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Operator
Hello, ladies and gentlemen. Thank you for standing by for GDS Holdings Limited's third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session. I will now turn the call over to your host, Ms. Laura Chen, head of investor relations for the company. Please go ahead, Laura.
Laura Chen
Hello, everyone. Welcome to the third quarter 2022 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 Securities 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 include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. GDS press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. I'll now turn the call over to GDS founder, chairman, and CEO, William Phuong. Please go ahead, William.
William Huang
Thank you. Hello, everyone. This is William. Thank you for joining us on today's call. I'm pleased to report another quarter of solid results. We grew revenue by 15% and adjusted EBITDA by 11%, demonstrating that our business is resilient and defensive. In the current uncertain environment, we are managing GDS with the following priorities. In China, we are focused on delivering the backlog, keeping CapEx down to what is essential, and being selective about new business. Outside of China, we are stepping up our international expansion. It has been proven to be a winning strategy with a groundbreaking order secured during the quarter. While we are holding tight in China and waiting for recovery, we have created a second growth engine. At the same time, we are strengthening our financial position by monetizing assets in China and raising private equity for our international business. Overall, we remain very confident of our strategic position. We are on the right path to achieve our goals. While demand in China is slower during the current period, there are still significant new business opportunities. Large internet companies are growing They are building out their own IT platforms and deploying in new locations. They often favor larger sites around the market. If the customer is strategic and their demand matches our resource inventory, we will go after the new business. A good example is the nine megawatt order which we won in the third quarter. from a tech-driven retail platform. It is for our 10G1 data center, which is partly in service and partly under construction. We want another 20 megawatt order from a different customer in the current quarter, which fits the same pattern. Outside of China, we are building up our market presence during the quarter. we received a letter of award from a Chinese internet customer for a 64 megawatt deployment at the Nosa Jaya Tech Park, Johor. This is a clear proof of concept for our Singapore Johor button strategy. It lays a strong foundation for our continued expansion in Southeast Asia. During the first nine months of this year, Our new bookings totaled 61,000 square meters, including 28,000 square meters from international business. We will definitely exceed our 70,000 square meters target for the whole of... The new commitment mix this year is around 60% large internet. 20% financial institutions and 20% cloud customers. The profile of our new business in terms of the markets and the customer segments is very different from even one or two years ago. This shows how we have been able to evolve our strategy to capture growth Our backlog totals 258,000 square meters, out of which 122,000 square meters related to data centers which are already in service. We have reviewed our backlog with customers. Their commitments are solid. The underlying capacity is scarce resource in key locations and the customers will need for their future expansion. Our backlog is mainly spread across 10 cloud and the large internet customers. A couple of them have asked us to lengthen the moving period for two years to three years, which we will agree. On the other hand, We see that some of the large Internet orders, which we have won more recently, have a shorter moving period than the normal two-year schedule. Hence, the moving rates could pick up over the mid-term as the market recovers and these new contracts kick in. We expect to have one turn event from the backlog of around 3,000 square meters, or 1.2% of the total backlog. The customer has agreed to pay a substantial termination fee. We are managing our capacity expansion in sync with moving. As a result, we have brought the utilization rate back up over 70%. Our installed base is very solid. Over the past five years, our trend rate has averaged just over 0.5% per quarter, which is substantially lower than the global benchmarks. Over the next couple of quarters, We will have one customer churning around 17,000 square meters of area utilized. The customer is a large internet company whose scale has increased enormously in the past few years. This has led them to reconfigure their overall IT architecture. I'm pleased to say that around half the churn capacity will come back to us after a few quarters as the customer deploys at other GDS sites. In fact, over time, there's a good chance