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spk04: good morning and good evening ladies and gentlemen thank you for joining and welcome to the chin data group holdings limited third quarter 2022 earnings conference call we will be hosting a question and answer session after management's prepared remarks please note that today's event is being recorded i will now turn the call over to your first speaker today mr don joe from investor relations of chin data group please go ahead don
spk08: Thank you, Operator. Hello, everyone. Welcome to ChainYard Group's 2022 Third Quarter Earnings Conference call. This is Don from the Investor Relations Team of the company. With us today are Mr. Wu Huapeng, our CEO, Mr. Nick Wang, our CFO, Ms. Zoe Zhuang, our Finance VP, and Ms. Joy Zhang, our General Counsel. During this call, Nick will take you through the quarterly review of our operation performance, and Zoe will present our financial results. Management team will be here to answer your questions afterward. Now I'll quickly go over the safe harbor. Some of the statements that we make today regarding our business, operations, and financial performance may be considered forward-looking, and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. For more information, please refer to the risk factors discussed in our filings with the SEC. During this quarter, 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.chingdatagroup.com. We have also updated our quarterly presentation on the company's investor relations website, which you can refer to as a supplementary material for today's call. Without further ado, I will now turn over the call to Nick. Nick, please go ahead. Thank you, Da.
spk03: Hello, everyone, and thank you for joining the call again. The company continued its solid business performance in the third quarter of 2022. The close collaboration between our team in China and Southeast Asia led to a record nine straight quarters of upbeat financial performance. Revenue in the first nine months in 2022 has already surpassed that of full year 2021. And we are raising our full year guidance for the second time in a year. With the increasing demand for digital infrastructure globally, as well as the catalyst provided by the East Data, West Computation policy, the company sees its advantages in hyperscale business to be even more apparent. We will continue to do the right thing in the correct manner. to consistently build our capability, to strengthen our research and development, to enhance our competitive power, to operate our business in a prudent manner, so as to create long-term value for our clients, partners, investors, and other stakeholders in a sustainable way. Now, let's start with some key highlights of the third quarter. On slide four, We added one new project with an additional 45 megawatts new capacity in the third quarter, bringing our total capacity to 821 megawatts and total number of data centers to 31. We put three data centers into service, bringing our total in-service capacity to 579 megawatts, an increase of 68 megawatts during the quarter. Demand and ramp up remains healthy and strong. We received an additional client commitment of 49 megawatts in the third quarter, burning our total contracted and IOI capacity to 700 megawatts, leading to still a healthy client commitment rate of our total capacity at 85%. Another 53 megawatts was put into utilization in the quarter. bringing our total utilized capacity to 454 megawatts and a solid utilization rate of 78%. We continue to devote resources to innovation and research and development for better data center solutions. Our total approved and patented patents by the end of the quarter reached 400 compared with 361 in the previous quarter last year. Our consistent effort in innovation is earning more recognition. Recently in November, our hybrid evaporative cooling technology catering to high computing power demand in data center was awarded first prize of data center science and technology achievement in CDCC National Summit. Making Qingdata the only third party data center company that is winning such prize for two straight years. Financially, our top and bottom line momentum remains strong and healthy. Revenue was RMB 1,202.7 million for the quarter, which is a 62.4% year-over-year growth. Adjusted EBITDA was RMB 614.5 million, a 66.8% year-over-year growth, with a margin of 51.1%. Gas net income was RMB 241 million for the quarter, which is a 207.4% year-over-year growth, with a margin of 20% and new high. Regarding our 2022 guidance, which is raised for twice this year, we currently expect our full-year revenue to be in a range of 4.33 to 4.43 billion RMB. which is a 200 million RMB increase in midpoint compared with the previous guidance. We expect our full year adjusted EBITDA to be in the range of 2.2 to 2.26 billion, which is a 90 million RMB increase in midpoint compared with the previous guidance. Now, let's go