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spk09: And good evening, ladies and gentlemen. Thank you and welcome to Chin Data Group Holdings Limited's first quarter 2021 earnings conference call. We will be hosting our question and answer session after management's back remarks. Please note today's event is being recorded. I will now turn the call over to the first speaker today, Ms. Joy Zhang, Investor Relations Director of Chin Data Group. Please go ahead, ma'am.
spk02: Hello, everyone. Welcome to Chin Data's 2021 First Quarter Earnings Conference Call. I'm Joy, and with us today are Mr. Alex Zhu, our CEO, Mr. Nick Wan, our CFO, and Ms. Zoe Zhuang, our Finance Vice President. On behalf of our CEO, Nick will take you through the quarterly review of our operation performances, and Zoe will present our financial results. Alex, Nick, and Zoe will be here to answer your question afterwards. Now, I'll quickly go through the safe hopper statement. Some of the statements that we're making today regarding our business, operations, and financial performances may be considered forward-looking. And such statements involve a number of risks and uncertainty that could cause actual results to differ materially. For more information, please refer to the risk factors discussed in our most recent filed with the FEC, and also in our Form 6K for the quarter ended March 21, 2021, which has been filed with the FEC as well. During this call, we will present both GAAP and non-GAAP figures. Reconciliation of non-GAAP to GAAP measures is included in our earnings press release. which is distributed and available to the public through our investor relations website located at investor.chindatagroup.com. We have also updated our quarterly presentation on the company's investor relation website, which you can refer to as supplementary material for today's call. Without further ado, I will now turn over the call to Nick.
spk05: Thank you, Joy. Hello, everyone. Now let's first take a look at some highlights for the first quarter of 2021 on page four of the slide. We delivered solid results once again in the period as we continue to increase capacity, grow revenue, control costs effectively, and build our capacity capability. In terms of our capacity, the number of our in-service data center reached 14 by quarter end. compared with 13 by end of 2020. We grew our total IT capacity in service to 337 megawatts, compared with 291 megawatts by end of 2020. For under construction capacity, we have a total of seven data centers under construction throughout China, India, and Malaysia, with a total IT capacity of 154 megawatts. compared with 198 megawatts by the end of 2020. On power utilization and efficiency, we continue to maintain our energy efficiency performance in the business of efficiently converting electric power into computing power. Our total power consumption in the first quarter was 348 million kilowatt hours. and our year-to-date average PUE by end of the first quarter was 1.19 compared to 1.22 in full year 2020. The number of approved and pending patents by quarter end reached 231 compared with 216 by end of 2020. We continued our effort in capacity build-up And additional patents in the quarter cover initiatives for operation and construction efficiency improvement, such as cooling technology, construction module, and data center equipment, et cetera. With effective cost management practice, we maintain our average construction cost for all in-service data centers at less than US dollar 3 million per megawatt during the quarter, which is well below industry average. On some key financials, our top and bottom line remains strong as revenue and adjusted net income reached historical high and increased by 63.9% and 175.8% year on year to RMB 643.4 million and 109.3 million respectively. Now, let's take a closer look at our data center assets, as you can see on slide six and slide seven. In China, we continued our steady delivery and completed the construction of CN09 project in northern China. This project, along with the capacity expansion on CN8, added a total in-service capacity of 46 megawatts in the first quarter. On contracted capacity, we added a total of 15 megawatts by expanding our collaboration with our existing client, which are CN06 and CN08 in northern China, among which 11 megawatts was converted from existing indication of interest capacity. In particular, high density cabinets with per cabinet density of up to 25 kilowatts to 32 kilowatts will be installed for such newly contracted capacity. The solid fundamental technology that we have long been investing in has made such installation possible. And we will continue to be the trusted partner accommodating to the increasing computing demand of our clients. We added around 17 megawatts utilized capacity in quarter. and it increased our total utilized capacity from 221 megawatts in year-end 2020 to 238 megawatts in the first quarter. Such was contributed by the steady ramp-up in projects, including CN01, CN06, CN08, and CN11A, and CS01. as well as the newly in-service CN09 in northern and southern China respectively. We managed to maintain a high client commitment. As you can see on slide seven, the contracted ratio of all in-service capacity was 90% in the first quarter. Taking into consideration indication of interest capacity, the combined contracted ratio of all in-service capacity would be 91%. For under construction capacity, contracted ratio was 70.3% in the first quarter. Taking into consideration indication of interest capacity, the combined contracted ratio of all under construction capacity