 7.9 billion RMB and the net debt for last quarter annualised adjusted EBITDA multiple was 6.8 times.
Speaker Change: As shown on slide 24.
Speaker Change: In 2024 cash balance was $7 9 billion RMB and the net debt to last quarter annualized adjusted EBITDA multiple was six eight times.
Daniel Newman: Turning to slide 26.
Speaker Change: Turning to slide 26.
Daniel Newman: We recently announced our first asset monetization transaction. This involves selling 100% of the equity of certain data center project companies. to an SPV managed by a major Chinese securities company. with back-to-back issuance of ABS. For the avoidance of doubt, the ABS represents the equity of these projects and it is not a liability of GDS. The ABS is 70% subscribed by top-tier institutional investors in China, led by China Life. while GDS subscribes for the remaining 30% and retains the rights for ongoing operation of the underlying data. The ABS will be listed on the Shanghai Stock Exchange as a standardized security product.
Speaker Change: We recently announced our first asset monetization transaction.
Speaker Change: This involves selling 100% of the equity of certain data Center project companies.
Speaker Change: Two an SPV managed by a major Chinese Securities Company.
Speaker Change: With back to back issuance of ABS.
Speaker Change: For the avoidance of doubt the ABS represents the equity of these projects and it is not a liability of GDS.
Speaker Change: The ABS is 70% subscribed by top tier institutional investors in China led by China life.
Speaker Change: While GDS subscribed for the remaining 30% and retains the rights for ongoing operation of the underlying data centers.
Speaker Change: The avs will be listed on the Shanghai stock exchange as <unk>.
Speaker Change: A standardized security product.
Daniel Newman: The total enterprise value or EV for the transaction is up to approximately 2.9 billion RMB. applying an EB to EBITDA of around 13 times. The total equity consideration is up to approximately 1.7 billion RMB. or 1.2 billion RMB netted with a 30% reinvestment by GDS in the ABS. The upfront cash proceeds are around 500 million RMB and the deferred net cash proceeds are around 700 million RMB. The reason why there are deferred proceeds is because the underlying data centers are still ramping up. Upon closing, we will deconsolidate existing debt of around 1.2 billion RMB.
Speaker Change: The total enterprise value or EV for the transaction is up to approximately $2 9 billion RMB.
Speaker Change: Implying an EV to EBITDA around 13 times.
Speaker Change: The total equity consideration is up to approximately $1 7 billion RMB.
Speaker Change: Or $1 2 billion RMB.
Speaker Change: It was a 30% reinvestment by GDS and the Aps.
Speaker Change: The upfront cash proceeds around 500 million RMB and the deferred net cash proceeds are around 700 million RMB.
Speaker Change: The reason why there are deferred proceeds is because the underlying data centers are still ramping up.
Speaker Change: Upon closing, we will de consolidate existing debt of around $1 2 billion RMB.
Daniel Newman: We are making good progress with our public REIT or C-REIT application. It is moving forward faster than expected. C-REITs are not permitted to invest in the equity of unlisted companies. However, they can invest through ABS. As shown on slide 28, with the ABS transaction expected to close in the next couple of months. We can cover our 2025 CapEx at 4.3 billion RMB without increasing our net deficit. We expect our net debt to last quarter annualized adjusted EBITDA multiple to come down to just over six times at the end of the current year. With the recovery in our share price, our 2030 CB is now deeply in the money.
Speaker Change: We are making good progress with our public REIT or theory application. It is moving forward faster than expected.
Speaker Change: Salaries are not committed to invest in the equity of unlisted companies.
Speaker Change: However, they can invest through ABS.
Speaker Change: As shown on slide 28, with the ABS transaction expected to close in the next couple of months.
Speaker Change: We can cover our 2000 2025, capex at $4 3 billion RMB without increasing our net debt.
Speaker Change: We expect our net debt to last quarter annualized adjusted EBITDA multiple to come down to just over six times at the end of the current year.
Speaker Change: With the recovery in our share price now 20, <unk> CB is now deeply in the money.
Daniel Newman: If we treat this CB as converted, our year-end net debt to last quarter annualized adjusted EBITDA multiple will be around 5.5%.
Speaker Change: If we treat this CB as converted.
Speaker Change: At year end net debt to last quarter annualized adjusted EBITDA multiple will be around five five times.
Daniel Newman: Turning to slide 29. For the full year of 2025. We expect our total revenues to be between $11.29 billion and $11.33 billion. to 11.59 billion RMB. applying a year-on-year increase of between approximately 9.4% and adjusted EBITDA to be between 5.19 and 5.39 billion RMB, implying a year-on-year increase. of between approx 6.4% In addition, as I already mentioned, we expect CapEx to be around 4.3 billion RMB.
Speaker Change: Turning to slide 29.
Speaker Change: For the full year of 2025.
Speaker Change: We expect our total revenues to be between 11 two nine.
Speaker Change: To 11, five 9 billion RMB.
Speaker Change: Implying a year on year increase of between approximately nine 4% to 12, 3%.
Speaker Change: And adjusted EBITDA to be between $5, one nine and $5 three 9 billion RMB.
Speaker Change: Implying a year on year increase.
Speaker Change: Between them.
Speaker Change: Six 4% to 10, 5%.
Speaker Change: In addition, as I already mentioned, we expect capex to be around $4 3 billion RMB.
