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spk14: Good morning and good evening, ladies and gentlemen. Thank you and welcome to Chain Data 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. I'll now turn the call over to the first speaker today, Mr. Don Zhou from Investor Relations of Chain Data Group. Please go ahead, Don.
spk02: Hello, everyone. Welcome to Chain Data Group's first quarter and full-year 2021 earnings conference call. This is Don from the investor relations team of the company. With us today are Mr. Michael Faust, chairman of the board of the company, Mr. Wu Huapeng, our newly appointed CEO, Ms. Sandy Hsiao, our president, Mr. Nick Wong, our CFO, Mr. Eric Fan, our newly appointed COO, Mr. Zhang Binghua, our newly appointed CTO, and Ms. Zoe Zhang, our finance VP. In addition to providing a discussion and analysis of our quarterly performance, the company would also like to take this opportunity to share more on our recent management update, as well as the growth plan going forward. To begin with, Mr. Michael Faust will walk you through the recent management update and the rationale behind. Harpoon 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. Now I will quickly go over the safe harbor Some of the statements that we make today regarding our business, operations, and financial performance may be considered forward-looking, and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. For more information, please refer to the risk factors discussed in our filings with the SEC. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in our earnings press release, which is distributed and available to the public through our investor relations website located at investor.qingdatagroup.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 for today's call. Without further ado, I'll now turn off the call to Mr. Michael Faust. Michael, please go ahead.
spk01: 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 in their leadership of Chin Data going forward. As you know, we made the announcement a couple of weeks ago, the appointments of our CEO, our president, COO, and CTO of the company. Leading the team, Mr. Wapung Wu was appointed as our CEO and as a director of the board. A little background on Wapung. He joined Chin Data in 2019 as president of our China business. And prior to that, he was the founder of iTech Club and the founder and headmaster of 1024 Academy, which both are preeminent platforms that bring together top technology executives for training and idea exchanges. Wapung also served as vice president of Phoenix New Media and the CTO of iFeng from 2007 to 2013. Wapung'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, Wapong brought in a series of strategic customers and projects and successfully established solid relationships with local governments and our partners in the data center ecosystem. After a thorough search process, it became clear to the board that Wapong is the best fit as the group's new CEO with his strategic thinking, industry resources, and understanding of the company and our team. Ms. Sandy Hsiao 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 Chin Data Group. Mr. Xinyu 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 in strategic planning and operations. He served as vice president and the general manager of Securit Asia with Saint-Gobain from 2015 to 2021, and served as strategic planning director of Saint-Gobain from 2013 to 2015. In addition, Mr. Phan 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 2009-2011 and also served as a consultant with the Boston Consulting Group for four years from 2006-2009. In addition, we're very pleased to announce that Mr. Benoit Jean was appointed as our chief technology officer. Binghua has a very long distinguished background in the IDC industry. Prior to joining Chin Data, he was the technical director, senior director, and the general manager of the systems department and IDC engineering at Baidu from 2010 to 2011. Prior to that, Mr. Zhang served as the chief engineer in the Beijing Telecom Planning and Design Institute from 1995 to 2010. Um, we are very pleased to have him join our team and, um, he's a very distinguished, very well known in the industry. So, uh, we're, we're very happy to have him join us. And lastly, we have, as you well know, we have Nick Wong as our CFO who's been with the company for over two years now. So we're a very well positioned, uh, with our management team and, um, You know, the company benefits from this very strong team with diversified experience and expertise covering our business operations, strategic planning, technical know-how, as well as capital markets operations. We're highly confident that under this team, Chin Data's business is more diversified. Its culture is more open with a solid foundation so that we can further strengthen our position as the leading data center platform in China and in the Asia Pacific emerging markets. So with this, I'll turn the call over to our CEO, Mr. Wa Peng Wu, who will provide you with a comprehensive overview of the company's plan going forward. Thank you.
spk05: Thank you for your introduction, Chairman. Thank you for the approval and trust of the Board of Directors. It is an honor to take on the responsibility of managing such a business as Jinghuai. I look forward to the close cooperation between the Board of Directors and the management team in the future. Next, I would like to briefly review the company's business and financial highlights in the fourth quarter of 2021 and the previous year, and make a preliminary introduction to the company's next development plan that represents the company's attention to everyone. In the fourth quarter of 2021, the company added four new data centers. The total number of data centers rose to 27, adding 85 trillion watts of capacity. The total capacity rose to 673 trillion watts, adding 70 trillion watts of operating capacity. The total operating capacity has been increased to 440MW, which is 95MW more than expected. The total contract capacity is more than expected, which is 589MW. The overall contract capacity is more than expected, which is 87.5%. The total capacity is 36MW more than expected, which is 304MW more than expected. Our data center maintains efficient and efficient operation, In 2021, the average PUE was 1.21. In terms of finance, we continued to perform well. The previous year's income and the adjusted EBITDA exceeded the previous year's interest rate. Among them, the income reached RMB28.5 billion, which increased by 55.8% and exceeded the interest rate line by 0.8%. The previous year's adjusted EBITDA reached RMB14.2 billion, which increased by 66.5% and exceeded the interest rate line by 1.5%.
