Gds Holdings Ltd. · HKEX:9698

Gds — FY2020 Earnings Presentation

54 slides from Gds's earnings presentation, Mar 11, 2021

  1. Slide 1: 4Q20 & FY20 Earnings Call

    4Q20 & FY20 Earnings Call 11 March 2021 NASDAQ: GDS HKEX: 9698 © GDS 2016 0

  2. 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

  3. Slide 3: Business Strategy & Performance Highlights

    Business Strategy & Performance Highlights William Huang, Chairman & CEO © GDS 2016

  4. Slide 4: Expanding Market Opportunity

    Expanding Market Opportunity Key Drivers of Data Center Demand 2019 2024E 19-24E CAGR A.I. Applications 262.3 35.7% (RMB Bn) 57.0 IoT Devices 18.4 32.1% (Bn) 4.6 Cloud Services 645.2 34.1% (RMB Bn) 149.0 5G Mobile Phones 290.4 84.0% (Mn) 13.8 Data Centers (1) 74.9 31.8% (RMB Bn) 18.8 Source: Company

  5. Slide 5: FY20 Highlights

    FY20 HIGHLIGHTS (1)(2) Sales Momentum • Net additional total area committed of +136,676 sqm, or +271 MW • Total area committed increased by 51.6% y/y to 401,554 sqm Capacity Expansion • Total capacity increased by 139,545 sqm to 455,342 sqm, +44.2% y/y • Total development pipeline at YE20 of nearly

  6. Slide 6: 4Q20 Highlights

    4Q20 HIGHLIGHTS (1) Sales Momentum • Net additional total area committed of +30,097 sqm, or +58.9 MW • Total area committed increased by 51.6% y/y to 401,554 sqm Capacity Expansion • Total capacity increased by 25,742 sqm to 455,342 sqm, +44.2% y/y • Land acquisitions adding +126,000 sqm (net) to th

  7. Slide 7: Sales Achievement

    Sales Achievement Net Additional Total Area Committed (Sqm) – By Quarter Net Additional Total Area Committed (Sqm) – By Year Organic Acquisition (1) Organic Acquisition (1) 136,676 46,471 (2) 27,911 37,996 19,927 30,097 81,215 81,135 7,984 11,862 9,045 22,443 22,112 9,045 41,486 108,765 26,544 25,12

  8. Slide 8: Hyperscale Orders

    Hyperscale Orders Largest Individual Orders Obtained In 4Q20 Huizhou 1 – Under Construction Area IT Power Contract Data Center Committed Committed Commences (Sqm) (MW) SH19 7,984 14.0 4Q20 BJ7 3,509 7.7 4Q20 LF5 2,893 6.4 2H22 HZ1 12,533 26.3 2H21 © GDS 2016 7

  9. Slide 9: Customer Franchise

    Customer Franchise Customer Segment Breakdown By Total Area Committed Leading CSP / Large Internet Customer Additions FSI & Large Enterprises 2011 – 2016 9.2% (1) 2017 Large Internet 14.1% 703 2018 Customers 76.7% +12.7% Y/Y (2) 2019 (3) 2020 Cloud Service Providers Notes: 1. Azure China is operated

  10. Slide 10: Growing Construction Pipeline – Area Under Construction

    Growing Construction Pipeline – Area Under Construction (U/C) Area U/C (Sqm) & Pre-Commitment Rate – By Quarter Area U/C (Sqm) & Pre-Commitment Rate – By Year 73.9% 73.9% 69.1% (1) 63.6% 62.3% 68.4% 48.4% 63.6% 149,983 (1) 39.0% 27.1% 137,070 133,208 137,070 110,706 89,834 89,834 65,201 25,055 24,50

  11. Slide 11: Growing Operational Capacity – Area In Service

    Growing Operational Capacity – Area In Service Area In Service & Commitment Rate – By Quarter Area In Service & Commitment Rate – By Year 94.3% 94.9% 91.9% 94.3% 91.9% 91.9% 94.1% 95.8% 89.0% 91.8% 318,272 318,272 279,618 266,260 229,986 225,963 225,963 160,356 101,258 60,982 4Q19 1Q20 2Q20 3Q20 4Q2

  12. Slide 12: Resource Progress

    Resource Progress Capacity Expansion 4Q20 & FY20 (1) 55,509 (3) 92,085 (2) BJ10/11/12 17,359 38,267 (3) (4) 149,983 SH19 Phase 1 137,070 10 New DCs SH19 Phase 2 HZ1 SH19 Phase 1 89,834 SH13 SH14 Phase 1 SH16 11 New DCs (2) BJ7 LF8 Area Under Construction Projects Initiated Projects In Service Area U

