CD Q4 2021 Earnings Call
Operator: 00:05 Good morning and good evening ladies and gentlemen. Thank you and welcome to Chindata Group Holdings Limited Fourth Quarter and Full-Year 2021 Earnings Conference Call. We will be hosting our question-and-answer session after management's prepared remarks. Please note, today's event is being recorded. 00:23 I’ll now turn the call over to your first speaker today, Mr. Don Zhou from Investor Relations of Chindata Group. Please go ahead, Don.
Don Zhou: 00:34 Hello, everyone. Welcome to Chindata Group’s fourth quarter and full-year 2021 earnings conference call. This is Don from Investor Relations Team of the company. With us today are Mr. Michael Foust, Chairman of the Board of the company; Mr. Wu Huapeng, our newly appointed CEO; Ms. Sandy Xiao, our President; Mr. Nick Wang, our CFO; Mr. Eric Fan, our newly appointed COO; Mr. Zhang Binghua, our newly appointed CTO; and Ms. Zoe Zhuang, our Finance VP. 01:07 In addition to providing a discussion and analysis of our quarterly performance, the company will also like to take this opportunity to share more on our recent management update, as well as the growth plan going forward. 01:21 To being with, Mr. Michael Foust will walk you through the recent management update and the rationale behind. Huapeng will be providing you a comprehensive look at the company’s plan going forward in Chinese, followed by Nick’s English version. Nick will then 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. 01:48 Now, I'll quickly go over the Safe Harbor. Some of the statements that we make today regarding our business, operations, and financial performance may be considered forward-looking, and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. For more information, please refer to the risk factors discussed in our filings with the SEC. 02:13 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 investors.chindatagroup.com. We have also updated our quarterly presentation on the company's Investor Relations website, which you can refer to as an important supplementary material on today's call. 02:44 Without further ado, I’ll now turn over the call to Mr. Michael Foust. Michael, please go ahead.
Michael Foust: 02:53 Thank you, Don and thank you everyone for joining our earnings call this morning or this evening. As the Chair of the Board of Directors, I would like to take this opportunity to introduce you to our Senior Leadership team. We are very pleased to have this team in place and we’re confident of the leadership of Chindata going forward. As you know, we made the announcement a couple of weeks ago of the appoints of our CEO, our President, COO, and CTO of the company. 03:21 Leading the team, Mr. Huapeng Wu was appointed as our CEO and as a Director of the Board. A little background on Huapeng. He joined Chindata in 2019 as President of our China business and prior to that he was the founder of iTechClub and the founder and headmaster of the 1024 Academy, which both are preeminent platforms that bring together top technology executives for training and idea exchanges. 03:48 Huapeng also served as Vice President of Phoenix New Media and the CTO of Ifeng.com from 2007 to 2013. Huapeng’s performance in the last three years has truly been outstanding. With his 20 years of experience and contacts within China’s technology and data center sectors, Huapeng brought in a series of strategic customers and projects and successfully established solid relationships with local government and our partners in the data center ecosystem. 04:19 After a thorough search process, it became clear to the Board that Huapeng is the best fit as the Group’s new CEO, with his strategic thinking, industry resources, and understanding of the company and our team. 04:34 Ms. Sandy Xiao has been with the company for over two years. With her deep understanding of the company having served as our Chief Operating Officer since August of 2019 and as a Board Director since July 2019, Sandy was appointed as President of Chindata Group. 04:51 Mr. Xinyue Eric Fan joined the company in December 2021 as Vice President of Business Operations and was appointed as our new Chief Operating Officer. Eric has a deep background and strategic planning and operations. He served as Vice President and General Manager of Sekurit Asia with Saint Gobain from 2015 to 2021, and served as Strategic Planning Director of Saint Gobain from 2013 to 2015. 05:25 In addition, Mr. Fan served as an Associate Director at Dow Chemical from 2011 to 2013. And prior to that, Eric was a Senior Manager at Honeywell Building Solutions from 2009 to 2011, and also served as a consultant with The Boston Consulting Group for four years from 2006 to 2009. 05:48 In addition, we are very pleased to announce that Mr. Binghua Zhang was appointed as our Chief Technology Officer. Binghua has a very long distinguished background in the IDC industry. Prior to joining Chindata, he was the Technical Director, Senior Director, and the General Manager of the Systems Department and IDC Engineering at Baidu from 2010 to 2022. 06:17 Prior to that, Mr. Zhang served as the Chief Engineer in the Beijing Telecom Planning and Design Institute from 1995 to 2010. We are very pleased to have him join our team and he is a very distinguished, very well-known in the industry. So, we are very happy to have him join us. 06:38 And lastly, we have, as you well know, we have Nick Wang as our CFO, who has been with the company for over two years now. So, we are very well positioned with our management team and the company benefits from this very strong team with diversified experience and expertise covering our business operations, strategic planning, technical knowhow, as well as capital markets operations. 07:07 We are highly confident that under this team Chindata’s business is more diversified, its culture is more open with the solid foundation. So, we can further strength our position as the leading datacenter platform in China and in the Asia Pacific emerging markets. 07:24 So, with this, I’ll turn the call over to our CEO, Mr. Huapeng Wu, who will provide you with a comprehensive overview of the company’s plan going forward. Thank you.