spk11: Thank you for the introduction, Michael. I'd like to start by thanking the board of directors for their trust and endorsement. It is an honor to shoulder the responsibility of managing and operating such an excellent data center enterprise. And I look forward to working in close cooperation with the board and our management team. 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. On slide eight, in the fourth quarter of 2021, we put four new projects under construction. rating 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 megawatts. Our indication by interest capacity increased by 95 megawatts bringing our total contracted and IOI capacity to 589 megawatts. And our utilized capacity increased by 36 megawatts to 304 megawatts. Our total capacity contained a high contracted and IOI ratio of 87.5%. Financially, our full-year revenue and adjusted EBITDA all beat our guidance. Revenue totaled RMB 2.852 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. Adjust EBITDA totaled RMB 1.419 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 RMB 316.4 million with a margin of 11.1%. Next, I will introduce the company's next development plan in four aspects.
spk05: First of all, I would like to talk about our perspective on the future of the industry and our memories of passion. First, we believe that the super-large-scale data center of the Asia-Pacific market has a huge memory. As of the next five years, the data center's demand will be up to 20% more than the growth rate. The large-scale demand will come from the international digital technology system that actively expands its business in 700 million, and the Chinese digital enterprise that successfully came out of the sea. And as the policy environment in 700 million becomes more stable and marketable,
spk11: Next, I will discuss our future data plan in four primary aspects. On slide 10, first of all, I would like to share a bit about our outlook on the industry and the opportunities for team data. We believe there is a huge opportunity for hyperscale data centers in the APAC emerging market. Citing some research source, data center demand is expected to grow at a trigger 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.
spk05: Second, from a long-term point of view, the domestic market will have a stronger industry and market structure under the guidance of the East-South and West-South Policy. We also provided the key description of the policy in the secondary part of the presentation of the data. In the direction of the top-level carbon neutralization and the large-scale development of the digital economy, East and West China is a highly achievable digital center industry development plan. Its essence is to balance a serious eastern one-way city. The population is in a dense zone, and the population is in a dense zone, and the population is in a dense zone, and the population is in a dense zone, and the population is in a dense zone, and the population is in a dense zone, will lead most of the computing demand and supply to energy and renewable energy in the region. We strongly believe that this policy has persisted in the understanding of the core of the digital center business for a long time, and is highly consistent with the idea of converting green electricity into computing power in the most efficient way. As the demand for digital centers in the future moves towards the transition to the node area of economic computing, Second, I'd like to share our thoughts.
spk11: on our work in the domestic market in China. In a medium to long-term perspective, we expect the recent policy, namely the East Data West Computing Policy, to shape industry and market landscape in a manner that is very favorable for chain data. You can also refer to slide 47 in the appendix for the key highlights of the policy. This policy is a highly viable strategic development plan for the data center industry in China, developed under the grand strategic scheme 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 efficiencies and inefficient renewable energy use. 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 abounded. We think the goals of this policy are highly consistent with our longstanding views on the nature of the data center business, which at the core is to efficiently convert green electric power into computing power. As the demand for data centers in the future gradually shifts toward a 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 and our planning in Qingyang City, Gansu Province, another cluster as designated in the policy. We believe our existing and to be developed capacity in these regions will further strengthen our industry leadership.
spk05: Third, in the context of the increase in industry entry thresholds, the industry is gradually entering a period of good and bad. Its impact includes small and medium-sized data centers in some urban areas and small and medium-sized data centers with no scale, no customers, and no efficiency, which will lose market competitiveness. Next, the industry will enter the stage of integration, and in the case of the valuation gradually returning to a reasonable level, it will provide opportunities for asset integration, business cooperation, or acquisition.
spk11: Third, with increasingly for the industry, we expect the industry to enter a period of consolidation and survival of the fittest. Impacts of such are likely that, firstly, small data centers with no economies of scale, very few customers, and low efficiency will become increasingly less competitive. Secondly, with industry consolidation, Valuation shall return to reasonable level, which shall provide us ample opportunities for asset integration through business cooperation or through merger and acquisitions.
spk05: Fourth, from the point of view of domestic market, the market demand is affected by the regulation and supply volume, but there is also a bright side to it. First of all, the company's existing customers continue to grow with relatively competitive pure business. Its new business model, such as the development of public cloud and international market opening, we see that the main customers continue to increase their demand for digital center. Second, the company's ability in supply side, resource side, technology and pursuit of efficiency is gradually recognized by new customers in various industries, thereby stimulating the diversification of customers' new demand.
spk11: Fourth, a short-term perspective on the domestic market. Although macroeconomy and supply chain issues are laying impact on market demand, chain data has its unique highlights. Firstly, as our anchor customers continue to grow its business through new business initiatives, such as public cloud and through international market expansion, we continue to see a corresponding increase in demand. Our unique capabilities in supply, resource, technical know-how, and efficiency are increasingly being recognized by more customers in various industries, which is driving interest demand from a broader range of customers.