would be 81%. On our overseas development, given the pandemic situation in India, The status of our BB101 project is being closely watched, and we will take adequate measures for the execution of the project. Next slide. Our strategy and capacity building. Following the establishment of the three business subgroups in the last quarter, we continued our effort in capacity buildup for the vision of better serving digital leaders and providing the industry with next-generation computing infrastructure solutions with greater diversification and a better cost efficiency and to further strengthen our cost and technical advantages. On our renewable energy initiatives, we are making steady progress in our existing 150 megawatts photovoltaic power generation project in pursuit of our long-term 1,300 megawatts renewable energy development plan. As a recent development, we signed an additional 200 megawatts renewable energy development framework agreement with the local government in April and thus further expanded our planet long-term development capacity to 1,500 megawatts. Going forward, the company will utilize proper internal and external resources to carry on a long-term energy development and to safeguard our business of efficiently converting electric power to computing power. On the environmental and sustainability side, the company published its second ESG report on April 3rd, which is available on our website. Furthermore, Our green effort is being constantly recognized by the society. As a recent development, Greenpeace published its Clean Cloud 2021 report on April 21st and has ranked ChimData number one on Clean Energy Scorecard among all internet cloud and data center companies surveyed, with a total score of 85 out of 100. The scorecard covered a range of topics of energy transparency, energy efficiency and carbon reduction, renewable energy performance, and government and industry influence. We have topped the list for two consecutive years and scored a perfect 40 out of 40 on renewable energy performance this year. On capital markets, MSCI announced the result of its May 2021 quarterly index review on May 12th, 2021. and selected the company for inclusion in the MSCI China All Shares Indexes. The addition of the company will take effect after market close on May 27, 2021. Such signifies the further recognition we are earning from the market. I will now turn over to Zoe, our VP of Finance, to go over our key financial results. for the first quarter of 2021. Being mindful of time, I encourage our listeners to also refer to our earnings press release, which is posted online, and includes our quarterly results, along with other additional details. Please note that all numbers today are in RMB terms, and that all comparisons are on a year-over-year basis, unless otherwise noted.
spk03: Now, turning to slide 11, in Q1, our total revenue grew by 16.3% quarter-over-quarter to RMB 643.4 million from RMB 553 million in Q4 of last year, an year-over-year increase of 63.9%. The strong revenue growth was in line with our ramp-up in capacity as utilized capacity increased to 238 megawatts at the end of Q1 from 221 megawatts at the end of Q4 last year. This includes organic growth of around 15 megawatts from previous in-service data centers and organic growth of around 2 megawatts from new in-service data centers. Moving to slide 12. On our expense and margin trend, our prudent cost control efforts enabled us to maintain stable margins while continuing to grow our adjusted EBITDA and adjusted net income. We recorded a 70.4% year-over-year increase of adjusted EBITDA, outrunning that of the revenue. while the adjusted EBITDA margin was 47.8%. Looking into the cost and expenses items, utility costs recorded a year-over-year increase of 69.6%. Maintenance and other costs recorded a year-over-year increase of 34.5%. and adjusted SG&A recorded a year-over-year increase of 73.7%. Take a further look at our adjusted net income on slide 13. The adjusted net income in the first quarter was RMB 109.3 million compared to RMB $39.6 million in the same period of last year and RMB $58.0 million in the fourth quarter of 2020. Adjusted net income margin for the quarter reached 17%, also a historically high for the company. we are holding a healthy position of cash and cash equivalent, generating healthy cash flow from operations. We are also in the process of diversifying our channels of financing to meet our commitment for development. On slide 14, CapEx was RMB 654.4 million for the first quarter, and we have a cash position of RMB 6,916.7 million as of March 31st, 2021, compared to RMB 1,242.1 million as of the same period, end of last year. On slide 15, you can see that our credit ratios remain healthy. Our adjusted EBITDA to interest ratio, or the interest coverage ratio was 5.3 in the first quarter. Meanwhile, our total cash generated from operation was RMB 193.4 million compared to RMB 99.8 million in the same period of last year. The contribution to the change of cash position in the quarter, other than operating cash flow and the capex, as mentioned previously, was cash flow from financing activities. Moving to our guidance on slide 16, looking into the rest of 2021, we continue to expect our total revenues to be in the range of RMB 2.7 billion to RMB 2.78 billion and adjusted EBITDA to be in the range of RMB 1.28 billion to RMB 1.33 billion. This forecast reflects our current and the preliminary views on market and operational conditions which are subject to change. This concludes our prepared remarks for today. Operator, we are now ready to take questions.