Huapeng Wu: 07:37 [Foreign Language] 09:30 Thank you, for introduction Michael. I’ll start by thanking the Board of Directors, their trust and endorsement. It is an honor to shoulder the responsibility [Technical Difficulty] operating such an excellent data center enterprise, and I look forward to working in close cooperation with the Board and our management team. 09:52 Let me begin by briefly reviewing the company's business and financial highlights for the fourth quarter and full-year 2021. And then, I will take everyone through a comprehensive look at our development plan. 10:06 On Slide 8, in the fourth quarter of 2021, we've put four new projects under construction, bringing our total number of data centers up to 27. Total capacity increased by 85 megawatts during the fourth quarter to reach 673 megawatts. Specifically, in the fourth quarter, our in-service capacity increased by 70 megawatts to 440 megawatt. 10:36 Our indication by interest capacity increased by 95 megawatts, bringing our total contracted and IOI capacities to 589 megawatts. And our utilized capacity increased by 36 megawatts to 304 megawatts. 10:54 Our total capacity contain a high contracted and IOI ratio of 87.5%. Financially, our full-year revenue and adjusted EBITDA both beat our guidance. Revenue totaled RMB2.852 billion for the year 2021, representing a year-over-year increase of 55.8%, which is 0.8% higher than upper range of our guidance. 11:26 Adjusted EBITDA totaled RMB1.49 billion for the year 2021, representing a year-over-year increase of 66.5%, which is 1.5% higher than our upper range of the guidance. Net income turned positive for the year 2021 at RMB316.4 million, with a margin of 11.1%. 12:01 [Foreign Language] 12:47 Next, I want to discuss our [future plan[ in four primary aspects. On Slide 10, first of all, I'd like to share a bit about our outlook on industry and the opportunities for Chindata. We believe there is a huge opportunity for hyperscale data centers in the APAC emerging markets. 13:11 Citing some research force, data center demand is expected to grow at a CAGR rate of over 20% over the next five years. Much of this demand will come from international digital technology giants, cloud computing, and Chinese digital technology companies that are succeeding with their business expansion in the region. With an increasingly stable and market-oriented regulatory environment in the region, our existing and expanding capacity in this region has positioned us with a first-mover advantage to seize these market opportunities. 13:53 [Foreign Language] 14:39 Second, I'd like to share our thoughts and outlook in a domestic market it in China. In a medium-to-long term perspective, we expect the recent policy, mainly the East Data West Computing policy to shape industry and market landscape in a manner that is very favorable for Chindata. 15:48 You can also refer to Slide 47 in the appendix for the key highlights of the policy. This policy is a highly viable strategic developed plan for the data center industry in China, developed under the grand strategic theme of carbon neutrality and digital economy development of the country, aiming to address the increasing disparity between insufficient energy supply and computing power demand in densely populated areas of eastern first-tier cities, as well as low energy efficiency and insufficient renewable energy use. 16:31 The plan is expected to redirect most of the future computing power demand to areas in the west where energy and renewable energy supply is abundant. We think the goals of this policy are highly consistent with our long-standing views on the nature of the data center business, which at the core is to efficiently convert green electric power into computing power. 16:59 As the demand for data center in the future gradually shifts toward the computing hub as designated under this policy, the company sees significant advantages offered by its existing deployment, namely Zhangjiakou campus, which is right in the Beijing-Tianjin-Hebei computing hub as designed by the policy, and Datong campus, which is enjoying extreme geographic proximity to the Beijing-Tianjin-Hebei computing hub, and our layout under planning in Qingyang City, Gansu Province, another cluster as designated in the policy. 17:42 We believe our existing and to be developed capacity in these regions will further strengthen our industry leadership. 17:57 [Foreign Language] 18:30 So, with increasingly [Technical Difficulty] for industry, we expect industry to enter a period of consolidation and survival of the fittest. Impacts of such are likely that, firstly, small data centers was no economy of scale, very few customers, and low efficiency will become increasingly less competitive. 18:56 Secondly, with industry consolidation, valuations shall return to reasonable level, which shall provide us ample opportunities for asset integration through business corporation, or through merger and acquisitions. 19:16 [Foreign Language] 19:58 Fourth, the short-term perspective of domestic market, although macro economy and supply chain issues are laying impact on market demand, Chindata has its unique highlights. Firstly, as our anchor customer continues to grow its businesses through new business initiatives such as public cloud and through international market expansion. We continue to see a corresponding increase in demand. 20:27 Secondly, our unique capabilities in supply, resource, technical know-how, and efficiency are increasingly being recognized by more customers in various industries, which is driving increased demands from a broader range of customers. 20:49 [Foreign Language] 22:11 We believe that we can capitalize on this tremendous opportunities in China. Thanks to our competitive advantages. On Slide 11, our first major advantage is our business model, and we see several major advantages in it, including our full stack solution, early energy-abundant region layout, high quality client profile, and credible asset and long-term contract. 22:39 Firstly, Chindata is offering customized full-stack solution covering product design, technical solutions, development and construction, supply chain management, and operation and maintenance service, making itself an efficient developer and operator of the IDC business. 22:57 Second, our site selection and skill, the majority of our data centers in China are located in self-built campus right in and around the Beijing-Tianjin-Hebei computing hub as designated under the East Data West Computing policy. In this region, the climate is cold, the land and power resources are abundant, costs are relatively low, and latency is not an issue. And we possess a large land reserve [indiscernible]. Moreover, our economy of scale is highly evident. 23:33 Third, our customer relationship. We enjoy close customer relationships with digital leaders in the international or domestic markets. The healthy development of these clients, is in-turn, bringing the company long-term, steady, and sizable demand. 23:52 Finally, our assets and contract, more than 92% of our data center assets are self-owned with solid asset valuations in place. In addition, most of the company's contract are long-term 10-years contract in nature. Commitment is normally received in development space, operating a high degree of business certainty. 24:19 [Foreign Language] 25:03 Our second major competitive advantage is our business localization in the APAC emerging market. We have a strong local business team in the region with all-around capabilities, covering customer management, project development, campus operations, and government relationship, etcetera. 