that the customer's new deployments with us will grow much bigger than the churn. Turning to the slide nine. In the first nine months of this year, we brought 23,000 square meters of capacity into service. In the last quarter of 2022, we bring another 5,000 square meters into service. Compared with our original plan for this year, we have pushed back nearly 59,000 square meters of completions into service. year to FY to 23 and beyond this will help us to materially capex which Dan will explain later over the past 20 years we have built a GDS into the leading deploy developer to developer and operator of high-performance data centers in China and a top five player globally. Our unique platform and multinational cloud and internet companies to seamlessly deploy their IT infrastructure in all of China's tier one markets. In recent years, our home market customers have accelerated their expansion in into high growth markets overseas they are asking for our support an exciting opportunity to expand our platform beyond mainland china pinned by a stronger demand from existing customers to address this With enhanced focus, we have set up a new international holding company as a vehicle for all our assets and operations outside of mainland China. It is headquartered in Singapore, and over the next couple of years, it will have its own dedicated management. We believe that we can rapidly grow GDS International into leading regional and center platform for leveraging our industry business relationships and the scale economics gs international has the potential to become a major value driver for our shareholders two of the world's largest data center markets are on our ball step in Hong Kong and Singapore. It therefore makes sense for us to focus initially on building up our presence in and around these regional hubs. We entered the Hong Kong market many years ago, leveraging third-party data center capacity to serve mainly financial institution customers. In recent years, the demand profile in Hong Kong has changed, with hyperscale driving the majority of growth. New purpose-built data centers are required to fulfill this demand. We initiated our path for self-development in Hong Kong in 2018. We selected West Kowloon as the best location to serve both enterprise and hyperscale customers and acquired our first brownfield site for redevelopment as Hong Kong One. We then sourced three other projects in close proximity to Hong Kong One, creating a virtual campus with multi-year supply pipeline. This is highly beneficial for customers as it enables them to land and expand in the same location and operated with the optimal efficiency. It is a unique proposition in Hong Kong. We have already sold out Hong Kong One to leading China cloud, global cloud, and FSI customers. demonstrating our competitive edge. Singapore ranks in the top five data center markets globally. It was also one of the fastest growing. However, in 2019, the Singapore government temporarily paused new data center approvals due to the pressures on resources and inbox impacted on our review. When we were considering our strategy for Southeast Asia, we felt that that's the biggest opportunity and the right place to start was by adjusting the spillover demand from Singapore. This situation is very familiar to us from our edge of town development in China's tier one markets. We moved early We moved early and decisively to secure land and power for hyperscale development at the diverse sites in close proximity to Singapore. As a result, we are well ahead of other players in executing this Singapore Joe Holt button strategy. On the Johor side, in Malaysia, we locked up a sufficient resource for 280 megawatts of development at the North Algeria Tech Path. We have the landmark 64 megawatt customer wing, which I already spoke about, and a strong sales pipeline. On the Badan side in Indonesia, we locked up the 58 MW for future development. We have already received a sales MOU from a potential anchor customer and expect the order to come in the next couple of quarters. We aim to submit an application for Singapore project approval in the near future. and are also evaluating opportunities in other Asia capital cities to future expand our footprint in the region. Like I mentioned earlier, we have grown GDS into the leading carrier neutral platform in China by building up continuous supply in shareware markets and focusing on strategic customers. This is exactly what we are doing with our international business. With resource secured and some great customer wins, we are on the right track to achieve our vision. We have been through difficult periods in the past. The challenges that we are experiencing now are for the short term, while the data center industry is for the long term. During this time of uncertainty, we continue to build up our position by expanding our customer base and enhancing our market presence both in China and outside China. We remain very confident about our future. Now, I will now pass on to Dan for financial and operating review. Thank you.