spk09: Thank you. At this time, to ask questions, you will need to press star 1 on your telephone. Chinese-speaking participants, please kindly ask your question in Chinese first, then translate your question into English. To withdraw your question, please press the power or hash key. Please stand by while we compile the Q&A roster. Your first question comes from Young Liu. Please ask your question.
spk10: Thank you for the opportunity to ask a question. First of all, congratulations to the company for achieving very good performance. My first question is to hear the management level's view on the current market competition, especially in the company's main camp, Hebei, for example, the Beijing market. At the same time, the company also has an asset in Jiangsu. I would like to hear the competitive attitude of these two markets. The second question is that we see that the Hebei government recently has a tightening policy on the project approval of the data center. I would like to hear from the management of the company about this policy for the future of the company, the expansion of new production capacity and the influence of the new order acquisition. The third question is a housekeeping question. I see the seventh page of our PPT. I will do the translation briefly. The first question is regarding the competitive dynamics. We would like to hear management comments. on the dynamics in the key domestic markets, especially Hebei and Jiangsu province. The second question is, what would be the expected impact to Qingdao's future expansion in Hebei province, given we see that local government tightened approval for new data center capacity? And the third question is a housekeeping one. We see in page 7 of the presentation, B project is under construction but ready for service in first quarter this year. What is the status for that project now? Thank you.
spk05: Hi. Thank you, Luyang, for the quick questions. I don't think I need the Chinese part of the answer. I just strictly talk about, answer the question in English. For a question about the intensified competition, the company also noticed there was some level of intensified competition in some regional market recently, especially in the Jiangsu province. We think that it would have a negative impact to those IDC operators who cannot provide the true value to their customers because of their limited in-house capabilities limited the scope of service, and the relative rigid cost structure makes them very sensitive and vulnerable to the competition. But for CHIN data, first of all, we don't see the intensified competition in the region we operate. So the impact on us is very limited. But most importantly, we believe the hyperscale sector we are in is quite immune to this kind of competition. For this point, I want to take a little bit more time to explain. You know, as you know, you probably, everybody knows that the Chin Data has a very, very unique and highly differentiated hyperscale full-stack model from the primary development to operation. And our capital and cost efficiency is much higher than the other sector, which is based on the traditional wholesale and retail models. So these definitely have three unique characteristics. On the investment side, under Chin Data Model, our per unit CapEx spending based on cost is much lower than the CapEx spending under Merger Acquisition Model based on trading market value. Therefore, our total CapEx spending for the same level of IT capacity is much less. Second point is actually that our capital-to-cash return cycle is shorter, as we are capable of delivering projects much faster, and our capacity ramp-up rate is quicker. This actually enhances our capital turnover rate, reduces leverage ratio, and significantly increases our return on invested capital. In addition, our prudent treasury policies, cash pooling and interest, and foreign exchange hedging policy help reduce the fluctuation of our cash flows. This business model and operation model and the capability model that manages the CHIN data result in CHIN data's great financial performance so far. I want to repeat some of the numbers we just introduced in our, you know, official ER-releasing presentations. So, on the profit and loss side, relatively less per-unit capex spending leads to less depreciation and amortization costs. And the low debt level and ever decreasing borrowing costs leads to low interest expenses, which can explain perfectly why our adjusted net income, which include depreciation and amortization and interest, has remained