into the details of our product construction and delivery on slide seven. Our delivery is generally in line with the original schedule, as we put three projects into service in the third quarter, with a total capacity of 68 megawatts. CN14 and CN18, located in our Shanxi and Hebei Province campus, respectively, are supporting the business of our anchor client. The Indian project with a design capacity of 20 megawatts aims to support one of the key international clients. We are further expanding our capacity in the promising APAC emerging market as we put MY06 Phase III, a 43 megawatts hyperscale project under construction, aiming to support our anchor clients overseas business. The project is scheduled for delivery in 2024. MY06 phase three, together with MY06 phase one and two that we previously disclosed, makes up a hyperscale data center campus of over 100 megawatts in Johor, Malaysia, currently the largest overseas campus of the company. With the above changes in the third quarter, as you can see on slide eight, we have brought our total capacity up by 45 megawatts. reaching 821 megawatts by the end of the third quarter, with 579 megawatts in service and 242 megawatts under construction. For the first nine months of the 2022, we have put a total of around 139 megawatts into service. Among the under construction capacity by quarter end, we currently expect another 35 megawatts of them to be delivered in the rest of 2022. Our MY03 project, originally scheduled for delivery in this quarter, is slightly delayed to the fourth quarter. We expect another 164 megawatts to be delivered in 2023 and 43 megawatts to be delivered in 2024. Now, let's turn to our clients and demand on slide 10. We continue to serve our existing clients in supporting their healthy growth as a trusted partner. The momentum on overall demand from our unique client base remains strong and healthy. Our total client commitment increased by 50 megawatts in the third quarter, mainly contributed by two major projects that aim to support a core business of our existing clients. Specifically, we received 11 megawatts IOI from Project CN19 in our Hebei province, supporting the key international client. and a 38 megawatts IOI for project CN20 in our Shanxi campus, supporting the anchor client. Meanwhile, three megawatts of IOI was converted into contract during the quarter on product CE01 in Yangtze River Delta region, supporting the key international client. For the first nine months in year 2022, we have received a total of around 110 megawatts of client commitment. representing a 19% increase from end of last year. We therefore continue to maintain a very, very healthy client commitment profile for our asset portfolio. On slide 11, for our existing 579 megawatts of in-service capacity, 96% of them are committed by clients in either contract or IOI in the third quarter. Compared with 95% in the previous quarter, and 88% in the same quarter last year. For our total capacity on slide 12, 85% of them were committed by clients by the end of the third quarter, compared with 84% in the previous quarter and the same quarter last year. In addition, the majority of specifically 85% of existing contract of our contracted capacity remains to be in 10 years term. And the weighted average remaining term per contracted megawatts by the end of the third quarter is around 8.27 years. Our unique client base and such solid contract profile has driven our performance in the past, is further providing strong visibility of our business into the future. Now, coming to customer moving on slide 13. Our consistency in high quality and fast delivery, combined with our healthy and differentiated client base, led to another quarter of better-than-industry ramp-up performance. We added 53 megawatts of utilized capacity in the third quarter, bringing our total utilized capacity to 454 megawatts, compared with 268 megawatts in the same quarter last year, which is 69.3% of your real growth. and 13.1% quarter-over-quarter increase. Quarterly move-in was mostly contributed by projects in our Shanxi and Hebei campus in China that support the anchor client, as well as the BBY01 Indian project for one of the key international clients. A better sense of the faster-than-industry ramp-up of our portfolio can be obtained if we take a closer look at the ramp-up data of several projects that were put into service in year 2022. CN11C reached over 90% utilization in less than four quarters. CN12 reached a 90% utilization in three quarters. CN14 took one quarter to reach 47% utilization. And if we further look back at all the hyperscale projects of the company, that were put into service since 2020. It took on average 2.94 quarters for contracted capacity to reach over 90% utilization. Finally, our utilization rate by the end of the third quarter remained very healthy, standing at 78% compared with 78% in the previous quarter and 72% in the same quarter last