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.