positive for the consecutive quarters in the past. We think this metric should not be overlooked anymore I suggest you take another look at our net income figures on page 13 on our Earnings Relief presentation. And on the liquidity and capital structure side, we have ample and healthy cash balance. Our long-term debt ratio remains at a very low level, and our incremental borrowing cost is trending down. Again, I suggest you take another look at our liquidity profile on page 15 in our Earnings Relief presentation. So, in summary, As long as we stick with our unique development and operation model, maintain our scope of service level, we are going to take full advantage on all capital and cost efficiency related matters. Therefore, stay relatively immune to price competition, especially in the locations where we operate our hyperscale data centers. So that's number, that's your question number one. Now, your question number three about the assets on our CA11B. I think we actually, our principle is always follow the demand and requirement from our customers. When our customer has some redeployment request in Q1 about this data center, CA11B, you know, we actually follow this request. And therefore, we make a little bit of redeployment, reconfiguration of our data overall servers utilization among different data centers. I won't elaborate on the detail, but the result is actually, we actually make this CA11B, this data asset delivered in Q2 based on this redeployment of overall server strategy from the customers. So that's actually one of the reasons. Okay. I will also, regarding to your question, too, about our current policy, macro policy, regulatory policy on the Hebei province, I'm going to refer to my colleague, Zoe, to give you an elaboration on this.
spk03: Regarding the second question, our company's unique operation model has great contribution and also enablement or empowerment advantages in the company's project locations in terms of fixed asset investment, foreign currency investment, local taxation, personnel and talent employment, and also the regional industry upgrading. So in one word, the tightening of the relevant policies will have very limited impact on the company.
spk09: Thank you. Your next question comes from James Wang from UBS. Please ask your question.
spk06: 管理層,晚上好。 我是瑞英的分析師James。 我有三個問題啊。 The first question is, we see that Ali has recently lost a cloud client in overseas business. We guess it may be a self-sufficiency. So we want to know if this company is an opportunity to accelerate the development of overseas markets in the near future. This is the first question. The second question is about the fusion. This is a question. So I want to know if our company is communicating with current or potential customers, whether the customer is There are corresponding requirements for this green indicator. I also see that other companies, our PS, are also continuously chasing our company in this regard. So in terms of carbon neutralization, how does our company maintain its position in this industry? This is the second question. The third question is about resource storage. As we mentioned earlier, the local government is also recently tightening the data center indicators. Good evening, management. This is James Wong from UBS. So my first question is on just the overseas opportunities. So AliCloud in its recent announcement indicated they've lost a large cloud customer in its international business. So just wondering whether that could be one of your key anchor tenants and whether this might accelerate your international expansion. The second question is on carbon neutrality. So just wondering whether our customers, both existing and potential customers, whether Renewable Energy has become a new KPI for them and whether these customers are actively looking for ITC projects with renewable energy sourcing? And also, the peers are also trying to catch up on renewable energy and ESG. So how do we keep ourselves ahead on this particular aspect? And the third question is on resource availability. So it looks like the government is tightening energy quota handout. So how is our current land bank looking, particularly given if we look at the project under construction in the first quarter that looks like it's down versus the fourth quarter of last year. Thank you.
spk02: Hi James, thank you for your question. For your first and second question, I'll invite our CEO Alex to give you an answer. And for the third question, we'll invite Zoe to give you the answer. Alex, please.
