Gds Holdings Ltd. · HKEX:9698
Gds — Q2 2019 Earnings Presentation
41 slides from Gds's earnings presentation, Aug 13, 2019
Slide 1: 2Q19 Earnings Call
2Q19 Earnings Call 13 August 2019 NASDAQ: GDS © GDS 2016 0
Slide 2: Disclaimer
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 a
Slide 3: Business Strategy & Performance Highlights
Business Strategy & Performance Highlights William Huang, Chairman & CEO © GDS 2016
Slide 4: 2Q19 Highlights
2Q19 HIGHLIGHTS Sales Momentum • Net additional total area committed of +20,987 sqm • Total area committed increased by 54.3% y/y to 220,818 sqm Capacity Expansion • Total capacity (in service + under construction) grew by 53.1% y/y to 258,814 sqm • Invested Rmb 539.1 mn ($78.5 mn) of capex for capa
Slide 5: Sales Achievement
Sales Achievement Net Additional Area Committed (Sqm) Total Area Committed by Customer Segment FSI & Large Enterprises Cloud Service Providers 81,215 13.5% Large 13.5% Internet 610 41,485 Customers 37,075 +8.5% Y/Y 25,125 73.0% 20,987 2Q 14,933 1Q 16,088 1Q FY15 FY16 FY17 FY18 1H19 © GDS 2016 4
Slide 6: Resource Progress
Resource Progress Capacity Expansion – 2Q19 14,769 (1) 20,628 8,440 78,373 65,736 SH10 GZ6 (2) BJ4 BJ9 (2) BJ8 LF1 LF2 Area Under Construction Projects Initiated Projects In Service Area Under Construction Pending Acquisitions 31/03/19 2Q19 2Q19 30/06/19 Notes: 1. Area in Service adjustments: SH10:
Slide 7: New Data Centers Brought in to Service
New Data Centers Brought in to Service Shanghai 10 Beijing 4 © GDS 2016 6
Slide 8: Beijing 9 Acquisition
Beijing 9 Acquisition Beijing 9 ◼ Located in Daxing district, close to BJ1/2/3 ◼ 8,029 sqm fully committed and stabilized ◼ Majority taken by 3 strategic internet customers ◼ EV of Rmb 693 mn, subject to adjustment ◼ Estimated stabilized EBITDA of Rmb 87 mn ◼ Target closing by Y/E19 © GDS 2016 7
Slide 9: Strategic Partnership with GIC
Strategic Partnership with GIC Build-to-Suit Data Centers at Customer Site in Jiangsu ◼ Initially focus on built-to-suit program for a top customer ◼ Three-way partnership with strong endorsement from customer ◼ Strengthen key customer relationship ◼ Leverage capabilities in construction and operati
Slide 10: Synchronized Sales & Capacity Growth
Synchronized Sales & Capacity Growth Commitments vs. Capacity (Sqm) Commitment & Pre-Commitment Rates Area Committed Commitment Rate Pre-Commitment Rate Area Pre-Committed Area In Service 258,814 Area Under Construction 237,251 225,557 220,818 96.3% 96.1% 95.6% 94.9% 199,831 93.7% 191,060 183,743 16
Slide 11: Financial & Operating Review
Financial & Operating Review Dan Newman, CFO © GDS 2016
Slide 12: 2Q19 P&L Analysis
2Q19 P&L Analysis Quarterly Financial Review Rmb‘000 (unless indicated) 2Q18 1Q19 2Q19 Y/Y Q/Q Service Revenue 626,347 890,946 985,094 57.3% 10.6% Equipment Sales 11,163 895 95 (99.1%) (89.4%) Total Net Revenue 637,510 891,841 985,189 54.5% 10.5% Cost of Revenue (499,989) (679,832) (723,420) 44.7% 6
Slide 13: 2Q19 Underlying Trends