William
Thank you, William. Starting on slide 17, where we strip out the contribution from equipment sales and the effect of FX changes. In 3Q22, our service revenue grew by 2.8% and underlying adjusted EBITDA grew by 1% quarter on quarter. Our underlying adjusted EBITDA margin was 45.1% compared to 46% in the previous quarter. Turning to slide 18, service revenue growth is driven mainly by delivery of the committed backlog. Net additional area utilized during 3Q22 was 14,184 square meters. Around 5,300 square meters was in Tier 1 markets, and the remaining 8,800 square meters was from BOT projects. In the fourth quarter of 2022, we expect move-in to be a few thousand square meters lower as a result of the first part of the churn, which William mentioned. Monthly service revenue per square meter was RMB 2,237 compared to RMB 2,265 the previous quarter. The decrease is mainly due to dilution from move-in at BOT projects. For FY22 as a whole, we still expect MSR to decline by around 5% year on year. Turning to slide 19, our underlying adjusted gross profit margin was slightly down on the prior quarter at 50.7%, and our adjusted EBITDA margin was just under one percentage point lower at 45.1%. In 3Q22, utility cost was 31.6% of service revenue compared with 30% in 2Q22 and 28.8% in 3Q21. Turning to slide 20, 2022 is a transition year in terms of bringing down our capex in mainland China on the one hand, and increasing investment overseas on the other hand. Our organic capex in mainland China will be around RMB 6 billion for FY22, which is a few billion lower than in the past couple of years. We expect a further significant drop in mainland China organic capex next year. After 4Q22, we will have no more material acquisition consideration outstanding. With the landmark business win in Johor, we are accelerating our capex as the contract is for delivery next year. Accordingly, we expect international capex of RMB $2 billion this year, rising to RMB $4 billion next year. Looking at our financing position on slide 21, at the end of 3Q22, we had RMB 9.1 billion or US dollars 1.3 billion of cash on our balance sheet. And our net debt to last quarter annualized adjusted EBITDA ratio was 7.6 times on a consolidated basis. Our effective interest rate dropped to 4.4%. To make it more clear, I would like to lay out a preliminary view of our FY23 investment and funding plans, starting with uses of funds in mainland China. We expect organic capex next year to be around RMB 3.5 billion, down from RMB 6 billion this year. We are able to bring it down to this level because we already have substantial capacity in service to support move-in. Furthermore, the cost to complete all the capacity in service and under construction in mainland China is only RMB 7.1 billion, and as William described, we are pushing back project completions over several years. Scheduled debt repayment for mainland China will amount to around RMB 2 billion, some of which we will refinance as we always do. Our preliminary assessment of total uses for mainland China in FY23 is therefore around RMB 5.5 billion, excluding refinancing. Turning to sources for mainland China, we expect to have positive operating cash flow of over RMB 1 billion. In addition, we expect to draw down around RMB 2.1 billion of new project debt, representing 60% of incremental capex. We have RMB 9.1 billion available to draw down under committed project finance facilities in mainland China. To supplement our sources, we are pursuing an asset monetization strategy. We are developing several structures with different partners. So far, we have signed the subscription agreement with a sovereign wealth fund for the offshore China data center fund, which is still subject to execution of other agreements, regulatory approvals, and satisfaction of various conditions. We have also signed a detailed term sheet with a well-known industrial property company for the sale and partial leaseback of one of our properties. Taken together, we expect to generate around RMB 3 billion of cash proceeds from the first asset injection into the fund and the sale and leaseback. Thereafter, we have the option of doing more through these and other structures. In aggregate, we expect our total sources for mainland China in FY23 to amount to over RMB 6 billion, which would be sufficient to cover our total uses. With selective asset monetization, we can fully fund the growth of our business in mainland China until it becomes self-financing after two or three years. Turning to international, As I mentioned previously, we expect total capex for international in FY23 of RMB 4 billion or US dollars 550 million. We expect to finance 60% of this, say, RMB 2.4 billion or US dollars 340 million with project debt, and the facilities are already in place. For the balance, we plan to raise private equity so that GDS International is separately capitalized. We recently started talking to potential investors about this opportunity. As you can imagine, there's a lot of interest in partnering with GDS, one of the world's leading data center companies, in its international expansion in a high-growth region. We plan to raise sufficient private equity to fully capitalize GDS International's current business plan in one or more funding rounds. With this approach, we can grow the international business ambitiously without further capital injections from GDS holdings. Over the next few years, we believe that the combination of asset monetization in mainland China and external capital raised for international can meet our funding requirements in a consistent and well-structured way. At the end of this year, we expect our cash position to be around RMB 7.5 billion or US dollars 1.1 billion. This is sufficient to cover all short-term debt at GDS holdings level, including the CB, which is puttable in 2Q23. We have no long-term debt outstanding at GDS holdings level, which is repayable until 2027 at the earliest. Turning to slide 22, we reconfirm that our revised guidance for FY22 revenue and adjusted EBITDA and the original guidance for FY22 CAPEX remain unchanged. We would now like to open the call to questions. Operator, please.