spk07: Okay, the first question, Alibaba currently are not the main customers of the company, so they have no impact on the company. We can't comment on the names of other customers. The second question is about carbon neutralization. Currently, our target customers value ESG very much. Almost all key target customers we have contacted and clearly proposed the requirements of the carbon neutral river route map. Even some customers who have not yet proposed the hard-to-reach requirements, we also appreciate the company's exploration at the green development level. The company believes that this is very beneficial to us and our customers in the future demand side. to launch a new business cooperation model. In the same industry, we are always in a position of sustainable development and practical leadership. On April 3, we have already released the second ESG report of the company. In the 2021 green cloud report released by the Green Peace Organization on April 21,
spk02: I'll give you a translation for Alex's answer. For James' first question, as Alibaba is not one of our current anchor customers, so it does not really affect us that much. But as to the specific name of possible new or expanding customers, currently we are not ready to disclose yet. For your second question, so on the ESG regard, our current customers are all making it very important issue and agenda in their own development. And they have keep on posting that as the continuous request for all of their suppliers. and for us as well. So far, with the key anchor customer that we have already developed our business relationship, all of them have already given very clear carbon neutrality goals and roadmap requests for us. Even for some of our existing work, potential clients does not really give a very visible hard request on the carbon neutrality. They are approaching us and express their appreciation of our company's exploration and attempt in the green development. We do think what we do for the ESG and sustainable development will definitely benefit us in the future expanded collaboration with all of our existing and potential customers under the new cooperation model. Also, for the second aspect, within our industry, we have always maintained our leadership in this aspect with substance and heart records. We have published our second ESG report on April the 3rd, which is now available on our website. And also, our green effort is being constantly recognized by the society. And as a recent development, Greenpeace has published its Clean Cloud 2021 report and ranking data as number one among all of the Internet cloud and data center companies second year in a row. We have topped the list with a perfect 40 out of 40 score on renewable energy performance this year. Zoe, please.
spk03: On the third question regarding the reserve, the company believes that there is no longer a distinction between the first tier cities and the periphery areas at the business operation level for the customer key infrastructure for our target customers. Our company has already made a very early judgment on this trend a few years ago, and prepared certain reserves, such as the land and energy. So from the current point of view, we have gained some first mover advantages already. Such kind of advantage will allow us to maintain a dominant position on the supply side. Thank you.
spk06: Thank you. Thank you, Zhou.
spk05: Thank you, Zhou. Back to your question a little bit, one more point. I think, you know, in the ER releasing presentation every quarter, there's always two categories. One is the assets in service. The other one, assets under construction. So the decreasing of under construction assets, the large part of reason is actually we move some of the product become in service in the operation. So that product is going to move up to the assets in service category. That's actually the major reason. And also, we have recently, we have made, and we believe, in the near and midterm, we're going to achieve some, I think, we're going to make some positive development with existing and potentially new customers on some pipeline projects based on a strong supply we have in certain advantages of the geographic location, as Zoe mentioned to you just now. So we're going to find an appropriate time to disclose this development through the assets under construction categories in the future.
spk06: Thank you very much, Nick.
spk09: Your next question comes from Alter Lai from Citi. Please ask your question.
spk08: Thank you, Guan Licheng. Hello, I'm Alter Lai from Huaqi. There are two questions I would like to ask. The first is, will 3C be a major growth engine for our expansion plan in the next two years? The second question is about the model level. According to your assumption, the result is that the utility cost in the first quarter is about $254 million per kilowatt. For the first quarter of last year, there was an obvious decline. But for the fourth quarter of last year, there was an increase. Is this a one-off? Is it seasonal? Or are there some things that we need to pay attention to? In the future, when the case in Shanxi is raised, can we expect an average cost decline of the utility cost? My first question is regarding the growth pipeline from the 3C new site. And the second one is can we expect the further cost down from this new site in terms of average megawatt perspective? Lastly, it's on the housekeeping question. Why the megawatt cost increased over the quarter? Thank you.
