GDS Holdings Ltd

HKEX:9698

Earnings Call Analysis

Company Showcases Growth Amidst CapEx Guidance

In the 3Q '23, the company reported a year-on-year revenue increase of 6.4% and a 5.6% rise in adjusted EBITDA. Despite these gains, adjusted EBITDA did see a 1.4% quarter-on-quarter dip. Margins modestly declined, with the EBITDA margin sitting at 44.7%, slightly lower than the previous year due to increased utility costs. Capital expenditure (CapEx) in China reached RMB 3.1 billion over the first nine months, aiming to hit the RMB 3.5 billion full-year guidance and anticipating a reduction to RMB 2.5 billion next year. International CapEx is expected to align with the RMB 4 billion guidance. Financing strategies include a mix of equity and non-recourse debt, particularly for international segments, with plans to maintain organic positive cash flow. Leveraging asset monetization may accelerate deleveraging beyond the projected sub-6x net debt to EBITDA ratio over three years. No changes were announced for FY '23 guidance, tracking towards the lower end for revenue and higher end for EBITDA.

Capacity Expansion and International Growth

In a recent quarter, the company marked significant progress in expanding its capacity and reaching international markets. Gross move-in for the quarter neared 21,000 square meters, split between 17,000 in China and 4,000 internationally—the latter making a material contribution for the first time. New capacity of around 23,000 square meters came into service, primarily leased to a single client moving from other centers. Furthermore, a promising 20,000 square meters is set to be available soon, again fully committed. International strategy execution, particularly in Johor, Malaysia, is on track with around 96 megawatts of power capacity committed and an additional 73 megawatts due to come online in upcoming quarters.

Performance Metrics and Margin Pressures

Utilized area increased by 16,000 square meters, but higher-than-usual churn due to customer redeployment could impact growth negatively in the short term, though the effect is expected to be partially offset by international business. Monthly service revenue per square meter dipped by 4% compared to the same quarter last year, aligning with expectations. Despite a rise in utility costs impacting profitability, the adjusted gross profit margin maintained a healthy level at 49.5%. Mitigating efforts helped stem further margin erosion.

Financial Guidance and Capital Allocation

The company is carefully managing its financials, aiming for positive cash flow before financing on an organic basis, without the need for asset monetization. The standalone international side is projected to have negative cash flow before financing of roughly RMB 4 billion, partly financed by a pending equity raise expected to close in the first quarter of the following year. Consolidated net debt relative to adjusted EBITDA is being addressed with a multistage financing strategy, including debt and equity, to manage leverage more effectively. Revenue projections for the fiscal year are at the lower end of guidance range, while adjusted EBITDA trends towards the higher end.

Customer Churn and Sales Outlook

Expected churn is 7.5% of the total area, mostly attributed to a single customer's redeployment. However, this customer's new commitments to the company exceed the churned area by 50%. The focus remains on acquiring business that matches inventory with prompt move-in schedules and fair pricing. In regards to sales, predictions indicate a potential increase, with international sales expected to continue strong momentum, underscored by sizable orders.

Technological Advancements and Market Competition

The company is adept with liquid cooling technology—essential for AI computing—and has secured agreements to pass any related cost increases to customers. Targeting a diverse customer base, the company is confident in its competitive edge, nourished by over two decades of experience in the Chinese market and a strong foothold in international venues. The strategy encompasses domestic, international, and Chinese demand, asserting an optimistic stance towards competition and market dominance.

Earnings Call Transcript 2023-Q3

[Operator]

Hello, ladies and gentlemen. Thank you for standing by for GDS Holdings Limited Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Today's conference call is being recorded. 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, executive]

Thank you. Hello, everyone. Welcome to the Third Quarter 2023 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 investorsgds-services.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 Khoo, 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 prospectus 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 will now turn the call over to GDS Founder, Chairman and CEO, William Huang. Please go ahead, William.

[William Huang, executive]

Hello, everyone. This is William. Thank you for joining us on today's call. The #1 priority of GDS management is to create value for our shareholders and a drive share price recovery. We are pursuing this goal by executing distinct strategies for our China and International business. For China, our financial objectives are to grow EBITDA at a steady rate, maintained positive cash flow before financing and delever the balance sheet. We are getting there by one -- first taking a highly selective approach to new bookings, which match our inventory and it come with fast-moving rates.

