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Operator
Hello, ladies and gentlemen. Thank you for standing by for GDS Holdings Limited's fourth quarter and full year 2021 earnings conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded. I'll now turn the call over to your host, Ms. Laura Chen, Head of Investor Relations for the company. Please go ahead, Laura. Thank you.
Laura Chen
Hello, everyone. Welcome to the fourth quarter and full year 2021 earnings conference call of GDS Holdings Limited. The company's results were issued via Newswire Services earlier today and are posted online. A summary presentation, which we will refer to during this conference call, can be viewed and downloaded from our IR website at investorsgdsservices.com. Leading today's call is Mr. William Huang, GDS founder, chairman, and CEO, who will provide an overview of our business strategy and performance. Mr. Dan Newman, GDS CFO, will then review the financial and operating results. Ms. Jamie Koo, our COO, is also available to answer questions. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Security Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the company's perspective as filed with the U.S. SEC. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please also note that GDS earnings press release and this conference call can include discussions of unaudited gap financial information as well as unaudited non-gap financial measures. GDS press release contains a reconciliation of the unaudited non-gap measures to the unaudited most directly comparable gap measures. I will now turn the call over to GDS founder, chairman, and CEO. William, please go ahead, William.
William Huang
Hello, everyone. This is William. Thank you for joining us on today's call. I'm delighted to report another year of strong financial results. In 2022, we grew revenue by 37%. 36%, and adjusted EBITDA by 38% year-over-year, in line with our guidance. At the same time, we made significant progress in key business areas, which underpinned our long-term success. We sustained our sales momentum, adding around 120,000 square meters, or 280 megawatts, of new commitments from an increasingly diversified customer base. We secured over 300,000 square meters of new capacity supply in market in China by a combination of land purchases and project acquisitions. This increasingly scares results will give us a competitive advantage for years to come. We put in place the foundations for our Singapore Plus strategy with two complementary campuses in Malaysia and Indonesia. We increased our use of renewables to over 30% and We completed over US$2.6 billion of debt financing to ensure that our projects are fully financed on a sound basis. In addition, we raised over $600 million from a private CB issue with strategic value added. Our strategic market position is stronger than ever. Despite the challenging operating environment, we remain focused on executing our business plan, improving our efficiency, and seizing key opportunities when they arise. In 4Q21, we booked 23,000 square meters of new commitments. For the full year of 2021, We hit our sales target with 96,000 square meters of organic bookings and 23,000 square meters from acquisitions. For 2022, we expect to achieve around 90,000 square meters of new organic commitments. While there is some change in the demand profile, overall demand is at a similar level to last year. As shown on slide six, we won five hyperscale orders during 4Q21. Hyperscale typically means cloud and large internet, but in each of the past two quarters, one of our hyperscale orders was from a financial institution. Turning to slide seven, during 2021 as a whole, we saw a change in our new business mix, with cloud accounting for 50%, large internet for 30%, and FSI and enterprise for 20%. Our sustained sales momentum demonstrates the strength of our customer franchise across the demand spectrum. Turning to slides eight and nine. One of the key to our success is having the right capacity in the right place at the right time. This enables us to provide a more complete solution to our customers and the depreciation GDS from the competitors. In tier one markets, it has become increasingly difficult, if not possible, to obtain sustainable suitable land for data center development, together with the necessary power quota and access to renewables. Customers must be able to scale up their presence in tier one markets in order to satisfy the requirements for low latency and high availability. This is recognized in the government's ESA data with computation. concept for the data center industry. During 2021, we accelerated our capacity sourcing in order to build up a sustainable supply. We acquired or entered into definitive agreements for 16 data center projects, mostly located in the urban areas of Beijing and Shenzhen, where new supply is limited. And we acquired and purchased the land with energy quota in all the tier one markets. In total, we added around 300,000 square meter up to our development pipeline, equivalent to over three years new bookings at our current sales run rate. It is valuable asset which underpins our ability to serve customers and create value for our shareholders going forward. While assuring our position in mainland China, we also took significant steps to build up our presence in Hong Kong and Southeast Asia. In Hong Kong, we now have a pipeline of four purpose-built data centers that will enter service between 2022 and 2025. Ensuring continuous supply, we have an anchor commitment for Hong Kong 1 and expect to have commitment for Hong Kong 2 in the second half of this year. I have been in Singapore for the past few weeks. I'm very excited by the potential of our regional strategy. We will initiate construction of our Southeast Asia projects in the next few months. and to obtain our first anchor orders shortly thereafter. Turning to the slide 14, a few months ago, we published our first ESG report and set out a target to achieve carbon neutrality by 2030. In 2021, we achieved 34% renewable energy usage compared with the 22 in the prior years of 2021. Recently, four of our data centers were recognized by the government as national green data centers based on their renewable energy usage and advanced green technologies in design and operation. To conclude my part, all the things that we have done are for long-term business plan. All the temporary Temporary uncertainties in the macro environments are not going to impact our execution of business. We are positioning ourselves to be long-term winners in the data center market. Now I will hand over to Dan for the financial and operating review.