Speaker Change: Yes.
Daniel Newman: On slide 30, we look at our guidance a few different ways. Our official guidance takes into account deconsolidation of the data center projects underlying the ABS. on a normalized basis. If we assume the ABS did not happen... our adjusted EBITDA growth for 2025 at the midpoint would have been around 10.7%. This is consistent with the objective we set of getting back to double-digit growth. Alternatively, if we take our official guidance... and then add on the gain on the sale of the data center project. The adjusted EBITDA growth for 2025 at the midpoint is around 16.7%.
Speaker Change: On slide 30, we look at our guidance a few different ways.
Speaker Change: Our official guidance takes into account deconsolidation of the data center projects underlying the ABS.
Speaker Change: On a normalized basis.
Speaker Change: If we assume the avs did not happen.
Speaker Change: Our adjusted EBITDA growth for 2025 at the midpoint would have been around 10, 7%.
Speaker Change: This is consistent with the objectives, we set of getting back to double digit growth.
Speaker Change: Alternatively, if we take our official guidance.
Speaker Change: And then add on the gain on the sale of the data center projects.
Speaker Change: The adjusted EBITDA growth for 2025 at the midpoint is around 16, 7%.
Daniel Newman: Lastly, the additional capex which we will incur for the 152 megawatt new order in 2025 will lead to higher growth in 2026. Our current and very preliminary view is that adjusted EBITDA growth could be in the low teens for 2026 before taking out further mega new orders or asset monetization.
Speaker Change: Lastly, the additional Capex, which we will incur for the 152 megawatt new order and.
Speaker Change: In 2025.
Speaker Change: <unk> lead to higher growth in 2026.
Speaker Change: Our current and very preliminary view is that adjusted EBITDA growth could be in the low teens for 2026 before taking out a further mega new orders or asset monetization.
Daniel Newman: Finishing on slide 31, we're not providing guidance to day one.
Speaker Change: Finishing on slide 31, we're not providing guidance today one hello.
Daniel Newman: However, we note that day one ended 2024 with run rate adjusted EBITDA of around 60 million US dollars. Based on the expected ramp-up, this will increase by multiples over the next two years.
Speaker Change: We know that day, one and 2024 with run rate adjusted EBITDA of around 60 million U S dollars.
Speaker Change: Based on the expected ramp up this will.
Speaker Change: We will increase by multiples over the next two years.
Operator: We'd now like to open the call to questions. Thank you. If you wish to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. For the benefit of all participants on today's call, please limit yourself to one question. If you have more questions, please re-enter the queue. Please stand by while we compile the Q&A roster.
Speaker Change: We'd now like to open the call to questions operator.
Speaker Change: Thank you if you wish to ask a question you will need to press star one and one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one and one again.
Speaker Change: For the benefit of all participants on today's call. Please limit yourself to one question. If you have more questions. Please re enter the queue.
Speaker Change: Please standby, while we can pilot the Q&A roster.
Speaker Change: Okay.
Operator: We will take our first question.
Speaker Change: We will take our first question.
Yang Liu: And your first question comes from the line of Yang Liu from Morgan Stanley. Please go ahead, your line is open. Thank you for the opportunity to ask questions.
Speaker Change: And your first question comes from the line of young Li from Morgan Stanley. Please go ahead. Your line is open.
Young Li: Thank you for the opportunity to ask questions.
William Huang: I would like to have some visibility in terms of your plan to spin off day one and let it go public. Could management update us in terms of the current plan and schedule? Yeah, that is my question. Thank you, Yang Liu.
Speaker Change: How would you like to have some visibility in term of your plan to.
Speaker Change: Speaking of Daiwa and let it go public.
Speaker Change: Can management update us in terms of the current plan and.
Speaker Change: Yeah on the schedule.
Speaker Change: Yeah, that's it for my questions. Thank you.
William Huang: I think, yeah, I think last quarter, some investors asked the same question, but we don't have a clear view, right? Now, I would like to say, we do have the plan. We have the IPO plan, it's more visible. And we plan to list the company within 18 months. So I think this is achievable and we are very confident based on the current international business. Day One's business grows so fast and we are very confident it will be a very successful IPO in the next 18 months and bring more high value for our current shareholder. Thank you.
Speaker Change: I think yes, I think last quarter.
Speaker Change: Some investors ask the same question, but if we don't have to clear for you right now I would like to say, we do have the plan we have.
Speaker Change: The IPO <unk> more visible.
Speaker Change: And we plan to.
Speaker Change: This is a company within 18 months.
Speaker Change: So I think this is achievable and we're very confident based on the current international business Dave.
Speaker Change: <unk> business grow so fast and we're very confident it will be a very successful IPO.
Speaker Change: Next 18 months and bring.
Speaker Change: More high value for our current shareholders.
Operator: May I follow up in terms of the C-REITs progress that Dan just mentioned? You see faster than expected growth, progress here. What is the status now? Is it under NDRC or under CSRC or stock exchange? And should we expect it to come out in the next one or two or three quarters? What's your expectation now?
Speaker Change: Thank you may I follow up or you can come off the.
Speaker Change: Serious progress Dan just mentioned.
Speaker Change: You'll see faster than expected growth progress.
Speaker Change: Our progress here.
Speaker Change: What is the status now.
Speaker Change: N D. R C on the CSR C. All stock exchange and then should we expect it to come out in the next one two or three quarters or what's your expectation now thank you.