spk05: We believe that Qinhuai can fully utilize its competitive advantages and grasp these memories. Our competitive advantages are mainly reflected in the following three aspects. The first is the core competitiveness of the large-scale business model. This includes the pre-war development and operation capabilities. The company has from data center product design, technology program, development and construction, supply chain management, to pre-war customized solution program capabilities. In terms of scale and scale, the main data center of the company is built in a very organized way within the area of the construction around the first-line city. and the node area of the east. The climate is cool, the land and electricity resources are abundant, and the cost is low. There is no problem with time and space, and the scale is obviously effective. There is a large amount of land reserves. The third is the relationship between customers. The main customer of the company is an international or domestic digital and gold-based enterprise with a high growth rate, which can bring long-term stable and large-scale business needs. Finally, our assets and contracts. More than 90% of the company's digital central assets are supported by We believe that we can capitalize on these tremendous opportunities in China thanks to our competitive advantages. On slide 11,
spk11: our first major advantage is our business model. And we see several major advantages in it, including a full stack solution, early energy abound region layout, high quality of client profile, and credible asset and long-term contract. Firstly, Shindata is offering customized full stack solutions covering product design, technical solutions, development and constructions, supply chain management, and operation and maintenance service, making itself an efficient developer and operator of the IDC business. Second, our site selection and scale. 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-Beta-West computing policy. In this region, the climate is cool, the land and power resources abundant, Costs are relatively low and latency is not an issue. And we possess a large land reserve as well. Moreover, our economy of scale is highly evident. Third, our customer relationship. We enjoy close customer relations with digital leaders in our international or domestic markets. The healthy development of these clients is in turn bringing the company long-term steady and sizable demand. Finally, our assets and our contracts. More than 92% of our data center's assets are self-owned with solid asset valuations in place. In addition, most of the company's contracts are long-term 10-year contracts in nature. Commitment is normally received in development space, offering a high degree of business certainty.
spk05: The second big aspect is the local advantages of the Asia-Pacific New Silver Market. First of all, the company has a localized team in the Asia-Pacific New Silver Market, which can cooperate from customer management, project development, long-term operation, and government relations. Second, the size and scale advantages. The company's important data center is to expand to the Asia-Pacific New Silver Market with Singapore as the core country. The land and energy are abundant, the cost is low, and there is no time problem. The scale-based storage business and the large-scale positive business
spk11: Our second major competitive event 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 relationships, etc. In addition, we enjoy location and scale 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 abounded, costs are relatively low, and latency is not an issue. Our existing business and new hyperscale business initiatives will bring us the benefit of a kind of scale. Last but not least, the capability and the customer relationship we have under our hyperscale model in the domestic market are replicable for our overseas business.
spk05: The third big factor is ESG's advantage. First, the company has a strong energy integration capability, including the integration capability of design, development, repair, and accessories. and the ability to develop, store, and use energy-saving and energy-saving system. Second, in terms of energy-saving deployment, whether it is the east-west node area or the west-south node area in the future, Qinhuai's main data center is located in the area of energy and renewable energy. Third, the energy utilization of the company is excellent, and the energy efficiency is maintained at a 1.2 level for a long time. Fourth, the company's diversified renewable energy strategy Our third major competitive advantage comes from our ESG initiative.
spk11: 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 reduction. Second is our energy and boundary 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 hubs designated in the policy of East Data and the West Computing. which reach traditional and renewable energy. In addition to that, our energy efficiency, we have been running our data centers in an energy efficient way, evidenced by a PUE constantly at around 1.2, all the way around. Finally, our diversified renewable energy sourcing approach. We will, on one hand, pursue the development of local generation, local consumption solution in energy abounding regions. And on the other, establishing long-term renewable energy procurement arrangement with long-term strategic partnership.
spk05: Based on the company's unique competitive advantage in the domestic and international market and market judgment, the company's business growth plan will be carried out in the following four aspects. First, vigorously expanding the Asia-Pacific new market business. Second, the important node-setting deployment around the East China Sea. Third, actively using on slide 12. Based on these market opportunities and our assessment on a domestic and overseas data center industry, we will leverage our competitive advantage to execute our growth plan in four major aspects.
spk11: 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 and geographical development. Finally, we will pursue a diversified renewable energy sourcing model with our energy abound region layout as the cornerstone. Please let me introduce the above aspects in details.
spk05: First of all, we will expand our business in the Asia-Pacific new market. In order to seize the biggest opportunity in the Asia-Pacific new market, the company has set up a 20-watt overseas data center. In the next two years, the new data center will be about 1.1 billion watts. First, we'll deepen our presence in APEC
spk11: As you can see on slide 13, on top of our existing 20 megawatts service capacity in the region in Malaysia, we have an additional 96 megawatts capacity currently in Malaysia and India, and an additional five megawatts of business acquisition to be finalized in Thailand. At the same time, we're also negotiating and evaluating other potential projects. Our proven hyperscale model is highly replicable overseas, And our goal is to become the largest Harvard-skilled data center company in the Asia-Pacific regions outside China.
spk05: Our goal is to become the largest Harvard-skilled data center company in Asia-Pacific regions outside China. to actively meet the practical needs of Beijing and other countries. Since 2017, the company has been in charge of Zhangjiakou, and has set up a new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale new generation of large-scale The large amount of land resources allocated by the company in this node area can be continuously converted into more large-scale data centers to meet the daily growth of the needs of different customers, especially core customers. We have the deep roots of the industry in Zhangjiakou, Hebei, and we have the planned layout of Gansu and Qingyang. As early as 2020, the Qinhuai Data Group has initiated the research and inspection of technical facilities in the western region. During this period, we have established a good cooperation relationship with Gansu Province and Qingyang City. Qinhuai Data
spk11: Secondly, we will further advance our geographic layout in key clusters as designated under the East Data West Computing Policy. On slide 14, we have established our presence in Changiakou City as early as 2018. 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 local economy. Currently, We own a total capacity of 268 megawatts in Zhangjiakou and a total capacity of 2,010 megawatts in Datong, Shanxi province. Datong enjoys extreme geographic proximity to the Beijing, Tianjin, Hebei computing hub. We possess a balanced reserve of land within these regions, which can be conveniently incorporated into more hyperscale data centers to meet growing business demand from various customers. in particular, our anchor customers. We have also initiated our site selection process for potential computing infrastructure development in Western China in as early as 2020. We have established a 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 latest policy. 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 to five years.