Second, delivering the backlog and the increasing capacity utilization and setting a high bar for new CapEx to fulfill orders with first firm moving schedules. For International, our financial objectives are to create a second growth engine, which enhances our equity value valuation. We are leveraging our competitive strength to build a leading presence in regional hub markets, win landmark commitment from global and the China customers and finance the business independently.

Now let's dive into our progress towards achieving these objectives. In 3Q '23, we won 21,000 square meters or 54 megawatts of new customer commitments all in China. The 2 largest orders were from Internet companies in the live streaming and the short video vertical, which continues to perform strongly. The orders were for additional capacity at our campuses in Langfang near Beijing where they have already deployed the move-in period faster than usual.

Market demand in China has not yet picked up noticeably as large customers still have inventory to absorb. The data center market will recover when this is a broader basis recovery in the digital economy. We believe that the AI demand wave is coming. However, it will take more time for customers to further develop their models and applications, adapted to new regulations and solve the chip supply issue. AI will require a lot of data center capacity in Tier 1 markets, which pays to our strength.

When this demand starts to materialize in size, we will be very well positioned. Since the launch of our international strategy, new bookings from International have made up 40% of net additional area committed. In order to maintain this success, we are putting a lot of effort into securing attractive resource supply, just like what we did before in China.

Our gross move-in for the third quarter was nearly 21,000 square meters, comprising 17,000 square meters in China and nearly 4,000 square meters International. Throughout the current phase of market development, the gross move-in for our China data centers has been sustained at a consistent level. Meanwhile, 3Q '23 was the first quarter in which International made a material contribution. We expect the contribution from International to ramp up significantly over the next few quarters.

In 3Q '23, we brought around 23,000 square meters of new capacity into service. 13,000 square meters was at 2 of our campuses in Langfang, China. The capacity is 100% committed to a single customer, which is redeploying from other data centers. The move-in period for this new capacity is faster than usual. The remaining 10,000 square meter is the first data center at our NTP campus in Johor, Malaysia. This data center is also 100% committed with the move-in period of only a few months.

In 4Q '23, we expect to bring another 20,000 square meters into service, half in China and half International. Once again, all of this new capacity is 100% committed with fixed move-in schedules.

Turning to Slide 15. We are making good progress in the execution of our International strategy. Starting with Hong Kong. Our first data center, Hong Kong 1 has entered the service and is almost sold out to global and the China customers. Our second data center Hong Kong 2 is under construction. During the current quarter, we expect to secure an anchor customer commitment for Hong Kong 2 more than 15 months ahead of project completion.

Moving to Johor. Our NTP campus has 160 megawatts of power capacity across the first 3 phases. Out of which 96 megawatt is already committed. In 3Q '23, we delivered 23 megawatts, which is already fully revenue-generating. Over the next few quarters, we will deliver the remaining 73 megawatt of committed capacity, which will also become fully revenue-generating within a short period of time. While we still have room for expansion at NTP, we have enhanced our resource supply by acquiring land for a second campus in Johor. We refer to this new site as campus Tech Park or KTP.

In the first phase of development, KTP will have 108 megawatts of power capacity. We are seeing strong demand for our capacity in Johor from global and the China customers. We are the only player to have 2 complementary locations, both of which are only a few kilometers from Singapore. Across these sites, we have secured 268 megawatts of power supply over the next 3 years. This gives us time-to-market advantage and important considerations as customers are accelerating procurement to meet AI demand.

Furthermore, we have already proven our execution capability in Johor by deploying our prefab technology including liquid cooling modules to successfully deliver hyperscale capacity in just over 1 year. In Singapore, following the award on Power Quota, we are finalizing the site selection for our first data center. We are on track to deliver capacity in 2026.

In Indonesia, we are very pleased to finalize a JV agreement with INA. The Indonesia Sovereign Wealth Fund, we believe that INA will be a great partner for us because of their complementary strengths, unique relationships and the value add. The JV is for all of our developments in Indonesia. We continue to make progress with our first project in Batam. We are working with INA to put in place the essential infrastructure.