2Q19 Underlying Trends Quarterly Financial Review Rmb‘000 (unless indicated) 2Q18 1Q19 2Q19 Y/Y Q/Q Total Net Revenue 637,510 891,841 985,189 54.5% 10.5% Less: Equipment Sales 11,163 895 95 (99.1%) (89.4%) Service Revenue 626,347 890,946 985,094 57.3% 10.6% Adjusted NOI 290,817 457,332 521,923 79.5%
Slide 14: Revenue & Area Utilized
Revenue & Area Utilized Revenue (Rmb Mn) Area Utilized (Sqm) & MSR (Rmb / Sqm / Month) 127,107 Service Revenue Equipment Sales 118,050 108,326 100,679 86,665 0.1 0.9 0.5 10.2 11.2 2Q18 3Q18 4Q18 1Q19 2Q19 985.1 890.9 829.1 Average MSR 752.6 626.3 2,719 2,679 2,678 2,644 2,624 2Q18 3Q18 4Q18 1Q19 2Q1
Slide 15: Underlying Adjusted NOI & EBITDA
Underlying Adjusted NOI & EBITDA Underlying Adjusted NOI (Rmb Mn) & Margin Underlying Adjusted EBITDA (Rmb Mn) & Margin 46.2% 48.5% 49.8% 51.3% 53.0% 35.3% 38.0% 40.0% 42.5% 44.3% 521.9 457.3 435.9 412.8 378.4 365.2 331.4 289.5 286.1 221.1 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 © GDS 2016
Slide 16: Stabilized vs. Ramping-Up Data Centers
Stabilized vs. Ramping-Up Data Centers Breakdown of Area In Service as at 2Q19 Stabilized Data Centers Ramping-Up Data Centers Area In Service Net Floor Area Commitment Utilization Net Floor Area Commitment Utilization (Sqm) Rate Rate (Sqm) Rate Rate KS1 6,546 98.2% 93.7% SH4 8,415 97.0% 77.3% SH1 6
Slide 17: Cost Breakdown & Operating Leverage
Cost Breakdown & Operating Leverage 2Q19 Cost Breakdown & Operating Leverage (Rmb Mn) % of Service Revenue Service Revenue 985.1 2Q18 3Q18 4Q18 1Q19 2Q19 Utility Cost 229.4 24.1% 24.8% 23.1% 22.8% 23.3% Rent, Labour & Other (1) 233.8 29.7% 26.7% 27.1% 25.9% 23.7% Underlying Adjusted NOI 521.9 46.2%
Slide 18: Capex & On-Going Investment
Capex & On-Going Investment Capex Paid (Rmb Mn) (1) Construction Program 2Q19 1,692.7 Net Floor Area Pre-Commitment RFS Date (Sqm) Rate (%) SZ5 Phase 3 2H19 6,821 80.1% BJ6 2H19 5,167 0% SH7 2H19 7,071 13.5% 1,157.5 SH12 2H20 3,653 100% 1,076.1 BJ7 2H19 11,116 100% 834.4 KS2 1H20 6,120 100% KS3 2H20
Slide 19: Financing Obligations & Liquidity
Financing Obligations & Liquidity Debt & Cash Outstanding Loan Maturity Schedule as at 30/06/19 (Rmb Mn) 30/06/18 31/03/19 30/06/19 Working Capital Loan Project Loan Convertible Bond / LQA Adjusted Rmb Mn Rmb Mn Rmb Mn EBITDA 7,442.7 7,611.4 4.4 3,356 Total Loan 5,990.2 Convertible Bond 1,925.3 1,96
Slide 20: Strategic Partnership with GIC
Strategic Partnership with GIC Construction Phase Operating Phase GDS GIC GDS 100% 90% 10% Management & Operating Services Asset & Operating Asset & Operating Companies Companies Lease & Service Agreements Lease & Service Agreements Customer Customer Note: Simplified corporate and agreement structur
Slide 21: Contract Backlog Build-Up
Contract Backlog Build-Up Backlog Build-Up 2Q19 (Sqm) Backlog Breakdown Net Additional Area Committed Net Additional Area Utilized By Customer (1) By Data Center Status Other Customers 20,987 9,057 4.0% 93,711 Customer 1 81,781 20.8% Customer 4-12 26.7% Under In Service Construction 44.7% 55.3% Cust
Slide 22: Updated Business Outlook