Operator
Certainly. For the benefit of all participants on today's call, please limit yourself to one question. If you have more questions, please re-answer the queue. Ladies and gentlemen, to ask a question, you will need to press star, one, one. Once again, to ask a question, please press star, one, one. And our first question comes from the line of Yang Lu with Morgan Stanley.
Yang Lu
Thanks for the opportunity to ask question. My question is related with sales. I think third quarter GDS delivered very strong sales with almost 30,000 square meters new booking. Do management think that is a sustainable level or we should combine 2Q, 3Q together? And do you think that the previous target of 80,000 square meter is achievable? I think William mentioned that 70,000 square meter target revised down after 2Q. The company would definitely exceed that. Whether the company can go back to previous pattern like 20,000 square meter per quarter and 80 per year. Do you think that is achievable target? Thank you.
William Huang
I think, yes, we revised the guidance, sales and guidance in Q2, right? We adjusted to the 70,000 square meters. But now we are very confident to achieve above this number in total years level. I think it looks like in the next couple of years, we still cannot maintain this number.
William
Thank you. Okay, thank you.
Operator
And our next question comes from the line of Tina Howe with Goldman Sachs.
Dan
Hi, management. Thank you very much for the detailed presentation. So I have a question on the customer churn front. I'm wondering, because now we're talking about potential reopening of China in the second quarter of 2023. So have we seen any early signs of customers' demand start to recover? And on the other hand, any potential further customer churns maybe on the horizon that we should be watching out for?
William Huang
I think, number one, I think this year, actually, it's very clear the cloud players, they have slowed down their CapEx whole year. And we see, what we can tell is anyone recover Definitely, but still need time because of the COVID policy in China didn't change a lot. But on the other hand, I think what we see is that the internet player is very active this year. It's much more active than before. I think it's due to their IT structure changing or their business still growing in China and outside of China. So in our view, maybe next year the car will slightly recover, but the large Internet companies still maintain very active demand in next year. That's our view, current view. In terms of, yeah.
William
Yeah, the chair, yes. Dan will answer. Can I just answer the part about?
Dan
Sure, sure.
William
Yeah, the chair. Yeah, okay. Excuse me. From the fourth quarter of this year to the fourth quarter of next year, which is five quarters, I think we have a total of 80,000 square meters of area utilized, which comes up for renewal. And out of that, we mentioned today one churn event involving 17,000 square meters. Other than that, there's no other significant churn that we're aware of or we expect, nor is there any other early termination of contracts that we're aware of or expect. And as regards the one-churn event that William spoke about, it's actually a result of the company's or the customer's success because of their extraordinary growth and therefore the evolution of their IT architecture. So it's in no way a negative or even a systemic issue. And we're fortunate we competed for their new deployment, and we won the majority of it. And so really there's only a timing difference between churning in one place and moving in another place. And as William mentioned, I think eventually the movement will be... Yeah, we can say that it's a new migration.
William Huang
It's a non-chain type. Right, yeah.
William
Okay, sorry, Tina, your next question.
Operator
Yeah, yeah.
Dan
Yeah. It's very clear now. Thank you. Yeah.
Operator
Thank you. And our next question comes from the team with RBC Capital Markets.
spk08
Thank you. I wondered, for Dan, if you could maybe talk a little bit about the sources of funds. And you talked about inside of China debt financing. what are we looking at in terms of current debt financing conditions, what cost of debts, and on the equity side for outside of China, maybe a little bit of color around the types of parties that you foresee doing business with and that have shown interest so far.
