Summary of the Conference Call on China Data Centers Industry Overview - **Industry**: Data Center Real Estate Investment Trusts (C-REITs) in China - **Recent Developments**: On August 8, 2023, China's first two data center C-REITs, Southern GDS Data Center REIT (508060.SS) and Southern Range Tech Data Center REIT (180901.SZ), were listed on the Shanghai and Shenzhen Stock Exchanges. The underlying assets are mature wholesale data center facilities owned by GDS Holdings and Range Intelligent, with capacities of 29MW and 43MW respectively in tier-1 markets [1][4]. Key Points Market Dynamics - **C-REIT Market Size**: As of June 2023, there are 68 listed C-REITs in China with an aggregate market capitalization of RMB 200 billion. The new data center C-REITs introduce a new sector category within the existing C-REIT framework, which includes various sectors such as industrial parks and logistics [2]. - **Utilization Rates**: The Langfang and Greater Shanghai regions accounted for 12% of total IDC supply and 16% of total IDC demand in China in 2024. Utilization rates in Langfang improved to 81.3% in Q1 2025, while Greater Shanghai maintained a stable utilization rate of 72% in 2024 [9][10][11]. Financial Metrics - **Unit Economics**: Monthly recurring revenue for single-data center projects ranges from RMB 500-600 per kW (excluding electricity costs) or RMB 1,000 per kW (including electricity costs). EBITDA per utilized capacity ranges from RMB 5-7 million per MW, with EBITDA margins exceeding 85% when excluding electricity costs [9][19][23]. - **Valuation Metrics**: The GDS C-REIT offering implies a 16.9x EV/EBITDA for 2026, while Range Intelligent's C-REIT implies a 15x EV/EBITDA. On their first trading day, both C-REITs saw a 30% increase in share price [9][30][31]. Impact on GDS Holdings - **Financial Impact**: GDS will deconsolidate 29MW of capacity and report a revenue and EBITDA reduction of RMB 175 million and RMB 144 million respectively, representing 2% of revenue and 3% of adjusted EBITDA in 2025. The C-REIT listing generated approximately RMB 1.6 billion in proceeds net of reinvestments, against GDS's net debt of RMB 35 billion as of Q1 2025 [9][30]. Future Outlook - **Growth Expectations**: The focus on backlog delivery is expected to enhance revenue growth visibility and improve EBITDA/FCF for GDS. The company is well-positioned to benefit from the demand driven by Generative AI and cloud growth acceleration [36]. - **Risks**: Key risks include below-expected demand, slower overseas revenue ramp-up, and potential pricing declines in both domestic and international markets [38]. Additional Insights - **C-REIT Financing Benefits**: The introduction of C-REITs provides a new financing channel for data center operators, potentially improving capital recycling and balance sheet health. It also allows for specialization between data center developers and asset managers, which could enhance operational efficiency [4]. - **Pricing Trends**: The pricing level for GDS's C-REIT reached RMB 512/kW/month in 2024, while Range Intelligent's pricing was RMB 1,075/kW/month, which includes electricity costs [19][20]. This summary encapsulates the critical insights from the conference call regarding the developments in the China data center industry, focusing on the newly listed C-REITs and their implications for market dynamics, financial metrics, and future growth prospects.

Group 1 - The company, 首程控股, announced investments in two closed-end infrastructure securities investment funds related to data centers, aligning with national strategies for digital economy and "new infrastructure" [1] - The investments are made through its wholly-owned subsidiary, 北京首源欣荣投资有限公司, and its fully-owned subsidiary under 首程基石, which manages the 北京平准基金 [1] - These investments aim to promote the development of smart infrastructure and technology infrastructure, contributing to the high-quality development of the real economy [1]

Group 1 - The company, Shou Cheng Holdings, has made significant investments in two REITs focused on data centers, aligning with national strategies for digital economy and new infrastructure [1] - The Southern Wanguo Data Center REIT, backed by Wanguo Data Holdings, is positioned as a valuable asset in China's data center landscape, supporting the country's new infrastructure strategy [1] - The company aims to leverage REITs as a key financial tool to optimize asset structure and expand investments in new infrastructure, contributing to the growth of China's digital economy [1] Group 2 - Runze Technology is focused on providing comprehensive solutions for big data, cloud computing, and 5G applications, with its REIT positioned as a leader in the domestic market [2] - The successful listing of the Southern Runze Technology Data Center REIT exemplifies the integration of technology finance and green finance, enhancing asset utilization and capital structure [2] - The group plans to continue increasing investments in core intelligent infrastructure real estate in China, aiming to strengthen its leading position in the REITs market [2]