William Huang: Thank you. Yeah, I think, you know, I think we say we made significant progress, but we cannot disclose. We don't allow them to disclose so far, right? So I think maybe once we get allowed to disclose, we will announce this progress update immediately. And I think I remember we last quarter when we talk about the seed rates progress, we aim to the end of this year. But I think the progress may be four or six months ahead than what we expect.
Andrew: Yeah, I think Andrew.
Speaker Change: <unk>.
Speaker Change: We say, we made significant progress, but we cannot disclose.
Speaker Change: We do a lot of to disclose so far right. So I think.
Speaker Change: Yeah.
Speaker Change: Once we get it.
Speaker Change: Allowed us to.
Speaker Change: Disclose we will announce this progress update.
Speaker Change: Immediately and I think.
Speaker Change: I remember.
Speaker Change: Last quarter, when we talk about the secrets progress we aim to the edge.
Speaker Change: And of that this year, but I think.
Speaker Change: Progress maybe.
Speaker Change: For six months ahead downwards.
Speaker Change: Specs.
Operator: Thank you.
Speaker Change: Thank you.
Operator: We will take our next question.
Speaker Change: Thank you.
Speaker Change: We will take our next question.
Sarah Wang: Your next question comes from the line of Sarah Wang from UBS. Please go ahead, your line is open. Thank you for the opportunity to ask questions.
Speaker Change: Your next question comes from the line of Sara Wang from UBS. Please go ahead. Your line is open.
Sara Wang: Thank you for the opportunity to ask questions I have two questions mainly on the China business. So first of all May I ask what are the current capex is based on existing orders on hand.
William Huang: I have two questions, mainly on the China So first of all, may I ask whether the current CAPAX is based on existing orders on hand? As Benjamin just mentioned, that includes the more than 150 MW order win in first quarter. How shall we think about new order wins throughout 2025?
Ron: As Ron just mentioned that include more than 150 megawatts auto in first quarter and.
Ron: How shall we think about new auto wins throughout 2020 by.
William Huang: The second question is regarding the existing vacant capacities. William just mentioned the AI inference demand from hyperscalers now. They require more than 50 megabytes project size. The existing capacity utilization ramp-up is mainly driven by non-AI demand.
Ron: Second question is on.
Ron: Regarding the existing vacant capacities are William just mentioned the AI inference demand from hydro scale, there's now.
Ron: More than 50 megawatts project site.
Ron: India existing capacity utilization around harvest, mainly driven by now AI demand. Thank you.
William Huang: Thank you. Yeah, the first question is, I think the yeah, this is the first quarter we're we have won the deal, which we announced, right. But of course, I think we see a lot of popularity. But as I just mentioned, we are we will wait and see what what's the chip supply situation, right? This is the key driver to drive the AI deployment in China data center. So I think the there's something not not very clear so far about in terms of the chip supply. Everybody know that, right? So we are very cautious on that.
Speaker Change: Yeah on the first question is I think this is the first quarter, where we had.
Speaker Change: The deal, which we announced it right but of course, I think we see a lot of pipeline.
Speaker Change: As I just mentioned.
Speaker Change: We will wait and see.
What's the chip supply.
Speaker Change: Situations like this is the key driver to drive that.
Speaker Change: The AI deployment in China data Center.
Speaker Change: So I think there is a something that's not very clear so far.
Speaker Change: About in terms of chipset surprise, everybody know that right. So we are very cautious on that we are watching this.
William Huang: We are watching this situation very, very closely. So this is the key. let's say, criteria to let us decided go or ungo for some deal. So I think number one, the demand from the all the hyperscalers is very strong. This is everybody can see from the all the CAPEX guidance. This is for sure. But second, this is this trend, this demand will maintain, not just today and this year. It will maintain three and five years. So this is we are very super confident for the current year's demand and the next few year's demand. But we are more patient because of some potential supply uncertainty chips.
Speaker Change: Uh huh.
Speaker Change: Situation very very closely so this is the key.
Speaker Change: Yes.
Speaker Change: Let's say criteria should lead us.
Speaker Change: Decided go and go for some deal so I think number one the demand from the all the Hyperscale is very strong this as everybody can see from the audience.
Speaker Change: Our Capex guidance. This is for sure but secondly, this is that this trend. This demand we're maintain not just today and this year. It will maintain three and five years. So we are very super confident for the.
Speaker Change: Currency as demand in the next few years demand, but we are more patient because of December.
Speaker Change: As potential.
William Huang: So we are very, very cautious to monitor all the supply chain changements in the future. And then we can decide. On the other hand, we are ready to do anything, anytime, at any order, if we wish. So we are ready for that.
Speaker Change: Supply.
Speaker Change: Uncertainty chipset. So we are very very cautious to monitor the or the supply chain changes in the future and then we can decide on other hand, we are ready to do anything any time any order if we wish so we're ready for that.
Speaker Change: So jess.
William Huang: Our current state strategy is wait and see, and very selective to choose the new order. This is the first question. The second question is, I think, of course, in the AI world, the first wave of all investing in AI training. Now, because the deep sea It has triggered all the China inference. coming more early than everyone, everybody expects. So they bring deep-seek. We love deep-seek. It brings the order, inferencing. coming more early. It definitely fit our results where we located. So I think the The inference requirement is totally different than the training requirement. Number one, it should stay close to the traditional cloud.