William
Thank you, William. Starting on slide 17. where we strip out the contribution from equipment sales and the effect of FX changes. In 4Q21, our service revenue grew by 6.1%. Underlying adjusted gross profit grew by 6%, and underlying adjusted EBITDA grew by 6.7%, quarter on quarter. Our underlying adjusted EBITDA margin was 47.2%. Turning to slide 18 and 19, service revenue growth is driven mainly by the delivery of the committed backlog and closing of acquisitions. Net additional area utilized during 4Q21 was 19,147 square meters. Excluding acquisitions, move-in has been at a similar level for the past five quarters. The first quarter of each year is usually the seasonal low. In the current month of March, move-in has also been affected by COVID-related lockdowns in a number of our markets. Accordingly, we expect move-in in 1Q22 to be slightly below the trend line. However, we still believe the move-in pace will pick up again once we see more certainty in the macro environment. MSR per square meter was almost flat in 4Q21 as compared with the prior quarter. For the full year 2021, MSR declined by 3.6%. In 2022, we expect MSR to decline further by mid single digits in percentage terms. The MSR dilution from Edgertown and BOT projects will continue in 2022. but we expect the decline to be more mild in 2023 and onwards. Turning to slide 21 and 22, our underlying adjusted gross profit margin was 52.5 percent for 4Q21, the same as in the prior quarter. As a result of higher coal prices, we are seeing thermal power tariffs increase by around 10 to 20 percent across Tier 1 markets. We are passing on around half of the increased cost to our customers. However, we estimate that temporarily elevated power tariffs are a drag of around 1 to 1.5 percentage points on our profit margin this year. Turning to slide 22. During 2021, we brought 120,000 square meters of new capacity into service. comprising organic developments and acquisitions, but excluding VOT projects. Over the past few quarters, we've adjusted the pace of our construction to reflect the current environment. Accordingly, in 2022, we expect to bring around 85,000 square meters into service. Our pre-commitment rate remains at over 60%. Assuming that on average, 90% of capacity is saleable, We currently have around 46,000 square meters under construction, but not yet pre-committed, equivalent to around two quarters new bookings at the current sales run rate. Turning to slide 23, our capex for FY21 was 13.7 billion RMB, consisting of 9.7 billion for organic capex and 4 billion for acquisition consideration. The organic capex includes around 1 billion for land banking, which is not categorized as acquisition for accounting purposes. As at the end of 4Q21, we had a liability of around 2.1 billion RMB on our balance sheet in respect of deferred and contingent consideration payable for acquisitions which had closed before the year end. Looking at our financing position on slide 24, At the end of 4Q21, we had 10 billion RMB or 1.6 billion US dollars of cash on our balance sheet. And our net debt, the last quarter annualized adjusted EBITDA ratio was 6.3 times. Our effective interest rate for the whole of 2021 was 5.5% compared with 6.6% in 2020. During 1Q22, we successfully raised $620 million US dollars through the issue of convertible senior notes with a 0.5% coupon and seven-year tenor. With all the refinancing, we have successfully extended the tenor of our project debt. Over the next 10 years, project debt repayments average around 2 billion RMB per annum. Turning to slide 25 and 26. And at the end of 2021, we had around 320,000 square meters of area utilized and around 235,000 square meters of total backlog. Assuming that we complete all the existing projects, deliver the backlog, and sell out the small amounts of remaining inventory, our revenue generating area would almost double from today's level. for over 600,000 square meters. This is without initiating any new projects. The cost to complete all the existing projects is around 13 billion RMB, which we could finance with our existing resources. Turn into slide 27. For the fall year 2022, we expect our total revenue to be in the range of 9,320 million RMB to 9,680 million RMB, and adjusted EBITDA in the range of 4,285 million RMB to 4,450 million RMB, which implies a margin of around 46% at the midpoint of revenue and EBITDA ranges. We expect our capex to be around 12 billion RMB, out of which 6 billion is mainland China organic capex, 2 billion relates to regional expansion, and 4 billion relates to acquisition consideration plus land banking. We would now like to open the call to questions. Please, operator.