25:23 In addition, we enjoy location and skill advantages. We have several important data centers located in neighboring countries of Singapore as we are expanding into APAC emerging markets. Land and energy are abundant, cost are relatively low, and latency is not an issue. Our existing business and new hyperscale business initiatives will bring us benefit of the economy of scale. 25:51 Last, but not least, the capabilities and the customer relationship we have under our hyperscale model in domestic market are replicable for our overseas business. 26:04 [Foreign Language] 26:54 Our third major competitive advantage comes from our ESG Initiative. We have strong integration capabilities. Our comprehensive energy solutions cover power generation, transmission, and distribution. We also possess strong R&D capabilities for green power development, energy storage applications, energy conservations and emissions and reduction. 27:20 Second is our energy-abundant region layout. The majority of our existing campus in the east, as well as the to be developed campus in the west are exactly in or around those computing hub designated in the policy of East Data and West Computing, which has reached traditional and renewable energy. 27:41 In addition to that, our energy efficiency, we have been running our data centers in energy efficient way, evidenced by a PUE constantly at around 1.2 [fully around] [ph]. Finally, our diversified renewable energy sourcing approach, we will on one hand pursue the development of local generation, local consumption solution in energy-abundant region, and on the other, establishing long-term renewable energy procurement arrangement with long term strategic partnership. 28:17 [Foreign Language] 28:51 On Slide 12, based on these market opportunities and our assessment on an adjusted and overseas data center industry, we will leverage our competitive advantage to execute our growth plans in four major aspects. 29:07 Firstly, we will deepen our presence in APAC emerging markets. Secondly, we will further advance our geographic layout in key clusters as designated under the East China West Computing policy. Thirdly, we will actively use alternative approach such as merger acquisition and joint venture partnership for [client] [ph] and geographical development. Finally, we will pursue a diversified renewable energy sourcing model with our energy-abundant region layout as the cornerstone. 29:38 Please, let me introduce the above aspects in details. 29:45 [Foreign Language] 30:25 First, we will deepen [indiscernible] APAC. As you can see on Slide 13, on top of our existing 20 megawatt service capacity in the region in Malaysia. We have an additional 96 megawatt capacity [Technical Difficulty] currently in Malaysia and India, and an additional 5 megawatts of business acquisition to be finalized in Thailand. 30:49 At the same time, we're also negotiating and evaluating other potential projects. Of a proven hyperscale model is highly replicable overseas and our goal is to become the largest hyperscale data center company in the Asia-Pacific regions and outside China. 31:10 [Foreign Language] 32:36 Secondly, we will further advance our geographic layout in key clusters as designated under East Data West Computing policy. On Slide 14, we have established our presence in Zhangjiakou City as early as 2017 and the city is now the exact cluster as designed under the latest National Policy. Since our presence, we have rapidly established our new generation hyperscale computing infrastructure to accommodate the development of the Beijing-Tianjin -Hebei Region. We have built a solid foundation in Zhangjiakou and has promoted the locally economy. 33:19 Currently, we own a total capacity of 268 megawatts in Zhangjiakou and a total capacity of 2,010 megawatts in Datong, Gansu Province. Datong enjoys stream geographic [indiscernible] through the Beijing-Tianjin-Hebei computing hub. 33:38 We possess about [indiscernible], within these regions, which can be convenient into a more hyperscale data centers to meet a growing business demand from various customers, in particular our anchor customers. 33:52 We have also initiated our site selection process for potential computing infrastructure development in Western China in as early as 2020. We have been established healthy working relationship with local government of Qingyang City, Gansu Province, which is now the designated cluster in the Gansu Province computing hub as designated under the policy. 34:17 We are currently planning to acquire 300 acres of land for the development of hyperscale computing infrastructure cluster in the region in the next three years to five years. 34:31 [Foreign Language] 35:08 We will proactively expand our geographical resources client base through active acquisition and JV partnerships. On Slide 15, with entrance requirements becoming more stringent, we expect those old, inefficient medium and small sized data centers will become increasingly less competitive, which will help market prices in the IDC sector return to reasonable levels. 35:36 Once this happens, we expect to see more acquisition opportunities that can leverage our capital reserve, technical know-how, and superior leading client profile to actively pursue and negotiate potential opportunities that can provide synergy to our geological layout, client base, and business model, and to generate additional value for our long-term development. 36:02 [Foreign Language] 36:35 Finally, with energy abundant region layout as cornerstone, we will continue to obtain renewable energy through [different] [ph] approaches. On Slide 16, in energy abundant region, we plan to stick with the local generation, local consumption approach. With our datacenters in these energy abundant region as the leverage, the company will introduce strategic partner into the region to conduct local power generation, while the company will assume the role of local power consumption. 37:08 Along with this, we will further strengthen our in-house R&D capabilities and improve energy efficiency and energy storage technology. Meanwhile, we will cooperate with green energy enterprises and the [Power Grid] [ph] for long-term green energy procurement arrangement. 37:29 [Foreign Language] 37:50 Last, the execution of our ESG initiative has been widely recognized. We have been sticking to our zero carbon principle and we're among the leading players and have committed ourselves to the goal of using 100% integrated renewable energy solutions in all of our next-generation hyperscale data centers operated in China by 2030. 38:15 [Foreign Language] 38:53 Under this four point gross plan, our dedicated commitment to all of our customers and stakeholder remain unchanged, which are to be the leading industry player in terms of operational efficiency, project delivery, cost management, energy efficiency, and emission reductions. And that as a result to deliver outstanding asset return. 39:19 Financially, we have been delivering financial results that are beyond market expectations for six consecutive quarters since our IPO in 2020. The company expects such momentum in business and financials to continue in 2022, and is highly confident in its business and financial prospects going forward. 39:42 [Foreign Language] 39:54 Thank you again for the comprehensive review on where the company is heading going forward.
