VNET Group, Inc.

Hello, ladies and gentlemen. Thank you for standing by for the first quarter 2026 earnings conference call for VNet Group Inc. After the management's prepared remarks, there will be a question and answer session. Please note the Chinese line is in listen-only mode. If you wish to ask questions, please dial in through the English language line. Participants from our management include Ms. Sharon Liu, Rotating President, Mr. Peter Zhang, SVP of Operational Finance, Ms. Xinwan Liu, Head of Investor Relations of the company. Please note that today's conference call is being recorded. I will now turn the call over to the first speaker today, Ms. Xinwan Liu. Please go ahead.

Thank you, Operator. Hello, everyone, and welcome to our first quarter 2026 earnings conference call. Our earnings release was distributed earlier today, and you can find a copy on our website as well as on newswire services. Please note that today's call 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 are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. For detailed discussions of these risks and uncertainties, please refer to our latest annual report and other documents filed with SEC. VNAT does not undertake any obligations to update any forward-looking statements except as required under applicable laws. Please also know that VNAT's earnings precedence and this conference call include the disclosure of unaudited GAAP and non-GAAP financial matters. VNAT's earnings precedence contains a reconciliation of the unaudited non-GAAP matters to the audited gap measures. A summary presentation, which we will refer to during this conference call, can be viewed and downloaded from our IR website at ir.vnet.com. Next, I'd like to alert you that we will be utilizing text-to-speech technology powered by Newlink.ai to deliver this quarter's prepared remarks by Ms. Sharon Liu, our rotating president, and Mr. Peter Zhang, our SVP of Operational Finance. The management team will join the Q&A session in person. Additionally, this conference is being recorded. A webcast of this conference call will also be available on our website at ir.vnet.com. Now let's get started with today's presentation. Ms. Liu, please go ahead.