spk05: Next, the company will actively use the model including the acquisition and collaboration of JV to supplement local coverage and customer support. In the context of the day-to-day rise in industry entry thresholds, the industry will eliminate some commercial small and medium-sized water centers to drive market prices back to normal. We will proactively expand our geographical resources on base
spk11: through active acquisition and JV partnerships. On slide 15, with entrance requirements becoming more stringent, we expect those old inefficient medium and the small size data centers will become increasingly less competitive, which will help market price in the ID return to reasonable levels. Once this happens, we expect to see more acquisition opportunities and 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 geographical layout, client base, and business model, and to generate additional value for our long-term development.
spk05: In the end, the company will continue to rely on the diversification of the energy vehicle layout. Under the positive guidance of the energy vehicle layout, Finally, with our energy abound region layout as the cornerstone,
spk11: We will continue to obtain renewable energy through different approaches. On slide 16, in the energy abandoned region, we plan to stick with the local generation, local consumption approach. With our data centers in these energy abandoned regions as the leverage, the company will introduce strategic partners into the region to conduct local power generation while the company will assume the role of local power consumption. 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 for long-term green energy procurement arrangements.
spk05: We have received a lot of recognition from the ESG. The company has always insisted on carbon neutrality. Last, the execution of our ESG initiative has been widely recognized. We have been sticking to our zero-carbon principle, and we are among the leading players and have committed ourselves to the goal of using 100%
spk11: integrated renewable energy solutions in all of our next-generation hybrid data centers operated in China by 2030.
spk05: The growth plan above the company brings us an unchangeable commitment to customers and other interests, and in terms of operations efficiency, project delivery, investment costs, and energy-saving reduction, we have done our best in the industry, and thus brought an excellent asset return. Under this four-point growth plan, our dedicated commitment to all of our customers and stakeholders
spk11: remain unchanged, which are to be the leading industry player in terms of operational efficiency, project delivery, cost management, energy efficiency, and emission reduction. And as a result, to deliver outstanding asset return. Financially, we have been delivering financial results that are beyond market expectation 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.
spk05: Thank you again, Fa Peng, for the comprehensive review on where the company is heading going forward.
spk11: 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. On slide 21, we added 70 megawatts in service capacity during the quarter, mainly attributed by project CN11-C, a 71 megawatts project 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. We have shared these projects as recent developments in our last conference call, and now they are officially put under construction. MY06 Phase 1 and Phase 2, located in Joha, Malaysia, has a total capacity of 60 megawatts and is expected to be delivered starting from fourth quarter of 2022. They will be supporting the overseas business of our anchor client. For CN16 and CN17, they are located in Hefei and Tianjin respectively, each with a capacity of around 14 megawatts, and will be supporting the top two Chinese cloud service providers that we won recently. These projects showcase how we have successfully expanding our cooperation with clients from home and in overseas markets. Well, at the same time, embrace alternatives in business model so as to obtain new clients. 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 megawatts in the previous quarter. For the 233 megawatts and their construction capacity, we are currently expecting to deliver the majority of them in year 2022, while 54 megawatts will be scheduled for delivery in the first quarter of 2023. 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 anchor client on our existing project CN15 in greater Beijing region, all together making a total of 102 megawatts from five under construction projects. As a recent development, IOI on project CN15, a total of 52 megawatts, was fully converted into contract in the first quarter of 2022, demonstrating that solid relationship we are enjoying with the anchor client. Now, let's take a look at overall commitment status. For all our in-service capacity, 87% of them are with either contracted or with IOI commitment from the clients. and such ratio has been stable in the past. Commitment for our under-constructed capacity is healthy as well, which contracted an IOI ratio by end of fourth quarter at 88%. 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 long-term contract that guarantees sustainable revenue stream. On project ramp-up, on slide 28, we added 36 megawatts utilized capacity in the fourth quarter, burning our total utilized capacity to 304 megawatts. New utilization mostly came from projects in greater Beijing area. 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 project in early ramp-up stage In particular, project CN11-C has been the main contributor to our quarter-over-quarter utilization ratio change. We're providing you a better sense of our current portfolio geographically of slide 29, which simply shows you where we started and the 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 projects in greater Beijing area, not in Beijing, but in particular Zhangjiakou City, Hebei Province, and Datong City, Shanxi Province, which are 100 and 300 kilometers away from Beijing respectively. Currently, as you can see from the bottom left pie chart, in-service capacity in greater Beijing area makes up around 90%. Our vision is apparently being further justified 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. Meanwhile, you may tell from the top left pie chart that 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 our experienced local team, our in-house capability, and our commitment for greater overseas, we believe more can be done going forward. 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 shed some light on our Hong Kong listing option on slide 33. 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 dual primary listing in Hong Kong. Specifically, grandfathered Greater China issuers that apply for dual primary listing or secondary listing are allowed to continue to retain their certain weighted the voting rights or VIE structure 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. With these, we believe we now have the option for dual primary or secondary listing in Hong Kong. Now, I will hand over the call to Zoe Zhang, our VP Finance for financial updates.