year. Meanwhile, Based on our existing client commitment, we have 246 megawatts of client commitment unutilized by end of the third quarter, which is around 54% of our current utilized capacity. Beyond the solid performance of our business in China, we would also like to share the recent new milestone for our development in the APAC emerging market. On slide 14, On October 20th, the company celebrated the grand opening of the project MY06 in Sibenik, Johor, Malaysia. The entire MY06 project, as we just discussed, holds a design capacity over 100 megawatts, among which 19 megawatts has been recently put into service in October. Leveraging on a company's innovative construction and design methodologies, The construction of the 19 megawatts or MY06 Phase 1 as disclosed was completed in a record time of around 11 months since breaking ground in November 2021. The completion of such project has also made Bridge Data Center, the company's EPEX subsidiaries, the first company with Malaysia digital status to complete the construction and hand over the business-ready hyperscale data center in 2022. Excluding the delivery of MY06 Phase 1, by end of the third quarter, the company has 40 megawatts in service capacity, and another 120 megawatts in the construction in the 8-pack emerging market, as well as the Thailand project to be further expanded. In addition to such, We have a 65% client commitment ratio for these capacities, solid relations with existing clients on existing projects, and an experienced local team. And we have been actively engaging with existing and potential clients in China and the region for further cooperation opportunities in APEC emerging markets. We feel very confident that more can be achieved in the coming quarters and in the future in this promising region. Now, let's take a look at the snapshot of our asset portfolio by end of the third quarter. Business in greater Beijing region remains the key engine of the company, accounting for 75% of our total capacity and 94% of our utilized capacity, while enjoying the highest utilization ratio of 83% among all regions that we are operating. APAC projects are taking a larger share in our under-construction pipelines, accounting for 49% of our total construction capacity. Our early judgment in site selections in the greater Beijing region and our differentiated way of doing business is consistently generating healthy resources, which further enable the company to tap into different regions for business opportunities and to establish a more diversified business layout. On other aspects of our business on slide 16, the company issued its latest ESG report on October 18th, which is the third annual ESG report of the company. We have now set zero carbon as the company strategy and a DADTA or data as our ESG strategy ecosystem. D represents decarbonization. implying our ongoing effort in adopting green energy for zero carbon emission. A represents alignments, indicating our stance on aligning with our industry and supply chain partners for a shared and prosperous business ecosystem. T represents technology, which is the gene that will continue to drive the company to lead the innovation and development of the industry. The last letter A represents the advanced attitude taken by the company to consistently driven the sustainable development of the industry. More information of the ESG report can be obtained at the company's website. Regarding other efforts on sustainability, we entered into a green loan agreement in September with a bank on project financing for our project in one of our Hebei campuses. The loan is aligned with green loan principles 2021 addition, with all loan proceeds intended for green building, renewable energy, and energy efficiency related to the project. On slide 17, our effort on innovation and research and development. We are winning wider recognition for our technical solutions. On November 9th, the company's hybrid evaporative cooling technology Catering to data center high computing demand was awarded the first pride of data center science and technology achievement on China CDCC Summit. The award, authorized by National Office for Science and Technology, is recognized as a prestigious national level award for data center industry. The company has been awarded first prize for two consecutive years, being the only third party data center company to have achieved such. The technology is a perfect demonstration of our ongoing effort in pursuing the mission of efficiently converting electric power into computing power. It owns 18 patents and its combination of numerous sub-technologies that leads to a result of estimated 358 days of natural cooling per year, estimated annual PUE of 1.16, and the best energy efficiency achievable for liquid cooling solution. With these, I have concluded my part on operating performance for Q3 2022. And I will now turn over to Zoe for details in our financial performance. Zoe, please.