Good morning and good evening, everyone. Thank you for joining our call today. I'll start with an overview of our major accomplishments during the first quarter of 2026. We began this year with strong results thanks to strong execution of our effective dual core strategy and hyperscale 2.0 framework. On the operational side, our wholesale IDC business delivered robust growth driven by strong customer demand and fast customer movements as of March 31st, 2026. Our wholesale capacity in service rose by 18 MW to 907 MW, in line with our plan to concentrate our capacity expansion deliveries in the second half of the year. Meanwhile, driven by customers' fast move-ins, wholesale capacity utilized by customers grew by 64 MW to 687 MW, bringing the utilization rate to 75.7%, up 5.6 percentage points quarter over quarter. Our retail IDC business continued to progress smoothly, supported by growing AI-driven demand. Retail MRR per cabinet increased slightly to RMB 9,448 sequentially, and retail utilization rate remained stable at 64.1% during the first quarter. On the financial side, our total net revenues increased by 19.8% year-over-year to RMB 2.69 billion for the first quarter. Wholesale revenues remain the key growth driver, reaching RMB 1.06 billion, a significant year-over-year increase of 58.1%. Our adjusted EBITDA for the first quarter also increased by 30.6% year-over-year to RMB 891.5 million, driven by the strong growth of our wholesale IDC business. In addition, Our premium, reliable services continue to earn customer trust and gain market share, evidenced by multiple high-quality order wins, totaling 519 megawatts, year-to-date 2026. I will go through the details on the next slide. Moving on to our new order wins on slide 5, year-to-date 2026. Order momentum remained strong, with three wholesale orders, secured totaling 517 megawatts, fueled by continued growth in AI-driven demand for high-quality data center resources. We secured two orders, 110 megawatts and 400 megawatts, from an Internet customer at separate data centers in the Greater Beijing area. Meanwhile, another data center in the Greater Beijing area won a 7-megawatt order from a local services customer. Furthermore, bolstered by AI-driven demand. We also secured new retail orders, totaling approximately 2 megawatts across multiple retail data centers from customers in the local services, internet, and IT services sectors. This robust order momentum underscores our strengthened competitive positioning and growing ability to capture market share. At the same time, continued policy support for AI-plus initiatives is reinforcing industry tailwinds Authorities are promoting the development of large-scale, clustered green computing infrastructure, which is accelerating the broader adoption of computing power across industries and further expanding the addressable market. Meanwhile, driven by the AI industry's rapid progress, demand for AI-related computing power and data center resources is surging, driving the industry into a new growth phase. However, the effective supply of high-quality data centers remains relatively limited, constrained by utility and power quotas limitations in core regions. Against this backdrop, IDC players with long-term industry accumulation, sufficient resource reserves and project deployments in core regions are best positioned to fully capture the structural opportunities arising from the expansion of AI demand. As a pioneer in AIDC, VNet is poised to benefit from these structural shifts. Our high-performance, large-scale data center clusters coupled with a robust resource pipeline in core regions represent a significant advantage. Furthermore, our proven track record in rapid delivery and operation and maintenance excellence are competitive strengths that are becoming increasingly difficult to replicate at scale. supported by favorable policies, and an ongoing structural transformation within the industry. We are confident in our ability to consistently capture emerging market opportunities and cement our leadership position. Now let's delve into our business updates, starting with our wholesale business on slide 7. Our wholesale business continued to grow, with capacity in service increasing by 18 megawatts. quarter over quarter to 907 MW. Utilized capacity grew by 64 MW, sequentially to 687 MW, driving the utilization rate up to 75.7% from 70.1% last quarter, mainly attributable to customers' fast move-ins at NOR Campus 02A and NHB Campus 03. Our mature capacity utilization rate also reached 93.8%, a relatively high level. We have a clear growth path for our wholesale data center capacity. Let's move on to slide 8. Our total wholesale resource capacity continued its upward trajectory, reaching 2.48 GW as of March 31, 2026. Specifically, our capacity under construction rose to 516 MW with a pre-commitment rate of 85.8%. year-to-date 2026. Capacity held for short-term and long-term future development grew to 697 megawatts and 359 megawatts, respectively. It's worth noting that the majority of the capacity reserved for future development is driven by resources we have secured at our Wulan Chabu IDC campus, demonstrating our ability to secure critical resources and rapidly scale capacity in strategic regions Our secured resources provide us with a meaningful competitive edge, particularly given the tightening effective supply in the IDC industry, and reinforce our confidence in the long-term growth potential driven by AI-related demand. Moving to our retail IDC business on slide 9, our retail business progressed smoothly in the first quarter. Retail capacity in service increased to 50,170 cabinets. from 49,863 cabinets last quarter. The utilization rate remained stable at 64.1% as of the end of March. MRR per retail cabinet slightly increased to RMB 9,448 this quarter. Turning to our delivery plan on slide 10. We delivered 18 megawatts in the first quarter of 2026. in line with our delivery plan which concentrates the majority of the year's deliveries in the second half we currently have eight data centers under construction with seven in the greater beijing area and one in the yangtze river delta we plan to deliver 516 megawatts of capacity over the next 12 months around 250 megawatts during the second and third quarters of 2026 and around 266 megawatts during the fourth quarter of 2026 and the first quarter of 2027, with the majority allocated to our data centers at the Wulan Chabu IDC campus to meet the strong demand from wholesale customers. In conclusion, our first quarter performance demonstrated both strategic effectiveness and execution strength. Looking forward, we will remain focused on advancing our dual core strategy and Hyperscale 2.0 framework, further developing our scalable green data center clusters and enhancing our comprehensive AIDC solutions to meet growing AI-driven demand. In parallel with our long-term strategy, we have also strengthened our shareholder base by welcoming new strategic investors. Affiliates of CATL have entered into a share purchase agreement to acquire up to approximately 38.1% of our shares from subsidiaries of Shandong High Speed Holdings Group with closing expected in the fourth quarter of this year. We would also like to express our sincere appreciation to Shandong High Speed Holdings Group for their trust in our vision and years of partnership and support in our growth journey with CATL's entry. We believe that this new relationship will generate meaningful strategic synergies and bring opportunities for fruitful collaboration across technological innovation, supply chain, and next-generation AI data center development, enhancing our long-term competitiveness and growth momentum. Overall, we remain confident in capturing the growth opportunities ahead and delivering sustainable long-term value for all shareholders. Now, I will turn the call over to our SVP of Operational Finance, Peter for further discussion of our operating and financial performance. Thank you, everyone.