Operator
Thank you. If you would like to ask a question, please press star and 1 on your keypad. And if you'd like to cancel that request, you can press the hash key. For the benefit of all participants on today's call, Please limit yourself to two questions. If you have more questions, please re-enter the queue. So once again, that's star and one for questions. Your first question today is from the line of Yang Lu from Morgan Stanley. Please go ahead.
Yang Lu
Thanks for the opportunity. I have two questions here. The first one is, could you please share your latest observation on demand? We see several new changes. More public health and internet companies reported their recent earnings. And we also see a new run of COVID in China, et cetera. What is the incremental change on the demand side for both moving and also new order or new sales? The second question. is we see Chinese government released the East to Data West Computation Initiative. What is the implication to GDS, especially given GDS has a long-term tier-one market strategy? Thank you.
William Huang
Okay. Let me answer your question, Yanli. Thank you. Number one, about demand side, I think, as I just mentioned, demand still maintained a similar level of last year. This is based on our market observation. But the demand profile has changed. As I just mentioned, in the last two quarters, we mentioned that demand will be shifted the profile will shift from the large cloud to a lot of the internet and enterprise and financial institutions. This is happening. If you remember a couple of quarters ago, we mentioned the demand. We already told the market the demand has shifted. But the demand level is still maintained. That's our conclusion. So that's why I think if you, I just mentioned our new order booking profile, it's maintain the change, right? So this is the fact which I tried to mention. The second question is moving, right? The moving, I think it's early to, talk about, too aggressive to talk about it. Because we see the, because it's too much macro and micro impact to the customer moving condition, like COVID lockdown and all those supply chain issues still there. So I think the, now it's a little bit too early to give this a positive way, but we still will see once some condition improved, I believe the customer will catch up. Because the demand is real, and they are just waiting for some outside condition improved, like a supply chain and lockdown condition.
Yanli
Another question?
William Huang
Another question?
Yanli
Yes, go ahead. Dongshu Xishuang.
William Huang
Okay, the second question, yeah, Dongshu Xishuang, right? East data, west computation. East data and west computation. I think it's good news for us. Number one, the government still encourages the new infrastructure, right? So this is good news. And another good news for GDS is we talk about this is a We read the government policy as two parts. One is it's the data, right? So this means government finally recognized low latency product is very, very necessary, right? So this is, that means government know that demand will continue increase in the demand. let's say, tier one market, low latency product. On the other hand, we understand the government want to encourage the people to put more, let's say, cold data in a renewable energy source location, right? Has a lot of renewable energy source. But we believe GDS is working very closely with the government and our client. So I think GDS has already demonstrated we have the capability to catch up all kinds of opportunities in the future. So I think another impact I try to express is this new policy is already introduced one year ago, right? But now it's pretty firm. But it's a guidance and need time. And also, I will say, GDS, it will not impact any of our resource which we are already on hand. So this is my understanding of the government policy.
Yang Lu
Thank you.
Operator
Thank you. The next question is from the line of Tina Hu from Goldman Sachs. Please go ahead.
Tina Hu
Hi. Thanks, management, for your time. I have two questions. The first one is in terms of, let's say, the next three years from 2023 to 2025, where do we see our growth rates? is more stabilizing at around like 20-something percent or do we see when all of these near-term uncertainties or headwinds have dissolved, we can see an acceleration of our revenue growth as well as the EBITDA margin situation. Do we see maybe going forward again continued EBITDA margin improvement? after this short-term electricity or coal price inflation. That's number one. And the second question is regarding our M&A strategy this year. Notice that management got it for 19,000 square meters of organic sales this year. So just wondering what's our M&A strategy this year. Thanks.