Finally, we are moving forward with the first round private equity capital raising for our International holdco and is going well. I will now pass on to Dan for the financial and operating review.

[Daniel Newman, executive]

Thank you, William. Turning to Slide 19. In 3Q '23, revenue increased by 6.4% and adjusted EBITDA increased by 5.6% year-on-year. For the quarter-on-quarter analysis, we've excluded onetime items, which arose in 2Q '23, as previously disclosed. On this basis, revenue grew by 4.9% and adjusted EBITDA decreased by 1.4% quarter-on-quarter. The decrease was mainly due to higher utility costs, which I will come to in a minute.

Turning to Slide 20. During 3Q '23, we achieved net additional area utilized of 16,000 square meters. During the past few quarters, our net add has been affected by higher-than-usual churn, which is mainly due to one customer's redeployment. This will continue into the fourth quarter. However, we are now seeing the impact partly offset by great contribution from International.

Monthly service revenue per square meter was RMB 2149 in 3Q '23 compared with the third quarter of 2022, MSR decreased by 4%, in line with our expectations.

Turning to Slide 21. Due to the seasonal fluctuations in PUE, we think it makes most sense to look at our margin trends by comparing with the same quarter in the prior year. For 3Q '23, our adjusted gross profit margin was 49.5% compared with 50.7% in 3Q '22, a decrease of 1.2 percentage points.

During 3Q '23, utility cost as a percentage of revenue was 35.1% compared with 31.6% in 3Q '22, an increase of 3.5 percentage points. This reflects increase in power generation and more recently, in power distribution tariffs. However, as you can see, we were able to mitigate some of the impact of higher utility cost with other cost savings.

Adjusted EBITDA margin was 44.7% in 3Q '23, which is only slightly down versus the same quarter of last year.

Turning to Slide 22. Over the first 9 months of 2023, our China CapEx totaled RMB 3.1 billion. Our full year guidance was for RMB 3.5 billion and we still expect to be within that figure. However, next year, we expect China CapEx to be materially lower at around RMB 2.5 billion. Over the first 9 months of 2023, our International CapEx was around RMB 2 billion. Given the rapid pace of development in Johor to meet delivery schedules, we expect full year CapEx for International to be around RMB 4 billion, in line with our guidance. Our preliminary view is that International CapEx will be RMB 4 billion or higher next year.

On Slide 23, we plan to finance the International business independently. On the equity side, we are undertaking an equity private placement, the proceeds of which will be ring-fenced. On the debt side, we're aiming to finance International projects on a nonrecourse basis, which should therefore look at our financial position in 2 distinct parts. GDS Holdings, excluding International, which is in effect, Listco plus the China business and International standalone.

Over the first 9 months of 2023, GDS Holdings, excluding International had negative cash flow before financing of RMB 1.8 billion. As William mentioned, our objective is to maintain positive cash flow before financing on an organic basis without assuming any asset monetization. Cash flow before financing for this segment was, in fact, positive in 3Q '23, but it will take another year or so before it is consistently positive quarter after quarter.

International stand-alone will have negative cash flow before financing of around RMB 4 billion this year and potentially a similar amount next year. We can finance this deficit with around 50% equity and 50% debt. For the equity requirement, we aim to raise at least USD 400 million or RMB 2.8 billion in the current funding round. We've received very strong interest from regional and global investors and expect to close the capital raise in 1Q '24.

Looking at our financing position on Slide 24. At the end of 3Q '23, our consolidated net debt to last quarter annualized adjusted EBITDA was 8.6x, excluding the net debt and negative adjusted EBITDA of International, the multiple was 7.4x to 5x. If we continue along the same path, the leverage of GDS Holdings excluding International falls to below 6x within 3 years. However, we continue to work on various asset monetization initiatives including 2 data center funds, the potential [indiscernible] and property sale and lease back. This could enable us to delever a bit faster.