William
Yeah, you are, for the sources of funds, you're talking about the project debt component in China. So, as you know, our approach, has been to project finance each data center development and to put that project finance into place at the inception of the project so that between the capital which we allocate to the project and the committed project finance facility, the project is fully financed. The situation we find ourselves in is based on expected level of capex next year in China, which I mentioned was around 3.5 billion, and out of which we expect to debt finance 60%, which is just over 2 billion. So that would be the total amount of new project debt drawdown. But it's already, the facilities are already in place. There's not over 9 billion R&B committed undrawn, available for drawdown project finance facilities. So there's practically no new financing we need to do in order to be able to achieve that drawdown. It's just a fraction of what is available to us. But more generally speaking, the project finance market in China for data centers and particularly for us is as supportive as ever. Data centers are a priority area of infrastructure frequently and repeatedly emphasized by the government in various policy statements. And therefore, the financial sector is very, very supportive in terms of allocating credit and so on to data centers. Most of our debt, most of our project debt is technically is floating rate. but it's floating rate against a benchmark which we call the over five-year loan prime rate, which doesn't change very much. It's not a fully market rate, therefore it's not volatile. Over the course of this year, I think it's come down by 35 basis points. So it's exactly the opposite experience of the US and most of the rest of the world. Our pricing benchmark for debt is actually lower this year. And I think our effective interest rate, which we just reported at 4.4%, is the lowest in our history. For the international capital raise, you asked me what kind of investors we're talking to. So there's a spread. We've been approached by a variety of investors and initiated a process. to explore more thoroughly the potential sources of capital. I think the one point I would make about this is that when we've raised capital, we always try to do it in a value-added way. It's not just about money, but it's also about what the financial or the capital provider brings to us in terms of added value to the business. So I think that's really what we're looking for. We're looking for an investor who can be a partner and also add value to the business. Thank you.
Operator
Thank you. And our next question comes from with J.P. Morgan.
spk10
Yeah, hi. Good morning. Thanks for taking my question. So my question is on the Nusa Jaya and the Southeast Asia expansion in general. I think congrats on this win.
spk11
What is the delivery schedule for this project going to be looking like? How do the economics for MSR look like compared to what we have in China? And lastly, for the Chilean international... Sorry, Goku, your line is not very clear.
Laura Chen
Can you repeat your question, please?
spk11
Thank you. What would be the kind of...
William
ownership eventually that you're comfortable with for the international public. Hey, Google, we can't hear you. Hello? Hello? Hey, Google, we can't hear you. Can you repeat your question?
Operator
Our next question will be coming from the line of Michael Elias with Cowen.
Michael Elias
Well, hopefully I come through clearly. I just had a question for you related to the churn. Could you guys give a little bit of color of when you expect that churn? Is it in one tranche or is it in multiple tranches? And then also, is that in just one tier one market or is that in some edge of town or even remote sites? Any color there would be helpful. Thanks.
William
Hi, Michael. The 17,000 square meter churn, there will be around 3,000 square meters in the fourth quarter of this year. And I think the balance will be spread across the first two quarters of next year. And it's all in one tier one market. It involves several different sites and several different data centers. I think it's highly marketable capacity. And given time, we wouldn't have any problem reselling that capacity to other customers.
Michael Elias
Thank you. I appreciate that color. And just as a follow-up question, as we think of the cadence of net installs moving forward, and I feel like one overhang was the elections. you know, just as you look to next year, are you seeing any indications from customers that they could pick up the pace of their installs into your facilities? Thank you.
William
Michael's asking about the monthly move, the quarterly move-in rate, whether we see any potential pickup.
William Huang
Yeah, as I just mentioned, I think that if you have a view for next year, I think the cloud will slightly recover, but it's It will cost much longer time, but they start to recover. That's my view in next year. But what we see is the new order from the internet giant, they are moving at a speed much higher than what we expect. So it's a combination.
William
Thank you. Thank you.
Operator
And our next question comes from the line of Frank Luthan with Raymond James.
Frank Luthan
Great. Thank you. So talk to us a little bit more about the international expansion. I mean, what are you finding that more attractive? Is it just the certainty of the business environment? Is it better growth? And will the customers be new to you, or will you be sort of following some of your current mainland China customers there? Thank you.