spk15: Thank you, Nick. Now let me walk you through our quarterly and full-year financial performance. Our financials remain a healthy momentum. On slide 35, revenue in the fourth quarter increased by 41.4% year-over-year to RMB 781.7 million, driven by the robust growth of the company's co-location services. For full-year 2021, Total revenues increased by 55.8% to RMB 2,852.3 million from RMB 1,831.1 million in the same period of 2020. 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 RMB 435.2 million from RMB 326.9 million in the same period of 2020, mainly driven by increase in utility costs and depreciation and amortization expenses. Selling and marketing expenses in the fourth quarter of 2021 decreased by 32.3% to RMB 18.7 million from RMB 27.6 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 90.5% to RMB 89.7 million from RMB 99.1 million in the same period of 2020, primarily due to lower share-based compensation expenses as well. General and administrative expenses in the fourth quarter of 2021 decreased by 24.4% to RMB 91.5 million from RMB 121 million in the same period of 2020. For full year 2021, general and administrative expenses decreased by 36.3% to RMB 359.5 million from RMB $564.3 million in the same period of 2020, also primarily due to lower share-based compensation expenses. Research and development expenses in the fourth quarter of 2021 increased by 15.4 percent to RMB $14.8 million from RMB $12.9 million in the same period of 2020. For full year 2021, research and development expenses increased by 83% to RMB 75.3 million from RMB 41.2 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. Our full year net income came positive for the first time in year 2021, showcasing the efficiency we are enjoying in our hyperscale business model. We recorded net income of RMB 318.4 million with a margin of 11.1% compared with net loss of RMB 283.3 million in year 2020. Looking into our core expenses and costs on slide 37, most of them are 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 of 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. Utility costs both in the fourth quarter as well as for full year 2021 grew faster than our revenue as a result of increase in tariff price of around 15% in part of our great Beijing region campuses. With stringent cost control 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 RMB 404.2 million, from RMB 239.4 million in the same period of 2020. Quarterly adjusted EBITDA margin was constantly improving with the margin in the fourth quarter stood at a historically high of 51.7%. On a full year basis, adjusted EBITDA margin is 49.7% compared with 46.5% in year 2020. Details in the gap to non-gap reconciliation on EBITDA and net income would be available in our 6K filing, all appendix in our IRPPT. Now, let's take a look at our cash and debt position and our capex on slide 39. Capex in the fourth quarter was RMB $1,163.9 million. adding up to a full year capex of RMB 3,766.9 million. We continued to work in our business expansion to meet the increasing demand from our customers by investing around RMB 5 to 6 billion for our current under construction data centers delivery and also for the in-service data center balance payment for the full year We have a cash and net position of RMB 5,241 million and RMB 5,477 by end of fourth quarter respectively, ending up in a net debt position of RMB 104.1 million. Cash dynamics during the quarter was contributed by a net operating cash flow of RMB 297.5 million and mostly offset by a RMB 1,100.5 million investing cash outflow. Again, we grew with high quality, healthy cash flow, leverage and coverage. On slide 41, by end of fourth quarter, our total debt to capital ratio was 35.1%. Our total debt to last 12 months 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 compared with 5.6 by end of third quarter and 4 by end of same quarter last year. Finally, Let's take a look at the guidance. We have fit 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 the guidance for revenue and adjusted EBITDA in year 2022 to be in the range of RMB 4,070 to 4,170 million and RMB 2040 to 2120 million respectively, implying a 45.2% and 46.5% year-over-year growth at midpoint respectively. This forecast reflects our current and preliminary views on the market and operational conditions. This concludes our prepared remarks for today. Operator We are now ready to take questions.
spk14: Thank you. Ladies and gentlemen, if you wish to ask a question, please press star 1 on your telephone and light for your name to be announced. If you wish to withdraw your request, please press the pound or hash key. When asking the question, please state your question in Chinese first, then repeat your question in English for the convenience of everyone in the call. Please ask one question at a time. Your first question comes from the line of Yang Liu from Morgan Stanley. Please ask your question.
spk08: 那公司现在在甘肃的布局是否已经有明确的客户的需求意向? 对,我就这一个问题。 或者说这个需求大概在什么,就哪一年,什么时间才可以看得到? 谢谢。 My question is regarding the company's preparation for the East Data West Computing, whether Chain Data's core customers have dedicated demand to be deployed in Gansu Province. And with that demand, we will see that come out. Thank you.
spk11: I believe CEO Mr. Hua Peng can answer this question with my colleague, General Counsel Joy, as a translator on the English part. Hua Peng.
spk05: Okay, let me answer this question. We believe that we still have the advantage of the pre-industrialization of the pre-industrialization of the pre-industrialization of the pre-industrialization of the Thank you for your question. We believe that
spk12: Under the East Data, West Computing policy, we actually enjoy 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 Datou at a very early stage. We have launched our first computing cluster 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. 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, the east computing hub. Well, within this area, we have banked abundant land, resources, and power facilities that uh strengthen the client and government relationships and paired with our full stack capabilities we believe our advantage will become more obvious in the next round um
spk05: Yes, we can also see some very positive news. So now, Shanxi Province is actively applying for becoming one of the national computing hubs under the national policy.