Nick Wang: 40:00 Now, let me walk you through another exciting quarterly performance that we have delivered and to provide you a better sense on our project delivery, client commitment, capacity ramp up, as well as geographic layout. 40:16 On Slide 21, we added 70 megawatts in-service capacity during the quarter, mainly attributed by a project CN11-C, a 71 megawatts project that’s located in Hebei province of China, supporting the business of the anchor client. We also put four new projects into our portfolio, namely MY06 Phase 1 and Phase 2, CN16 and CN17. 40:44 We have shared these projects as recent development in our last conference call. And now they are officially put under construction. MY06 Phase 1 and Phase 2 located in Johor Malaysia, has a total capacity of 60 megawatt and is expected to be delivered starting from fourth quarter of 2022. They won't be supporting overseas business of our anchored clients. 41:12 For CN16 and CN17, they are located in Hebei and Tianjin respectively, each with a capacity of around 14 megawatts and they will be supporting the top two Chinese cloud service provider that we won recently. These project showcased how we have successfully extended our cooperation with clients from home and in overseas market. Well at the same time, embrace alternative in business model, so as to obtain new clients. 41:44 With these new products, as you can see on Slide 22, we have brought our total capacity to 673 megawatts by the end of fourth quarter. In-service capacity by quarter-end stands at 440 megawatts, compared with 370 megawatt in the previous quarter. 42:05 For the 233 megawatt and the construction capacity, we are currently expecting to deliver the majority of them in year 2022. While 54 megawatts of these are scheduled for delivery in the first quarter of 2023. 42:23 On client commitment on Slide 25, the four new under construction projects in the fourth quarter brought us a total of 87 megawatts IOI capacity. In addition, we received an additional 15 megawatts IOI from the anchored client on our existing product CN15 in Greater Beijing region, altogether making a total of 102 megawatts from five under construction projects. 42:53 As a recent development, IOI on project CN15, a total of 52 megawatts was fully converted in new contract in the first quarter of 2022, demonstrating that solid relationship we are enjoying with anchored client. 43:10 Now, let's take a look at our overall commitment status. For all our in-service capacity, 87% of them are with either constructed or with IOI commitment from the client, and such ratio has been stable in the past. Commitment for our under construction capacity is healthy as well, with constructed and IOI ratio by end of fourth quarter at 88%. 43:38 Again, this is the advantage that we're enjoying in our hyperscale business, which is credible commitment from the leading players in the industry and a long-term contract of guaranteed sustainable revenue stream. On product ramp-up, on Slide 28, we added 36 megawatts utilized capacity in the fourth quarter, bringing our total utilized capacity through 304 megawatts. 44:03 New utilization mostly came from projects in Greater Beijing are. Utilization ratio by end of fourth quarter is 69%, which is healthy and similar to previous level. To be more specific, the inclusion of new projects in early ramp up stage in particular project CN11-C has been the main contributor to our quarter-over-quarter evaluation ratio change. 44:31 We are providing you a better sense of our current portfolio geographically on Slide 29, which simply shows you where we started and a direction we're heading for. In China, and as we have made proximity to energy one of our site selection principle, when we started the business, we have run the majority of our project in Greater Beijing area, not in Beijing, but in particular, Zhangjiakou City, Hebei Province and Datong city, Shanxi Province, which are 100 kilometers and 300 kilometers away from Beijing respectively. 45:06 Currently, as you can see from the bottom left pie chart, in-service capacity from greater Beijing area mixed up around 90%. Our vision is apparently being further testify with the published of East Data West Computing policy. Our early judgment has provided us early advantage and we plan to achieve further from here. 45:30 Meanwhile, you may tell from the top left pie chart, but we are on our way of becoming a company with greater geographical diversification. Our overseas business already makes up 17% of our total capacity by end of 2021. With already experienced local team, our in-house capability and our commitment for greater overseas, we believe more can be done going forward. 45:57 For more details in our asset portfolio, you are recommended to refer to information in appendix of our IR materials. We will also like to share some light on our Hong Kong Listing Option of Slide 33. 46:14 Recent regulatory changes released in November 2021 relaxed listing requirements for overseas issuers in Hong Kong; Grandfathered Greater China Issuers with certain weighted voting rights and/or VIE structures can now apply for a dual-primary listing in Hong Kong. Specifically, Grandfathered Greater China Issuers that applied for dual primary listing or secondary listing are allowed to continue to retain their certain weighted voting rights or VIE structures in the event it is subsequently delisted from the qualifying exchange on which it is listed or after their conversion of secondary listing to primary listing in Hong Kong. 47:02 With these, we believe we now have the option for dual-primary or secondary listing in Hong Kong. 47:10 Now, I will hand over the call to Zoe Zhuang, our VP, Finance for financial update.
