Daniel Newman: I think Yang Liu was also asking about your bookings, expectation for bookings.
William Huang: Yes, we don’t want to set–because every quarter is change, frankly speaking, so I think to maintain the last two years average level, which means 50 megawatts per year, is our base, but based on our current pipeline, we can maybe go very, very high number, maybe double, something like that, but we don’t want to set up too much high expectation. But 50 megawatts is our base in the international market, but of course as I just mentioned, this is just the Southeast Asian market. We also look very closely with the–for other new markets, like North Asia and also European markets as well.
Daniel Newman: I think Yang Liu, I just want to check, your question about increasing pipeline, if you were referring to the secured development pipeline, the reason why that’s gone up very significantly is because at our established campus, that we refer to as NTP, we acquired additional land and secured additional power. At the same time, we have established a second campus in Johor called KTP, where we have started construction, around 20 megawatts, but we plan in a single phase to go to around 100 megawatts, and we also look forward to obtaining some commitments for that site in the next few quarters.
Yang Liu: Got it, thank you.
Operator: Thank you for the questions. Our next questions come from Daley Li from Bank of America Securities. Please go ahead.
Daley Li: Hi management, thanks for taking my questions. I have two questions. The first one is about the China data center business. Could management share some of the demand trend for our clients, maybe for public cloud providers and the internet companies and financial companies, how the demand trended given right now, the government is publishing more policy to support the AI into data center, and how do we see the competition? My second question is about the overseas business. Congrats on the recent fundraising. How do see future financial channel in the overseas market as we try to develop more business after two to three years, in terms of financing channel? Thank you.
William Huang: Okay, I’ll take your first question. In China, I think we do see some signals that AI demand is increasing, but based on the current chip supply issue, I think the demand not–the demand actually is already there but not fulfilled by our chips, so what we can tell, the chip supply in terms of a new version of Nvidia, like H20 and also some China chip supply profile, what we can see is maybe the end of this year or early next year, China data center demand will recover in a significant way. What is think this year, still you can see a lot of the demand frying right now, but actually every people is waiting for the chips, so the impact to our data center real demand, I would say it will start from next year.
Daniel Newman: Your question about financing requirements and options for international, the rationale behind the capital raise which we announced today is to ensure that we have adequate equity capital for the existing portfolio which is in service and under construction, but we are moving forward rapidly and the requirement for additional capital will depend on how the business plan evolves. We will take a view as new opportunities come up and new commitments are made. I think we’ve spoken before about a strategy of limiting the amount of capital which GDS Holdings allocates to international. We’ve allocated US $411 million, now we’re starting to leverage our equity investment with external equity at a premium valuation.
I think this first Series A capital raise has required us to establish GDS International on a standalone basis and put in place the governance and all the aspects of an intercompany relationship and so on, which is quite a challenge. I think after having done this deal and with the investor group who are now partnering with us, I think GDS International is very well placed to do further capital raises, and that could either be at the country level, as we’ve done already in Indonesia with our joint venture with INA, or it could be at the international holdco level.
Daley Li: Thank you management.
Operator: Thank you for the questions. Our next questions come from Robert Chu from JP Morgan. Please go ahead.
Robert Chu: Okay, thanks. Thanks Dan, thanks William. I’m asking on behalf of Gokul. I have two parts of my question. First one is on the competitive landscape and the IRR. Can you help us understand what the IRR looks like for the international business, given we have so many regional players, local players or Chinese players competing in this market? Secondly, I think you kind of guided the international business revenue contribution for this year will be probably 9, 10%, so you mentioned that you are considering to expand beyond this Southeast Asian market, probably Europe or North Asia, so how should we think about the revenue contribution from international business in three, five years time? Thanks.
Daniel Newman: Thank you Robert. First of all for the IRRs, we have undertaken projects in Hong Kong and in Johor and in Batam. Each market has a different of cost of capital, but if we look at it in a very general way, the IRRs have been within the range that we target–have targeted historically – you know, unlevered post-tax IRRs of not less than 10% up to IRRs in the low teens. This currently compares really quite favorably with what is achievable in China at the current stage in the cycle. For the contribution of international, without giving out forecast, I think we talked before about hitting 15% of consolidated revenue or adjusted EBITDA within three years. I think that is definitely achievable, and it may be higher than that.
Robert Chu: Thank you.
Operator: Thank you for the questions. One moment for the next question. The next question comes from the line of Bora Lee from RBC Capital Markets. Please go ahead.