spk12: which is another very good news for our facility based on our current layout.
spk05: At the third point, we believe that under the guidance of the country's east-west calculation strategy, in the next one to two years, the high-speed transmission network between core nodes and major core nodes will accelerate construction, and the change in energy strategy will also lead to
spk12: We also see that under the new national policy, the core net nexus, the net hub, and the high-speed internet construction will also be prioritized by the national construction plan and also be speed up. the current national resource policy, the power policy, is also pushing the whole economy towards the western part of China. 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 With all of these factors, we can see that the new demand is shifting gradually towards the western part of China. And that becomes the reason why we deploy our resources in advance 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.
spk14: Great, thank you. Our next question comes from Tina Ho from Goldman Sachs. Please ask your question.
spk15: Thank you. Let me translate. Thank you very much for your time management and congratulations on the very solid result. So my question is regarding our customer diversification progress since the third quarter result. 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?
spk12: Thank you.
spk10: Thank you, Tina.
spk11: I think Mr. Wu-Hua Peng will be in the best position to address the customer diversification progress we made since Q3. And our group president, President Sandy, will address your questions on communication dynamics. Please go ahead, Mr. Wu-Hua Peng. Mr. Wu-Hua Peng, please go ahead. and then President Xiao will talk about our market competition pattern.
spk05: Our diversification has been progressing. I have been in charge of the diversification of customers for the past 19 years. In addition to maintaining a high growth of core customers, we have also been providing services to two other international Internet leading customers and domestic leading manufacturers. Okay, hold on.
spk12: In terms of our efforts in the client diversification, since I joined the group in 2019, I have been working on that and put lots of effort 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. Very happily, in the fourth quarter of last year, we have also won the bid of one of the top two PRC cloud provider new projects. And those projects are now already being in construction.
spk16: Next, I would like to talk about the market competition. Last year, some prices in the eastern and southern parts of the region were indeed very intense, and there were some non-negotiables. And because of this, we also took the initiative to quit some competitions. But the ITC industry is a heavy asset investment industry. He has his own investment logic. This kind of short-term irrational behavior can't last long. Recently, we have also observed that these behaviors gradually become irrational. So we are still full of confidence in the future. This is the first aspect. On the second aspect, Xinhua's model is different from many of us. We are a full-time service model. So our price can rarely be directly compared in the market. This is also a place where we can maintain our price advantage. The third point is that most of our contracts with customers are long-term contracts that lock prices. So, especially last year's competition, the impact on the company is very, very limited. Please help me translate it.
spk15: So I will translate for Cindy's words. 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 and investment. And also we actively give 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 rational, and we are confident for the future. And secondly, is regarding for Chin Data, we provide the unique one-stop, full-stack solution and this very unique business model, which made it very hard to be benchmarked with other service providers. So, our price has been very stable and steady. And thirdly, you know, majority of our contracts are long-term price pre-locked for 10 years. So the last year for the fierce price competition has very minor impact on Qingdata's business. Okay, thank you.
spk14: Thank you. Our next question comes from Arthur Lai from CT. Please ask your question. Arthur, your line is open. Please ask your question.
spk04: Hi. 谢谢管理层。 然后也恭喜管理层有这么好的一笔大骂卷。 我是花旗的Arthur Lai。 我有两个小问题是最常被investor问的。 第一个问题就是在我们的特色, 就是刚刚Sandy说一个全站式的服务。 I would translate my question. The most frequent question I have been asked is how the management forecasts the upcoming year's electronic costs, and then do we have an edge if we use more green power? Thank you.
spk10: Thank you, Arthur.
spk11: I can address these questions. You know that our data center deployment strategy is always in those energy abounding regions. And also in this region, when we build our data center, it's hyperscale in nature. Hyperscale is basically the economy of scale. So the more scale, more data center built into the same location, the less per unit cost we're going to have. As you can see from the fourth quarter, you know, figures, our overall per unit, the cost of expenses outside utility costs, all dropping down because of simply because of an increased scale of the economy. So even around the last quarter, we saw the national level power shortage driven the price, the power price increase. Actually, our EBITDA bottom line even increased because this power price increase can be well offset by our diluted the per unit cost due to the economy scale. And we build this power price increase 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. In terms of renewable energy, We've done, like Fatou introduced in his development plans, I think ESG initiative is one of our four major growth plans. we're going to seek multiple methods or alternatives to deploy our ESG initiative in the region we operate, namely in the East Data regions in the first place to strengthen our position, and then in the three to five years to extend that deployment into west computing hub like Xinyang City. So with this deployment, I think we are well positioned to attract more strategic investors into green energy generation sites and they become a local generator, and we become a local new energy consumer. And that way, I think that's going to provide a long-term situation for our strategic partner on the generation side. They have a better return to secure the business. For our foundation, they can actually have the lowest green energy cost, you know, in the long term. And obviously, you know, the other way to – green energy is through the power grid. That's an equation of the supply and demand situation. We believe with more green power generated through the power grid and the overall trend of the renewable power price in the future is going to be either close to the traditional energy or even trending a little bit lower in the future.