William
Yeah, may I start, Frank, and then we'll add in. I mean, the logic of our international expansion was the same as the logic of our business in China, right? Our proposition to our customers is to be a solution for how they deploy their IT. And we try to integrate our data centers into a platform to be present in all the tier one markets wherever our customers have critical mass of demand. So that takes us into Hong Kong. It takes us into Singapore and the adjacent areas and beyond. I would say that the growth rates in Southeast Asia are currently higher than in China. I think there's a huge hinterland in Southeast Asia where many aspects of the digital economy are taking off. And the opportunity over the next 10 years is probably as good as anywhere in the entire world. And to begin with, it's very concentrated in and around Singapore, but we think it will spread out from there. So that's the attraction. In terms of the customers, I think it's very valuable that we have the insight and cooperation and demand from our home market customers as we go into these areas. That's clearly a big advantage. But we will definitely win significant business from non-Chinese customers. I can say that with total confidence. In Hong Kong, for our Hong Kong One data center, we have order from one of the largest cloud players in China and one of the largest cloud players globally. And I think given a little bit of time, and you'll see that we have a mix of China and global customers in our Southeast Asia data centers. They're not necessarily new customers because we may serve some of those global customers in China. But I just say they're non-Chinese customers that we will serve outside of China.
William Huang
Yeah. I think, in fact, the Southeast Asian markets represent almost 50% of the China market. It's already very... a sizeable market. And the grocery, I believe the grocery in this region, the demand grocery is much higher than other regions globally. So this is totally, the market profile totally fits GDS. to generate more big-scale new order in this region. So I think this is – we are very excited about the opportunity. And we also believe we have the very, very strong competitive edge to win the future market in this region. Okay, great.
Frank Luthan
Thank you.
Operator
Thank you. And our next question comes from the line of Sarah.
Sarah
Thank you for the opportunity to ask. Hello? Hello? Can you hear me?
William
Yes, you can. Thank you.
Sarah
Thank you. Just one quick question on the delivery schedule. So I noticed the number of square meters to deliver for 2022 this year is revised down by, say, roughly 20,000 square meters. And then the delivery square meter for next year remains largely unchanged. So is it because most of the projects in China somehow is delayed into 2024 or beyond?
William
Yeah, so we still have a lot of flexibility. Data center development has very distinct phases and is very modular. we've incurred a certain amount of cost for the projects which are under construction and we can time and phase out how we incur additional costs. It's really tied to when the customer needs to take delivery. I think for the area under construction, it's over 60% pre-committed. So those sales agreements have a start date, delivery date in them. That's when the customer is entitled to begin to move in. But if the customer agrees to delay or defer that start date, then we can delay or defer the CAPEX. So I think we can actually continue to push back the completion of the projects. That sort of takes the opportunity to repeat a number I mentioned during the prepared remarks. If you look at the area which we have under construction, it's well over 100,000 square meters. But the cost to complete all of it is just over 7 billion RMB. We talked about mainland China organic CapEx next year being around 3.5 billion. So that's approximately 50% of the cost to complete all the remaining capacities. That gives you some idea of what our run rate capex is versus the capacity that we could bring into service.
Sarah
Got it. Just one quick follow-up. So given the flexibility in our delivery schedule, do we see any risks to our, say, committed square meters?
William
You mean the backlog? No, I mean we have a 240,000 something square meter backlog and we mentioned that there was one call it early termination from that backlog which is actually a partial early termination. It's not an early termination of the entire commitment from that customer and it's 3,000 square meters. 1% of the backlog. And in that case, because it's an early termination, there's a substantial, I'd say, very substantial termination fee that we will receive either this quarter or next quarter. So that's a very immaterial amount of churn from the backlog. And we have the financial protection of the termination fee.
Sarah
Got it. Thank you.
Operator
Thank you. from the line of Alex Wang with DEWA.
Alex Wang
Okay. So my first question is regarding our .
Laura Chen
Alex, we can't hear you.
Alex Wang
Hello? Hi.
Laura Chen
Yeah, it's setting up. It's fine.