Group 1 - The company, Shou Cheng Holdings, has made significant investments in two REITs focused on data centers, aligning with national strategies for digital economy and new infrastructure [1] - The Southern Wanguo Data Center REIT, backed by Wanguo Data Holdings, is positioned as a valuable asset in China's data center landscape, supporting the country's new infrastructure strategy [1] - The company aims to leverage REITs as a key financial tool to optimize asset structure and expand investments in new infrastructure, contributing to the growth of China's digital economy [1] Group 2 - Runze Technology is focused on providing comprehensive solutions for big data, cloud computing, and 5G applications, with its REIT positioned as a leader in the domestic market [2] - The successful listing of the Southern Runze Technology Data Center REIT exemplifies the integration of technology finance and green finance, enhancing asset utilization and capital structure [2] - The group plans to continue increasing investments in core intelligent infrastructure real estate in China, aiming to strengthen its leading position in the REITs market [2]

Core Insights - The launch of the first public REITs for data centers, namely Southern Runze Technology Data Center REIT and Southern Wanguo Data Center REIT, marks a significant expansion of public REITs' underlying assets, filling a gap in the data center sector [1][3] - Both REITs experienced a strong debut, with each reaching a 30% increase on their first trading day, indicating robust market interest and active trading [1][2] Fundraising and Asset Details - Southern Runze Technology Data Center REIT issued 1 billion shares, raising 4.5 billion yuan, with proceeds primarily allocated for the construction of the Chongqing Runze (Southwest) International Information Port project [2] - Southern Wanguo Data Center REIT issued 800 million shares, raising 2.4 billion yuan [2] - The underlying asset for Southern Runze is an A-18 data center in Langfang, Hebei, with projected service fee income of 540 million yuan and a net profit of approximately 257 million yuan for 2024 [2] - Southern Wanguo's underlying asset is the Guojin Data Cloud Computing Data Center in Kunshan, with projected service fee income of 164 million yuan and a net profit of about 47.33 million yuan for 2024 [2] Investor Interest and Market Dynamics - The issuance of the first public data center REITs saw enthusiastic investor participation, with the public offering for Southern Runze closing within a day and a low confirmation ratio of effective subscription applications [2] - The strong demand for these REITs is seen as a precursor to their successful market performance [2] Policy Support and Future Outlook - The successful launch of these REITs is attributed to strong policy support from regulatory bodies, which have encouraged the development of new infrastructure projects, including data centers [3] - The China Securities Regulatory Commission has expressed ongoing support for technology companies to utilize new asset classes for asset securitization and REITs [3] - The emergence of more data center public REITs is expected to evolve into a broader industry phenomenon, promoting a shift from mere scale expansion to value creation in the data center sector [3][4] Expansion of Public REITs - The public REITs market has been expanding, with a growing range of asset classes being included, from industrial parks to data centers [4] - The issuance of public REITs is seen as a vital tool for empowering the real economy, with potential future expansions into additional asset types such as elder care facilities [4][5]