spk16: I would like to add a few more points. There are many ways to obtain green electricity. The first one is self-sufficiency. As you all know, Qinhuai is the first self-sufficient power plant in the country to invest in the first self-sufficient power plant in Shanxi. We can also participate in government trading platforms and buy a green card. The first two methods I mentioned earlier are actually likely to reduce the cost of electricity used by the company, and will not increase the cost of green electricity use. So I'll help translate Sandy's supplemental words. So there are multiple ways to acquire green energy. First one is for the self-generation, self-use. As you know, Qingdata is the first one to adopt this model in Shanxi province.
spk15: with the green energy generation for the 150 megawatts. And the second way is for the green energy transaction in different national or provincial province platform. And third one is the green energy certificate. And the first two types for the self-generation, self-use model, and also for the transaction at national platform or provincial platform. this might possible to lower the green energy cost. So in the future, Chin Data will adopt multiple channels to acquire green energy and to increase our ratio of the renewable energy and to try to leverage and to lower our green energy cost in the future. Thank you.
spk14: Thank you. Next question comes from Ming Ren Li from CICC. Please ask your question.
spk13: Let me translate myself. So, under the background of the policy, which channel more computing resources from the eastern areas to western regions, could you elaborate more about how to take advantages with our full-stack hyperscale business model? 我来具体的阐述一下吧,刚才在正式介绍环节已经有所设计。
spk05: Yes, regarding this, I think we have already responded to the previous question. I think the most important advantage we have in the east-west border is that we are already on the eastern border. There is a lot of layout on the eastern border of Zhangjiakou. And from the national policy and from the strategy, why do we do this? In fact, they proposed this kind of extreme, extreme, scale, standardization. This is also what we have been working on. So our advantage, in addition to the potential advantage, we also have our own operating experience and technical ability in this kind of group construction and super-large scale model. Whether it is in the eastern node or in the western node, it will play our advantage in the construction and operation. Let me translate it for you.
spk12: Okay, so to your question, we think we have already touched upon it in our previous response and also introduction in our slides. But to sum up, we believe that the most important advantage that we have is that we have already established a pretty extensive layout right in the yeast, one of the designated East computing hub, which is Zhangjiakou City. So from the interpretation of the national policy, we believe that the country, like the government, is trying to push in those designated computing hubs to establish a cluster, a computing cluster, which is sizable, which 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 through our standardization, through our modularity model since the very beginning. And because we have been doing that, 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.
spk14: Thank you. Our next question comes from Albert Hung from J.P. Morgan. Please ask your question.
spk03: Thank you. I just want to know that in the case of three to five years or even seven years, how would you look at some changes in the IDP industry competition pattern? I would assume that in the West, when new nodes are established, some resources will actually be more likely to be obtained than in the East. Is this referring to that in the future competition pattern, Let me translate my question. The new China policy is data waste compute will drive more data center build into non-tier-one city in the waste. I agree, chain data has the first mover advantage. In three to five years, how did you see the competitive landscape in the waste areas? I assume the access to the resource in West could be easier versus that in T1 City. Does it imply more fragmented market landscape in the future? Thank you.
spk11: Thank you. Very interesting. So many interests and questions on this recent policy on East Data and the West Computing. And we are very happy to answer all of them. The best person to answer this, again, is our CEO, Mr. Wu Huanfeng. Please go ahead, Mr. Wu Huanfeng.
spk05: Nick, we didn't hear some of the questions in the Chinese part. But I think, in general, in terms of Chinese virtual reality, he may be asking if there will be any changes in the next three to five years or even longer. How do we take advantage of this?
spk11: It mainly refers to the fact that many of the plans are slowly moving towards the first-tier cities. Will there be a lot of intruders that will create more pressure on us to acquire resources, and then create a more scattered pattern? Now, it's mainly us working in it.
spk05: This question, I think I will... I think the demand is more In the short term, the new demand will gradually move towards the central node and the western node. In the first-tier cities, there will be no migration in the short term. From the perspective of the future class, I think when these new demand move towards the central node and western node, We still need to show our advantage in the early stage. It will make it easier and faster for us to supply these new demand. I would like to add one more thing.
spk12: Please translate it. Translation for Hua Feng'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 hubs in either the east or maybe the west part of the cities under 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 us to be the best one, to be the go-to person and first choice for our clients to best meet their demands.
spk05: Let's ask Sandy to add something.
spk16: I would like to add that the guidance of Dongshu Calculation is actually the same as the selection process from the beginning. The selection process is especially useful for the establishment of a super-large-scale data center. However, if you want to independently do super-large-scale data centers, it is actually very challenging for an enterprise in the selection, planning, design, and product development. It's not that everyone has the ability to choose. Because that place has a large local area, there are very complex electricity and network situations. So it has a very strong interoperability with a company. And after these years of accumulation, we have been providing this kind of full-time service to customers. So we have the ability to develop better. In fact, as you mentioned, competition has always been there. For example, when we went to Zanzibar, it was a wasteland. But after we planned it, you can see that even though there are a lot of people, the scale of the competition is still small. Because the challenge here is more about the ability to integrate the experience.
spk15: So I'll help translate Sandy's words. The first one, this national guidance, national policy is highly aligned with Achieve Data 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 energy and sufficient land resources, and this is the unique advantage for the hyperscale business model. 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 the development, and the delivery, and the maintenance, and the multiple capabilities. And this is the gene, gene data has for the long time. It is not everyone can do this in a very short term. And also, you know, in the areas where this is sufficient land resource. It also requires the ability for the energy, for the electricity integration capabilities, for the power generation, transmission, and the distribution. And Chinedata has accumulated a lot of expertise and know-how in these areas as well. As you know, the competition has always been with Chinedata. We are the first mover in the John Jacko area. And, you know, in the recent years, there are multiple competitors in this area as well. But Chin Data is still either in the scale or in the technical know-how, is still in the leading position in this area. So thank you for your question.