Good morning and good evening, everyone. Before we start the detailed discussion of our financial performance, please note that, unless otherwise stated, all the financials we present today are for the first quarter of 2026 and are in renminbi terms. Furthermore, unless otherwise specified, all the growth rates I am reviewing are on a year-over-year basis. Let's turn to slide 12. In the first quarter, we continued to focus on high-quality development. Our total net revenues increased by 19.8% to RMB 2.69 billion, mainly driven by the rapid growth of our wholesale business. Our adjusted cash gross profit rose by 25.1% to RMB 1.21 billion, while our adjusted EBITDA also grew year-over-year by 30.6% to RMB 891.5 million. Let's look more closely at our top line. As you can see on slide 13, we have a new milestone this quarter as wholesale revenues have surpassed retail revenues for the first time. Wholesale revenues, our key revenue growth driver, increased significantly by 58.1% to RMB 1.06 billion for the first quarter mainly attributable to activity at the NOR Campus 01 and NOR Campus 02A. Retail revenues increased by 5.4% to RMB 1.02 billion for the first quarter. Our non-IDC business revenues increased by 0.3% to RMB 606.6 million for the first quarter. During the first quarter, we maintained solid margins thanks to ongoing efficiency enhancement initiatives. As shown on slide 14, our adjusted cash gross margin improved to 45% from 43.1% in the same period last year. Our adjusted EBITDA margin rose to 33.1% compared with 30.4% in the same period last year. Moving on to liquidity, on slide 15, we maintained robust and healthy liquidity our net operating cash inflow reached RMB 173.7 million during the first quarter, excluding the impact of RMB 119.1 million in income tax related to capital transactions and other one-off items. The net operating cash inflow for this quarter would be RMB 292.8 million. Our cash position remained solid with total cash and cash equivalents restricted cash and short-term investments reaching RMB 8.8 billion as of March 31st, 2026. Next, let's take a look at our debt structure on slide 16. We maintained our prudent approach to debt management. As of March 31st, 2026, our net debt to the adjusted last quarter annualized EBITDA ratio was 3.8 and total debt to the adjusted last quarter annualized EBITDA ratio was 6.1, both remaining at healthy levels. Our adjusted trailing 12 months EBITDA to interest coverage ratio was 5.8. We prioritize long-term debt maturity planning in our debt and strategic management to ensure the security of debt repayment. Currently, the company's short and medium-term debt maturing in 2026 to 2028 comprises 45.8% of our total debt. Turning now to CapEx spending on slide 17. Our CapEx was RMB 1.91 billion in the first quarter, with the majority allocated to the expansion of our wholesale IDC business. We continue to expect our CapEx for the full year 2026 to be in the range of RMB 10 billion to RMB 12 billion. mainly to support our planned delivery of 450 to 500 megawatts in 2026. We continued to advance our asset monetization strategy and made meaningful progress during the first quarter. As we mentioned on our last call, in March 2026, two of our private rate projects were successfully listed on the Shanghai Stock Exchange. with a combined offering size of approximately RMB 6.36 billion and an EV to EBITDA multiple of around 13 times to 14 times by establishing a scalable, efficient capital recycling model. These re-listings give us an advantage in this inherently capital-intensive industry, allowing us to reinvest in new project development. we expect to realize no less than RMB 2 billion in total cash proceeds from our REIT-related initiatives this fiscal year, substantially strengthening our liquidity position and setting a new benchmark for sustainable growth in digital infrastructure. Now moving to our full year guidance for 2026 on slide 18, as we expect strong demand from our wholesale IDC customers and ongoing operational efficiency gains throughout 2026. We expect total net revenues to be in the range of RMB 11.5 billion to RMB 11.8 billion, a year-over-year increase of 15.6% to 18.6%, and adjusted EBITDA to be in the range of RMB 3.55 billion to RMB 3.75 billion, representing a year-over-year increase of 19.2% to 25.9%, The above outlook remains unchanged from the previously provided estimates. Before I conclude, I'd like to briefly update you on our ESG efforts. Sustainability remains important to our business strategy, supporting our operational excellence and long-term growth. In April, we published our sixth ESG report, highlighting our ESG progress and achievements in 2025. Our average annual power usage efficiency improved to 1.24 in 2025, compared with 1.27 in 2024. Total renewable energy consumption accounted for 36% of total resources utilized by VNet in 2025, compared with 18% in 2024. These accomplishments also won continued recognition from leading ESG rating agencies. We were included in the Global Edition of the S&P Global Sustainability Yearbook for two consecutive years, 2025 and 2026, and were also selected for the China Edition for four consecutive years, where we were once again recognized among the top 1% in IT services industry. Going forward, we will deepen our commitment to sustainability, strengthening our investments in intelligent infrastructure and green data center operations to create long-term sustainable value. To sum up, we delivered robust first quarter results, reflecting continued strong execution and strategic direction. Looking ahead, we will stay focused on strengthening our core capabilities to capture the opportunities arising from accelerating AI adoption and digital transformation. delivering sustainable, high-quality growth, and creating long-term value for all stakeholders. This concludes our prepared remarks for today. We are now ready to take questions.