William Huang
Okay. I answered the question. Number one is the Yeah, I think we set up the base of the, let's say, every year we increase the new booking. It's around 90,000 square meters. This is organic, right? We're still consistent to give the guidance on that, and we are confident for that. But this is, you know, in the last 12 or 18 months, the macro environment, which is very, not very good, but we're still confident to maintain this level of the growth, right? This is our base. So, of course, we don't estimate any, we don't give any upside on that. But we believe if the government policy or macro environment improved, I think the market will accelerate. But now we are slightly, let's say, confident for the future next five years, next three years, because we see the central government encourage the economy again, right? Recently, a vice prime minister Mr. Liu He released very good policy to the market. And we think, we believe, this will encourage all the internet company or cloud company or enterprise company will restart their business plan, right? This is number one, right? So above 20%, definitely is our base. The second question?
Tina Hu
M&A strategy.
William Huang
Yeah. M&A, I mean, as a tool, it's very important for us. Last 2021, as we just mentioned, we are more focused on to use the M&A as a tool to acquire more valuable assets. land with a carbon quota. So because in the tier one market, we think, we believe, because of the carbon neutral policy is the main policy. So in the tier one market, in the next few years, the results will getting more tight than before. So this, but our customer demand in tier one market still very strong. So in order to maintain the growth profile, the resource, qualified resource, enough resource is much important than before to support our growth. So that's why M&A in the last year, we more focused on the acquired valuable asset and resource. But now, this year, we will more focus on some project which have even more mature assets we will focus on. So as we mentioned in the last couple of quarters, GDS in the next 18 months, even 20 months, is a good opportunity for us to acquire more small platforms. We are open to see all kinds of opportunities to acquire them. acquire the project, even platform. So this is what we can give the message to the market right now. But I think we follow up. We're watching all the kind of opportunity right now. Our pipeline became very strong.
Tina Hu
Thanks, William.
Operator
Thank you. The next question is from the line of Jonathan Atkins from RBC Capital Markets. Please go ahead.
Jonathan Atkins
Thank you for taking the question. It's Laura Lee on for John. First of all, I was wondering, have you been seeing any changes in the customer decision process for leasing uptake, and what impact are government actions having on their IT decisions? And then secondly, on Malaysia and Indonesia, I'd be curious as to the put-and-takes of customer interest, given perhaps customer-specific challenges and the power challenges that Singapore is experiencing.
Yanli
The leasing uptake and the government decision.
William Huang
Okay. Hey, Dan, you answered the question?
William
I couldn't hear the first question. Why don't you answer the customer interest in Southeast Asia and asked about Malaysia and Indonesia, your dialogue about that. I just want to check the first question.
William Huang
Yeah, as I just mentioned, I have been in Singapore almost one month because of the keep developing this region's business. Frankly speaking, I'm very excited about the whole momentum in this region. It's very active. I met a lot of the private equity guys and a lot of our customers here. The reason because I met a lot of private airline because they are very encouraging me because they think there's more unicorn in this region is happening right now. And on the other hand, our customer, our install-based customer, I met a lot of their business people in this region. They all increased their business in this region significantly in the next few years. So that means the future demand in this region definitely will encourage us to more aggressive in this region. So, our custom demand, in terms of the real demand, right, in short term, I have to say we definitely will get some results in the short term and second quarter, second half of this year. Verbally, we already get a couple of custom commitment in this region.
Laura Chen
Laura, can you please repeat your first question?
Jonathan Atkins
Sure. So I was wondering if you've been seeing any changes in the customer decision process for taking up policing, and then what impact are government actions having on your customers' IT decisions?
William Huang
I think definitely our customers, they have their own IT logic, right? This is even if you look at the last couple of years, our customers, they have their own philosophy and the deploy logic. This cannot be changed in short term, right? So I think that's why GDS always follow up our customer criteria first. and our customer logic in terms of their business logic and their IT logic. So I think, of course, we also believe carbon neutral will be the future, but our customers are very smart. They know how to separate their very cold data to remote place, which they already do, right? So I think this will not change our customer behavior a lot. But it's naturally, when the IT grows, more data coming, we still believe the tier one market, low latency market demand is still very strong. On the other hand, the code dates will significantly increase as well. So this is a different product, different demand, so it needed a different product to response. So that means, that's my understanding.
Operator
Great, thank you. Thank you. The next question is from the line of Joel Ying from Nomura. Please go ahead.