spk11: And I would like to add one more point. I would like to add one more point. It's actually in our business, I think, government relationship is super important. You know, in the region we operate, either in Zhangjiakou and Datong, because we have been there in the past three to four years. And we became one of the largest, you know, enterprises, foreign capital enterprises, you know, and make a significant contribution to a local economy in terms of, on a quality side, helping local economy converting from a more traditional agriculture to a digital economy. On a quantitative side, we have provided a large number of employment locally. And also we become one of the significant tax contributor, GDP contributor to the local government. So as a return, the government grant us a lot of preferred or privileged policy in terms of guaranteed land resources and power allocations in those regions. And we believe that with this relationship, and we also have certain advantage over the new entrants into the area.
spk14: All right, thank you. Next question comes from Harry Truong from DBS. Please ask your question.
spk07: 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. Yeah, thank you for your questions.
spk11: I think I can address this question. Maybe Sandy can add some. I think in terms of moving speed or ramp-up speed, we're still seeing that our average moving rate or ramp-up rate is between six to nine months for the majority of our under-contracting business. That's number one. 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 that the utilization is going to remain at around 70%, maybe a high 60%, or maybe a low 70%. But as the more product going into the mature and fully utilized stage, we believe our overall utilization rate for the entire portfolio is going to be much higher in the mid to long run.
spk16: Thank you, Nathan. You've answered so many questions. I don't have any more questions. Thank you.
spk14: Right, thank you. Our next question comes from Kaifeng Jia from Citix. Please ask the question.
spk09: Thank you for your time. Congratulations to the company for achieving a very good performance. My question is about direct movement. Because we see that direct movement is actually a relatively strong growth in the mid-term. And they are also ready to enter the entire budget area. 所以想了解一下我们是如何看待中期的话直接调动对我们的一个业绩贡献的。 I will translate my questions. It seems like ByteDance still have strong growth in the midterm, and they plan to invest more in cloud computing. So just wondering how management sees the contribution from ByteDance in the midterm. Thank you. Thank you.
spk11: Now, Sandy, you can answer this.
spk16: Zhijie has always been the most important client of our company. Thanks to Zhijie's rapid growth, the company has also achieved very good performance and rapid development. In the past few years, our growth mainly came from the client Zhijie. In the next few years, we will still have a large number of orders from this client. And in terms of their new business, including their cloud, including their overseas business, we also have very close cooperation with them. So just now, there was a question mentioned that we can deliver in 2022. In fact, these are all very, very urgent needs. So we are now sweet worries. It depends on whether we can deliver more capacity to ourselves. The demand is very fierce. And we are also overseas. We hope that in 2020, we can deliver 60 megabytes to customers.
spk15: Okay, so I'll translate. As well now, ByteDance has been very essential, very important customer for our team data, and we maintain very good relationship. And also, in the past, ByteDance has contributed a large portion of demand. And also, we see under construction pipelines, there are still a lot of orders are from Binance. This is due to their very strong business need, especially for the new business initiative on the cloud computing and overseas expansion. And for this new business initiative, we will closely cooperate with Binance together to support their business expansion and to provide infrastructure for their future business growth. And also, you can see that for the overseas, we are going to deliver another additional 60 megawatts for 2022. So, this is due to their strength of demand, and we are in a position to deliver this as soon as possible. Yeah. Thank you.
spk14: Thank you. Our next question comes from Edison Lee from Jefferies. Please go ahead.
spk06: 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&Q. So I would like to know what was driving that and also what is the longer-term outlook on the MSR trend. Thank you.
spk11: Sandy or Fafeng, would you want to address that?
spk16: Thank you.
spk15: Yeah, so I'll help translate it in these words. The MSR is at company level, and it's a weighted average of different regions' prices. As you know, in different regions, the price is different due to the different utility costs and the different other maintenance costs as well. In last year, the fourth quarter, the Shanxi province, we delivered two big 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 region. But you can see the EBITDA margin is still increasing in the fourth quarter of last year, reached a historical high of 51.7%. And so the margin is still very robust, very healthy. Thank you.
spk14: Thank you. Once again, if you wish to ask a question, please press star 1 on your telephone keypad. We have a follow-up question from the line of Edison Lee from Jefferies. Please ask your question.
spk06: 好,谢谢。我再有一个更新的问题,就是好像你刚才说,如果好像上汽解析项目由于电价比较便宜,然后这个最终的这个收费和MSR会比较低,其实在上汽解析项目的IRR会不会比好像在这个河北解析项目还要高? 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 costs. So the headline MSR in Shanxi actually is lower. So my question is whether the Shanxi projects IRL could be even higher than those in Hebei, for example.
spk11: Thank you, Edison. I think our IRL for the project in both regions, including Hebei and Zhangjiakou and Datong only... for Zhangjiakou and Lingxiu are much higher than industry average. And yes, the IRR for the project in these regions have a very similar profile.
spk14: All right. Thank you. So we have reached the end of the question and answer session. So ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.
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