Group 1 - The core viewpoint of the news is that AI application stocks in China experienced a significant decline, with the ChiNext AI Index dropping nearly 2% and falling below the 10-day moving average [1][3] - The decline was led by companies such as Wanxing Technology, which fell over 11%, while only a few stocks like Zhongji Xuchuang and Runze Technology managed to rise [1][3] - Despite the downturn, there was a net subscription of 6 million units for the ChiNext AI ETF (159363), indicating continued investor interest [1][3] Group 2 - The release of GhatGPT-5 has created pressure on domestic large model companies, although the long-term trend for AI remains positive, presenting opportunities for companies with established performance [3] - A recent high-level meeting emphasized the need for deep implementation of the "AI+" initiative, aiming to accelerate the commercialization of AI applications [3] - Analysts predict that 2025 will mark a significant year for AI Agent capabilities, with a shift from content generation to process agency, suggesting a focus on large model developers and AI application platforms [3][4] Group 3 - According to CITIC Securities, the overall operating conditions of tech giants in Q2 2025 are expected to be significantly better than previously cautious market expectations, with a notable increase in cloud business growth [4] - The global AI capital expenditure (CAPEX) is projected to grow by 64% in 2025 and 50% in 2026, driven by increased demand for computing power and the impact of tax reforms in the U.S. [4] - The ChiNext AI ETF (159363) is highlighted as a key investment opportunity, with a portfolio that allocates approximately 70% to computing power and 30% to AI applications [4][5]

Group 1 - The first batch of data center REITs, namely Southern Universal Data Center REIT and Southern Runze Technology Data Center REIT, successfully listed on the Shanghai and Shenzhen Stock Exchanges, marking the expansion of REITs into new infrastructure supporting the digital economy in China [1][2] - Southern Universal Data Center REIT issued 800 million shares at a price of 3.0 CNY per share, raising a total of 2.4 billion CNY, while Southern Runze Technology Data Center REIT issued 1 billion shares at a price of 4.5 CNY per share, raising a total of 4.5 billion CNY [1] - On the first day of trading, both REITs experienced a stable performance, with each increasing by 30% compared to their issue prices [1] Group 2 - The underlying asset of Southern Universal Data Center REIT is the Guojin Data Cloud Computing Data Center project located in Kunshan, Jiangsu, which has maintained a 100% signing rate and over 92% billing rate for the past three years, with a projected annual cash distribution rate of 5.07% by 2025 [1] - Southern Runze Technology Data Center REIT is based on the Runze (Langfang) International Information Port A-18 Data Center, which is included in the 2023 National Green Data Center list, located in Langfang Economic Development Zone, Hebei, featuring 5,897 cabinets and a total power exceeding 42 MW with a cabinet utilization rate of over 99% [1] - The successful listing of the first batch of data center REITs is seen as a positive demonstration for supporting technological finance, green finance, and digital finance innovation, revitalizing quality assets in the data center sector and expanding effective investment [2]

Core Viewpoint - The successful listing of Southern Runze Technology Data Center REIT marks a significant milestone in the asset securitization of China's data center industry, reflecting profound changes in the digital infrastructure sector [1][5]. Group 1: Underlying Asset Logic - The core value of Southern Runze Technology REIT lies in its ownership of the A-18 data center, which has a unique geographical advantage, being only 20 kilometers from Beijing's South Sixth Ring and 29 kilometers from Daxing Airport, catering to the high demands of the Beijing region [2]. - The A-18 data center has 5,897 cabinets and a total power of 42.5 MW, achieving a 100% signing rate and over 99% listing rate for three consecutive years since its operation began in December 2020, positioning it as a leader among similar projects in China [2]. Group 2: Model Innovation - The REIT's success is attributed to its unique "data center + green electricity" model, which addresses the challenges of heavy asset investment and long payback periods in the data center industry [3]. - By securitizing the A-18 data center with a valuation of 3.725 billion yuan, the company has created a virtuous cycle of "investment-operation-securitization-reinvestment," allowing for accelerated national computing network layout without significantly increasing debt [3][4]. Group 3: Industry Significance - The REIT model provides a replicable framework for the industry, enabling companies to transition from heavy asset holders to light asset operators, focusing on high-value-added services like computing power scheduling and customer service [4]. - The introduction of REITs allows for the transformation of illiquid fixed assets into tradable standardized products, reducing corporate debt ratios and providing social capital with access to the digital economy's benefits [4]. Group 4: Policy and Market Resonance - The successful listing of Southern Runze Technology REIT is supported by a robust policy framework, including the 2024 notice from the National Development and Reform Commission promoting the regular issuance of REITs in infrastructure [5]. - The REIT's launch enhances the multi-tiered capital market system in China, with a total of 68 public REITs issued by June 2025, expanding the asset spectrum to include technology-intensive assets like data centers [6]. Group 5: Valuation Logic Restructuring - The emergence of REITs introduces a new valuation method based on NAV (Net Asset Value), shifting the focus from PE (Price-to-Earnings) ratios, which are volatile due to heavy asset characteristics [7]. - This shift may lead the industry to prioritize operational efficiency and cash flow stability over mere scale competition [7]. Group 6: New Opportunities from Asset Securitization - The listing of Southern Runze Technology REIT initiates a new wave of asset securitization in the data center sector, vital for supporting the construction of digital infrastructure during the 14th Five-Year Plan period [8]. - The REIT model creates a closed loop of "construction-operation-securitization," potentially becoming a crucial financial infrastructure for building a digital China [8]. Group 7: Industry Development and Green Transition - The successful issuance of data center REITs promotes healthy development across the industry, with third-party IDC service providers holding over 50% market share, indicating room for increased concentration [9]. - The green attributes of the A-18 project, recognized as a "National Green Data Center," are essential for its approval, and future REITs will likely consider green metrics as key valuation factors [9].