spk05: Sure. Arthur, thank you for your questions. I think, again, for the logistic management, I don't think that we need to repeat a question in English. So you only need to ask the questions in English at the same time. We try to only answer it in English. So back to you, Arthur, your first question about the ,, yes. Shanxi is definitely one of our geographical forecasts moving forward. There's certain advantages on the resource side, on the energy side, especially on the renewable energy side moving into the future. And like the companies are turning a plant, I think the mix of the asset we're going to put, hyperscale data center asset we're putting in Shanxi, going to become a little bit higher moving into the future. So for the advantages just mentioned. Your second question about our average utility cost increase in Q1, that's actually, yes, you already answered the question. It's actually due to the seasonality issues, especially in the winter seasons. But moving forward in the mid to long run, we believe with more low cost, especially low utility cost regions and our Hyperscale data as an industry region come into service, our weighted average utility cost come down, you know. And also moving forward with our renewable energy come into play, renewable energy strategy come into play into the full execution move with the addition of the, I would say, much favorable renewable energy cost, you know, in the regions. We believe in the long term, our average utility cost is going to come down no matter what region it is.
spk08: Okay, thank you, and congrats on a strong bid on the EBITDA margin.
spk09: As a reminder, if you wish to ask a question in Chinese, please kindly translate your question into English after that. Your next question comes from Tina Ho from Goldman Sachs. Please ask your question.
spk12: Hi, management. So I can just speak in English, that's fine?
spk05: Yeah, no problem at all.
spk12: Okay. First of all, congratulations on the very strong results. Obviously the revenue growth as well as EBITDA growth is tracking way ahead of your four-year guidance. So I have a few questions. The first one is regarding pricing. So from the previous few quarters' results, I have sort of calculated the effective pricing per megawatt and seems like it has come down from previously around 1 million RMB per month per megawatt to now close to 920,000. So just wondering what has driven the pricing pressure recently. And then the second question is regarding major customer demand as we know that From the prospectus, we know that your major tenant is a social content provider, and recently there seems to be some user usage slowdown with that customer. So wondering how do you think that's going to affect that customer's demand with us? And then the third question is regarding your longer-term EBITDA margin. We have seen obviously for this quarter it has performed very well. So going forward, what do you think will be a relatively stabilized margin level? And the last question is regarding your CapEx. I understand that during the last quarter's earnings call, management provided this year's CapEx guidance about 4 to 5 billion RMB. So if we take this into account together with last year's capex, around 2 billion, the total capex per megawatt addition, when we calculate that, is around 5 million U.S. dollars per megawatt. I remember in the prospectus we had around 3.6 million U.S. dollars per megawatt, so I was just wondering if I have missed something in the capex numbers there. Thank you.
spk05: Thank you, Tina. Just a sort of mathematical clarification. I think our quarter-over-quarter MSR on average price especially the Q1 2021 versus Q4 2020, actually doesn't decrease, essentially. So what you saw is probably our Q4 2020 versus Q3 numbers. So I just want a little bit clarification on this. But however, I'm explaining the driver of this, the driver for the MSR. So our data center projects or assets are located in different regions. And their contract price will be different by region. And because the development and operating cost varies from one region to the other. So the theory is, the lower the cost for certain region, the lower price offering Chinde will make to our customer. But in each region, our contract price has been remaining very stable and not affected by the market competition at all. Okay. So that's a further explanation. And looking forward, obviously, the geographical mix of where our data centers are located are the major driver of our weighted average MSR. Again, the lower the cost for that region, the lower price offering Chin Data will choose to offer to its customers. So in the moving into the future, we expect to have slightly more data center assets get deployed into those low-cost regions. As I answered a question from Arthur Lai, that we probably going to build more data assets in Shanxi where they are restored energy and renewable energy resources abounded and the cost is relatively low. And that's actually going to give us a competitive advantage on the cost side and therefore translate into the market the pricing side to our customers and compared to our peers. So that's actually my answer to your first questions. Your second question about the customer demand, actually, you know, for our customer, first of all, we don't get