  13. Slide 13: Resource Pipeline – Area Held For Future Development

    Resource Pipeline – Area Held For Future Development Area Held For Future Development – By Year (Sqm) Area Held For Future Development Breakdown (Y/E20) Market Data center Tenure Area In Sqm Total SH17 Remaining Phases Own 13,468 SH Pujiang Site Remaining Phases Own 49,562 479,875 Greater Shanghai K

  14. Slide 14: New Tier 1 Market – Chongqing

    New Tier 1 Market – Chongqing First GDS Data Center In Chongqing Under Construction n Land acquired from local government in early 2020 n Total of NFA of ~25,000 sqm across two data centers on the site n First data center, CQ1, under construction in 1Q21, with a NFA of ~8,640 sqm n Anchor order secu

  15. Slide 15: M&A Update

    M&A Update SH19 BJ15 (Previously BJ14) SZ8 – New Acquisition TJ1 – New Acquisition n Closed in 4Q20 n Equity purchase agreement signed in n ~2,500 sqm of NFA n Equity purchase agreement signed 1Q21 in 1Q21 for 65% equity interest n Phase 1 of 7,984 sqm in service and n Equity purchase agreement sign

  16. Slide 16: Regionalization

    Regionalization Driven By Home Market Customer Demand SINGAPORE MALAYSIA n Less resource constrained than Singapore 2020 IT Capacity: 433 MW (1) n Greater availability of renewable energy 2024 Colocation Revenue: $2.1 bn (1) n Global Tier 1 market INDONESIA n Well established regional hub n Signific

  17. Slide 17: Financial & Operating Review

    Financial & Operating Review Dan Newman, CFO © GDS 2016

  18. Slide 18: 4Q20 & FY20 P&L Analysis

    4Q20 & FY20 P&L Analysis Quarterly Financial Review Rmb‘000 (unless indicated) 4Q19 3Q20 4Q20 Y/Y Q/Q FY19 FY20 Y/Y Service Revenue 1,159,610 1,522,353 1,627,451 40.3% 6.9% 4,094,571 5,716,868 39.6% Equipment Sales 19,577 2,396 4,149 (78.8%) 73.2% 27,834 22,104 (20.6%) Total Net Revenue 1,179,187 1,

  19. Slide 19: 4Q20 & FY20 Underlying Trends

    4Q20 & FY20 Underlying Trends Quarterly Financial Review Rmb‘000 (unless indicated) 4Q19 3Q20 4Q20 Y/Y Q/Q FY19 FY20 Y/Y Total Net Revenue 1,179,187 1,524,749 1,631,600 38.4% 7.0% 4,122,405 5,738,972 39.2% Less: Equipment Sales 19,577 2,396 4,149 (78.8%) 73.2% 27,834 22,104 (20.6%) Service Revenue 1

  20. Slide 20: Revenue & Area Utilized By Quarter

    Revenue & Area Utilized By Quarter Total Revenue (Rmb Mn) Net Additional Area Utilized (Sqm) (1) & MSR Service Revenue Equipment Sales Organic Acquisition 29,324 1,631.6 1,524.7 18,202 14,988 16,589 16,461 4.1 1,342.2 7,819 7,816 248 2.4 1,240.4 16,589 16,213 1,179.2 10,383 14,336 7.7 7,816 19.6 7.8

  21. Slide 21: Revenue & Area Utilized By Year

    Revenue & Area Utilized By Year Total Revenue (Rmb Mn) Net Additional Area Utilized (Sqm) & MSR (1)(2) Service Revenue Equipment Sales Org anic Acquisition 70,190 5,739.0 15,236 46,614 47,696 22.1 5,302 7,819 4,122.4 24,631 54,954 14,717 6,131 41,312 39,877 27.8 3,777 18,500 10,940 2,792.1 5,716.9 F

  22. Slide 22: Underlying Adjusted GP & Margin and GP Yield

    Underlying Adjusted GP & Margin and GP Yield Underlying Adjusted GP (Rmb Mn) & Margin – By Quarter Underlying Adjusted GP (Rmb Mn) & Margin – By Year 52.8% 53.9% 54.0% 53.4% 53.7% 46.7% 47.7% 47.7% 52.8% 53.7% 3,070.4 873.3 2,161.9 812.2 1,317.2 720.5 759.7 664.3 468.4 612.5 FY16 FY17 FY18 FY19 FY20