spk11: Thank you, Nick. Now, let me walk you through our quarterly financial performance. Our financials remain on a healthy momentum. On slide 21, Revenue in the third quarter increased by 62.4% year-over-year, or 15.9% quarter-over-quarter, to reach RMB $1,202.7 million, which is in line with our steady ramp-up. Looking further down on slide 22, total cost of revenue in the third quarter increased by 74.2% to RMB 736.5 million from RMB, 422.9 million in the same period of 2021, mainly driven by increases in utility costs and depreciation and amortization expenses. Selling and marketing expenses in the third quarter of 2022 decreased by 43.7% year-over-year. to RMB 15.1 million, primarily due to less share-based compensation expense and less marketing activity. General and administrative expenses in the third quarter of 2022 increased by 36.1% year-over-year to RMB 116.1 million, primarily due to higher share-based compensation and professional fees. incurred during the period. With this, operating income in the third quarter of 2022 increased by 72.2% year-over-year to RMB 317.5 million with a margin of 26.4%. Net income in the third quarter of 2022 increased by 207.4%. year-over-year to RMB 241 million, with a historical high net margin of 20%. For further breakdown of core cost and expense item on slide 23, regarding utility cost, it recorded at 97.3% year-over-year growth, faster than revenue, and accounted for 32.8% of total revenue in the third quarter. The increase was mostly due to a combination of increase in utility unit cost in Hebei campus as a result of adjustment in utility cost of fee charging mechanism leading to a higher flow of utility cost as we have disclosed in last quarter and a higher revenue proportion contributed by Hebei campus. as the majority of the additional utilized capacity in the quarter came from the project in this region. Maintenance and other costs and adjusted SG&A expense were well maintained within our reasonable range, a result of the economy of scale of our business model, as well as the stringent cost control effort of the company. With this, on slide 24, our land-gap profitability remained healthy. Adjusted EBITDA in the third quarter of 2022 increased by 66.8% year-over-year to RMB $614.5 million from RMB $368.4 million in the same period of 2021. Dynamics in utility costs has led to a slightly lower adjusted EBITDA margin in the third quarter, but still over 50%, at 51.1%. Adjusted net income increased by 162.8% year-over-year to RMB 294.3 million, hitting a historical high margin at 24.5%. details in the gap to non-gap reconciliation on the EBITDA and net income would be available in our 6K filing or the appendix in our IRPPT. Now, let's take a look at our cash and debt position and our capex on slide 25. We continue to work in our business expansion to meet the increasing demand from our customers. by investing more capital into our under-construction data centers. CapEx in the third quarter was RMB 1,325.4 million, and the CapEx in the first nine months of 2022 added up to RMB 3,558.1 million, almost to the level of year 2021. The financing channels remain open and secured for the company, and we continue to draw down financing for our project development, ending up in a total debt position in the third quarter of RMB $8,416.1 million. Generally speaking, we don't have major loan or debt facilities to mature in 2023 or 2024, only minor ones based on some of our project loan payback amortization schedule. Regarding the cash flow dynamics in the third quarter, on slide 26, a one-off delay in payment collection due to client internal system upgrade and the COVID-19 lockdown issues leads to an active cash flow from operation in the quarter, which has mostly recovered. following the end of the third quarter in October and November already. A negative cash flow from operations coupled with RMB $1,433.6 million cash flow from investing offsetting by RMB $726.9 million cash flow from financing and the effect of exchange rate changes of RMB 104.6 million, led to a lower cash position by end of quarter at RMB, 4,987.9 million, and an asset position of RMB, 3,380.4 million. Now, let's take a look at some key leverage and coverage ratios on slide 27. On leverage ratio, net debt to last 12 months adjusted EBITDA ratio stood at 1.6 compared with 1 in the previous quarter. The seemingly increase can be moderated if we exclude effect from the one-off payment collection issue, while the total debt to last 12 months adjusted EBITDA remained at 4.1, a similar level as with the previous quarter. Our coverage ratios continue to improve as we maintain our strong profitability with our last 12 months adjusted EBITDA to interest ratio rising to 8 compared with 6.7 in the previous quarter. We maintained a healthy capital structure under the current challenging market environment with our total debt to capital ratio standing at 44.1% compared with 41.6% in the previous quarter. Our prudent financing policy, healthy cash generation, asset return, and profitability have together made this possible. A better sense of the company's return profile can be referred to on slide 28. 8% IT capacity utilization ratio of the company by the end of the third quarter yielded a pre-tax RIC of 16.5% compared with 17% in the previous quarter and 15.3% in the same quarter last year. Finally, on our 2022 full-year guidance, given strong business momentum, the company raised its 2022 full-year guidance, which is the second rate during the year. Full-year revenue guidance is raised by RMB 200 million at midpoint, or a 4.8% increase compared with the previous guidance. Now, in the range of RMB 4.33 billion to RMB 4.43 billion, Full-year adjusted EBITDA guidance is raised by RMB 90 million at midpoint, or a 4.2% increase compared with the previous guidance. Now in the range of RMB 2.2 billion to RMB 2.26 billion. This concludes our prepared remarks for today. Operator, we are now ready to take questions.
spk04: Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. When asking a 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. Once again, to ask a question, please press star one and one.
