Hello, ladies and gentlemen. Thank you for standing by for GDS Holdings Limited's First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there'll be a question-and-answer session. Today's conference call is being recorded. I'd now like to turn the call over to your host, Ms. Laura Chen, Head of Investor Relations for the company. Please go ahead, Laura. Thank you. Hello, everyone. Welcome to the First Quarter 2022 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 investors.gds-services.com. Leading today's call is Mr. William Wei Huang, GDS Founder, Chairman, and CEO, who will provide an overview of our business strategy and performance. Mr. Daniel 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 U.S. SEC. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please note that GDS earnings press release and this conference call includes 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'll now turn the call over to GDS Founder, Chairman, and CEO, William. Please go ahead, William. Thank you. Hello, everyone. This is William. Thank you for joining us on today's call. We are operating in a difficult environment. Everyone is having to deal with unprecedented challenges, including the recent COVID lockdown in China. GDS business is resilient and defensive. We generate recurring revenues underpinned by long-term contract with high-quality customers. Despite the challenges, I'm pleased to report a solid set of the result for the first quarter. We grew revenue by 32% and adjusted EBITDA by 29% year-on-year. We continued to win new business with 18,000 square meters of net additional customer commitments. We strengthened our funding position by raising $620 million from a convertible bond issued to strategic investors and completed a further $530 million of project financing. In the near term, we must deal with the challenges to the best of our ability. However, at the same time, we'll remain focused on strengthening our strategic position for the medium and the longer-term scope. Further developing our customer franchise, adding to our resource pipeline, consolidating the market as opportunities arise, and accelerating our regional expansion. With scale, resource already secured, great customer relationships and a proven track record, we have locked in enormous growth potential, which will materialize in the future. It is just a matter of time. Turning to slide four. Starting from late February, mass city lockdowns happened in many areas of China because of the COVID outbreak. We have a total of 82 data centers in service, out of which 58 have gone through lockdown situations, and over 30 are still locked down today. During these lockdowns, around 880 people were isolated inside our data centers, including 660 GDS employees and 220 from our customers. We needed to keep our data centers in continuous operation while keeping the people inside safe and healthy. We never failed to deliver. All of our data centers are running as usual without interruption, and all the people inside are taken care of. We really appreciate every effort from our data center employees. It is also highly appreciated and recognized by our customers. Turning to Slide five. The first quarter of the year is always a slower season because of the Chinese New Year. On top of this, lockdowns also impacted the move-in rates. Nonetheless, we still achieved over 112,000 square meters of net additional area utilized for the quarter, and our utilization rates increased to 67%. As shown on Slides six and seven, we have always maintained a high commitment rate for our area in service and area under construction. We have a very large backlog, totaling 243,000 square meters, which is equivalent to 73% of our area utilized. It provided us with high visibility to future growth. Our backlog is solid. Our data centers are concentrated in Tier One markets, where supply is increasingly scarce. Our customers need this resource. We will continue to deliver the backlog. As I said, it is just a matter of time. Turning to Slide eight. We have scaled down our capacity delivery this year to align with the current slower environment. In the first quarter of 2022, we brought 4,500 square meters of capacity into service and initiated one new data center under construction. SH18 phase I, which is 68% backed by an anchor customer commitment. Turning to Slides nine and 10. While delivery is slower for some customers, there are still other customers out there with substantial new requirements. In 1Q22, we booked 18,000 square meters of new commitments, including three hyperscale orders. Two came from the existing cloud and the large internet customers. Then the remaining one came from a new financial institution customer. Turning to Slide 11. Continuing the trend which we highlighted last quarter, financial institutions and the large enterprises accounted for around 45% of new bookings in 1Q. We are still confident of achieving our full-year sales target of around 90,000 square meters net add. From what we see in the pipeline, there could be larger contributions from Hong Kong and Southeast