Alex Wang
It's fine now. Okay. So, regarding our customer diversification strategy. So, the total customer base reached roughly 820 this quarter. So, I want to get more color about the incremental customers occurring in the next several quarters regarding about the customer mix and about the longer-term picture regarding customers. We have an initial landscape about 20% from cloud in the next several quarters, but in the long-term, the mix will be further recovered in 2023-2024. And the second question is regarding customer moving progress. We mentioned some customers delay their moving from two years to three years. Is this feedback more from cloud customers in mainland China or some initial response coming from international customers?
William
Thank you. The first question was about increasing the number of customers. I think it's quite about... new enterprise customers, because that's where that number comes from. The second question was, which type of customers were requesting the extended move-in period from two to three years? Maybe I can answer that one. As William mentioned, if you look at that total backlog, most of it, almost all of it, actually pertains to around 10 customers. I think 9 out of the 10 are Chinese cloud and internet companies and maybe the 10th is a non-Chinese cloud internet company. There's only a couple who have requested an extended move-in period. They're both Chinese cloud or internet companies. William, what about the enterprise business opportunities?
William Huang
Yeah, I think if you look at our first two quarters, our new order mainly driven by the enterprise customers, especially financials. That's our very solid customer base. And we also added more new industry. We made very significant progress to acquire new customers to strengthen our customer base in this year. This is our strategy. We always did like again and again in the last few years. I think that's why our orders still maintain very stable situation. Even in this year, we still can get a very high-level new booking if compared with our peers or global peers. So our new order bookings still maintain very high level. So I think that's all based on we have very strong customer base, and we continue to defect the customer base. So this year, I think in the next year, GDF still will focus on the hyperscale plus a very good high-quality enterprise customer.
Operator
Thank you. And our next question comes from the line of Mingran Li with CICC.
Mingran Li
hi management thanks for taking my question just a small one regarding overseas business uh since all our three on the construction data centers in malaysia have been fully pre-committed and ready for service next year how do we expect the overseas moving wage revenue growth rate and margin thanks
William
Yeah, so overseas in our definition includes Hong Kong, where the first data center, Hong Kong One, will come into service in the next couple of months. And that is fully committed, mainly to China and global cloud. And the move-in rate there will be over two years, which is standard and typical for cloud players. For the commitment that we've announced, the letter of award, 64 megawatts for New Sijaya, it's actually three data center buildings, but it's the entire phase one of our development on that site. And the delivery will be the second half of next year, and we expect the move-in to be very fast for the entire capacity. And that's illustrative of what William was mentioning, that some internet companies have place orders a shorter period of time ahead of when they require delivery and then commit to a faster move-in than we typically see with cloud customers. So as you mentioned revenue and EBITDA, I think the international business will be mildly EBITDA negative next year. be around breakeven the year after. It could be better, but that's the base case.
William
Thank you. And we have a follow-up question from the line of Yang Lu with Morgan Stanley. Pardon me, Yang.
Operator
Please check your mute button.
Yang Lu
Thank you for another opportunity to ask question. I take a look at your capex plan and the operating cash flow and also the debt. Do you think actually if we look a little bit forward going into 2024 with a little bit higher operating cash flow and also similar or even a little bit down capex, Do you think a free cash flow positive is achievable for the China business in 2024? Thank you.
William
I think it's close. Liu Yang, we would expect or hope that operating cash flow will grow and organic capital may be lower. The gap to being self-financing will narrow down. We may pursue asset monetization not just upon that gap, but we may pursue it to deleverage as well. Asset monetization generates cash proceeds, but it may also lead to some debt deconsolidation. So I think the strategy is not purely and simply driven by uses of funds, the liquidity, but also by leverage. I think that's, at this point, we put in a considerable amount of work on developing the structures that we've already talked about, the sale and leaseback and the data center fund, and frankly, the international capital raise. And we're working on other structures, which we haven't yet The objective is to have optionality. We're working with different partners with different structures. Even in this difficult time, there's very strong interest and commitment from these partners to getting these deals done. I think it gives us optionality as to how much capital we want to recycle or raise regardless of whether the mainland China business is free cash rate positive, we might still be doing it.
William
Thank you.
Operator
Thank you. 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 Piacente Group Investor Relations. See you next time.
Operator
Bye-bye. This concludes this conference call. You may now disconnect your line. Thank you.
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