Zoe Zhuang: 47:18 Thank you, Nick. Now, let me walk you through our call today and the full-year financial performance. Our financials remain healthy momentum. On Slide 35, revenue in the fourth quarter increased by 41.4% year-over-year to RMB781.7 million, driven by the robust growth of the company’s colocation services. For full-year 2021, total revenues increased by 55.8% to RMB2,852.3 million from RMB1,831.1 million in the same period of 2020. 48:00 On Slide 36, in-line with the company’s revenue growth, total cost of revenue in the fourth quarter of 2021 increased by 33.2% to RMB435.2 million from RMB326.9 million in the same period of 2020, mainly driven by increases in utility costs, and depreciation and amortization expenses. 48:30 Selling and marketing expenses in the fourth quarter of 2021 decreased by 32.3% to RMB18.7 million from RMB27.6 million in the same period of 2020, primarily due to lower share-based compensation expense. For full-year 2021, selling and marketing expenses decreased by [9.5%] [ph] to RMB89.7 million from RMB99.1 million in the same period of 2020, primarily due to lower share-based compensation expenses as well. 49:11 General and administrative expenses in the fourth quarter of 2021 decreased by 24.4% to RMB91.5 million from RMB121 million in the same period of 2020. For full-year 2021, general and administrative expenses decreased by 36.3% to RMB359.5 million from RMB564.3 million in the same period of 2020, also primarily due to lower share-based compensation expenses. 49:51 Research and development expenses in the fourth quarter of 2021 increased by 15.4% to RMB14.8 million from RMB12.9 million in the same period of 2020. For full-year 2021, research and development expenses increased by 83% to RMB75.3 million from RMB41.2 million in the same period of 2020, primarily due to higher personnel costs as the company continued to invest in its research and development initiatives to further enhance its service offerings. 50:36 Our full-year net income was a positive for the first time in year 2021 showcasing the efficiency we are enjoying in our hyperscale business model. We recorded net income of RMB318.4 million with a margin of 11.1%, compared with net loss of RMB283.3 million in year 2020. 51:05 Looking into our core expenses and the cost on Slide 37 most of them maintained with normal level as measured by percentage of revenue. Maintenance and other costs continue to make up around 10% to 12% of our revenue, while our adjusted SG&A as a percentage of revenue went from 14.1% in year 2020 to 12.4% in year 2021, demonstrating economies of scale as we keep expanding our capacity. 51:42 Utility cost both in the fourth quarter, as well as for full-year 2021 grew faster [indiscernible] revenue as a result of increase in tariff price of around 15% in part of our Great Beijing region [campuses] [ph]. 52:00 With stringent cost and economies of scale, brought by capacity expansion, our profitability continues to improve. On Slide 38, adjusted EBITDA in the fourth quarter of 2021 increased by 68.8% to RMB404.2 million from RMB239.4 million in the same period of 2020. Quarterly adjusted EBITDA margin was constantly improving with the margin in the fourth quarter stood at a historical high of 51.7%. 52:41 On a full-year basis, adjusted EBITDA margin is 49.7%, compared with 46.5% in year 2020. Details in the GAAP to non-GAAP reconciliation of EBITDA and net income would be available in our 6-K filing or the appendix in our IR PPT. 53:03 Now, let's take a look at our cash and the debt position and our CapEx on Slide 39. CapEx in the fourth quarter was RMB1,163.9 million adding up to a full-year CapEx of RMB3,766.9. We continued to work in our business expansion to meet the increase in demand from our customers by investing around RMB5 billion to RMB6 billion for our current under-construction data centers delivery and also for the in-service data center balance payment for the full-year 2022. 53:51 We have a cash and a net position of RMB5,241 million and RMB5,477 by end of fourth quarter, respectively ending up in the net debt positions of RMB104.1 million. Cash dynamics during the quarter was contributed by a net operating cash flow of RMB297.5 million and mostly offset by our RMB1,100.5 million investing in cash outflow. 54:29 Again, we grew with high quality healthy cash flow leverage and the coverage. On Slide 41, by end of both quarter, our total debt-to-capital ratio was 35.1%. Our total debt to last 12-month adjusted EBITDA ratio was 3.9 compared to 4.4 in the previous quarter and 4.9 in the same quarter last year. Our last 12 months adjusted EBITDA to last 12 months interest ratio by end of fourth quarter was [6] [ph], compared with 5.6 by end of third quarter and 4 by the end of same quarter last year. 55:11 Finally, let's to take a look at the guidance. We have beat our full-year guidance for the two straight years and we are currently holding a positive view on our year 2022 performance. We have set a guidance for revenue and adjusted EBITDA in year 2022 to be in the range of RMB4,070 million to RMB4,170 and RMB2,040 million to RMB2,120 million, respectively, implying a 45.2% and 46.5% year-over-year growth at mid-point respectively. This forecast reflects our current and preliminary views on the market and operational conditions. 56:06 This, concludes our prepared remarks for today. Operator, we are now ready to take questions.