Joel Ying
Thank you for taking my question. So I have two questions. The first one is, as we're talking a lot about M&As, a lot, so I would like to understand that what is the funding position at this moment, and do you actually need more capital, and how to raise the money in future? The second one is about the margin guidance. I think the major reason for the slightly weaker margin growth, sorry, the EBITDA growth compared to revenue is about the utility cost. Anything else rather than the utility, can we see potential risk for the margin side this year? And also, if any extra cost for the green energy side, that could happen? Thank you.
William
William, I'll answer your questions. First of all, we do have resources. I'll just make a general comment, which is that if there's an opportunity which is good enough, we will most definitely find a way of obtaining the financial resources. If you look at what we've done historically, raised capital in a variety of different ways. We've worked with, you know, sovereign wealth fund and programmatic joint ventures. We've worked with Chinese private equity fund, CPE, in undertaking certain project developments. I mean, recently we raised capital privately from Sequoia China infrastructure and from a sovereign wealth fund and also from our with support from our long-standing and largest shareholder, SCT GDC. I think that the interest from private capital providers in working with GDS is very high. And those dialogues are going on all the time. So I really don't think that access to capital in any way is going to be a constraint in what we want to do and what we think makes strategic sense.
William Huang
Yeah, I added some color on that. I think we are, in mid-term, we don't worry about our capital. We have enough capital to grow our business plan. On the other hand, if some good things happen, let's say, we need the capital. We never worry about that. We have a different way to access the, we have the capability to access the different type of the capital. We already demonstrate we have this kind of capability in the last six or seven years. We could go to the market, raise money, when we believe can create value for our customer, create value for our shareholder. So we just issued a private note, a CB, a few weeks ago. It's already damaged, even in this market, we still can access easily, right? So I think this is not the issue for us to access. If we do have some big deal to try to do, a lot of the capital won't help us to create the value for our shareholders, right? It's not an issue.
William
Yeah, so on your question about... The biggest factor behind revenue growth is moving. That's one driver which is not within our control because customers have flexibility on their moving. That's part of the way that we work with customers and part of the value proposition. All of our backlog is absolutely rock solid. The data center capacity is there. It's prime capacity in Tier 1 markets. And it's really just a matter of some quarterly fluctuation in terms of the move-in. But for us to make a forecast about customers' likely move-in behavior over the next few quarters is difficult. We always... very conservative on that one assumption because it is outside of our control. So we've taken a view which I hope is a conservative view on moving, and that's what reflected in the revenue. On the margin side, yeah, we see an interruption to our trend for many quarters of years of margin improvement. The biggest factor is the power tax. I believe it's a temporary factor. Last October, you know, the government liberalized power tariffs in China in the kind of wider range and float. So, yeah, liberalized the wholesale power market. But, you know, at that time and until now, you know, the whole price is that reflected in tax. I think this transition to a more liberalized market is still ongoing and probably will be for at least this year and maybe next year in different places. Eventually, I think these liberalizations are going to lower power tariffs because it will enable us to exercise our purchasing power as a kind of large in all the locations. And the full price will also, I think, revert to the mean. But once again, we took the view that for this year, that the power tax is elevated, and that really is the major factor behind the low margin.
William Huang
Yeah, I can add a little bit of color on that. Number one, about moving, if you look at the last six years, in the normal time, our customer moving is quite normal and on track. And as I just mentioned, last 18 months, this is all the macro and micro. environment impacts our customers, definitely. So there's too much uncertainty condition impact to our customers' business. So in general, I think if you look at a long-term point of view, the IT still grows. The digitalization, nothing changed. So I think this is, in our view, is a short-term. So we believe if the macro condition getting improved, our customer still will execute their original business plan even better. So in our view, moving is a short-term issue, right? But we will see. We hope everything will be improved in the next 12 months. And We believe things are getting better.
Operator
Thank you. And due to time limits, please ask that you limit yourself to one question per person. So the next is from the line of Michael Elias from Cowan and Company. Please go ahead.
Michael Elias
Great. Thanks for taking my questions. So just really quickly, You know, we've seen some volatility in the Chinese market. Just wondering, in terms of the private market valuations you're seeing for data center assets, have you seen any changes there? And then also, I know you've mentioned that you have different ways to finance M&A to the extent you wanted to move forward with that. But just as we think about your leverage, you know, could you give us a sense of what the upper bound or what the maximum leverage you'd be able to put on the or willing to put on the businesses? Thank you.