Speaker Change: Our current state of strategy is wait and see and then.
Speaker Change: Very selectively to choose.
Speaker Change: It did it did new order.
Speaker Change: Is that fair.
Speaker Change: The question. The second question is I think.
Speaker Change: Of course, the in the AI World, the first wave or investing at AIG training now.
Speaker Change: The deep seek.
Yes.
Speaker Change: Triggered or the China inference coming.
Speaker Change: <unk> be more early Dan.
Speaker Change: Everyone everybody expects so they bring deep seek would love deep deep seek.
Speaker Change: It's bringing the order.
Speaker Change: Inferencing com.
Speaker Change: Coming more early <unk> definitely.
Speaker Change: Fifth our resolve.
Speaker Change: Results were weak.
Speaker Change: Hello.
Speaker Change: Where we located so I think.
Speaker Change: Inference requirement.
Speaker Change: Different totally different than the training requirement.
Speaker Change: And it should stay at close the crowd tradition of Carl took.
William Huang: to collaborate to support an enterprise. Number two, it will lead more new applications. come to more early. And this is also required a very, very short latency. So this is all fits our resource, which we are located in. So we can see in the next wave, the current wave, the coming wave is the inference is a huge benefit, good, good, a positive for GDS resource what we have.
Speaker Change: So car a breakthrough support.
Speaker Change: Enterprise.
Speaker Change: Number two it will lead to more new application.
Speaker Change: Come to more early and this is also.
Speaker Change: Quite very very short latency. So this is all fit our resource which we are located so we can see in the next wave. The current wave coming wave is the inference is a huge benefit.
Speaker Change: A positive for GDS.
Speaker Change: What we have.
Operator: That is very clear.
Operator: Thank you.
Speaker Change: Not exactly thank you.
Speaker Change: Okay.
Operator: We will take our next question.
Thank you.
Speaker Change: We will take our next question.
Frank Louthan: Your next question comes from the line of Frank Louthan from Raymond James & Associates. Please go ahead, your line is open. Great. Thank you.
Speaker Change: Your next question comes from the line of Frank Louthan from Raymond James and Associates. Please go ahead. Your line is open.
Frank Louthan: Great. Thank you can you characterize the types of customers and workloads that youre getting so what percentage that is AI versus more traditional cloud.
William Huang: Can you characterize the types of customers and workloads that you're getting? So, what percentage of that is AI versus more traditional cloud enterprise type business that you're seeing come in China today? And what is the current book to bill rate, meaning how long is it taking you when you sign a contract, when you're fully billing at the current rate look like today? Yeah, very currently, I think the workload in that tier one market, which we are, we are seeing, we have seen is mainly driven by the input. Not training, right? Training, as I just mentioned, it's happening in the last two years.
Frank Louthan: Cloud enterprise type type business that you are seeing come in.
Frank Louthan: In China today, and what is the current book to Bill rate, meaning how long are you taking if when you sign a contract when you're you're fully billing at the contracted at the contracted terms historically that was fairly lengthy what does that current rate look like today.
Frank Louthan: Yes.
Frank Louthan: Currently I think the workflow in the tier one market, which we are we are seeing.
Frank Louthan: We have seen is.
Frank Louthan: Mainly driven by the increase now.
Speaker Change: Cheney right Sina and Weibo as the IHS mentioned, it's happening in the last two years. So it's not in our strategy. So we are focused on the tier one market our resource or in the tier one market is inline with our resource business strategy as well so I think.
William Huang: So it's not in our strategy. So we are focused on the Tier 1 market, our resource. Or in the Tier 1 market, it's in line with our resource business strategy as well. So I think we are very clear that currently in Tier 1 market, demand mainly driven by the AI inference. And of course, in the meanwhile, it's also leading traditional cloud deployment more faster than before. Yeah, this is what we see, yeah. This is number one. Number two. Yeah, just I just mentioned that we choose our criteria is that if we We use the current, our capacity and the CapEx data center under construction to fit.
Speaker Change: What do we have very clear the currently in tier one market demand, mainly driven by the AI inference and of course in a Meanwhile, its also needed a tradition of cloud deployment more faster than before yes. This is what we see yes, there's number one.
Speaker Change: Number two.
Speaker Change: Uh huh.
Speaker Change: Yes.
Speaker Change: I just mentioned that we choose our criteria is that.
Speaker Change: If we.
Speaker Change: We use the current our capacity and.
Speaker Change: Capex Capex in <unk>.
Speaker Change: Capacity in the data center.
Speaker Change: And the construction to fit.
William Huang: our customer demand, shortened demand. I think this is the time from the obtained order to fully utilize is 12 months. It's 12 months. It's much better than previous last couple of years order. Typically last last couple of years, typically two years, even longer, right? Now it's We, let's say, improved the lead time for us. Are those lead times contractually obligated or is that just how quickly the customers want to move? Yes, absolutely. Yeah, yeah, absolutely. And as I mentioned, the deal which we select, the contract length is much longer than before. Based on our current position, we are sitting in a very good position to negotiate new terms compared with the last couple of years.
Speaker Change: Our customer demand.
Speaker Change: Short term demand I think this is lead times from the op tender.
Speaker Change: Order to fully utilize is 12 months is 12 months, it's much better than previous lots of couple of years order typically lost lots of couple of years typically two years, even longer right now.