Operator: 56:15 Thank you. [Operator Instructions] Your first question comes from the line of Yang Liu from Morgan Stanley. Please ask your question.
Yang Liu: 56:53 [Foreign Language] 57:23 My question is regarding the company's prepayments for the East Data West Computing, whether Chindata’s core customers have dedicated demand to be deployed in Gansu Province and [indiscernible] well with – we will see that come out? Thank you.
Michael Foust: 57:48 I believe that Mr. Huapeng can answer this question with my colleague and General Counsel Joy as the translator on the English part.
Huapeng Wu: 58:00 [Foreign Language] 58:56 Thank you. Congratulations [indiscernible]. Thank you for your question. We believe that under the East Data West Computing policy, we actually enjoyed the unique first mover advantage. Based on our thoughts on the nature of the data center business, which is to effectively converting electricity power into computing power, we have allocated resources in power-abundant regions like Zhangjiakou and Datong in very early stage. 59:26 We have launched our first computing [indiscernible] in Zhangjiakou City in as early as 2017, currently we own a total capacity of 268 megawatts in Zhangjiakou and a total capacity of 210 megawatts in Datong while Zhangjiakou is now becoming the exact computing hub as designated under the latest national policy. 59:54 Based on our estimation; we are the largest carrier-neutral IDC solution provider among who owns facilities in the east part of the designated national computing hub with east computing hub. Well, within this area, we have banked abundant land, resources and power [indiscernible], strengthen the client and government relationships and paired with our [indiscernible] capabilities we believe our advantage will become more obvious in the next [round] [ph].
Huapeng Wu: 60:35 [Foreign Language] 61:00 Yes. We can also see some very positive news. So now, Shanxi Province is actively applying for becoming one of the National Computing Hubs and the national policy, which is another very good news for our facility [indiscernible] currently out.
Huapeng Wu: 61:23 [Foreign Language] 62:15 And we also see that under the new national policy, the core [indiscernible] high speed Internet construction will also be prioritized by national construction plan and also be speed up. On the current national resource policy, the power policy is also pushing the whole economy towards the Western part of China. 62:53 We can also see that because of the ESG requirement from our clients themselves, they also have the drive to deploy more of their computing centers into the western part of China. So, with all of these factors, we can see that the new demand is shifting gradually towards the Western part of China. 63:21 And that becomes the reason why we deploy our resources in the [indiscernible] and by picking Qingyang as our launch point and we will proceed with our plans with caution, but we are confident that this is a good move.
Operator: 63:48 Right. Thank you. Our next question comes from Tina Hou from Goldman Sachs. Please ask your question.
Tina Hou: 63:58 [Foreign Language] 64:35 Let me translate. Thank you very much for time management and congratulations on the results. So, my question is regarding our customer diversification progress since the third quarter results, has there been any customer expansion progress besides our core customer? Also, in terms of the market price competition has it become worse, better or similar versus before? Thank you.
Nick Wang: 65:07 Thank you, Tina. I think, Mr. Huapeng Wu will be in the best position to address the customer diversification progress we made since Q3. And our Group President, Sandy will address your questions on [Technical Difficulty] dynamics. Please go ahead Mr. Huapeng.
Huapeng Wu: 65:31 [Foreign Language] 66:23 In terms of our efforts in client diversification, since I joined the group in 2019, I have been working on that and put lots of efforts into this. Since then other than the continuously growing demand from our anchor customer, we have also secured other international cloud providers and the leading National PRC cloud service providers. 66:59 Very, very properly, in the fourth quarter of last year, we have also [indiscernible] of one of the top two PRC cloud providers, new projects. And those projects are now already being in construction.
Sandy Xiao: 67:23 [Foreign Language] 68:03 So, I would translate with [indiscernible]. First point is, last year, we observed in the East part of China and also in the Southeast part, there is some irrational market behavior in the investment. And also, we actively up some opportunities, but you know for the asset heavy industry, the investment has its own logic and the short-term behavior will not be sustainable. We also observed in the recent time that market has been gradually be back to the rationale and we are confident for the future. 69:05 And secondly with regarding Chindata. We provide a unique west [indiscernible] solution and this very unique business model, which made it very hard to be benchmark with other service providers. So, our price has been very stable and steady. And thirdly, you know majority of our contracts, a long-term price pre-locked for 10 years. So, last year for the fierce price competition has very minor impact on Chindata’s business.
Tina Hou: 69:44 Okay. Thank you.
Operator: 69:47 Thank. Our next question comes from Arthur Lai from Citi. Please ask your question. Arthur, your line is open. Please ask your question.
Arthur Lai: 70:07 [Foreign Language] 70:54 I would translate my question. So, the most frequent question I had been asking is, how the management forecast upcoming in the Chinese cost? And then do we have hedge, if we use more green power? Thank you.
