Operator: And your next question comes from the line of Edison Lee from Jefferies.
Edison Lee: My question is mainly surrounding the power costs and also gross margin, because I saw that in 3Q, your gross margin actually is down Q-on-Q and year-on-year, while your EBITDA margin is actually up Q-on-Q and year-on-year. So I would like to know maybe you can explain again the power cost calculations for your Hebei projects and what is the proportion of your projects that include power cost versus those that did not include power cost? And also part of that based on your midpoint of your new guidance for the full year, that implies that your fourth quarter EBITDA margin will drop on a Q-on-Q basis. So I wonder whether that’s because your guidance is conservative or whether there are any other reasons?
Nick Wang: I think both Zoe and I can answer this question in multiple ways, but I’d rather let Zoe to state some facts for our Q3 utility cost increase. Please, Zoe.
Zoe Zhuang: As we explained that the energy cost to total revenue rise around 3.8% quarter-over-quarter, and in this quarter compared with last quarter. But if we look at EBITDA margin, that we stayed at 51.1% this quarter and compared with last quarter, it’s only, I think over 1% difference as this is offset with other expenses like the maintenance costs and other costs as well and this is offset by the economies of the scale. And the reason for this is in the Hebei province in the third quarter, there is a electricity cost increase around, I think, 15% in that region. And this has been — this is due to the state grid has changed their charging system, charging mechanism. So this has been reflected in our full year guidance already.
So this is your first — this is the first question. And second question is regarding the full year guidance, we took a very prudent way. So you can see that as the company has always been — we have hit the record — hit market consensus for nine consecutive quarters. So for the full year guidance, we still take very consistent and very prudent, very conservative estimate. And also for the full year guidance, there is new substation supposed to be on live, but — go on live. But considering current China COVID-19 lockdown situation and we think there might be some postpone, so we also take this as — take this factor into consideration. So the full year guidance is very conservative. But anyway, the company, the management team and the delivery team will try all the best to ensure the substation will be on live, go on live timely.
And if that will be the case, I think the performance will be a little bit better than our forecast.
Nick Wang: Edison, one thing I want to add is actually the Q4 expected construction of the 220 kilo-voltage substation is only onetime effect, and that’s only the potential and possible onetime effect. So there is more upper side on the previous guidance based on the prudent style we always demonstrated. But the reason for building that 220 kilowatts, I want to emphasize is for the future protection of the capacity. Because as of previous quarter, as we disclosed, we have so far signed up to 500 megawatts, 500 megawatts total capacity in the Shanxi region. Right now, we have roughly 250 megawatts, there’s going to be 250 megawatts more capacity. And as Huapeng has rightly point out, the early we can lock in our resources in the energy abundant region, the early we can secure all the necessary infrastructure, the better chance we’ll get from the future orders and big order from our anchor customers.
So we think that move to build a larger scale substation is absolutely a necessity for us and we want to make it happen as fast as possible.
Operator: And your next question comes from Tina Hou from Goldman Sachs.
Tina Hou: So thank you for the chance to ask a question again. My second question is regarding the rental price. So first of all, in the domestic market, I’m wondering what is the — over the past two quarters, let’s say, what is the new contract pricing versus the historical level? And then also for the offshore projects in Malaysia from our anchor customer, what is the rental price level versus the domestic market?
Nick Wang: Zoe, do you want to go ahead or I’m going to answer it. Maybe you’d better answer it first.
Zoe Zhuang: I’ll answer first. And for your two questions, first one is regarding the — the sales price has been very stable for us and especially for the domestic projects, we don’t see any change so far. So this is the answer for your first question. And the second question is regarding the overseas sales price. As overseas for this model is different with the domestic model the power is a pass through model, and so in each location, the price is very competitive. And since these are the hyperscale data centers, and as you know, the MY06 phase one is for one anchor customer. So I’m not in a position here to disclose the specific price here.
Nick Wang: Generally, the overseas price level, there is a two part, one service related, the other one is power related. So if we — because power is a pass through, I don’t want to comment on it, but the service related is higher than China. So I can give you that information.
Operator: Thank you. I will now hand the call back for closing remarks.