Asia than we thought before. Turning to Slide 12. I have been in Singapore for the past few months, along with our COO, Jamie. We have made substantial progress in our regionalization plan. According to the Cushman & Wakefield, Singapore is a top five data center market globally, and it was one of the fastest growing. We know from our wholesale market customers how much latent demand there is for Singapore. Currently, the Singapore government has elected to pursue a moratorium on data center constructions. While it may soon allow some new development, the numbers clearly indicate that excess demand will have to go elsewhere. We're one of the first movers to establish hyperscale green data center projects in close proximity to Singapore. To our understanding, there are no significant legal constraints on the flow of data cross-border between Singapore, Malaysia and Indonesia. Our sites are therefore well-placed to serve both as regional hub and the domestic market. Furthermore, we are the only player to have established projects both in Johor, Malaysia to the north of Singapore, and Batam, Indonesia to the south of Singapore. The first phase of our 54-megawatt projects at Nusajaya Tech Park, Johor, is now under construction. To complement this site, we recently signed a partnership with YTL Power to co-develop 168 megawatts of capacity across an individual design of a facility at the visionary YTL Power Green Data Center Park, Johor, approximately 60 km from Singapore. This data center will be powered by on-site solar generation. We have completed the land purchase in Nongsa Digital Park, Batam, and the construction of the first phase of our 28-megawatt project will start in the next couple of months. According to Cushman & Wakefield, Hong Kong is top 10 data center market globally, which offers excellent network connectivity and availability of all major cloud services. In the first quarter, we signed a build-to-suit lease for HK 3, together with our existing project, HK 1, HK 2, and HK 4. This will give us a continuous supply of high quality data center capacity over the next 5-year. All concentrated in the favored West Kowloon area. This is an extraordinary achievement considering how difficult it is to solve for real estate in Hong Kong. In Macau, we are launching the first ever carrier neutral data center project to meet new international internet and the digitalization requirements. Across Southeast Asia, Hong Kong, and Macau, we now have visibility for over 300 MW of capacity. Our customers are very excited about this unique strategic presence. We expect to announce several anchor orders over the course of this year. Leveraging the strength of our franchise in mainland China, we believe that within a short period of time, we will create significant additional value for our shareholders through regional expansion. Now, I will hand over to Dan for the financial and operating review. Thank you. Thank you. Thank you, William. Starting on Slide 15, where we strip out the contribution from equipment sales and the effect of FX changes. In 1Q22, our service revenue grew by 2.6%. Underlying adjusted gross profit grew by 2.3%, and underlying adjusted EBITDA grew by 2.4% quarter-on-quarter. Our underlying adjusted EBITDA margin was 47.1% compared to 47.2% in the previous quarter. Turning to Slide 16. Service revenue growth is driven mainly by delivery of the committed backlog and closing of acquisitions. Net additional area utilized during 1Q22 was 12,545 square meters. Around 7,500 square meters was in Tier One markets affected by lockdowns, and 5,000 square meters was in BOT projects in unaffected remote areas. During the second quarter, we expect a similar level of net additional area utilized. Monthly service revenue per square meter was RMB 2,296 per square meter per month, down by 2.4% compared to the previous quarter. It is mainly due to dilution from move-in at BOT and edge of town projects. For FY 2022, we still expect MSR to decline by mid-single digits% year-on-year. Turning to Slide 17. Our underlying adjusted gross profit margin was 52.4% for 1Q22 compared to 52.5% in the previous quarter. As a result of higher coal prices and a raising of the ceiling on thermal power tariffs in China, we experienced around 10% increase in unit power cost in 1Q22 as compared to the prior quarter. On a per kilowatt hour basis, we are now paying around 15% more than we were a couple of quarters ago. Thermal power tariffs appear to have stabilized at the current level. We indicated on previous calls, we estimate that elevated power tariffs will have around a 1-1.5 percentage point impact on our profit margin for this year. However, over time, we expect thermal power tariffs to normalize. Turning to Slide 18. Our CapEx for 1Q22 was RMB 4.9 billion, consisting of RMB 2.2 billion for organic CapEx and RMB 2.7 billion for acquisition consideration. As at the end of 1Q22, we had a liability of around RMB 1.6 billion on our balance sheet in respect of deferred and contingent consideration payable for acquisitions which had closed by the end of the