Core Insights - The launch of the first batch of closed-end infrastructure REITs based on data centers marks a significant advancement in China's REITs market, indicating a new phase of development for infrastructure assets [1][6] - The strong market response to the debut of data center REITs reflects investor confidence in the industry's growth potential, driven by the increasing importance of data centers in the digital economy [2][4] Group 1: Market Performance - On the first day of trading, both the Southern Wanguo Data Center REIT and Southern Runze Technology REIT saw a 30% increase, with trading volumes of 234 million yuan and 452 million yuan respectively [1] - During the issuance phase, the two REITs attracted over 470 billion yuan in subscription funds, indicating high demand from various investors [2] Group 2: Industry Growth Potential - The data center market in China is projected to reach 318 billion yuan by 2025, with a year-on-year growth rate of 32%, and could exceed 1.2 trillion yuan by 2030, reflecting a compound annual growth rate of over 25% [2] - The "East Data West Computing" strategy is expected to further enhance the development opportunities for the data center industry, leading to a sustained increase in demand for quality data center assets [2] Group 3: Asset Characteristics and Benefits - Data centers are characterized by stable cash flows and long-term operational value, often located in prime areas with robust infrastructure and efficient management [2] - The successful listing of data center REITs provides a pathway for companies to unlock capital tied up in fixed assets, facilitating reinvestment into new projects and technology development [4][5] Group 4: Broader Economic Impact - The introduction of data center REITs enriches the asset landscape of public REITs, complementing traditional infrastructure assets like highways and industrial parks, thus enhancing the market's ability to support new productive forces [5] - The development of data centers as a foundational element of the digital economy is crucial for advancing the digitalization and intelligent transformation of the economy, contributing to high-quality economic growth [5][6]

Core Viewpoint - The listing of the Southern Runze Technology Data Center REIT marks a significant expansion of China's REITs market and provides a new channel for investors to share in the digital economy's benefits [3][4] Group 1: Fund Overview - The Southern Runze Technology Data Center REIT, managed by Southern Fund, officially listed on the Shenzhen Stock Exchange on August 8 [1][3] - This REIT is the first public data center REIT in the Shenzhen Stock Exchange and represents a key achievement in integrating new infrastructure construction with capital market support for the real economy [3][4] Group 2: Underlying Assets - The REIT's underlying asset is the International Information Cloud Gathering Port (ICFZ) A-18 data center project, located in a core area of the national integrated computing network [3] - The data center is designed with high standards and green low-carbon principles, providing stable, safe, and efficient operational capabilities to support advanced technology industries such as artificial intelligence, cloud computing, and big data [3][4] Group 3: Company Background - Runze Technology has been a leading comprehensive computing center company for 16 years, focusing on building high-performance, low-carbon computing infrastructure [4] - The listing of the REIT reflects the capital market's recognition of the value of data center assets and exemplifies the financial empowerment of the real economy [4] Group 4: Future Plans - Southern Fund aims to leverage its collaborative advantages and work closely with partners to enhance the fund's operational efficiency and asset allocation, thereby continuously creating value for investors [4] - The initiative is part of a broader effort to inject new momentum into the construction of a digital China and support the establishment of a new high-quality development pattern [4]