2023-05-25 14:57Financial Data and Key Metrics Changes - In Q1 2023, service revenue grew by 0.2%, while underlying adjusted EBITDA increased by 6.6% quarter-on-quarter [18] - The underlying adjusted gross profit margin rose by 1.4 percentage points, and the underlying adjusted EBITDA margin increased by 2.8 percentage points compared to the prior quarter [20] - The net debt to last quarter annualized adjusted EBITDA ratio was 8.1 times at the end of Q1 2023 [21] Business Line Data and Key Metrics Changes - Gross new bookings in Q1 2023 were approximately 12,000 square meters, evenly split between Mainland China and International [11] - Gross move-in for Q1 2023 was around 13,000 square meters, consistent with previous quarters [13] - The utilization rate increased from 67% to 72% over the past year [14] Market Data and Key Metrics Changes - Market demand in Mainland China has been soft, primarily due to large customers needing time to absorb their inventory [11] - The backlog for area in service decreased from 136,000 square meters to 110,000 square meters [14] - The company expects gross additional area utilized to continue at similar levels in Q2 and Q3 2023, with a significant increase anticipated in Q4 2023 [19] Company Strategy and Development Direction - The company aims to deliver a backlog of RMB6 billion, which is expected to drive revenue growth by over 60% in the coming years [8] - In Mainland China, the focus is on increasing utilization of existing assets and being selective in pursuing new orders [9] - The International business is being developed as a second growth engine, with a target to contribute over 10% of consolidated adjusted EBITDA within three years [18] Management's Comments on Operating Environment and Future Outlook - Management noted that the current environment in Mainland China is undergoing a period of adjustment, and they are optimistic about future demand driven by AI applications [9][10] - The CEO expressed confidence in the company's ability to enhance business performance and achieve sustainable growth, stating that the current share price does not reflect the true value of the company [16] - Management highlighted a positive shift in customer sentiment, indicating that major customers are resuming their business plans [28] Other Important Information - The company plans to cap net debt at current levels and target deleveraging to below 5 times net debt to adjusted EBITDA [17] - The effective interest rate for Q1 2023 dropped to 4.3%, and the company expects to repurchase $300 million of an existing convertible bond [21] - The company has signed a Limited Partnership Agreement for the China Data Center Fund, expecting to receive net cash proceeds of RMB1.45 billion upon completion of asset injection [22] Q&A Session Summary Question: What is the time horizon for delivering the existing backlog in China? - Management indicated that the financial targets are set for a three-year period, with a continuous process of adding new bookings and delivery [26][27] Question: Can you elaborate on the synergies between international operations and the core Chinese business? - Management highlighted the unique advantage of leveraging the current product and supply chain, which is not available to other players in the region [33] Question: What percentage of installs and sales are expected to be AI-related? - Management noted that AI-driven demand is still in early stages in China but is already impacting international business, particularly in Southeast Asia [37] Question: How much of the backlog will hit completion in 2023? - Management explained that over 50% of the backlog is cloud-related, and they expect to see a shorter lead time for new bookings [48][49]