any feeling that business slowing down for our customer, especially our most important anchor customers. On the contrary, we are seeing the demand for new data center project, for their new business, from our anchor customers in various regions remains actually quite strong. That's why when I answer a question for James, why there's some lower numbers this quarter compared to last quarter for the assets under construction, you're going to see more numbers added into this category as we move on, for the reason I just mentioned. And also, because of the advantage we have on the supply side, we believe once this demand become materialized, we can swiftly respond and meet this strong demand based on our competitive advantage in terms of available resources, superior development and operational capability, and most importantly, the relationships and the good executional credentials we had that established through our partnership for our existing uh existing project both in service and up under construction with our existing customers so that that's my answer to your second question uh and i'm going to refer your third uh third and fourth question related to the long-term ebitda margin and cap has to my colleague zoe
spk03: Yeah. So, hello, Tina. For our third question, on the company target at the high 40s in the midterm for our EBITDA margin target. And for the last question, it's regarding on the CAPEX. The capex is especially for the construction expenditures, mainly include land, shale, stable construction, electrical, mechanical equipment, and engineering, and also the auxiliary infrastructures. such as the substations for this project. And this is from the scope. And secondly, for the project, it includes the under-construction for their CAPEX and also for the in-service data centers. Usually, after they are ready for service, they still will have some final balance payment. And since we have very secure supply chain and vendor management, and so if we have these two add up together, it's our estimation. And also, Nick also mentioned that we will have some additional pipelines, and we will update you the information timely on each quarterly earning release.
spk12: Thank you very much, Nick and Zoe.
spk05: Thank you.
spk09: Your next question comes from Chris Cole from DBS. Please ask your question.
spk11: Hi, management team. Congratulations on the strong results. This is Chris Cole from DBS, and thanks for taking my questions. I have two questions. First, could management share your view on the impact of the antitrust investigations against Internet platforms on data center demand? And my second question is could management share more color on the strategy and the progress of new customer acquisitions like what sectors we are focusing on and where are the potential demand located? Thank you.
spk05: I think, yeah, thank you, Chris, for your questions. I think we don't, as a market practitioner, participant in this industry, we're not in the position to comment on the direct impact of the government's anti-monopoly or anti-trust attitude toward our downstream customers. But as far as I know, I think I just answered a question. When I asked a question for Lu Yang, I think for our customers, I don't think their business got affected. Well, on a day-to-day interaction with our customers, we still think that the potential of future collaboration of certain IDC, hyper-skilled IDC products, still ongoing. And we're going to have quite positive development moving into the future in different regions. So we don't know what's kind of the positive or negative impact on our anchor customers, essentially. But for those customers that yet to become on our customer list, there might be some impact to them, but we will closely watch the development of the situation and see how it's going to impact our process of acquiring this these players as our potential customers. Okay, so that's pretty much our comments on antitrust issues. And also in terms of the new customer development, the company is very affirmative to put the new customer acquisition as our short strategy into the future. And like we did in Q4 last year, we have acquired a new customer and added their name with a significant capacity into our business line. And we also are making some positive progress with other potential customers, not only in China, but also in the overseas market. Not only limited to domestic Chinese customers, but also those international players, digital leadership companies in the overseas market as well. So once we make some material progress on this, we will find the right time to disclose to the market.
spk11: Okay, great. Thank you. Thank you.
spk09: Your next question comes from Hongjie Li from CICC. Please ask your question.
spk04: Thanks, Benjamin, for taking my question. I have one question more related to whole industry. Like some leading public crowd has announced its first quarter results showing like over 30% growth and a significant slowdown. So how do you see this demand change? Is there any demand and supply dynamics change? And from our perspective, do you see any opportunities to undertake part of the demand from like originally from the public cloud and now some customers shift this demand directly to the IBC players? So how do we catch up this new trend? Thank you.