first quarter. We have a further RMB 463 million for the acquisition of Shenzhen 11, which we announced during 1Q22 and closed in April. These amounts do not include the cost of buying out partner interests in a few of our projects. Looking at our financing position on Slide 19. At the end of 1Q22, we had RMB 11.3 billion or $1.8 billion of cash on our balance sheet, and our net debt to last quarter annualized adjusted EBITDA ratio was 7.0 times. Our effective interest rate for 1Q22 was 4.7% compared with 5.4% in the previous quarter or 5.5% for the full year of 2021. During 1Q22, we successfully raised $620 million through the issue of convertible senior notes with a 0.25% coupon and seven-year tenor. During 2Q22, we will reduce working capital loans, which is shown here as short-term debt, by around RMB 2.3 billion or $350 million. Turning to Slide 20. As at the end of 1Q, we had total capacity in service and under construction of 660,000 square meters. Against this, we had total area committed by customers of 575,000 square meters. Assuming that we deliver all the backlog and sell out the small amount of remaining inventory, our area utilized or revenue generating capacity would increase by around 90%. The total cost to complete all existing projects is around RMB 11.2 billion or $1.7 billion, which we can finance with existing resources. It is a relatively small amount of CapEx to generate a large amount of growth because we have already made most of the investment. On top of our existing projects, we have secured another 460,000 sq m of pipeline held for future development. It's land and buildings with project approvals and energy quota, predominantly located in Tier One markets, which we believe is a very valuable asset. Turning to Slide 21. Based on our performance in 1Q 2021, 2022, and what we know so far of the current quarter, we are still on track to deliver results within our original guidance range for revenue and adjusted EBITDA. This assumes progressive relaxation of lockdowns over the next one to two months and a moderate pickup in the move-in rate in the second half of the year. We think that this is a reasonable assumption to make at this point in time. Accordingly, we are leaving our original guidance unchanged. We would now like to open the call to questions. Please operator. Thank you. We will now begin the question and answer session. If you'd like to ask a question, please press star one on your telephone and wait for your name to be announced. If you need to cancel your request, please press the pound or hash key. For the benefit of all participants on today's call, please limit yourself to one question. If you have more questions, please re-enter the queue. Our first question comes from Tina Hou at Goldman Sachs. Please go ahead. Hi. Good morning, management, and thank you very much for your time. One question from me is that, in terms of the overseas market, especially in Southeast Asia, in the longer term, say 5-10 years, how big of a potential market do you think it could be versus the domestic China market? What kind of growth rate can we expect from our projects and presence there? Thank you. Yeah. I answer first. I think the Southeast Asia market is mainly driven by the Chinese customer and the U.S. player. What we see the huge potential for the local domestic market, because a lot of the unicorn, the number of the unicorn increased very significantly in this region. That indicates the future market has huge potential. In terms of the population in this area is around 600 million population in this region. I think over the time, I think the market will grow to a similar level of the Chinese market, because let's say at least 50%, right? Around 50% of the Chinese market size. That's my view. The market is still in the early stage. It's more like eight years ago in China, but the potential is high. Yeah. In terms of the growth rate, I think the Southeast Asia market is the fastest growing market in the world, based on some analyst report, right? Now the total amount demand in current stage compared with China is still small, but we should well-positioned in this region. That's our thinking. Yeah. Thank you. William, can I just have a quick follow-up? Oh, yeah. By the way. So, uh- By the way, the Yeah. Yeah, by the way, based on my understanding, the current total market in Southeast Asia is 2,000 megawatts total. Existing market, I mean. Got it. Yeah. Thank you. Yeah. My follow-up would be, is our target customer also including the local and international companies? In addition to the domestic Chinese customers. Also, what kind of IRR project IRR should we expect for the Southeast Asia projects? Yeah. In terms of customer, I think very clear. GDS, our methodology is serve for the all kind of customer in this region. Of course, the first priority is serving our installed-base customer, which they have heavy business implementation in this region already. I think this is our first target. As you said, we are not just a sub Chinese customer. We potentially will also talk to all the international player and