Thank you. We will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. For the benefit of all participants on today's call, please ask your question to management in English and then repeat in Chinese. Your first question comes from Tom Tang from Morgan Stanley.

Thank you, management, for the opportunity to ask the question.

So again, congratulations on a very strong result and winning the over 500 megawatt of order. So my question is on the delivery pattern of the new order. So how should we think about the time or the pattern we're going to deliver this 500 megawatt order? And also on a quarterly basis, what is the impact to when or when we will see a significant impact to our revenue and EBITDA from this new order? And also, are we going to see upside to our current full-year capex guidance, given we're winning a very large amount of order? First of all, I would like to thank the management for giving me the opportunity to ask this question. Congratulations again on a very strong performance, and we have received an order of more than 500 megawatts. My question is mainly about the delivery rhythm of this order. How should we think about this 500 megawatt order, the landing time in the next few seasons, and when will it have a more significant impact on our income and EBITDA? In the end, will there be a potential rise in capital spending?

Thank you. Thank you, Tom.

Let me answer your question. Our new order of more than 500MW will be distributed in the next two to three years. That is, it will be distributed in 2026, 2027, and 2028. The first batch of payment will take place in the second half of 2026. We are completely based on the customer's payment rhythm to go up. As it goes up, it will inevitably have a more positive impact on our future income and EBITDA in the next three years. In fact, part of the payment in 2026, the company has pressed in in our guidance. Including the guidance of our K-Path, Thank you, Tom, for your question.

This is Sharon. With regard to the 500 megawatt new orders, we are planning to deliver these new orders in the next two to three years. effectively from 2026 throughout 2028. And we're going to deliver the very first batch in the first second half of 2026 based on the pace of our clients, our customers moving in pace. So that will translate into some positive impact on our next three years EBITDA. And also, we are not going to adjust our CAPEX guidance for the full year of 2026 because the CAPEX guidance we give is actually based on our annual delivered target of 550 to 500 megawatts. Therefore, we're going to keep our annual CAPEX guidance untouched.

Next question, please.

Your next question comes from Edison Lee with Jefferies.

Hey, hi. Thank you for taking my questions. I got two questions. Number one is that now that CATL has become a strategic investor in VNAT, So can you maybe share with us how investors should think about the synergies going forward? And also, previously, I think that Shandong High Speed has been building some green power plants in Yulan to help supply to your data center campus. So I wonder if that is ongoing and whether there will be any change to that. So that's number one. Number two is, can you comment on the pricing situation now that you have one pretty big project. And in fact, what are you seeing in terms of pricing trend in the market? And whether you think pricing in 2027 will actually be stable or even going up? Actually, can you open up a little bit about the effect of the system on you and JTL in which areas in the future? And then tell Shandong that it should not be necessary to build a green power cooperation with you in this pollution. I want to know what the progress of this plan is now and if there will be any changes in the future. This is the first question. The second question is about the price. Thank you, Edison. Let me answer your two questions.