spk01: We will go to our first question. One moment, please. And your first question comes from Lang Lu from Morgan Stanley.
spk04: Please go ahead.
spk06: Because the company had previously communicated with us on the annual production capacity or from the customer's order. It may increase from 120 to 150 megawatts a year. It may be a more practical demand. At present, the demand is very strong. I don't know if this will bring some future demand to this year. Or is it a sustainable situation now? Let me translate my question. First, I would like to congratulate on the following results. And my question is about the demand outlook. As management previously indicated that per year, 120 to 150 megawatts annual addition of the new order should be a reasonable target. But actually, up to now, the company sees a pretty strong demand. And I would like to ask whether this is sustainable and whether there's any pull forward of the future demand and how to look at the new booking in the next few years. Especially, I want to hear more color that whether the demand in China and in overseas market are different. Thank you. Thank you.
spk03: Yeah. And, uh, this is Nick, uh, I think, uh, uh, before our CEO, and, uh, answer your question and also logic and the behind our judgment of, I can assure you that there's no, absolutely no proof forward about future demand into this year. And also our, uh, our forecast into the future, which, uh, uh, which in, uh, in the midterm one in 20 to 150 megawatts, you know, increase of capacity on a per year basis is going to be a sustainable number to use. Okay. I'm going to turn it over to Huapeng to give you the logic behind our expectation on the demand side and on the supply, both China and overseas. Huapeng, please.
spk09: First of all, the short-term balloon that we can see from the existing customers' domestic and foreign balloons are relatively good.
spk05: Translation for Hua Peng's words. So we will divide the question into two aspects. For the short-term demand, to answer your question, we can see that either from China or from our foreign overseas clients, the demand has been very strong.
spk09: From a long-term perspective, let's first talk about China. So we will first keep on leveraging our current advantage in Hebei and Shanxi, where our campus
spk05: We will firstly to keep on making investment and lock up more resources, especially the rare resources such as the power supply, green powers, and also the energy quota. We also keep an eye on the critical resource allocations in the east and south part of China.
spk09: For our overseas markets,
spk05: will continue to secure resources around our current major campuses. While in Indonesia and Thailand, we're gonna make moderate down payments for the land resources in those areas. As a general principle, we'll only make substantial investment when we see clear committed demands from our clients.
spk09: We will still maintain a growth at a 120 to 150 megawatts growth pace.
spk05: Thank you. Thank you. Thank you.
spk04: Once again, to ask a question, please press star one and one on your telephone. Please state your question in Chinese first, then repeat your question in English for convenience of everyone in the call. We will now go to your next question. One moment, please. And your next question comes from Tina Hu from Goldman Sachs. Please go ahead.
spk02: Thank you for your time. Congratulations on a very strong performance. My question is about the electricity bill. In the third quarter, the percentage of income is relatively high, more than 30%. So I would like to ask, in the fourth quarter, or even next year, in the domestic electricity price market, what is the current Let me translate. So thank you, management, for your time and congrats on the very strong results. My question is about the electricity cost. So we've seen that in the third quarter, it has become north of 30% as a percentage of revenue. So just into the fourth quarter and into 2023, what is management seeing in terms of the electricity price trend and then as a percentage of revenue, what kind of ratio should we expect? Also related to this, since we already delivered our first Malaysia not first, our Malaysia project in the third quarter as well. So just wondering, in terms of the utility expense as percentage of revenue, how does that compare to the China part of the business? Thank you.
spk03: Thank you, Tina. I believe my colleague, our VP of Finance, Zoe Zhuang, is the best one to address these questions. Zoe, please.
spk11: Yes. So thank you, Tina, for your attention. And as we know, your last earnings call, we have disclosed this mechanism of the unit cost charging the change already. So this has been fully reflected in our third quarter financial statements already, and which results the energy cost to total revenue ratio around 3.8% or 3.5% quarter over quarter. However, as we always highlight, that our China data center campus are located in areas with abundant power supply, power resource, and with relatively cost advantage as well. So we estimate that in the near term and mid term, the power price will be relatively stable in the near future. And if there is any power shortage across China, I think that Qingdao with our location advantage will be least or less impacted compared with other regions in China in either the power supply or the power cost. And our second question is regarding for Malaysia. For all our overseas projects, it takes different model. The power cost is a pass-through model. So if there is any fluctuation in the power cost, there will be no impact on the EBITDA side. Thank you.