also local internet and a car player as well. In terms of the return, Dan, maybe you add on some color. Yeah. I think the returns will be well up to the levels in China, probably towards the top end of the range of what we typically achieve in China right now. You know, we have a favorable dynamic where the Singapore market is very constrained, and there's a very substantial amount of excess demand in the adjacent markets in Malaysia and Indonesia. You know, development costs and the operating costs, including power tariffs, are substantially lower than Singapore. We already have a very good handle on what the development cost is going to be for us. We also have a pretty good idea of what the selling price is gonna be for the initial orders because, of course, we've been in dialogue with potential customers for quite some time. Based on those inputs, we believe that we can offer a very competitive price for this nearshore capacity and still generate returns as I indicated, which are comparable at least on par, if not towards the top end of the range of what we can achieve in China these days. That's very clear. Thank you very much. Our next question comes from Jonathan Atkin at RBC Capital Markets. Please go ahead. Thank you. Two questions. One is, I think the CapEx guidance is unchanged, but you talked about it slowing delivery schedule. What is the kind of offset there, and then on M&A, just kind of your view on the M&A environment and how you view financing options going forward in case you need to write a. Yeah. I'll answer the questions, William. Yeah. Firstly, just to re-remind, we gave CapEx guidance a couple of months ago in a previous quarterly earnings of RMB 12 billion for this year. During this, in the script, I gave a breakdown saying that it would be RMB 8 billion organic, of which RMB 6 billion was in China and RMB 2 billion is in Hong Kong and Southeast Asia. RMB 6 billion in mainland China and RMB 2 billion in Hong Kong and Southeast Asia. The balance of RMB 4 billion would be acquisitions and land bank. The acquisitions and land banking is a bottom-up estimate. That's, you know, deals which have already been done. That number is no change. From out of that $4 billion, we already incurred around $2.7 billion in the first quarter, and we have the balance of payments, acquisition consideration, and land purchase payments, which will mainly be made in the second quarter. For the remaining part, the $8 billion, which is organic in mainland China and regionally, you know, we only incurred just over $2 billion out of the $8 billion in the first quarter. So that part, you could say, is you know, in line with a kind of quarterly run rate. I mean, four quarters at that run rate would add up to the $8 billion. In actual fact, because we've made adjustments to the delivery schedule, which of course involves a lot of coordination with customers as well, it takes some time for that to work its way through to, you know, CapEx paid. First of all, we have to slow down the incurrence of CapEx, and then it gets reflected in the timing and amount of CapEx payments. I think that the CapEx in the second half of the year could be somewhat less than it will be in the first half of the year. On M&A, I think your question, John, you were breaking up, but you were saying how would we finance M&A? You talked about the $1.7 billion that you need to meet your current development pipeline. Yeah. If you wanted to get more aggressive on expansion or- Yeah. to organic growth. Yeah. How do you view the financing environment? Well, if I may, I'll start off by answering that we are fully financed for what we've committed to already. I mean, that's always been our approach. We set aside, you know, cash to capitalize the projects with equity, and we secure project debt as early as we can in the life cycle of each individual project. Then we have some surplus resources over and above that. You know, if there are opportunities that we wish to pursue, which could be acquisitions or it could be other new business opportunities, then, you know, we need to obtain the capital to be able to pursue those. I think that even in the current environment, we have a very good range of options. You know, firstly, you know, we have to make a decision on whether to do something through public capital raising or through private capital raising. Then within public and private, there's a range of options. What I would highlight is that since 2016, when we IPO'd in the U.S., you know, we have done four private placements. If you recall with CyrusOne, with Ping An, with Hillhouse, and then recently with Sequoia and Sovereign Wealth Fund. That was equity, convertible preferred, and convertible bonds. You know, we've also done two joint ventures, one with Sovereign Wealth Fund, one with CITIC Private Equity, the largest private equity firm in China. Just recently, we announced a co-development with YTL Power. These are all in a category of private capital raising or accessing capital privately. We did this, you know, during the six years that we've been a public listed company