spk05: I think, Echo, thank you for the questions. I think, you know, again, I think like we explained just now, I think there might be some slowdown on overall public cloud of business, you know, but we haven't got a figure shot, you know, in the top of our mind. But, you know, for our customers, our key customers, who actually are also significant Internet players, And the homemade potential also do something in the public cloud area. We don't see the business slowing down at all. We don't know whether it's a real slowdown or real accelerated. We don't know. But at least in our interaction with our anchor customer, our existing customer, we are seeing that the potential collaboration of two sides will be increased, I think, in the near and mid-term, essentially. So having said that, I think that's probably addressed your second part of the question, you know, If there's new players other than the existing public cloud players in the marketplace who are facing the antitrust, the anti-monopoly regulation from the government, I think there are going to be more opportunities for chain data than risk because those companies affected by this anti-monopoly, those companies affected by the slowdown on the public cloud business are not our customers. And our customers a major anchor customer may have more chances to enter into those areas, and we will take some positive right along the course as well.
spk04: Thank you.
spk09: Your next question comes from Timothy Chow from Jefferies. Please ask your question.
spk00: Hello. Thank you for the opportunity to ask questions. I'm Timothy from Jefferies. I have a couple of questions. The first one being, like during the last analyst meeting, the company has announced about CN13 where there will be a new customer. So I would like to understand if you can disclose any progress of discussion with the customer or what can we, for example, what can we expect about the pricing compared with the company's current MSR? The second question is about the CapEx plans of the three new business units. I would like to understand if the management would like to talk something more about the three business units that was announced in last meeting. The last question is also about overseas expansion opportunities. I believe last month Microsoft has mentioned about a billion investment in Malaysia on IDC. So I'd like to understand if the company would have any plans to, you know, further expand their Malaysia business and, you know, in the longer term, what will be the geographical revenue split be like? Thank you.
spk05: Hey, Timothy, thank you for your questions. Starting from your question number three, yes, actually, we already become the closely collaboration partner for Microsoft in Malaysia. And also, we are already a closer collaborator with Microsoft in China as well. So that relationship is pretty close at the moment based on our successful execution of the past projects. and also our accountability that the team has demonstrated through this collaboration. So our strategy, one of our top strategies is always to expand our business cooperation with our existing customers and to make them happier and happier. Hopefully that this corporation can bring some significant, you know, wider scope, both in China and Asia's emerging markets. We'll find a proper time to disclose the positive development for the public later on. So that's the question number three. Question number one, regarding the CN13, that's the new customers we acquired in Q4. And I think if you check the schedule, they're from the The time in Q4 we signed the commitment with our customer to the time we plan to deliver the product to them is still quite a long extended period to go, essentially. At the moment, I think I can only say that everything is on schedule, and we're going to fulfill our promise to deliver the project on time, with the right quality, and hopefully we can even exceed our customers' expectation of it. You know, and your second question about a CapEx plan on the new business, we're still writing up the concrete executable business plan, the execution plan for these three major subgroups. But the most likely scenario is actually those three subgroups will serve our strategic, you know, objective. For example, with Jim Howard, you know, The primary mission of Chin Power, or the subgroup of it, is try to make sure that by 2030, you know, all the major hyperscale data centers for Chin data in China will be consuming 100 percent renewable energy, okay? So, if you don't make your renewable energy generation investment, you know, and completely rely on the market purchase and market transactions, this objective is very hard to achieve. Having said that, we may have an investment plan to invest into this renewable energy in the geographic location where we're going to build a future hyperscale data center to consume renewable energy. But we will be smart, and we will partner with the external investors to co-invest into this sort of project. and to make sure that the investment on capex spending from the Qingdao side can be made on a shared basis, can be minimized and output in terms of increased utilization of renewable energy and the potential improvement of the EBITDA margin by the relatively lower renewable energy cost and also by potentially you know, realizing the external revenue by turning our role from the great energy buyer to the great energy seller, kind of bring the huge commercial and financial benefits to the company.
spk00: Thank you. Very clear.
spk09: Thanks. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect your lines.
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