spk01: Thank you, Zoe. Shall I go to the next question? Thank you. We'll now take your next question. One moment, please.
spk04: Your next question comes from Mingran Li from CICC. Please go ahead.
spk10: Hello, Mr. Director. My question is about the system and expansion of HNAVA. At the end of October, the Malaysia project will be launched. How do we expect the up and down of this project? And as more overseas projects land, how do we expect a future overseas income contribution? Let me translate myself quickly. Thanks for taking my questions. My question regarding the moving rate of the Malaysia project, you know, open in October, and the revenue contributions from overseas in the next few years, And considering the strong demand profile, could you give us more color on the expansion plan for next year, like the capex mix between domestic and overseas? Thanks.
spk03: Thank you, Nicole. I think for the first part of the questions, our overseas project, especially the milestone one, MY06 Phase 1, since we already delivered in October, Looks like the ramp-up rate is very, very fast, essentially. And also, through the better, I would think, reasonable contract arrangement, we can actually collect the fees or the revenue portion much quicker than the normal contract we had in China. So at the moment, I think the operation is really running smoothly. I think Zoe can answer the question about the revenue contribution and also CapEx allocation for our overseas business. Zoe, please.
spk11: Okay. So, overseas business has always been our focus. In the financial year 2021, we can see from the financial statements that overseas business revenue accounted for around 5% of the total revenue. But by the end of the first nine months of this year, the overseas data centers accounted for around 19% of the total capacity. and total IOI intention of the customers in overseas accounted for nearly around 15%. And the most important, for those under construction capacity, nearly 50% of the capacity are from our overseas regions, from overseas countries. Thus, it's expected we will have higher growth rates of overseas revenue. And the current estimate is With the gradual delivery of Malaysia and India campus, the percentage of overseas revenue to the total group revenue will significantly increase in next year, which we estimate will be around in the range of over 10%. And I think in the years following, it will keep the increasing trend. And the second question is regarding the capex. The capex expenditure at a corporate level are expected to be at a similar level as in this year, compared with this year and next year. And both China and the overseas, our capex has competitive advantage, but apparently the overseas project capex will be slightly higher than the Chinese project. So we expect that the proportion will be also larger than the Chinese project.
spk01: Thank you, Zoe. Thank you.
spk04: Thank you. We will now go to our next question.
spk01: One moment, please. And your next question comes from the line of Edison Lee from Jefferies.
spk04: Please go ahead.
spk07: OK, thank you. Thank you very much for giving me the opportunity to ask questions. In fact, my main question is only about the interest rate and the electricity bill. Because in the third quarter, although your EBITDA rate has increased, the interest rate has dropped a lot. This may have something to do with the electricity bill. So can you explain a little bit about what you explained in the last quarter? Okay, my question is mainly surrounding the power cost and also gross margin. because I saw that in 3Q, your gross margin actually is down Q and Q and year and year, while your EBITDA margin is actually up Q and Q and year and year. So I would like to know, maybe you can explain again the power cost calculations for your HERPA projects and what is the proportion of your projects that include power costs versus those that do not include power costs. And I also found that based on your midpoint of your new guidance for the full year. That implies that your fourth quarter EBITDA margin will drop on a Q&Q basis. So I wonder whether that's because your guidance is conservative or whether there are any other reasons. Thank you.
spk03: Thank you, Edison. I think both Zoe and I are going to answer this question in multiple ways, but I would rather let Zoe to state some facts for our Q3 utility cost increase. Please, Zoe.