Turning to Slide 25. We are showing the loan maturity schedule for the first time with the depth of International separately identified. Over the next couple of years, we have, on average, RMB 2.7 billion per annum of principal repayments, all of which is onshore RMB project loans. A large part of this can be refinanced as we have been doing successfully for many years, although we do intend to use part of our cash balance to pay down fund debt, where it is prudent and efficient.

Turning to Slide 26. We are not changing our formal guidance for FY '23 revenue, adjusted EBITDA and CapEx. However, we note that FY '23 revenue is tracking to the bottom end of our original guidance range, while FY '23 adjusted EBITDA is tracking to the top end of the original guidance range. We'd now like to open the call to the questions. Operator?

[Operator]

[Operator Instructions] Now we're going to take the first question today and it comes from the line of Jonathan Atkin from RBC.

[Jonathan Atkin, analyst]

I wondered if you could remind us of your expectations around renewal pricing and renewal spreads inside of China over the coming year as well as your overall expectations around the pace at which utilization could increase in your existing campuses?

[Daniel Newman, executive]

Yes. Thank you, John. I always prefer to address this question in a more holistic way. We have a KPI of MSR per square meter per month, which reflects a number of different factors including renewal spreads and changes in the product mix and location. I think this year, we set expectations that it would decline by 4% year-on-year, which indeed it is doing so. I think next year, it will decline by less than that. So that preliminary view is about 2% year-on-year, which indicates that it's bottoming out. That gives you some indication of what's happening with renewal stress, although as I say, it does also reflect a number of other factors.

As regard to utilization rate, that will increase gradually. It will take about 3 years to get from where we are today, which is around 71%, 72% to over 80%. I think we cross 80% during FY '26. And then it will take another couple of years to get up into the high 80s.

[Jonathan Atkin, analyst]

If I could just squeeze in the additional part of my question. So KTP, is that a different part of Johor or is that adjacent to Nusajaya? Maybe give us a little bit of color there. And then the demand signals that you're seeing in Indonesia, in Batam, is the JV constrained to Batam or would you look to potentially go elsewhere in Indonesia?

[William Huang, executive]

Yes. I think the KTP actually is very close to Singapore as well. I mean in there, if you look at it, it's around 10 kilometers from NTP, right, 10 kilometer. So it's a typical, I mean, fit for the a lot of hyperscale guy, which is a cloud guy or some hyperscale deployment structure. So the good thing and the beautiful thing is that it's very close to Singapore, latency is not issue and also 10 kilometers away from our current NTP. So this is perfect to allow a lot of our customers -- fit a lot of our customers, deploy their IT in Singapore KTP and NTP.

So we are working very closely with a lot of the potential customers. This structure is perfectly fit their future demand. Batam, we have made a lot of progress in terms of construction. And we saw a lot of potential demand on our hands. So currently, we are working on a lot of the potential demand. So we believe this is a Batam -- sale of the Batam is not a big issue for us. So I think now Batam has a unique position. Number one, it is not only serve the region. They also serve fully recognized by the Indonesia domestic market.

And also the power cost is lower than any location in the Southeast Asia and potentially the renewable energy were coming soon. In the future, we will combine the renewable energy and low power cost and serve more broad region. This is a very unique position for the whole region. So we are very confident to get a lot of demand for time data center.

So INA is a very good partner. As I mentioned, I think the -- because they are very, very actively to help GDS set up more advantage in Batam and help us to introduce a lot of the renewable energy per year in this region. And also, they help us to find more -- find a lot of the potential data center sites in Jakarta as well.

So we are very appreciate -- they are real value-added partner. I think in the future, they can add more value in terms of bring us to the some SOE customer and also the government's potential demand. So I think we are looking forward to work more closely with INA.

[Operator]

[Operator Instructions] And the next question comes from the line of Yang Liu from Morgan Stanley.

[Yang Liu, analyst]

My question is regarding the move-in outlook because we see a pretty big delivery of the overseas project in third quarter. Should we expect starting from fourth quarter or maybe first quarter next year, will see Q-on-Q improvement of the move-in speed?

[William Huang, executive]

Yes, I think the -- you're right. I mean we have very good near term with our overseas customers, right? So I think from the Q4 and the next few quarters, the ramp-up is -- we are very happy this ramp-up speed, right? So I think you will see the overseas will contribute more, right, in terms of next year.