Ed: It's Ed.
Speaker Change: Yes.
Speaker Change: We are let's say.
Improved.
Speaker Change: The lead time for us yes.
Speaker Change: Are those lead times contractually obligated or is that just how quickly the customer yes, absolutely yeah, yeah, absolutely and as I mentioned that the deal, which we selected that.
Speaker Change: The couch it.
Speaker Change: Lance is much longer than before.
Speaker Change: Based on our current position where we are.
Speaker Change: Sit in a very good position to negotiate new terms compared with the last couple of years.
William Huang: We are in a good position.
Speaker Change: Well positioned.
Operator: Okay, great. Thank you very much. Thank you.
Speaker Change: Okay, great. Thank you very much.
Speaker Change: Okay.
Operator: We will take our next question.
Speaker Change: Thank you.
Speaker Change: We will take our next question.
Timothy Zhou: Your next question comes from the line of Timothy Zhou from Goldman Sachs. Please go ahead, your line is open. Great, thank you very much for taking my question. I think the first question is regarding the supply and demand dynamic. GDS Holdings Ltd.
Speaker Change: Your next question comes from the line of Timothy <unk> from Goldman Sachs. Please go ahead. Your line is open.
Speaker Change: Okay.
Timothy: Alright. Thank you Mike for taking my question I think the first question is regarding the supply and demand dynamics that you're seeing the tier one markets.
Speaker Change: As you mentioned that I think by end of this year I think the utilization rate of <unk>.
William Huang: We are approaching high 70s, just wondering if you have any sense on the industry-wide utilization rate, and also how do you think about the pricing environment in the T-Mobile Secondly, regarding Day One, I think you mentioned that... see around 250 megawatts. Okay, the number one question in China, I think the Q1 market just started. Yeah, as I said, they did order AI giant, they just give the guidance, official guidance. start from this year, right? Last couple of years, it's mainly driven by the training. This year, the guidance, of course, it's that the demand in the next three years, the demand will be.
Speaker Change: I think approaching the high Seventy's I was wondering if you have any sense on the industry wide utilization rate and also how do we think about the pricing environment in the tier one cities.
Speaker Change: And secondly is regarding let's say one I think you mentioned that you see around 250 megawatts new commitment for day, one and this year. Just wondering if you can provide some color on the on the orders or the demand and what kind of what type of customers that you are seeing that contributing this.
Speaker Change: New commitment and what are the underlying demand.
Speaker Change: And if there is any of that car risks regarding cheap or an ability in this region. Thank you.
Speaker Change: Okay.
Speaker Change: The number one question in China I think.
Speaker Change: Tier one market just a start.
Speaker Change: Yes, as I said did order.
Speaker Change: Giant Dave just to give the guidance official guidance stock comp. This year right last a couple of years is it mainly driven by the training this year the guidance.
Ed: Of course, it's Ed.
Ed: The demand in the next three years the demand will be.
William Huang: shift from pure training to training In the past, in the tier 1 market, even in the tier 1 market, the supply and the demand balance not balanced yet. It's a start.
Ed: Shifting from the trainee pure trading to Cheney.
Ed: Two.
Ed: Inferencing. So this is as I said this is best that would benefit us, but it now, but it's a situation things lots of.
Ed: Lastly in the in the past in the tier one market you mean, the tier one market.
Ed: The supply and demand balance not not not balanced yet.
Ed: It's a start.
William Huang: From my present view, I would like to say, after 6 or 12 months... This will rebalance and the demand and supply maybe after 12 months will turn around. So this is my view and the current in tier 1 market. There's a lot of the individual data center player, they used to have a lot of resource, but Most of them are very fragmented. So not fit current AI demand. On the other hand, but there's still a few individual player that still have the large scale resource. around the tier one market. But I think that given the time, I think the this is a this is a will definitely will digest for the AI demand, but Our, our strategy is that very, very selectively to choose.
Speaker Change: From my personal view I would like to say after six or 12 months.
Speaker Change: Definitely we rebalance and it will the demand and the.
Speaker Change: Supplier, maybe after 12 months with turnaround. So this is my view and the currency in tier one market.
Speaker Change: There is a lot of.
Speaker Change: Individuals datacenter prayer, they used to have a lot of resource, but most of them are.
Speaker Change: Fragments.
Speaker Change: So not a fit current.
Speaker Change: AI demands on other hand, it but at the end are still a few individuals prayer you still have the largest scale.
Speaker Change: Resource.
Speaker Change: Around the tier one market, but I think that given the time I think it.
Speaker Change: This is the division that will definitely we're digesting that.
Speaker Change: Demand, but I'll.
Speaker Change: Our our strategy is that very very selectively to choose it.
William Huang: Pursue the Order and the best order, the best deal for us is to fit our criteria, this is number one. Number two, so I think we another waiting for another way to see is we were willing to see the price. getting improved. If that's the case, I think it's a good market. It's turned out to be a good market and a healthy market. This is more fit for us. The Are they one, right? What kind of customers?
Speaker Change: Pursuit of order.
Speaker Change: The best order the best deal for assets that fit our criteria. This.
Speaker Change: This is number one number two so I think we another another waiting for another week to see is that we.
Speaker Change: We are willing to see the price.
Speaker Change: Getting improve.
Speaker Change: If that's the case I think it said, it's good market is cannot turnaround to the good market and a healthy market.