  23. Slide 23: Underlying Adjusted EBITDA & Margin

    Underlying Adjusted EBITDA & Margin Underlying Adjusted EBITDA & Margin – By Quarter Underlying Adjusted EBITDA & Margin – By Year 45.6% 47.4% 47.8% 47.1% 46.8% 24.5% 32.6% 37.0% 44.7% 47.2% 2,700.3 761.4 717.2 637.5 584.1 1,828.4 528.5 1,020.9 519.6 245.5 4Q19 1Q20 2Q20 3Q20 4Q20 FY16 FY17 FY18 FY1

  24. Slide 24: Construction Program

    Construction Program Self-Developed Data Centers Organic Capacity Delivery Schedule (Sqm) Area Under Pre-Commitment RFS Date Tenure Type Construction (Sqm) Rate (%) BJ8 1Q21 Lease Convert 10,911 100% 43,007 42,734 HL1 1Q21 Lease B-O-T 3,440 100% SH12 2Q21 Lease Brownfield 3,653 100% SH17 Phase 1 2Q2

  25. Slide 25: Capital Expenditure

    Capital Expenditure Capex Paid – By Quarter (Rmb Mn) (1) Capex Paid – By Year (Rmb Mn) (1) Organic Capex Rmb Mn 4Q19 1Q20 2Q20 3Q20 4Q20 Land / Property Purchase 9,378.0 Acquisition 538.3 B-O-T Data Centers 1,357.5 Organic Capex 1,222.8 1,048.7 936.8 1,975.4 2,000.5 1,520.8 Land / Property 770.2 1,3

  26. Slide 26: Financing Obligations & Liquidity

    Financing Obligations & Liquidity Debt & Cash Outstanding Loan Maturity Schedule As At 31/12/20 (Rmb Mn) 31/12/19 30/09/20 31/12/20 Working Capital / LQA Adjusted Rmb Mn Rmb Mn Rmb Mn Project Loan EBITDA 9,166.2 11,930.3 12,720.1 4.2 Convertible Bond 3,378 Total Loan C onvertible Bond 2,049.6 2,009.

  27. Slide 27: Debt Financing Activities

    Debt Financing Activities Comparison of Interest Rate Margin & Tenor Original Facility Facility Refinanced In FY20 Interest Rate Tenor Amount Interest Rate Tenor Amount Bank Bank Margin (Year) (Rmb Mn) Margin (Year) (Rmb Mn) PRC Bank A +270 Basis Points 7 1,010 PRC Bank D +15 Basis Points 10 1,200 P

  28. Slide 28: Backlog & Move-In Analysis

    Backlog & Move-In Analysis Backlog Build-Up For 4Q20 & FY20 (Sqm) Backlog By Data Center Status (Sqm) Net Additional Total Area Committed Backlog for Area In Service Net Additional Area Utilized Backlog for Area Under Construction 175,341 161,705 106,578 53,729 30,097 16,461 140,298 175,341 123,152

  29. Slide 29: Business Outlook

    Business Outlook FY21 Annual Guidance Rmb Mn FY20 Actual FY21 Guidance Implied Y/Y Total Revenue 5,739.0 7,700 – 8,000 34.2% – 39.4% Adjusted EBITDA 2,680.6 3,660 – 3,800 36.5% – 41.8% Capex (1) 9,378.0 12,000 ~28% Note: 1. Refers to net cash used in investing activities. © GDS 2016 28

  30. Slide 30: Questions & Answers

    Questions & Answers www.gds-services.com ir@gds-services.com © GDS 2016

  31. Slide 31: Appendix

    Appendix © GDS 2016

  32. Slide 32: Our Data Center Portfolio – Beijing & Shanghai Markets

    Our Data Center Portfolio – Beijing & Shanghai Markets Self-Developed Data Centers In Service & Under Construction Greater Beijing – 27 DCs (1) Greater Shanghai – 23 DCs CS1 BJ5/10/11/12 SH1/2/3/4/6/7/8/9/ 88 10/11/12/14/15/19 BJ4/6 54 13 50 33 27 SH5 61 BJ1/2/3/9 SH16/17 30 50 SH13 BJ7/8 LF1/2/3/4/

  33. Slide 33: Our Data Center Portfolio – Greater Bay Area & Chengdu / Chongqing

    Our Data Center Portfolio – Greater Bay Area & Chengdu / Chongqing Self-Developed Data Centers In Service & Under Construction In Tier 1 Markets (1) Great Bay Area – 13 DCs Chengdu / Chongqing – 2 DCs HZ1 SZ4 GZ1/2/3/6 SZ5 65 57 45 38 GZ4 SZ6 25 HK1 SZ1/2/3 CD1/2 Note: 1. Distance in km. © GDS 2016