Updated Business Outlook FY19 Revised Guidance FY19 FY19 Revised vs. Original Rmb Mn FY18 Actual Implied Y/Y Implied Y/Y Original Guidance Revised Guidance Guidance Total Revenue 2,792.1 3,900 – 4,100 39.7% – 46.8% 4,000 – 4,100 43.3% – 46.8% +2.6% – +0% Adjusted EBITDA 1,046.5 1,640 – 1,700 56.7% –
Slide 23: Questions & Answers
Questions & Answers www.gds-services.com ir@gds-services.com © GDS 2016
Slide 24: Appendix
Appendix © GDS 2016
Slide 25: Our Data Center Portfolio – Beijing & Shanghai
Our Data Center Portfolio – Beijing & Shanghai Self-Developed Data Centers in Tier 1 Markets Beijing Shanghai KM SH9, 10 KM 2 BJ5 SH1, 2, 3, 4 2 BJ6 13 SH8, SH12 5 54 61 58 BJ4 SH5 43 30 SH6, 7 & SH11 BJ7, 8 50 KS1, 2, 3 BJ1, 2, 3, 9 LF1, 2 © GDS 2016 24
Slide 26: Our Data Center Portfolio – Shenzhen, Guangzhou & Chengdu
Our Data Center Portfolio – Shenzhen, Guangzhou & Chengdu Self-Developed Data Centers in Tier 1 Markets Chengdu Guangzhou Shenzhen GZ1, 2, 3, 6 GZ4 SZ5 SZ1, 2, 3 SZ6 CD1, 2 25 SZ4 65 KM 38 45 © GDS 2016 25
Slide 27: Key Operating KPIs
Key Operating KPIs Last 8 Quarters As At: 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Area In Service (Sqm) 77,832 101,258 103,475 127,984 147,342 160,356 171,515 180,441 Area Under Construction (Sqm) 37,478 24,505 40,357 41,023 43,718 65,201 65,736 78,373 Total Capacity (Sqm) 115,310 125,763 143,832 16
Slide 28: Data Center Summary By Market
Data Center Summary By Market As at 30/06/19 (Sqm, Unless Indicated) Pre- Area in Area Under Area Area Pre- Total Area Commitment Utilization Total Capacity Area Utilized Commitment Service Construction Committed Committed Committed Rate Rate Market Rate (1) (2) (1 + 2) (3) (4) (3 + 4) (5) (3 / 1) (
Slide 29: Self-Developed Data Centers In Service – Shanghai / Kunshan
Self-Developed Data Centers In Service – Shanghai / Kunshan As at 30/06/19 (Sqm, Unless Indicated) Data Center Ready For Service Type Tenure Area in Service Area Committed Commitment Rate Area Utilized Utilization Rate KS1 2H10 Purpose-Built Owned 6,546 6,425 98.2% 6,132 93.7% SH1 2H11 Purpose-Built
Slide 30: Self-Developed Data Centers In Service – Shenzhen / Guangzhou
Self-Developed Data Centers In Service – Shenzhen / Guangzhou As at 30/06/19 (Sqm, Unless Indicated) Data Center Ready For Service Type Tenure Area in Service Area Committed Commitment Rate Area Utilized Utilization Rate SZ1 2H14 Converted Leased 4,286 4,218 98.4% 4,214 98.3% SZ2 1H16 Converted Leas
Slide 31: Self-Developed Data Centers In Service – Beijing, Chengdu & Hebei
Self-Developed Data Centers In Service – Beijing, Chengdu & Hebei As at 30/06/19 (Sqm, Unless Indicated) Ready For Commitment Market Data Center Type Tenure Area in Service Area Committed Area Utilized Utilization Rate Service Rate BJ1 2H15 Converted Leased 2,435 2,250 92.4% 2,206 90.6% BJ2 2H17 Con
Slide 32: Self-Developed Data Centers Under Construction
Self-Developed Data Centers Under Construction As at 30/06/19 (Sqm, Unless Indicated) Area Under Pre-Commitment Market Data Center Ready For Service Type Tenure Area Pre-Committed Construction Rate SH7 2H19 Purpose-Built Leased 7,071 954 13.5% SH12 2H20 Purpose-Built Leased 3,653 3,653 100% Shanghai