Speaker Change: It is more fit for us.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: David.
Speaker Change: Our day one right.
Speaker Change: 70%.
Speaker Change: Yes.
Speaker Change: The current customers.
William Huang: In terms of the day one customer, I think number one, the new order is from a very, very different cloud and video company. So I think it's from different country, different application, different workload. So very diversified in the last year's order, which we got from the international market. So this is number one.
Speaker Change: Oh, okay.
Speaker Change: <unk> day one.
Speaker Change: Customer I think the.
Speaker Change: Number one new order is from there are very very.
Speaker Change: Different.
Speaker Change: Crawl and in video companies. So I think it is.
Speaker Change: From different countries different applications different workflow, so very diversified in the last last year's order, which we.
Speaker Change: Got from the international market. So it is the number one number two.
William Huang: I think that in general in Southeast Asia, the main deployment is not AI, it's high performance GPU and the cloud. So the main workload for whatever Chinese customer or U.S. customer is cloud growth and also the video application, internet. A high performance CPU, sorry, high performance CPU, not a GPU in terms in the whole market percentage still a small number, right? So I think the new chips policy will not impact the whole Southeast Asia demand profile. Thank you.
Speaker Change: I think the.
Speaker Change: In general in Southeast Asia, the mains of deployment is not AI.
Speaker Change: High performance GPU and the crop so workflow for from the.
Speaker Change: Whatever Chinese customer or U S customer is comp growth and also the video application Internet.
Speaker Change: Yes.
Speaker Change: Let's see I performance, CPU, sorry, Hi, Pavan CPU <unk>.
Speaker Change: In terms of in the whole market percentages skill.
Speaker Change: A small number right. So I think the new chips policy were not impacted whole southeast Asia.
Speaker Change: Demand profile.
Speaker Change: Yes.
Speaker Change: Thank you that's very clear.
Speaker Change: Thank you.
Operator: We will take our next question.
Speaker Change: We will take our next question.
Jonathan Atkin: Your next question comes from the line of Jonathan Atkin from RBC Capital Markets. Please go ahead, your line is open. Thanks for taking my question.
Speaker Change: Your next question comes from the line of Jonathan Atkin from RBC Capital markets. Please go ahead. Your line is open.
Jonathan Atkin: Thanks for taking my question.
Daniel Newman: One China and then one, I guess day one. So what's the use of the ABS proceeds? And can you give us a little bit of a flavor for the customer profile, margin profile? Weighted Average Lease Expiration, just any color about those stabilized assets that you're issuing capital off of.
Jonathan Atkin: One China and then one I guess stay one.
Jonathan Atkin: So what's the use of the ABL proceeds and can you give us a little bit of a flavor for the.
Jonathan Atkin: Customer profile margin profile.
Jonathan Atkin: The weighted average lease exploration just any color about the stabilized assets that you're issuing capital off of.
William Huang: And then the day one question is maybe a little broader. You broke ground in Chonburi, I think, just a couple of days ago. What's the use case that you see for Thailand? And then any kind of update on JB and Batam, what's going well, what are some of the challenges that you're seeing relative to your last conference call?
Jonathan Atkin: And then the day one question, maybe a little broader you broke ground in Chonburi I think.
Jonathan Atkin: Just a couple of days ago, what's the use case that you see for Thailand, and any any kind of update on <unk>.
Jonathan Atkin: But Tom what.
Speaker Change: It's going well what are some of the challenges that you're seeing relative to your last conference call.
Daniel Newman: Thanks. Yeah, the ABS proceeds can be used either to pay down debt and de-lever or to reinvest if the right opportunity is there. And we look at new investment opportunities as being one part of the equation and asset monetization as being the other part of the equation. So this asset ABS issue has been achieved at a good time because we also presented with a very good new investment opportunity at around the same time. And when you put it all together, we are able to increase our capex. that keep our debt at the same level or lower.
Speaker Change: Yes.
Speaker Change: Yes proceeds can be used either to pay down debts and de lever or.
Speaker Change: Reinvest if the right opportunity is there.
Speaker Change: We look at new investment opportunities as being one part of the equation and asset monetization as being the other part of the equation. So this asset.
Speaker Change: <unk> has been achieved is a good time because we are also.
Speaker Change: Presented with a very good new investment opportunity at around the same time.
Speaker Change: Yes.
Speaker Change: Let me put it altogether.
Speaker Change: We were able to increase our capex.
Speaker Change: Third keep.
Speaker Change: Keep our debt at the same level or lower.
Daniel Newman: and be able to achieve, at the end of this year, lower net debt to EBITDA. We have a lot of assets that are suitable for asset monetization treatment. We selected assets for the first transactions that we thought would be highly acceptable to investors. The asset we chose for the ABS happens to be one that we acquired a few years ago. It has mostly financial institution customers, which obviously financial investors have high recognition for those kind of customers, but it doesn't have to be this way for the For the C-REACH, we chose a different seed asset with quite a different profile.
Speaker Change: And.
Speaker Change: Sure.
Speaker Change: We were able to achieve at the end of this year lower net debt too.
EBITDA.
Speaker Change: We have a lot of assets that are suitable for asset monetization treatments.
Speaker Change: Selected assets for the first transactions that we thought would be.
Speaker Change: Really acceptable.
To investors.