  34. Slide 34: Key Operating KPIs

    Key Operating KPIs Last 8 Quarters As At 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 (1) 4Q20 Area In Service (Sqm) 171,515 180,441 198,097 225,963 229,986 266,260 279,618 318,272 Area Under Construction (Sqm) 65,736 78,373 84,765 89,834 110,706 133,208 149,983 137,070 Total Capacity (Sqm) 237,251 258,814 28

  35. Slide 35: Data Center Summary By Market

    Data Center Summary By Market As At 31/12/20 (Sqm, Unless Indicated) (1) Area Held for Pre- Area In Area Under Total Area Area Pre- Total Area Area Commitment Utilization Future Commitment # of Self- Service Construction Capacity Committed Committed Committed Utilized Rate Rate Development Rate Mark

  36. Slide 36: Self-Developed Data Centers In Service – Greater Beijing

    Self-Developed Data Centers In Service – Greater Beijing As At 31/12/20 (Sqm, Unless Indicated) Data Center Ready For Service Type Tenure Area In Service Area Committed Commitment Rate Area Utilized Utilization Rate BJ1 2H15 Convert Lease 2,435 2,400 98.6% 2,353 96.6% BJ2 2H17 Convert Lease 5,819 5,

  37. Slide 37: Self-Developed Data Centers In Service – Greater Shanghai

    Self-Developed Data Centers In Service – Greater Shanghai As At 31/12/20 (Sqm, Unless Indicated) Data Center Ready For Service Type Tenure Area In Service Area Committed Commitment Rate Area Utilized Utilization Rate SH1 2H11 Purpose-Built Lease 6,432 6,298 97.9% 6,081 94.5% SH2 2H15 Purpose-Built L

  38. Slide 38: Self-Developed Data Centers In Service – Greater Bay Area

    Self-Developed Data Centers In Service – Greater Bay Area As At 31/12/20 (Sqm, Unless Indicated) Data Center Ready For Service Type Tenure Area In Service Area Committed Commitment Rate Area Utilized Utilization Rate SZ1 2H14 Convert Lease 4,286 4,272 99.7% 4,252 99.2% SZ2 1H16 Convert Lease 4,308 4

  39. Slide 39: Self-Developed Data Center In Service – Chengdu / Chongqing

    Self-Developed Data Center In Service – Chengdu / Chongqing As At 31/12/20 (Sqm, Unless Indicated) Data Center Ready For Service Type Tenure Area In Service Area Committed Commitment Rate Area Utilized Utilization Rate CD1 1H17 Purpose-Built Own 6,262 6,006 95.9% 4,712 75.2% CD2 Phase 1 2H18 Purpose

  40. Slide 40: Self-Developed Data Centers Under Construction

    Self-Developed Data Centers Under Construction As At 31/12/20 (Sqm, Unless Indicated) Area Under Area Pre- Pre-Commitment Market Data Center Ready For Service Type Tenure Construction Committed Rate BJ8 1H21 Convert Lease 10,911 10,911 100% LF3 1H21 Purpose-Built Own 11,664 11,664 100% LF4 Phase 1 2

  41. Slide 41: Self-Developed Data Center Capacity – Lease Vs Own

    Self-Developed Data Center Capacity – Lease Vs Own As At 31/12/20 (1) Area Under Held For Future Total Developed & Sqm Area In Service Construction Development Developable Capacity Lease 263,155 67,365 45,228 375,748 Own 46,973 69,705 434,647 551,325 Total 310,128 137,070 479,875 927,073 % Lease 84.

  42. Slide 42: Stabilized vs. Ramping-Up Data Centers

    Stabilized vs. Ramping-Up Data Centers Breakdown Of Area In Service As At 4Q20 Stabilized Data Centers Ramping-Up Data Centers Area In Service (Sqm) Commitment Rate Utilization Rate Area In Service Area In Service (Sqm) Commitment Rate Utilization Rate KS1 6,546 98.6% 94.4% SH6 7,620 94.5% 54.5% KS2

  43. Slide 43: Build-Operate-Transfer Data Centers for Customer 1

    Build-Operate-Transfer (“B-O-T”) Data Centers for Customer 1 Note: These projects are still under GIC arrangement and are not included in our KPIs. As At 4Q20 Number of Data Centers Total Planned Net Floor Area (Sqm) Projects Under Construction 5 19,441 Projects In Service 4 15,581 © GDS 2016 42