[Daniel Newman, executive]

Yes. So the third quarter, we look net of churn was 16,000 square meters, which is higher than it's been for last 5 or 6 quarters. International started to make a contribution there. I did mention that in the fourth quarter, there will be another portion, which shows some exceptional churn. That's the completion of what we've been talking about over the last 4 quarters. Nonetheless, I think the net additional area utilized in the fourth quarter, net of that churn will be higher than what it was in the third quarter. And next year, I expect it to be significantly higher than what it is on a net basis in 2023.

[Yang Liu, analyst]

I just want to make sure that the previous single customer churn will end in 4Q this year, right?

[Daniel Newman, executive]

That's right. Maybe I'll just take this opportunity just to give some statistics about churn. We talk about it in terms of square meters of area utilized. It's easier to track it that way. We think that our normal churn rate going forward will be around 4% of area utilized, maybe 4% to 5%, which I believe is low by global benchmarks. In past years, it was 2% to 3% but given the evolution of our business, it's natural. I think to expect that to be higher.

In the current year, I think the total churn will be around 28,000 to 29,000 square meters, which is around 7.5%. So it's clearly higher and the difference is what we call exceptional churn, the redeployment is actually the majority of that. Yes, this will happen from time to time and it could set us back in the short term, it can affect our growth rate by a small amount. But as it so happens, the redeploying customer has place new orders with us, which are 1.5x the amount which the terminated.

So in effect, it's 1 step back in 1.5 steps forward, albeit with a timing difference. Hopefully that will be complete and we will hopefully revert to just described as a normal level of churn.

[Operator]

[Operator Instructions] And the next question comes from the line of Frank Louthan from Raymond James.

[Robert Palmisano, analyst]

This is Rob on for Frank. Are you seeing any demand for liquid cooling-based servers? And if so, who pays the extra capital costs required for that? Do you guys pay it and adjust the pricing? Or does the customer contribute some capital?

[William Huang, executive]

Yes. I think as I just mentioned, we deployed the -- it's not -- first of all, I think liquid cooling was already deployed a couple of years ago in China already, right? We are very familiar with this technology. So we also -- I just mentioned, we are deploying our NTP1, right? So our customers also requested for liquid cooling.

So during the future, I think for the AI guy, this was very normal, but not everybody -- every AI customer use liquid cooling. It depends the difference -- the customer has a different required profile. But number one, we are very familiar with that. Number two, I think the cost -- in terms of cost, it's -- in our view, it's not significantly different, right, at the end what we built before for the normal case, right? So I think -- of course, it costs increase, we definitely will charge from our customer, which we already got in a mutual agreement with our customer. So this will not impact any of return.

[Operator]

And the next question comes from the line of Sara Wang from UBS.

[Xinyi Wang, analyst]

I have a question on overseas business, especially for the Johor campus, besides China customers, shall we expect meaningful new orders from either International customers, cloud customers or local customers. Is actually given there are a lot of other data center operators announced a meaningful pipeline in the region. So how shall we think about the competition landscape going forward?

[William Huang, executive]

So number one, we are targeting all kind of customers. Our sales team working on Domestic demand, International demand and also China demand. So we don't care who is customer, customer is a customer, right? So I think the -- but we believe our Johor campus, 2 campuses including new future campus KTP, we definitely -- we are confident to get the combination of the customer just like what we did in Hong Kong already, right? So I think this will not be the issue. We will not just specifically target one kind of customer. We target all, right?

So then we believe GDS sales and our product will welcome by the all kind of customers as well. So in terms of the competition, I think we're competing with everybody in China for 22 years. We don't afraid the competition, which we like the competition. I think GDS will grow -- we will grow from a lot of the competitors, right? So I think it's good and that's why if you -- we already demonstrated even in a very, very competitive market in China in the last 20 years, we're getting #1 position, right? This is the we already -- so we are not thinking about what's our competitor doing whether they can do everything, but we believe we will win in every market.