Speaker Change: We chose for the ABS happens to be one that we acquired a few years ago and it has mostly financial institution customers, which obviously financial investors.
Speaker Change: Hi recognition for those kinds of those.
Speaker Change: It's kind of customers, but because it doesn't have to be doesn't have to be this way for the.
Speaker Change: For the series.
Speaker Change: Chose a different seed asset with quite a different profile. It is more the cloud insights customer.
Daniel Newman: It's more of a cloud internet customer.
William Huang: Yeah, Joe, let's talk about a little bit about the Grand Prix in Thailand, which was announced the day before yesterday. I think this is, as usual, when we start to build a new data center, building a new capex in Thailand, that means we have a very, very strong customer demand back to us. So that's why we are starting to build a new campus in Thailand. And the customer is mixed, both from the demand in Thailand, the demands are very mixed, both from the U.S. and China. Chinese customers. It's quite a mix. So I think we can see that this is a...
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Let's talk about a little bit broke.
Speaker Change: The phone broke ground breaks and in Thailand.
Speaker Change: As announced.
Speaker Change: The day before yesterday I think this is a future where.
Speaker Change: When we started.
Speaker Change: A few of the new data center building, the new Capex in Thailand SaaS means.
Speaker Change: We have very very strong customer demand back to us. So that's why we are start we start to build a new campus in Thailand, and as the customer the customer is mix at both from.
Speaker Change: Ah.
Speaker Change: The demand in Thailand the demands.
Speaker Change: Mix, both from the U S post from U S and China.
Speaker Change: Chinese customers.
Speaker Change: It's a quite a mix yeah. So I think if we can see these things.
William Huang: We are, we built... This campus is the largest campus in Thailand so far. So I think we are very confident the demand will continue in Thailand. Thailand will be the new hub in Asia Pacific... in Southeast Asia, even in Asia Pacific.
Speaker Change: We built this campus is the largest campus in China. So far so I think they are.
Speaker Change: We are very confident that demand will continue in China, Thailand will be the new hub in Asia Pacific in Southeast Asia, even in Asia Pacific.
William Huang: So, uh, In terms of Batam, I think we are very happy to talk about that. We delivered the first two phases, which we committed to our customers, and we continue to build the remaining phases for our customers as well. So I think the Batam project is going well, and we see that based on this very good customer successful delivery, and I think more demand is coming to Batam as well. So this is what is happening in Batam Island.
Speaker Change: No.
Speaker Change: Yes.
Speaker Change: In terms of <unk>.
Speaker Change: I think we are very happy to.
Speaker Change: Talk about that we delivered the first of two phase, which we are committed to our customer and we.
Speaker Change: We are continuing to build it.
Speaker Change: The remaining phase for our customer as well so I think the potential project.
Speaker Change: It's boding well and we.
We see based on this customer.
Speaker Change: Very good customers are successful delivery and I think more and more demand is coming through as well. So this is what happening in ink attac either yes.
William Huang: If I could sneak one on China domestic, you highlighted big internet demand. But then you also mentioned deep seek. And there's a lot of a there's a deep ecosystem of AI startups in China. And how do you see the sales funnel and kind of prospects in terms of score meters or megawatts sold from from kind of AI startups within China versus established internet companies that are also, you know, increasing their capex.
Speaker Change: If I if I could sneak one on China domestic you highlighted big Internet demand, but then you also mentioned deep seek and there's a lot of <unk>, there's a deep ecosystem of AI startups in China.
Speaker Change: And how do you see the sales funnel.
Speaker Change: And kind of prospects in terms of square meters or megawatts sold from.
Speaker Change: From kind of AI startups within China versus established Internet companies that are also increasing our capex.
Speaker Change: Got it.
William Huang: Would you like to use the credit card? Yeah, I think the I think the demand right the most most driven by the established the company. And then we do see a lot of enterprise type demand is coming. Because this is just a start, a lot of small enterprise, the first phase is try their AI first. And they also internally, I think the sentiment is very good for all the Chinese enterprises inside China. Because everybody tried to leverage AI to improve their efficiency, or increase their revenue. I think this is very popular right now. So I think given the time, I think the demand will mainly be driven by the multi industry.
Speaker Change: Yes, sorry.
Speaker Change: Thanks.
Speaker Change: All of that established yeah, I think if you I think.
Speaker Change: Demand right. So most most of that driven by.
Speaker Change: Yes.
Speaker Change: We established the company and we just see a lot of enterprise type demand is coming.
Speaker Change: Because this is just a start a lot of small enterprise.
Speaker Change: <unk> try there.
Speaker Change: The AI first and also internally I think.
Speaker Change: I think <expletive>.
Speaker Change: Sentiment is very good for all that.
Chinese enterprise inside of China, because everybody try to leverage.
Speaker Change: AI to improve the efficiency.
Speaker Change: Kris Tim.
Speaker Change: Revenue I think it all this this is very popular right now so I think given the time I think it will.
Speaker Change: The demand.
Speaker Change: Mainly chip, we're driven by the multi industry yes.
William Huang: That's easy to see. Well, I believe it will happen in the next few years.
Speaker Change: So it's easy to see.
Speaker Change: Hi.
Speaker Change: I believe it will happen in the next few years.
Operator: It's already, it's stopped. Thank you.
Speaker Change: It's already it stops.
Speaker Change: Thank you Sir.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Thank you.