in the U.S. The business fundamentals, we believe, are still very solid. As we keep emphasizing that we have very high visibility for future growth from our asset base and from our backlog. There is very strong interest from private capital providers in investing in this sector, particularly with market leaders. Bottom line of this is that, you know, if there are opportunities that we wish to pursue, we will undoubtedly be able to access capital on reasonable terms to be able to do what we wish to do. If I could ask one last question then. The mix of internet versus enterprise versus cloud inside of China, you talked a little bit about FSI demand and so forth, but maybe just a little bit of an update on what you talked about in the script as well as last quarter. I don't know if William wants to add, but we talked last time, or we talked actually for quite a few quarters about being positioned for where demand comes from, and the demand profile changes over time. During last year, we saw significantly increased new business from financial institutions, both domestic Chinese and foreign. We had some tremendous wins, including most of the top 10 global banks and lesser banks on Wall Street. In the first quarter, FSI and enterprise business was 45% of new bookings. In the second quarter, it'll probably be a similar level, maybe 40%. Yeah, that demonstrates that you know we positioned our sales effort and our asset base correctly. William, would you like to add something what we're doing on the FSI enterprise side? Yeah. I think to diversify our customer base, always our goal, right? From day one. That's why let us catch up any kind of big growth from the different industry. If we look back last 10 years, we start from the enterprise customer, and then we catch up the internet booming. We go to the cloud takeoff. Now the demand also more balanced from the cloud internet and also the enterprise as well. I think we are very we have very solid customer base. That's allowed us to catch any kind of the demand from the. Because the market always change, so the only thing. The right thing to do is to always build your solid customer base, which we have. Now, since last quarter and this quarter, maybe last quarter and last few quarters, I think the growth we saw from the enterprise and the financial institution. Obviously, the cloud a little bit of slowdown, right? But we still can meet our target. Since last year, we already saw that change. Last year, we start to hire more, increase our sales people to penetrate to the enterprise customer and the financial institution. Now we saw the effort is coming, and we did the right thing last year. Thank you. As a reminder, please limit yourself to one question. If you have more, you may reenter the queue. Our next question comes from Michael Elias at Cowen. Please go ahead. Hi, this is just one from Michael. I just wanted to touch on the organic leasing target. You know, you noted in your prepared remarks that you could see a little bit more coming from Southeast Asia in 2022. Wondering if you could provide a little bit of color around the exact split between Southeast Asia/Hong Kong, along with mainland China. And secondarily, you know, your guidance does imply a step up in leasing to reach that 90,000 square meter target. And what are you hearing from your customers that indicates an acceleration is coming as part of that? What level of visibility do you have in your existing pipeline for that leasing to come on? Thank you. Dan, go ahead. Yeah. I'm sorry. On the first part of the question, we deliberately didn't provide any quantification of a split. You know, we can make our targets a number of different ways, right? It's not really appropriate for us to, you know, put some kind of quota on, you know, orders from a particular type of customer or particular region. You know, we have a couple of projects in Hong Kong, where we haven't yet disclosed anchor customer orders, and we have three major projects around Singapore. Three campuses, two in Johor and one in Batam. That's five projects in total. Of course, you know, we've made these investments in close consultation with our, you know, leading customers. There has been a sales dialogue going on for a long period of time. When we actually disclose a sales order, it depends on there being a firm commitment. It's too hard to say right now how many of those projects will have firm commitments within this financial year. It could be a combination. That's why it wouldn't really be meaningful or appropriate to put a number on it. I think we will have enough anchor orders in Southeast Asia to give investors a very strong feeling about, call it, proof of concept as to what we're doing. I think that's probably the most important thing. Your second question was about visibility on the 90,000. William, would you like to add something? Yeah. I think the number one, 90,000 square meters, we confirmed that we still can achieve, right? We are confident on that. If you think about it's a little bit too early to talk about the acceleration. In general, I think