spk11: Okay, so thank you for your attention and question. As we explained, that the energy cost to total revenue rise around 3.8% quarter over quarter. I mean, this quarter compared with last quarter. But if we look at EBITDA margin, that we stayed at 51.1% this quarter, and compared with last quarter, it's only, I think, over 1% difference. as this is offset with other expenses like the maintenance costs and other costs as well. And this is offset by the economies of the scale. And the reason for this is in Hebei province is in the third quarter there is electricity cost increase around I think 15% in that region. And this has been, this is due to the the stage grid has changed their charging system, charging mechanism. So this has been reflected in our four-year guidance already. So this is the first question. And second question is regarding the four-year guidance, we took a very prudent way. So you can see that as the company has always been, we have hit the market consensus for nine consecutive quarters. So for the full year guidance, we still take very consistent and very prudent, very conservative estimate. And also for the full year guidance, there is a new substation supposed to be on live, but go on live. But considering current China COVID-19 lockdown situation, and we think there might be some postpone. So we also take this as a, take this factor into consideration. So the four-year guidance is very conservative. But anyway, the company, the management team, and the delivery team will try all the best to ensure the substation will go on live timely. And if that will be the case, I think the performance will be a little bit better than our forecast.
spk03: Yeah, Edison, one thing I want to add is actually the Q4 expected construction of the 220 kilovoltage substation is only one type of one-time effect, and that's only the potential and possible one-time effect. So there's more oversight on the previous guidance based on the prudent style we always demonstrate. But the reason for building that 220 kilowatts, I want to emphasize, is for the future protection of the capacity, you know, because as our previous quarter, as we disclose, we have so far signed up to 500 megawatts, 500 megawatts total capacity in the San Si region. Right now, we have 25th, roughly 250. There's got to be 250 more capacity. And as Hua Peng just rightly pointed out, the early we can lock in our resources in this energy rebound region, the early The earlier we can secure all the necessary infrastructure, the better chance we'll get from the future orders and big orders from our anchor customers. So we think that move to build a larger-scale substation is absolutely a necessity for us, and we want to make it happen as fast as possible. Thank you.
spk01: Thank you.
spk04: To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. 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. Once again, that is star one and one if you would like to ask a question.
spk01: We will now go to your next question. One moment, please. And your next question comes from Tina Howard from Goldman Sachs. Please go ahead.
spk02: Thank you, Manager Cang. I have a second question to ask. This is about our current rent. First of all, I would like to ask, in China, in the last quarter and this quarter, the rent of the contract received from the main client side and before that, have there been any changes? Or is it relatively balanced? Because I see that our... Thank you for the chance to ask a question again. My second question is regarding the rental price. So first of all, in the domestic market, wondering what is the, over the past two quarters, let's say, what is the new contract pricing versus the historical level? And then also for the offshore projects in Malaysia from our anchor customer, what is the rental price level versus the domestic market? Thank you.
spk03: Thank you, Tina. Zoe, you want to go ahead, or I'm going to answer it. Maybe you'd better answer it first.
spk11: Okay. I'll answer first. And for your two questions, first one is regarding the sales price has been very stable for us, and especially for the domestic projects. we don't see any change so far. So this is the answer for the first question. The second question is regarding the overseas sales price. The overseas business model is different with the domestic model. The power is a pass-through model. And so in each location, the price is very competitive. And since these are the hyperscale data centers, and as you know, the MY06 phase one is for one Anchor customer. So I'm not in a position here to disclose the specific price here. Thank you.
spk03: Generally, the overseas price level, there's a two-part, one service related, the other one is power related. So if we, because power is a password, I don't want to comment on it, but the service related is higher than China. So I can give you that information.
spk01: Thank you very much. Thank you. I will now hand the call back for closing remarks. Thank you everyone for attending this conference call.
spk03: As you can see that we probably have a little bit contrarian, I would say, the business momentum undergoing in three ways. Our moving is very healthy and strong. Our current under construction development projects are very strong on time, and some of them even got delivered earlier under the request from the customer. And third, very important, our future demand, as you can see from the answers from CEO and myself and other management, will be ongoing, very strong. You know, and we anticipate that our very initial strategy find the most efficient way of converting electric power to computing power, then it continues to play out in the future and bring the high profitability, not just the operating profitability, I want to emphasize, but the return on asset, return on asset, which is historically speaking at the high T levels. This is actually more meaningful to all the stakeholders concerned, including those equity investors and also creditors. So that's what I want to say. And that the company is going to keep focusing on the efficiency, keep focusing on the hyperscale business scale, and keep focusing on balanced investment versus return in the foreseeable future. And thank you for your time.
spk04: Ladies and gentlemen, that concludes our conference for today. Thank you for participating. You may now disconnect.
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