Daley Lee: We will take our next question. Your next question comes from the line of Daley Lee from Bank of America Securities. Please go ahead, your line is open. Hi, management. Thanks for taking my question.
Speaker Change: We will take our next question.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Brady Lee from Bank of America Securities. Please go ahead. Your line is open.
Brady Lee: Hi management, Thanks for taking my question.
Daley Lee: I have two questions. One is regarding our future series of issuance. How do you anticipate the valuation range for this series? Because if we look at other series in Asia, in Asia, in the China market, warehouse, the valuation is pretty high, like 20 times EBITDA, EBITDA. So what's our expected valuation range for yield?
Brady Lee: Two questions one is regarding our the future series a issuance.
Brady Lee: How do you anticipate any valuation range.
Brady Lee: This series because if we look at other theories in Asia.
Brady Lee: Sure.
Brady Lee: The market warehouse revolutionary pretty high like a 20 times EV to EBITDA.
Speaker Change: Whats our expanded reservation rental days in the yield.
Daley Lee: My second question is regarding the moving pace for China market. If we look at the next like a few quarter by quarter moving pace by the client, and we have seen more rush order for AI chips in one queue. So would we, could we expect maybe more, you know, faster ramp up in like two queue or going forward?
Brady Lee: My second question is regarding the.
Speaker Change: Moving pace for China market.
Speaker Change: If we look on the NASA like a few quarter by quarter moving pace by the client.
Speaker Change: And we have seen more rush order and coach <unk>. So would we could we expand it maybe more.
Speaker Change: Lots of ramp Harbin by <unk> or going forward. Thank you.
Daniel Newman: Thank Can I stall a few more? Yeah, Dave, thanks for your question. Here there's around 50. We categorize them by the nature of the underlying assets, there's around 25. where the underlying assets are commercial real estate, industrial, business, park, logistics and so on. We think that subset is the best benchmarks for a potential data center C-REIT. Those 25 companies, there's two or three outliers, but if we exclude them... What remains is trading in a very well-defined range in terms of dividend yield. I believe that dividend yield is the driver of their valuation and the multiple is derived from that.
Speaker Change: Thanks.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes, David Thanks for your question.
Speaker Change: Sure there is around 50.
Speaker Change: <unk> solicited in China and.
Speaker Change: We categorize them by the nature of the underlying assets there is around 25.
Speaker Change: The underlying assets of commercial real estate.
Speaker Change: Industrial business Park logistics, and so on we think that subset.
Speaker Change: Is the best benchmarks for our potential.
Speaker Change: <unk> Center.
Speaker Change: Right.
Speaker Change: Those.
Speaker Change: 25 companies.
Two or three outliers, but if we exclude them.
Speaker Change: What remains as is trading in a very well defined range in terms of dividend yield I believe that dividend yield as the as the driver of that evaluation in the multiple is is derived from the the dividend yield is.
Daniel Newman: The dividend yield is... And if we take that as a reference and assume conservatively that we would offer a data center CV at a yield premium, we can derive what the implied multiple would be for us in terms of our asset monetization. And it's quite attractive. We set a benchmark 13 times with the ABS. And we stated that the investors in the ABS had the explicit intention. When the time is right, when all the qualification criteria can be met, to inject that ABS into us.
Speaker Change: Quite concentrated around 5%.
Speaker Change: And if we take that as a reference and.
Speaker Change: Assume conservatively that we would offer a data center at a yield premium.
Speaker Change: We can derive what the implied multiple would be.
Speaker Change: For us in terms of.
Speaker Change: Oh asset monetization.
Speaker Change: And it's quite attractive.
Speaker Change: We set a benchmark 13 times with the.
Speaker Change: With the ABS.
Speaker Change: We stated that the vessels in the ABS had the explicit intention.
Speaker Change: When the when the time is right when all the qualification criteria can be met.
Speaker Change: To inject that avs into a series so clearly they expect it to be able to do that at some kind of valuation.
William Huang: So clearly they expect you to be able to do that at some kind of valuation, multiple pick Yeah, in terms of the moving pace, right, I think, as I just mentioned, the new order is a six-month moving pace. I think that means, Yeah, start from this year. I think this is a very big change compared with the last couple of years.
Speaker Change: Multiple pickup.
Speaker Change: Yes in terms of the.
Speaker Change: Moving pace right.
Speaker Change: <unk>.
Speaker Change: Just to mention that the new order.
Speaker Change: Yeah.
Speaker Change: Six months.
Speaker Change: Moving.
Speaker Change: Moving pace I think theres definitely.
Speaker Change: Thank you.
Speaker Change: Yes.
Speaker Change: Starting from this year I think the this is it this is a very big change.
Speaker Change: The last couple of years here.
Speaker Change: Okay.
Operator: Thank you.
Speaker Change: Thank you.
Operator: As there are no further questions, I'd like to now turn the call back over to the company for closing remarks. Thank you all for joining us today, and we'll see you next time. Bye. This concludes this conference call. You may now disconnect your line. Thank you.
Speaker Change: Thank you.
Speaker Change: There are no further questions I'd like Tonight on the call back over to the company for closing remarks.
Speaker Change: Thank you all join US today, and we will see you next time.
Speaker Change: Thank you. This concludes this conference call you May now disconnect. Your line. Thank you.
Speaker Change: Okay.
Speaker Change: Okay.
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Speaker Change: Sure.
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