[Xinyi Wang, analyst]

Got it. And then is there any additional color on the gross new bookings for next year, should -- may be higher than this year, especially given dual core can that continue to ramp up?

[William Huang, executive]

You mean international market?

[Xinyi Wang, analyst]

Overall and then maybe there's additional comment on overseas contribution.

[Daniel Newman, executive]

We take this in 2 parts, right? China over quite a few quarters now, we've made it clear that we're not targeting a high sales volume. We're targeting a particular kind of business, which matches the inventory that we have, where there's a fixed moving schedule faster than what we've experienced before and of course, reasonable pricing. So we do any amount of business that meets those criteria.

We don't forecast any change in China market conditions, our own internal business plan just assumes continuation of the current run rate. We're not [indiscernible]. So we don't build in any kind of assumptions about a change in market conditions. But of course, we are very well positioned to respond to any change.

On the International side, I think the sales next year could be higher than this year. And this year including the second data center in Hong Kong, if we were able to conclude that presale precommitment during the fourth quarter than the gross bookings for International was about 20,000 square meters over the course of 2023. And we hope to lease that again next year.

The order size has been very large on the International side. So it's hard to predict because one order can make a huge difference. So it is not widely dispersed book of orders, but it's a small number of very large orders.

[Operator]

[Operator Instructions] And the next question comes from the line of Michael Elias from TD Cohen.

[Michael Elias, analyst]

First, on the demand side. As we think about Mainland China, would it be possible for you to create -- or provide a framework for how you're thinking about the evolution of demand in Mainland China. Specifically, you talked earlier about, it seems like there's some digestion that's happening in the market. But can you talk about your conversations with the cloud customers and essentially what it's indicating is driving the slowdown in the demand there?

Then my second question would be, as we think about getting ready for the AI opportunity, what is the standard density, power density to which you build your current data centers? And then as part of that, as you consider the AI deals that are on the market, what is the density that those workloads are running at? And to the earlier point, do they require liquid cooling. Any color there would be great.

[Daniel Newman, executive]

First one was about what's holding back demand in China? What's one of the cloud customers ?

[William Huang, executive]

Okay. I think there's a couple of things, I think the cloud players in China, I think now they are adjusted their strategy. I mean they are more pursue quality of the revenue. I mean not that just the quantity. So this is, I think, in the midterm and long term is very good for data center per year because historically, the discretion number including a lot of the stuff [indiscernible] like a network, all of the core that integrate as a cloud. So the number is big, but also some system integration.

But what we know is that those guys start to focus on the growth and real public computing revenue, which we believe this is a right strategy. And we'll -- given the time, they will grow their revenue properly and will drive the more high-quality data center demand in the future. That's what we see. This is the revolution from our customers. So I think this will get in the future will create more healthy data center demand for all the industry. This is number #1.

On the other hand, I think the AI is a hot topic in China already for a while. And China already announced a larger language model permission, right but still in terms of timing, I think as I mentioned, it's still a little bit early because developing schedule is behind the U.S. So what do we already seen the global data center driven by the other U.S. based large language model. This is not happening in China but it's coming. So I think it still need time, but in China still have another issue is supply chain issue in terms of the chips. So I think if this need maybe 12 months, maybe 18 months to solve the order issue. So what I expect is what happening in 1 year or 1.5 year, maybe in a big way.

The second question is the power density, of course, I think GDS is always leading the power density product in China. If we look back to 10 years ago, our first data center will build -- triple high density than anyone else in the market, right? So we are very follow-up to global channel and the IT chain.

So our last couple of years, we started to build very high power density. Average power density is 8 kW per rack before last couple of years. Now we also increased to 10 to 15 kW per rack, that is average number, which means we can serve 40 kW per rack is no issue for us. And again, I would say not only per rack power density we increased, also we increased each new campus power total capacity. This way we're well positioned to response to all the AI demand in the next few years. So we are ready for that.

[Operator]

As there are no further questions, I'd like to now turn the call back over to the company for closing remarks.

[Laura Chen, executive]

Thank you 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 Consulting Financial Communications. See you next time. Bye.

[Operator]

This concludes this conference call. You may now disconnect your lines. Thank you for your participation. Have a good day.