our customer is still prepared for the future. All our customer preparing for the future growth. So we are monitoring our customer business plan very closely. So in order to well-positioned to catch up whatever it's acceleration or still maintain the current demand profile. So I think our goal is long-term, mid-term, short-term, we cannot say whether it will accelerate or not. Still, we are confident for the midterm, long term, right? The demand still will not change. Thank you. Our next question comes from Frank Louthan at Raymond James. Please go ahead. Great. Thank you. I just wanna go back to the guidance. When you came in in the year the guidance was a little bit lower because of supply chain issues. Your customers were having supply chain issues and getting installations. Now, obviously they've been precluded from installing 'cause of the lockdowns. What's the bigger factor now in your mind that if there's something that would keep you from hitting the guidance or have to have you lower it later this year? Are you confident that they do have the equipment and they've gotten through the supply chain issues, they'll be able to do the installations, and now is it just the assumption that the lockdowns will pull through? How should we think about those two factors? The main difference is the lockdowns. I think when we gave guidance in mid-March, it was still relatively early. I don't think anyone had anticipated then that, say, Shanghai would be in lockdown for two months. I don't know how much, you know, specific detail investors have about, you know, the extent of lockdowns. You know, what we saw was the lockdown in Shanghai, which is quite well known, but also the surrounding areas, where the government, I think as a precaution, went into lockdown. That's in Jiangsu Province. Then there's quite a bit of news about some restrictions in Beijing. What I don't think is necessarily so well known is that Langfang, which is in Hebei province, just outside Beijing, that's been in lockdown for extended period of time as well. If you look at the page in our earnings presentation, and it's in the appendix where we show what we call ramping up data centers. Ramping up data centers is where most of the move-in is taking place. You just scan down that table, and you just look at the number of data centers which start with, you know, SH or CS, which is Changshu, or NT, which is Nantong. That's all in the Shanghai area and surrounding area affected by lockdown. Then you look at Beijing and Langfang, LF. You'll see that a very substantial part of our ramping up data centers are in the areas which have been among the worst affected by lockdowns. You know, we may be, you know, coming to the end of that, right? Certainly from government comments. When we looked at our guidance, you know, we assumed, as I said during the prepared remarks, that lockdowns come to an end progressively in the next 1-2 months. Thereafter, we assume that move-in would recover to the level that it was at last year. The last year was not affected by lockdowns, but it was affected by a number of other factors. I think if you look at the quarterly move-in last year, excluding acquisitions, it was in the high teens in terms of thousands of square meters per quarter. We've assumed that that's what will happen in the second half of the year. Then if that happens, we will come out with revenue within our guidance. I think that everyone can probably do their own cross-check mathematically because, you know, we've given a direction saying that our MSR will decline by mid single digits and we have revenue guidance. You know, if you divide one by the other, you can calculate the average area utilized and then construct a kind of quarterly progression for that metric. Thank you. Our next question comes from Gokul Hariharan at JP Morgan. Please go ahead. Yeah, hi. Thanks, William and Dan. First of all, on cloud, one of your bigger cloud customers yesterday mentioned that they're becoming a lot more selective in terms of their cloud investments and looking for quality growth rather than growth at any cost. Could you talk a little bit about the discussions you're having with customers, cloud customers, in terms of how they think about growth going forward? Is there a meaningful step down? And what kind of expectations do you have, let's say, in the next 3, 4 years, in terms of cloud growth? Secondly, on the FSI, financial services customers, is there any different profile in terms of financial service customers, in terms of the kind of demand that they have or the engagement models that you have? If that becomes a significant part, much bigger part of your revenue, does that mean anything for IRR or MSR? Thank you. Yeah. I think the cloud service provider still is a major driver, main driver to drive the data center demand and the growth. I think even they talk about the selective, they still pursue the growth, high growth rate. I think this does not mean they will slow down, let's say, geographically dramatically. I think they still maintain, I think, the 20%-30% growth. Still I think