Michael Foust: 71:20 Thank you, Arthur. I think, I can address these questions. You know, you know that our data center deployment strategy is always in those energy-abundant regions. And also in this region when we build our data center in hyperscale – in major hyperscale basically the [economy scale] [ph]. So, in the more scale, more data center built into the same location, the lost per unit costs we're going to have. As you can see from fourth quarter figures, our overall per unit cost and expenses outside utility cost all dropping down because of – simply because of increased [digital] [ph] economy. 72:00 So, even around the last quarter, we saw the national level power shortage, driven the power price increase, actually our EBITDA bottom line even increased because there's power price increase can be well offset by our diluted per unit cost due to the economy of scale. And we build this power price into our 2022 guidance as well. As you can see, even with this power price situation in the most conservative assumptions that our 2022 guidance will still provide us a very, very healthy and high EBITDA margins. 72:40 In terms of renewable energy, we've got like ultimately produced [indiscernible] plants. I think ESG initiative is one of our four major growth plan. We're going to seek a multiple message alternative to deploy our ESG initiative in the region we operate, namely in the East Data regions in the first place, strengthen our position, and then in the 3 year to 5 year to expand that deployment into West Computing like Qingyang City. 73:13 So with this deployment, I think we are well-positioned to attract more strategic investor into green energy, generation outside, and they become a local generator and we become local – new energy consumer. And that way, I think that’s going to provide [indiscernible] situation for our strategic partner on a generating side, they have a better return to secure the business for our [Technical Difficulty] and actually have the lowest energy cost in the long-term. 73:47 And obviously, the other way to – the energy is through the [power break] [ph]. That's an equation of the supply and demand situation. We believe with more green power generated through the power grids, and overall trend of the renewable power pricing in future, kind of be either close to traditional energy or even trending a little bit lower in the future.
Sandy Xiao: 74:15 [Foreign Language] 74:55 So, I'll help transfer Sandy’s supplemental words. So, there are multiple ways to acquire green energy, First one for the self-generation self-use. As you know, Chindata is the first one to adopt this model in Shanxi Province with the green energy generation for the 115 megawatts. And the second way is for the green energy transaction in different national provincial province platform. 75:25 And third one is the green energy certificate. And the first two types for the self-generation self-use model and they are also for the transaction at national platform, a provincial platform. This made possible to lower the green energy cost. So, in the future, Chindata will adopt multiple channels to acquire green energy and to increase our ratio of the renewable energy and try to leverage and to lower our green energy cost in future. Thank you.
Operator: 76:02 Thank you. Our next question comes from [Ming-Ran Lee] [ph] from CICC. Please ask your question.
Unidentified Analyst: 76:12 [Foreign Language] 76:31 Let me translate myself. So, on the background of the policy, with 10 or more competing with [indiscernible] western region. Could you elaborate more about how to take advantage with our full stack hyperscale business model? Thanks.
Huapeng Wu: 76:54 [Foreign Language] 78:00 Okay. So, to your question, we think we have already touched upon it in our previous response and also in introduction in our slides, but to sum up, we believe that the most important advantage is that we have, is that we have already established a pretty extensive layout in right in the meet, one of the designated [indiscernible] computing [Technical Difficulty] Zhangjiakou City. 78:33 So from the interpretation of the national policy, we believe that the country, like the government is trying to push in those designated computing costs to establish a cluster, the computing cluster, which is sizable, which is on have an economical scale, and also have a standardization model so that it can be to achieve the most benefit of the policy. And that's what we have already done as to our market standardization through our modularity model since the very beginning. 79:25 And because we have been doing that, on the experience from the operation and business development that we have been accumulating can certainly give us the first mover advantage, not only to expand our operation in the Eastern side of China in those computing hubs, but also transport all of those mature operation experience in our exploration for the western part of China. Thank you.
Operator: 80:03 Thank you. Our next question comes from Albert Hung from J.P.Morgan. Please ask your question.
Albert Hung: 80:11 [Foreign Language] 81:08 Let me translate my questions. The new China policy is data placed compute will attract more passenger deal into now tier one [indiscernible] in a waste. As we [indiscernible] first mover advantage, in three to five years, how did you see the comeback of [indiscernible] in the waste areas? I assume the access to the resourcing west could be easier versus [staffing tier 1] City, plus it implies more of recommended [indiscernible] the future? Thank you.
Michael Foust: 81:42 Thank you. Very interesting. So many interest and questions on this – the recent policy, on East Data and West Computing and we are very happy to answer all of them. I believe the best person to answer this again is our CEO, Mr. Huapeng. Please go ahead.
Huapeng Wu: 82:07 [Foreign Language] 83:40 Translation for Huapeng’s words. So, thanks for the question. And in the short-term, we kind of anticipate that the newly emerged demands will be more allocated into the designated computing policy either the East or maybe the West part, the cities and the policy And also in the short-term, we anticipate that the demand in the first tier cities might not migrate. But in the long-term, we still want to emphasize that our first mover advantage and how that will benefit as to be the best one to be the go to person and first choice for our clients to best meet their demands.
Huapeng Wu: 84:37 [Foreign Language]
Sandy Xiao: 84:40 [Foreign Language] 85:49 Yes. So, I'll help Sandy’s words. This national guidance, national policy is highly aligned with Chindata as a strategy for the long-run. Among a few years ago, we have been engaged in the hyperscale model in the areas where there is abundant energies and sufficient lender resources, and this is the unique advantage for the hyperscale business model. 86:16 And you know to do a hyperscale operator, you have to have the capability for the site selection for the planning for the technical design and the research and development and the delivery and the maintenance and the multiple capabilities. And this is the gene, Chindata has for the long time. 86:35 It is not everyone can do this in a very short-term. And also, you know, in the areas, where this is sufficient for the – with sufficient land resource, it also requires stability for the energy for the electricity integration capabilities for the power generation, transmission, and distribution, and Chindata has accumulated a lot of expertise in the knowhow in these areas as well. 87:04 As you know, the competition has always been with Chindata. We are the first mover in the Zhangjiakou area. And you know in the recent years, there are multiple competitors in these areas as well. But Chindata is still either in the scale or in the technical knowhow, is still in the leading position in these areas. So, thank you for the questions.
