1Q24 Earnings Call
22 May 2024
NASDAQ: GDS
HKEX: 9698
0
DISCLAIMER
This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. Such statements are based upon management's current assumptions, forecasts, expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties, assumptions and other factors, all of which are difficult to predict and many of which are beyond the Company's control, which may cause the Company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.
In addition to U.S. GAAP financials, this presentation includes certain non-GAAP financial measures. These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP measures have limitations as analytical tools and you should not consider them in isolation or as a substitute for an analysis of the Company's results under U.S. GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalent. First, adjusted GP, adjusted GP margin, adjusted EBITDA and adjusted EBITDA margin are not substitutes for gross profit, net income (loss), cash flows provided by (used in) operating activities or other consolidated statements of operation and cash flow data prepared in accordance with U.S. GAAP. Second, other companies may calculate these non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of these non-GAAP financial measures as tools for comparison. Finally, these non-GAAP financial measures do not reflect the impact of net interest expenses, income tax expenses (benefits), depreciation and amortization, operating lease cost relating to
prepaid land use rights, accretion expenses for asset retirement costs, share-based compensation expenses, gain from purchase price adjustment and impairment losses of long-lived assets, each of which have been and may continue to be incurred in the Company's business.
See the Appendix for reconciliation between our adjusted GP and adjusted EBITDA to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP, which is gross profit and net income or net loss, respectively.
1
Business Strategy & Performance Highlights
William Huang, Chairman & CEO
1Q24 HIGHLIGHTS (1)
Customer Commitments | • New customer commitments (gross) of +16,808 sqm |
• Total area committed increased by 5.4% y/y to 668,012 sqm | |
Customer Move-In | • Additional area utilized (net) of +18,127 sqm |
• Total area utilized of 436,875 sqm, +16.0% y/y, and utilization rate of 74.9% | |
Financial Results | • Total revenue grew by 9.1% y/y to Rmb 2,627.4 mn ($363.9 mn) |
• Adjusted EBITDA grew by 4.7% y/y to Rmb 1,183.4 mn ($163.9 mn) | |
Financing Transactions | • Obtained Rmb 4,294 mn ($595 mn) of new debt financing / refinancing facilities |
• Series A equity raise for GDS International in 1Q24 upsized to $672 mn | |
Notes:
1. Exchange rate of 7.2203:1 (RMB:USD) is used throughout this presentation, except where otherwise stated.
3
Driving Share Price Recovery
SOTP Equity Value Per GDS ADS (1)
$9.30 closing price per GDS ADS on 21 May 2024
$3.86 / ADS
International: Based on pre-money equity value of $750 mn implied by Series A new issue price
$5.44 / ADS
GDS Group Excluding International: Implied EV / 1Q24 Annualized Adjusted EBITDA of 9.4 times (2)
Notes: | ||
1 | . Total shares outstanding of 1,555,180,903 ordinary shares or 194,397,612 ADS, as at March 31, 2024. | |
2 | . Based on Rmb 34.95 bn of net debt for GDS Group at 31 March 2024, excluding net debt of International and pro forma for repayment of shareholder loans and other amounts due to GDS Group from International at | |
the closing of the Series A new issue, and 1Q24 Adjusted EBITDA for GDSH segment (GDS Group excluding International) of Rmb 1,136.6 mn multiplied by 4. | 4 | |
Gross Additional Area Utilized (Organic Tier 1 Only) (1)
By Quarter (Sqm)
China International
19,819
17,032
By Year (Sqm)
China International
60,284
53,008
48,739
12,365
11,056
783
1Q23 2Q23
Notes:
1. Excludes B-O-T and acquisitions.
12,839 12,478
7,997
3,632
3Q23 4Q23 1Q24
33,860
19,819
17,032
12,412
923111
FY20 | FY21 | FY22 | FY23 | 1Q24 |
5
Net Additional Area Utilized
By Quarter (Sqm)
1Q23 | 2Q23 | 3Q23 | 4Q23 | 1Q24 | |
China | |||||
Organic Tier 1 (Gross) | 11,056 | 12,365 | 12,839 | 12,478 | 17,032 |
Churn | (6,488) | (8,691) | (4,903) | (602) | (6,214) |
B-O-T (Net) | 1,517 | 1,706 | 4,310 | 201 | (12,510) |
Acquisition (1) | - | - | - | - | - |
China (Net) | 6,085 | 5,380 | 12,246 | 12,077 | (1,692) |
International (Net) | - | 783 | 3,632 | 7,997 | 19,819 |
Total (Net) | 6,085 | 6,163 | 15,878 | 20,074 | 18,127 |
Notes:
1. Refers to area utilized under customer agreements remaining in effect at the closing of the acquisition.
By Year (Sqm)
FY20 | FY21 | FY22 | FY23 | 1Q24 | |
China | |||||
Organic Tier 1 (Gross) | 53,008 | 60,284 | 33,860 | 48,739 | 17,032 |
Churn | (1,921) | (2,185) | (4,864) | (20,684) | (6,214) |
B-O-T (Net) | 12,386 | 8,867 | 21,966 | 7,733 | (12,510) |
Acquisition (1) | 15,236 | 16,855 | - | - | - |
China (Net) | 78,709 | 83,821 | 50,962 | 35,788 | (1,692) |
International (Net) | - | 923 | 111 | 12,412 | 19,819 |
Total (Net) | 78,709 | 84,744 | 51,073 | 48,200 | 18,127 |
6
Capacity Expansion - China
Capacity In Service & Under Construction At 1Q24
Additional Capacity Brought Into Service | Additional Capacity To Be Delivered |
153,107 | ||||||
104,002 | ||||||
63,389 | 50,678 | |||||
41,700 | ||||||
33,709 | ||||||
27,682 | 49,200 | |||||
14,189 (1) | ||||||
FY20 | FY21 | FY22 | FY23 | FY24 | FY25 | FY26 & Beyond |
Notes:
1. Excludes 13,188 sqm of area in service at three B-O-T data centers which the Company plans to transfer to the customer on an accelerated basis. This area is deducted from total area in service in 1Q24.
7
Capacity & Utilization - China
At 1Q24
We can grow utilized capacity by over 50% for existing projects…
Utilizable | Utilized: 403,609 sqm | Inventory: 218,226 sqm | 621,836 sqm |
Capacity |
Assuming 90% utilization rate
Deliverable | In Service: 549,352 sqm | Under Construction: 141,576 sqm | 690,928 sqm |
Capacity | |||
Area
Under Construction:
…with a marginal cost to complete of only141,576~Rmb 7.4 bn
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Gross Additional Area Committed (Organic Tier 1 Only) (1)
By Quarter (Sqm) | By Year (Sqm) |
China | International (2) |
21,499
19,154
16,098
7,440
11,6695,792
21,499
6,385
11,714
10,306
5,284
1Q23 | 2Q23 | 3Q23 | 4Q23 |
China | International (2) | ||||
99,197 | 95,362 | ||||
4,085 | 80,506 | ||||
16,808 | |||||
68,419 | |||||
28,331 | |||||
7,334 | 19,617 | ||||
99,197 | 91,277 | ||||
9,474 | 52,175 | 48,802 | 16,808 | ||
7,334 | |||||
9,474 | |||||
1Q24 | FY20 | FY21 | FY22 | FY23 | 1Q24 |
Notes:
1. Excludes B-O-T and acquisitions.
2. For the purpose of this presentation, "China" refers to assets or business in mainland China and includes 3rd party data centers in Hong Kong and Macau. "International" refers to assets or business outside mainland China, except for 3rd party data centers in Hong Kong and Macau which are included in "China", unless stated otherwise.
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Disclaimer
GDS Holdings Limited published this content on 22 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 May 2024 11:06:07 UTC.