William
Willing to try to answer? That might be, we did a lot of acquisitions in the past eight months, and they were good ones. I would say the private market valuations have come down. Of course, sellers would argue that the public market multiples should be ignored because they're going to go back up. We hope and expect that they will, but the private market is always going to be priced relative to the public market multiples. There are other buyers. There's still competition for these opportunities, but we've been very selective. It was very clear what we were looking for primarily data center projects in Beijing and Shenzhen and land with energy quota in the surrounding areas of all the Tier 1 markets. And we were able to close the deals or enter into definitive agreements for those deals on mid to high single digit multiples. We're talking about the acquisition price plus the cost to complete. divided by estimated stabilized EBITDA. The question about leverage, we've always financed our data centers with project finance. So our first objective is to allocate capital or cash to capitalize data center projects and then to put in place project finances as early as possible so that each project is fully financed in terms of capital allocated to it in debt. And as I mentioned before, if we debt finance an organic project, say, at 60% debt to total project cost, when that project is stabilized, it will translate into something like three to four times the debt treated up, which I think is quite an acceptable level. But of course, before then, the debt is incurred and the EBITDA is generated later. The consolidated net debt to EBITDA is not what we target. It's the outcome. It's the sum of all the projects. Some of them are stabilized and have net debt to EBITDA around three times. Others are ramping up. you know, they're fully committed, they are on a journey to the same end result, but right now they might be at, you know, very high leverage because, you know, the debt has been incurred, but they haven't yet reached the stabilized EBITDA. And then, of course, we've got debt incurred for projects under construction where there's also a very high pre-commitment rate of over 60%. The important thing is that all of these projects in Tier 1 markets have been de-risked with pre-commitments and are at their stage of development, which will end up in the same place, which is highly cash-generative, highly profitable. Our consulting net debt, it does fluctuate up and down. It was down after the Hong Kong IPO. It's up now because we made a decision strategically to allocate capital to securing a lot of development pipeline. And if you were to add back the value of our development pipeline, if you were to adjust our enterprise value and say, look, there's a hidden asset here, then our net debt would be somewhat less than it appears. I just hope that investors would keep an eye on that. We are somewhat sensitive to this because we appreciate that equity investors look at this, but whatever the level, if it's six or even if it goes higher to seven times, it is very comfortable because what I said, it's just the outcome of a whole series of projects which are soundly financed with all the capital allocated in the reserve and the project finance secured and in place.
Michael Elias
Thank you. Appreciate the call.
Operator
Thank you. The next question is from the line of Edison Lee from Jefferies. Please go ahead.
Edison Lee
Thank you. Thank you, management, for letting me ask the question. So my key question is about the organic growth going forward. I think you guys are guiding 85,000 square meters for 2022. And I remember previously, I think Some of you were talking about 100,000 per year, so I just want to get a better clarity as to whether you think going forward it will still be around 100,000 or you think 85 is a more reasonable number, and why would 2022 be 85 versus the previous expectation of a slightly higher number? Thank you. Thank you.
William Huang
I think we still, I think this level is always we focused always use a very, very solid way and a conceptual way to focus, give the market guidance. This is number one. I think the, I just say 90,000 square meters still is our guidance. Around 90,000 square meters. But, because this year, we will more focus on the high-core diversify our customer is number one. Number two, we also will focus on to get selectively customer, to get more high-priced customer. This is which we talk to our sales. So let them, give them the reasonable target, but we try to diversify our, more diversify our customer profile. This is always our, target to pursue to diversify our customers is always our consistent strategy, customer strategy, typically in current environment, right?
Edison Lee
May I follow up to ask the question that what will be your retail versus wholesale mix of the incremental capacity in 2022? Will that be very different from before?
William Huang
Yeah, I think as we just showed last two quarters, we already get the profile mix a little bit changed. And we think it's healthy, and we also will, we still will focus on this strategy, right? Retail, enterprise-type customer, now they are growing more faster than our expectation, which We think it's good. So retail customer still will increase.
Edison Lee
OK, thank you. Is there a mix that you can share, or any target on the mix between the two for this year?
William Huang
Last quarter, 20%. Yeah, I think the last quarter is 20%, right? It's mixed, and retail is representing 20%. Yeah, I think it will accelerate, and we target it to 30%.