Slide 33: Top Customers
Top 5 Customers In Terms of Total Area Committed End User % of Total Area Committed % of 2Q19 Service Revenue Number of Data Centers (1) Internet / Cloud Service Provider 27.9% 28.8% 18 Internet / Cloud Service Provider 24.0% 19.3% 13 Cloud Service Provider 10.5% 0.6% 5 Internet 8.6% 11.5% 6 Cloud S
Slide 34: Principal Shareholders
Principal Shareholders As at 30/06/19 Pro Forma Ordinary Shares (1) Equivalent ADS Equivalent ADS % of Total ADS Change (3) William Huang (2) 68,628,744 8,578,593 8,578,593 5.9% Directors & Officers 13,976,887 1,747,110 1,747,110 1.2% STT 405,922,804 50,740,350 50,740,350 35.1% Ping An 63,369,856 7,
Slide 35: Working Capital Management
Working Capital Management Accounts Receivable Turnover Days (# of Days) Days Payable Outstanding (DPO) (1) 71 72 69 64 63 # of Days 2Q18 3Q18 4Q18 1Q19 2Q19 DPO – Opex 74 80 80 82 91 DPO – Capex 114 196 75 162 243 Total DPO 105 153 76 136 178 Total DPO (Excl. Acquisitions) 85 122 64 121 163 2Q18 3Q
Slide 36: Historical Financial Results
Historical Financial Results Condensed Consolidated Statements of Operations Amounts in thousands Three Months Ended Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 RMB RMB RMB RMB RMB USD Net Revenue Service revenue 626,347 752,620 829,050 890,946 985,094 143,495 Equipment sales 11
Slide 37: Historical Financial Results
Historical Financial Results Condensed Consolidated Balance Sheets (1) Amounts in thousands. As of Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 RMB RMB RMB RMB RMB USD Cash 4,450,958 3,491,694 2,161,622 6,001,214 5,730,578 834,753 Accounts receivable, net of allowance for doubtfu
Slide 38: Historical Financial Results
Historical Financial Results Condensed Consolidated Statements of Cash Flows Amounts in thousands Three Months Ended Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 RMB RMB RMB RMB RMB USD Net cash (used in) provided by operating activities (18,308) 37,460 111,367 (59,806) 115,910 1
Slide 39: Reconciliation from Net Loss to Adjusted NOI
Reconciliation from Net Loss to Adjusted NOI Adjusted NOI Amounts in thousands Three Months Ended Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 RMB RMB RMB RMB RMB USD Net loss (102,077) (119,354) (122,911) (136,620) (93,159) (13,570) Net interest expenses 137,274 182,152 202,493
Slide 40: Reconciliation from Net Loss to Adjusted EBITDA
Reconciliation from Net Loss to Adjusted EBITDA Adjusted EBITDA Amounts in thousands Three Months Ended Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 RMB RMB RMB RMB RMB USD Net loss (102,077) (119,354) (122,911) (136,620) (93,159) (13,570) Net interest expenses 137,274 182,152 20
Slide 41: Definition of KPIs
Definition of KPIs Area In Service Net floor area of data centers in service for which one or more modules have been equipped and fitted out ready for utilizati on by customers Area Under Construction Net floor area of data centers which are under construction and not yet ready for service Area Comm