Chaince Digital Holdings Inc.

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

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.

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.