The first one is that the company has revealed in the report that the future of CATL will become a strategic shareholder of the company. If this to successfully complete the transition. We think that in the future, there will still be many areas to explore with CATL, such as AIDC storage, such as AIDC R&D platform, and supply chain coordination, etc. In terms of technology and resources coordination, it is actually dependent on the resources, storage, etc. of the electricity industry. In addition, in fact, In the future, we will have more opportunities to collaborate with you in the field of high-pressure direct current and green electricity direct current. Also, in the context of the industry, We now have close to 1 GW. If the delivery is successful this year, it will be close to 1.5 GW of capacity, which can provide a very good assistance for some landing scenarios on the CFPL side. We can accumulate more operating data on some related energy products in the future, and more actual operational strength to achieve a double-sided renewable energy. As mentioned, we have maintained a very good communication and cooperation with Shandong Express in terms of green energy. We are also very grateful to Shandong Express for its support for the company in the past and for its support for the entire green energy cooperation field. In the future, the company will continue to develop in the direction of green low carbon. to expand the opportunities for collaboration with high-end companies. In the future, in the development of green energy and digital infrastructure, there will still be multiple resources. We will adopt some more cautious market principles based on the rationality of the business and the compatibility of resources. The most important thing is that we want to focus on customer needs. This is the first question, which is some strategic cooperation with shareholders. The second question is about the price trend. . . . . . . . . . Thank you. 我们现在预期价格是会保持稳定的。 当然我们也很期待如果未来供需会有进一步的变化, 价格可以回暖,但是目前在这个阶段, 我们还是觉得价格会比较稳定。 谢谢。 Thank you for your question.

As we have disclosed in our quarterly report that CATL's affiliates It's going to become our strategic shareholder, shell the deal with Shandong's high-speed holding groups closed successfully. Actually, we see synergies across several areas, and we see that in our AIDC energy storage. We see the synergy in the supply chain. Specifically, the synergy that we saw in technology and resources. To elaborate, we are going to leverage CATL's extensive supply chain resources, energy storage, and dispatch capabilities, augmented by their proprietary high voltage DC technology through their own investments. and we are going to significantly enhance our data center's power stability and dynamic frequency regulation. I think this integration is vital to supporting the robust operational demands of hyperscale AIDC clusters, directly sharpening our long-term competitive edge, and also the synergy we saw in commercial and operational side. You know, VNet, if we deliver the rest of the wholesale ADC targets this year, this is going to bring our total wholesale capacity in service to 1.5 gigawatts. So this provides CATL with concrete use cases which can feed back into their businesses. And also, with our collaboration, we are going to accumulate a lot of critical operational data, this will also drive the mutual ecosystem value. And with regard to our prior collaboration with the Shandong High Speed Holdings Group in terms of the green energy integration, we have maintained fairly good communication and collaboration with Shandong High Speed Holdings Group in terms of the green energy development. and we extend our gratitude to their support in this regard. Going forward, VNet will continue to pursue the development of green and low-carbon data centers. We will actively evaluate or explore cooperation opportunities and expand our cooperation on that side. On top of that, You know, the green energy and the digital infrastructure development takes the coordination of multiple parties. And we, VNet, will continue to remain committed to the principles of prudent and market-oriented approaches. And we want to assess collaboration opportunities based on its economics. At the end of the day, we want to match resources that can best serve our customers' needs So, our goal is to increase our energy efficiency and promote our competitiveness in the green energy space. So, that is the question on the new strategic investor as well as our collaboration with the Shandong High Speed Holdings in terms of the green development. And now, coming back to the question on pricing. As we have disclosed in our earnings report that we have secured large orders that is going to be delivered within the next two to three years. And according to our observations, we have seen fairly strong demand from our customers in terms of premium and quality AIDC resources. And we're seeing that through Q1, also straight to Q2. I think, so for now, all of these customers are signing long-term contracts with us so as to secure these quality resources from us, and we expected the price to stable at the moment, and shall the supply and demand dynamics improve in the future, we might see the possibilities of prices trending upward as well. Thanks.

Next question, please.

Your next question comes from Timothy Zhao with Goldman Sachs.

Great. Thank you, Benjamin, for taking my question, and congrats on the solid results. My question is regarding the wholesale capacity reserves that you have. I noticed that in the first quarter, the company added another 300 megawatts capacity for the wholesale data centers. Just wondering if you have any targets for your capacity reserve for this year and probably in the mid-term. And out of that 1.3 gigawatts capacity that you have in terms of expansion pipeline and capacity under construction, just wondering if you can share what proportion of that already received the power quota approval from the government. Thank you.