Michael Foust: 87:31 And I will like to add one more point. Actually in our business, I think government relationships is super important. In the region we operate, either in Zhangjiakou and Datong because we have been there in the past three to four years. And we become one of the largest enterprises of foreign capital enterprises and make a significant contribution to a local economy, in terms of [indiscernible] side helping local economy converting from a more traditional agriculture to a digitally economy. 88:10 On a quantitative side, we have provided large number of employment locally. And also, we become one of the significant tax contributor, GDP contribution to the local government. So, as a return, the government brand has a lot of preferred privilege and policy in terms of guaranteed land resources and power allocations in those regions. We believe that with this relationship, and we also have certain advantage over the new entrance into the area.
Operator: 88:45 Alright. Thank you. Next question comes from [indiscernible]. Please ask your question.
Unidentified Analyst: 88:52 [Foreign Language] 89:13 Thanks management for the sharing and opportunity to ask questions. My question is, there are quite some data centers to be delivered in 2022, what is the expectation of the customer moving speed for these new projects? And what is the expectation of the overall utilization rate for the company in the next two to three years? Thank you.
Michael Foust: 89:35 Yeah. Thank you for your questions. I think, I can address this question. Maybe Sandy can add some color. I think in terms of moving speed or ramp up speed, we are still seeing that our average moving rate or ramp-up rate is between 6 months to 9 months for majority of our under-construction business. That’s number one. 89:59 Number two, in terms of utilization, we believe that because we're going to have a lot of new product to be delivered in 2022, we’d expect the utilization kind of remain at around 70%, maybe a high 60% or maybe a low 70%, but as the more project going into the mature and fully [utilized shades] [ph], we believe our overall utilization rate for the entire portfolio cannot of be much higher in the mid-to-long run.
Sandy Xiao: 90:35 [Foreign Language]
Operator: 90:41 Right. Thank you. Our next question comes from Kaifang Jia from CITIC. Please ask the question.
Kaifang Jia: 90:49 [Foreign Language] 91:08 I will translate my questions. It seems like [indiscernible] and still have strong growth in the mid-term and they are trying to invest more in cloud computing, so just wondering how management just see the contribution from the [indiscernible] in the mid-term? Thank you.
Michael Foust: 91:27 Thank you. Now, Sandy you can answer this.
Sandy Xiao: 91:33 [Foreign Language] 92:25 Okay. So, I will translate. As well now, ByteDance has been very essential, very important customer for Chindata, and we maintain very good relationship and also in the past, ByteDance has contributed large portion of demand. And also, we see under construction pipelines, there are still lot of orders are from ByteDance. This is due to their very strong business need, especially for the new business initiative on the cloud computing and overseas expansion. 93:02 And for this two new business initiatives, we will closely cooperate with ByteDance together to support their business expansion and to provide infrastructure for their future business growth. 93:15 And also, you can see that for the overseas. We are going to deliver another additional 16 megawatt for 2022. So, this is due to, their strength of demand and we are in a position to deliver this, as well as possible. Thank you.
Operator: 93:40 Thank you. Our next question comes from Edison Lee from Jefferies. Please go ahead.
Edison Lee: 93:47 [Foreign Language] 94:05 So my question is about MSR, because I saw that the MSR in the fourth quarter of last year actually fell more than 20% both year-on-year and Q-on-Q. So, I would like to know what was driving that? And also, what is the longer term outlook for the MSR trend? Thank you.
Michael Foust: 94:27 Sandy or Huapeng will you want to address that?
Sandy Xiao: 94:33 [Foreign Language] 95:03 The MSR is at company level and there is a weighted average of different regions prices. As you know, in different region, the price is different due to the different utility cost and the different other maintenance cost as well. In last year, the fourth quarter, the Shanxi Province, we delivered to take hyperscale data centers and this has been in the position to drag the MSR a little bit lower as the utility cost is much lower in the Shanxi Province. But you can see, the EBITDA margin is still increasing in the fourth quarter of last year. 95:46 Reached a historical high of 51.7%. And so, the margin is very still, very robust, very healthy. Thank you.
Operator: 95:58 Thank you. [Operator Instructions] We have a follow-up question from the line of Edison Lee from Jefferies. Please ask your question.
Edison Lee: 96:30 [Foreign Language] 96:50 So, my question is about the IRR of projects in the Western part of the country. So, as management pointed out, because of lower utility costs and maintenance cost, so the headline MSR in Shanxi actually is lower. So, my question is what are the Shanxi projects overall could be even higher than those in Hebei, for example?
Michael Foust: 97:13 Thank you, Edison. I think our IR for the project in both regions, including Hebei, and Zhangjiakou and Datong [indiscernible] are much higher than industry average. And yes, the IRR for the project in these regions were very similar profile.
Operator: 97:45 Alright. Thank you. So, we have reached the end of the question-and-answer session. So, ladies and gentlemen this conclude our conference for today. Thank you for participating. You may all disconnect