Edison Lee
Sorry, is that target just for 2022?
William Huang
Yes.
Edison Lee
Okay, great. Thank you very much, William.
Operator
Thank you. The next question is from the line of Frank Lawson from Raymond James. Please go ahead.
Frank Lawson
Great. Thank you. Dan, you mentioned that power was impacting your margins. Can you discuss any other inflationary items pressuring margins, and how easily are you able to pass on inflationary costs to customers from new builds and so forth, and what sort of pushback are you seeing from customers on that? Thank you.
William
No, it really is only power. It's power and growth track. And power, I think, is a temporary one. I think we mentioned before that if you look at our contract portfolio, around 65% of the capacity is with contracts where there is a separate power billing, metering and billing. which of course would fluctuate exactly with the tariffs. But if you look at the area which is actually revenue generating today, billable, it's more like 50% is what we call unbundled and 50% bundled. The situation is very dynamic and we're in the process of agreeing power purchase agreements and fixing tariffs with the grid companies and with the power generators in different locations. And the power tariffs are changing quite a lot. It's a really complicated exercise to pass this on to customers. It requires, operationally it's complex and it requires a lot of reconciliation and confirmation with customers. you know, we're not passing it all on. To some extent, we make a decision to absorb it. In the medium term, which maybe is after one year, where we start to see the benefit of our purchasing power, this whole dynamic might reverse, lower coal prices as well, in which case we benefit. So we don't want to disrupt too much the arrangement with the customers because, you know, you win some and you lose some, right? Right now, we lose a bit. In the longer term, it may work the other way.
Frank Lawson
Okay, great. Thank you very much.
Operator
Thank you. The next question is from the line of Hongjie Li from CICC. Please go ahead.
Yanli
Hi, management. Just a quick follow-up on the M&A question, because about 30% of the CapEx in 2021 was used for M&A. So just curious, in 2022, how much of the 12 billion CapEx will be used to seek M&A opportunities? Thank you.
William
Yes, I think I said around $4 billion. And as at the end of 2021, we had some consideration relating to prior years acquisitions that had not yet been paid because we always try to structure the acquisition consideration with as much deferral as possible and some of its contingent linked to milestones and so on. So I think we had about $2 billion on our balance sheet that was deferred and or contingent from prior acquisitions. And then, you know, there's some acquisitions which we did. There was one in particular we did in the first quarter of this year. So, I think we're looking at about $4 billion, $6 billion, I think. Sorry if I got it right. Yeah, $4 billion in 2022 for acquisition consideration.
William Huang
Yeah, I have to add some color on that. I think that our revenue guidance not assume any acquisition, right? It can bring more revenue on that. So we, of course, we reserve the capital to do some acquisition, but not assume the revenue bring from the acquisition deal, right? So there's still a lot of the opportunity, right? If the big opportunity coming, definitely we just mentioned we have the different way, we have a lot of options to access the capital to get a deal done.
Operator
Okay, thank you. Thank you. The next question is from the line of Albert Hung from J.P. Morgan. Please go ahead.
Albert Hung
Thanks for taking my question. I'm asking a question on behalf of GOKU. The Guangzhou 100K square meter project acquisition, may I know what's the timeline for conversion from minority to majority stake? How much of the 100K square meter is developed already? What's the consideration price? Thank you.
William
Can I answer that? It's a complex transaction because it involves a portfolio with a number of different locations, each of which is a separate approval, separate energy quota, separate situation in terms of the land or the real estate. There are performance conditions which attach to each of them. it may take a good part of this year, either this year or it may even roll over into next year before all the performance conditions are satisfied for us to move from minority to majority. I mean, it could be sooner. I mean, we're working in a very collaborative way with the seller to support them, you know, where appropriate to try to get the things done. There's a couple of billion of deferred consideration related to the remainder of that acquisition because it is a very, very large portfolio. It's tremendously valuable.
Operator
Thank you. As there are no further questions, I'd like to now turn the call back over to the company for closing remarks.
Laura Chen
Thank you all once again for joining us today. If you have further questions, please feel free to contact GDS Investor Relations through the contact information on our website or the PS&T Group's Investor Relations. Thank you all. Bye.
Operator
This concludes this conference call. You may now disconnect your line. Thank you.
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