Tom, thank you for your question. Yes, for the company's future reserve strategy, in the long term, we will continue to increase the resource layout. The current resource layout of the company will mainly focus on the long triangle and the core nodes of Dongshu Calculation. Our goal is to obtain resources above the GWA level. In the subsequent quarter, as we go to To get these resources, we will also gradually disclose them. From the company's point of view, you just asked about the so-called resources. In fact, we include land and energy indicators. In fact, the country has a window guide policy. In fact, the window guide policy, we say that it has been approved from the process. Because it has been approved twice. Thank you.

Thank you, Timothy, for your question. The company's strategy in the medium to long term is that we are going to increase our efforts in acquiring more resources. As we have mentioned that we are, and according to the company's plan, we are going to acquire gigawatt worth of resources primarily in Inner Mongolia, Yangtze River Delta, as well as the key notes along the EASTATA West Compute route. And we are going to disclose the resources acquired in the subsequent quarterly results. And speaking of the resources, that compromise consists of both LEND as well as power quotas. As you may know, there is window guidance imposed by the government and right now we have seen that whole flow being tested already because at VNAT we got four of our projects approved by the government and with others being reviewed at the moment. So the company is quite confident in acquiring more in terms of the land, as well as our power quotas. And also, the company is, like I said, actively exploring and acquiring potential more resources along the few regions that I've mentioned. Thank you.

Next question, please.

Your next question comes from Mingran Li with CICC.

Thanks, management, for taking my question. Really appreciate it. And congrats on a very strong result. I have questions about our overseas business. Regarding the ATL's proposed strategic investment, could you share any thoughts on how this partnership might shape your overseas expansion strategy? 我翻譯一下,感謝關於從ZoGP 跟資會組合非常強勁的一個業績。

我们这边想请教一下就是关于您的战略入股过后, 公司在出海方面有什么样的战略规划和布局考量,谢谢。 奥明然,谢谢你的问题啊,就是问到出海的布局, 实际上坦白讲由于我们和这些头部客户有非常良好的客户关系, 其实我们也是一直接到这个头部客户关于我们海外资源的一个反向的询问啊, China China China China China China Thank you, Min Ran, for your question.

With regard to our overseas deployment, We maintain a fairly close relationship with our leading or key clients or customers, and they have been sending inquiries on our resource acquisition or planning in overseas. The company is actively preparing and looking for potential resources in overseas projects. Specifically, we're talking about resources in Southeast Asia as well as other areas. Shall there be any further updates, we will communicate them with you in a timely manner going forward. Also, with regard to the new strategic investor of CATL, because they have a global presence and they have matured capability in supply chain as well as green energy. I believe these will be fairly good complementary. This will complement to our advantages also in terms of the business we're going to conduct in overseas countries. Thank you.

Next question, please.

Your next question comes from Dayli Li with B&A Securities.

Hi, management. Thanks for taking my question. I have one question regarding our financing channels. With our four-year guidance for the CapEx, how do we see the operating cash flow and also the financing channel like REITs to finance our CapEx? And could management share our future REITs project, which will be our plan? Okay, thank you for accepting my question. I will translate it here. I would like to ask about our financing structure. For example, we have開发职业 all year round. We also have a relatively strong cash and operating council. We also have this REIT project. I would like to ask how our entire budget is. In the future, for our REIT project, Thank you. Thank you for your question.

From the point of view of support, as mentioned before, we have a total of 450 to 500 megawatts of supply and demand. Our open-source investment support is unchangeable. This is the first point. The second point is from the point of view of financing. As you can see, we still need to do more, especially with ABS. Thanks for your question.

The full-year CAPEX guidance for 2026 is based on the annual delivery target of 450 to 500 megawatts. We have very diversified financing channels, both from the project level as well as the traditional financing channels. All of them serve the same purpose of supporting our full-year delivery target. Actually, in terms of the ABS, or asset-backed securities, we have successfully issued two of them in the first quarter, and we are continuing our efforts in this regard. Thank you.

Next question, please.

Your next question comes from Ethan Zhang with Nomura.

Okay, thanks for the opportunity to ask the question. So I've got two questions. The first one is follow up on the land reserve strategy. So could management give us more color current reserve in the Mongolia region, as well as what's our thoughts on the demands in other Eastern data, Western computing, computing hub cities. And my second question is, could management give us some color on the potential listing in Hong Kong market? Let me translate the two questions. The first one is about the issue of land reserves. Can Guan Licheng tell us more about the reserves in Ulan-Ude and how we can look at the needs and plans for other nodes in Dongshu Calculation? The second one is, can you share with us your thoughts on the market in Hong Kong?