  44. Slide 44: Top Customers

    Top 5 Customers By Total Area Committed (1)(2) By Revenue (1) % Of Total Area Number of Data End User End User % Of 4Q20 Total Net Revenue Committed As At 4Q20 Centers (3) Customer 1 35.8% 29 Customer 1 26.0% Customer 2 22.3% 19 Customer 2 22.4% Customer 3 5.8% 5 Customer 3 9.0% Customer 4 5.7% 10 C

  45. Slide 45: Forthcoming Contract Renewals

    Forthcoming Contract Renewals Contract Renewal Schedule (1) Period Sqm % of Total Area Committed FY21 29,764 7.4% FY22 17,660 4.4% FY23 38,228 9.5% FY24 36,056 9.0% Thereafter 279,846 69.7% Total Area Committed As At 31/12/20 401,554 100% Note: 1. Include two B-O-T Data Centers for Customer 2 and Cu

  46. Slide 46: Principal Shareholders

    Principal Shareholders As At 31/12/20 Pro Forma Ordinary Shares (1) Equivalent ADS Equivalent ADS % of Total ADS Change (3) William Huang (2) 80,446,240 10,055,780 10,055,780 5.4% Directors & Officers 17,870,679 2,233,834 2,233,834 1.2% STT GDC 477,288,484 59,661,060 59,661,060 32.1% Ping An 0 0 +4,

  47. Slide 47: Working Capital Management

    Working Capital Management Accounts Receivable Turnover Days (# of Days) Days Payable Outstanding (DPO) (1) # of Days 4Q19 1Q20 2Q20 3Q20 4Q20 FY19 FY20 88 88 84 77 74 70 DPO – Opex 99 96 114 107 88 82 82 62 DPO – Capex 66 94 106 136 139 138 128 Total DPO 72 95 108 129 127 121 117 Total DPO (Excl. 6

  48. Slide 48: Historical Financial Results – Statements of Operations

    Historical Financial Results Condensed Consolidated Statements of Operations Amounts in thousands Three Months Ended Year Ended Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Sep 30, 2020 Dec 31, 2020 Dec 31, 2019 Dec 31, 2020 RMB RMB RMB RMB RMB USD RMB RMB USD Net Revenue Service revenue 1,159,610 1,232,5

  49. Slide 49: Historical Financial Results – Balance Sheets

    Historical Financial Results Condensed Consolidated Balance Sheets Amounts in thousands. As of Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Sep 30, 2020 Dec 31, 2020 RMB RMB RMB RMB RMB USD Cash 5,810,938 3,611,121 7,742,082 6,004,537 16,259,457 2,491,871 Accounts receivable, net of allowance for doubtful

  50. Slide 50: Historical Financial Results – Cash Flows

    Historical Financial Results Condensed Consolidated Statements of Cash Flows Amounts in thousands Three Months Ended Year Ended Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Sep 30, 2020 Dec 31, 2020 Dec 31, 2019 Dec 31, 2020 RMB RMB RMB RMB RMB USD RMB RMB USD Net cash provided by (used in) operating acti

  51. Slide 51: Reconciliation from Gross Profit to Adjusted GP

    Reconciliation from Gross Profit to Adjusted GP Adjusted GP Amounts in thousands Three Months Ended Year Ended Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Sep 30, 2020 Dec 31, 2020 Dec 31, 2019 Dec 31, 2020 RMB RMB RMB RMB RMB USD RMB RMB USD Gross profit 294,723 350,338 361,102 408,965 430,046 65,908 1,

  52. Slide 52: Reconciliation from Net Loss to Adjusted EBITDA

    Reconciliation from Net Loss to Adjusted EBITDA Adjusted EBITDA Amounts in thousands Three Months Ended Year Ended Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Sep 30, 2020 Dec 31, 2020 Dec 31, 2019 Dec 31, 2020 RMB RMB RMB RMB RMB USD RMB RMB USD Net loss (103,662) (92,031) (101,047) (204,635) (271,501)

  53. Slide 53: Definition of KPIs

    Definition of KPIs Area In Service Entire net floor area of data centers (or phases of data centers) which are ready for service Entire net floor area of data centers (or phases of data centers) which are actively under construction and have not yet reached the stage Area Under Construction of being

  54. Slide 54: Analyst Coverage

    Analyst Coverage Broker Analyst Contact BofA Paul Dewberry paul.dewberry@baml.com BOCI Michael Meng michael.meng@bocigroup.com Berenberg Nate Crossett nate.crosssett@berenberg-us.com CICC Kai Qian kai.qian@cicc.cn Citi Arthur Lai arthur.y.lai@citi.com Citic Securities Yingbo Xu xuyb@citics.com CMB I

GDS Holdings — FY2020 Earnings Presentation on 6ix