that is the number they pursue at least. This is still big number, right? In my view. On the other hand, things we talk about the demand profile a little bit changed because a lot of the enterprise or internet giants, they start to do the hybrid cloud model. The demand from the cloud a little bit shifted to our end user to direct purchase data center. I think in total, from our perspective, the market total demand still maintain the similar size compared with last year. The demand shift from one industry to another industry, that's the current trend what we saw. In terms of the enterprise customer and the financial institution, I think they are not traditional colo demand, small size. They also represent very big demand, let's say 1,000 racks, 2,000 racks because they change their IT structure from their typical mainframe to their server base. The demand profile for each order is still very big. You can call it's like a semi hyperscale data center demand, right? In terms of price there, you wanna add some color? Yeah, semi hyperscale more or less answers the question about price as well, actually. It's almost entirely, I'm trying to think if it is, it is entirely actually what we would call downtown data centers. You know, unless we had continued, you know, to pursue the strategy of sourcing data centers, you know, within Beijing, within Shanghai, which, you know, which we have done and, I'm sorry, within Shenzhen, which is, you know, very time-consuming and challenging. You know, unless we'd done that, we would not have been able to get this business. It's mostly downtown. There is still a significant differential between the pricing for downtown and edge of town, which I think all customers recognize and accept. I think the IRRs are probably quite similar now between downtown and edge of town. I don't think this FSI business, you know, makes much difference to our average IRRs or, you know, to our operating cost structure and so on. Thank you. Our next question comes from Joel Ying at Nomura. Please go ahead. Thanks management for taking my question. Actually, I actually saw a tightening policy trend for the PUE monitoring and carbon emission quota management in Beijing area. Should we expect any, you know, impact to the company or industry into mid long term? Maybe some, you know, old data center may need renovation, so we might need some time or might need extra capital to solve such issues maybe in our own one. Can management talk about that? Thank you. Pardon? What's your question? Yeah. Yeah. William, there was, I think it was yesterday. I'm trying to think was it municipal government or NDRC announced implementation of this year's monitoring of PUE levels and list out like eight or ten, you know, actions that they would take to try to increase efficiency of small old data centers on it. It's a follow through from, you know, strategy policy, which they've announced several times. Okay. Previously to try to be more assertive in forcing data center operators to become more efficient or even creating a kind of economic push for older data centers to shut down. It doesn't affect us at all, Joel Ying. I mean, not negatively. I mean, maybe positively if there's some demand that shifts from that. In actual fact, I think we've played a very constructive role with the government in helping to establish this exercise, right? Because it requires. Yeah. some, you know, IT and integration to create the platform for the monitoring of PUEs. Yeah. I should add on to Daniel. I think because GDS is, it's the most efficient data center player in the market. I think this is not just government ask us to do from our benefit point, our self-benefit point of view. This improves the power efficiency, always our goal, our day-to-day job. Just as like Dan, what Dan mentioned, it would not affect us. Thank you. Our next question comes from Xinyi Wang at Daiwa Capital Markets. Please go ahead. Hi, management. Could you hear me? Yes. Yes. Congratulations for strong results. It's Xinyi Wang from Daiwa Capital Markets. I will ask question on behalf of John Choi. The first question is regarding our customer diversification, as we just mentioned earlier. As we're trying to diversify our revenue mix towards non-internet sectors, do we have maybe a target for revenue mix from enterprise and financial sectors in the next 1-3 years? Also we have observed your target of MSR of middle single-digit decline in this year. With our observation on new contracts acquired in the first quarter, is any willingness shown by the clients to negotiate the new cloud contract? My second question is regarding our capacity injection plan as we see this year is more back-loaded. Into the second half, what's our observation on the biggest downside risk for our capacity injection in the second half? Because we can see that over 80% of our capacity actually added in the second half. Thank you very much. Okay. Yeah. You know, Xinyi, we have sales targets, of course, but from a strategy and planning point of view, we don't, you know, set quotas for particular kind of customers or particular