Okay, Ethan, thank you for your question. Regarding the first question, regarding the storage of the entire company's land, when we were just talking about the overall resource storage, we also mentioned that in the long term, the company's resource deployment will still be in the Inner Mongolia, the Long Triangle, and the core nodes of Dongshu and Xishan. We are going to deploy Jiwa-class bases. Jiwa-class bases, actually, one Jiwa-class base corresponds to about 1,000 mu of land. In terms of land reserves, I would like to point out that the land prices in these areas are relatively cheap. In fact, the capacity of our land reserves covers only the lower single digit range of the entire project, so the company will definitely be active in the layout of land resources. The second point is about this Hong Kong IPO. Yes, I just responded to Peter's interpretation of the company's financing rhythm and financing method. In fact, we have all kinds of listed company levels, as well as asset platforms, including various financing levels of assets. The company's strategy is still to do financing in advance to deal with us in the future, whether it's CapEx or some CB payment plans. In fact, Thank you very much. Thank you, Ethan, for your question.

With regard to your question on our land reserve strategy, like I said, in the medium to long term, VNAT is planning to acquire one gigawatt worthy of campuses in Inner Mongolia. Yangtze River Delta, as well as the East Data West Compute Hops. To give you a specific number, the 1 gigawatt-worth of campus would roughly translate to 1,000 acres of land. Given the prices of the land is quite cheap, in actual percentage-wise, the capex for acquiring land will account for only low single digits of our total full-year capex, so the company would proactively acquire lands to prepare for our reserve capacity. And to add on to the question in terms of financing channels, as a listed company, we have diversified financing channels both from the listed company perspective as well as the asset level. The company is proactively raising funds to support our capex as well as our debt repayment. Now, moving on to the potential listing in the Hong Kong Stock Exchange, we have been actively exploring the feasibility of potential Hong Kong listing as part of our efforts to optimize our capital structure and better supported the company's long-term strategic development while broadening our international investor base. We will communicate with the public market in a timely manner once there is a more defined plan or any definitive progress. Thank you.

Next question, please. Your next question comes from Sarah Wang with UBS.

Hi, thank you for the opportunity to ask a question. And again, congratulations on the solid results. I have actually one question. So I noticed that the commitment and pre-commitment rate of our resources is already quite high. And then on top of that, we have another one gigawatt resources held for future development. So when I asked for this one gigawatt, what is the expected average lead time from order to delivery? And then at the same time, how shall we think about the unit capex, say, capex per megawatts, and how shall we think the trend going forward? 感谢提问的机会,那也恭喜公司取得非常强劲的业绩。 那我想请教一下就是我看到我们有披露我们为未来的资源储备目前是有一个GVA,想请教一下 Thank you for your question, Sarah. I would like to clarify that when we were talking about the resource strategy,

In fact, companies in these three areas are all looking at GWA-level bases. After we land, we will go to the capital market to disclose. For the price of single GWA, currently, we will be around 20,000 RMB. This is also due to an improvement in our supply chain capacity and large-scale procurement. In fact, the price of single GWA has been increasing uh uh uh Thank you, Sarah, for the question.

A clarification on the company's strategy, we are planning to acquire gigawatt level worth of resources in the three key regions, like I mentioned, and we are going to disclose the updates going forward. And moving back to the unit capex, for one megawatt of unit where we deliver the unit capax is around 20,000 RMB per kilowatt. So that is achieved thanks to our supply chain capabilities as well as our large-scale batch procurement. And we are fairly confident in also, so that is for the unit capax per kilowatt. And now moving on to the pre-commitment rate. We are quite confident in maintaining a fairly high pre-commitment rate, and we have now disclosed our data as of Q1, 2027. And in terms of the 500 megawatt order we secured, we are going to deliver them in batches. So we are going to keep updates to the market on the orders we have locked in, as well as the pace of their delivery. All in all, we want to say we are fairly confident in maintaining or securing a high pre-commitment rate for our capacities to be delivered. Thank you.

There are no further questions at this time. Ladies and gentlemen, that concludes our conference for today. Thank you for participating. You may now disconnect your lines.