markets. I mentioned that previously. I mean, I didn't think that would be the right approach. I mean, we're trying to position to address demand, you know, from, you know, what we consider to be a strategic high value customer base. We want to be in the right place at the right time to capture that demand. You know, the comments I make about MSR, you know, reflect some internal assumptions about, particularly about, the pricing for new contracts, which itself is reflecting the location of that capacity, whether it's downtown, edge of town or remote. You know, renewals also goes into that, although I'd say renewals is a pretty small part of the change in MSR. We've commented quite a few times before that overall renewals are close to flat. You know, we do have some older contracts, like 5-to-7-year old contracts, particularly for our first few data centers in each market. It would be like, you know, the data center number one, two, three, four in a particular market, where we have some, what we would call today, hyperscale customers. You know, at that time, you know, their order size was, you know, a few hundred square meters. You know, the total volume of their business with us has increased by, you know, 10 or, you know, more than 10x since then. Those customers typically have downtown capacity and edge of town capacity. When those contracts come up for renewal, and it's only a pretty small part of our total contract base, you know, we've seen some very small decline for that there. Once you factor that into our overall MSR, it doesn't make much. It's not make a material difference. By far the biggest difference is the location mix, you know, the BOT projects, the edge of town projects and so on. For the CapEx number, I mean, you know, if you look back, you know, we added around 80,000-90,000 square meters of capacity and service in the last per annum in the last couple of years. This year we've brought that down to around 60,000. We've done that because of the slower move-in. You know, in order to do that, you know, we have to consult with customers because there's also contractual, you know, delivery commitments that we have to adhere to. If you're asking whether there was a risk from the point of view of being able to execute, I think that's relatively small. I mean, we're not affected by supply chain issues to any great extent in terms of our construction activity. You know, we deal with suppliers in a very strategic way. We place what we call kind of bulk purchase orders. They produce a lot of equipment and hold it in inventory to be able to deliver to us at very short notice. You know, within mainland China, we don't really experience material issues in terms of getting plant and equipment supplied. Maybe it had some small effect on our construction in Hong Kong, just because of the logistics from mainland China to Hong Kong. Yeah, that’s not really what’s driving the 60,000 square meter number. That's more of a business decision to slow down the rate at which we bring capacity into service as a sort of ripple through of the slower move-in. Thank you. Our next question comes from Sara Wang at UBS. Please go ahead. Hi. Thank you for the opportunity to ask a question. I recall during our last earnings call that management shared that the outlook into next year should be better than this year. Given what happened so far, are we still holding the same view towards next year? What are our key assumptions for the outlook into next year? Thank you. Sara, I can't remember exactly what I said. I'm giving you the benefit of the doubt if I said next year will be better. I don't know if I'm specifically meant year, because that's just a you know an arbitrary start and end an end date. I mean, clearly we're going through a cycle, right? Everyone knows that. You know, we will the cycle will bottom at some point and there will be recovery. We have got many quarters of historic data on the ratio of move-in to backlog. You know, although there's quite a wide range, you know, that has held for a long period of time. Currently, we see move-in to backlog ratio has fallen to a level that we had not seen historically. So it's well below historical levels. I don't think that. You know, I don't think anything fundamental has changed or structurally has changed. I think that's cyclical and a reflection of some of the unprecedented, you know, factors which are currently affecting the market. Once those go away and once we see the cycle turn, I don't see why the, you know, historical ratio of move-in to backlog should not return. If that's the case, then we will see, you know, higher growth rates than we're seeing currently. Thank you. That's all the time we have for questions. I'd now like to turn the call back over to the company for closing remarks. Thank you all once again for joining us today. If you have further questions, please feel free to contact UBS Investor Relations through the contact information on our website or The Piacente Group Investor Relations. Bye. Thank you. This concludes this conference call. You may now all disconnect.