Bora Lee: Thank you. Hi, this is Bora on for Jon Atkin. I think William had mentioned GDS expects to enter additional markets. Can you elaborate on how you’re thinking about the margins or regions in which you’d like to expand and the time frame you had in mind? Secondarily, any update on the Singapore development? Thank you.
William Huang: I think our strategy is, first of all, I think we see the tremendous growth in Southeast Asia and the whole Asia-Pacific, which is a market we are very familiar with. I think the first step, we will still focus on Southeast Asia to get–to maintain the market-leading position, right, so I think this is our first priority. Meanwhile, we already started to develop the Japan market for a while, and I think we are maybe–in the near future, maybe we can announce some progress. I think the Japan market–the Korea market is also very attractive. It’s the top data center market in the world, and we see the demand, so in general we follow up the big market, we will also follow up the high growth market in the future.
But as I just mentioned, we do see some opportunity in Europe as well, but this is another future target market, but of course including Middle East. Singapore, yes, we target to deliver the launch data center by the end of the 2026, so that’s our time frame, and we made some progress. We have a couple short-listed, we already tried to do the final decision to choose in the site, so I think we will tell the investors once we’ve made the final decision.
Bora Lee: Great, thank you.
Operator: Thank you for the questions. One moment for the next question. Our next question, we have Sara Wang from UBS. Please go ahead.
Sara Wang: Thank you for the opportunity. I have two questions. First one is on China business. What’s the trend of MSR or churn rate when you renew contracts with existing customers, say over the past two quarters, and then how should we think about the trend going forward? Second question is still on AI, so maybe for both China and international projects, because AI requires a higher density rack or even more advance cooling methodology. Is there any difference between maybe high density power racks in terms of revenue or margin profile, compared to maybe cloud demand we have seen previously? Thank you.
Daniel Newman: Yes, I’ll answer the first question and maybe William–
William Huang: Yes, I think in general, I think the current AI–of course, the AI will definitely in the future, will be the main driver to drive the data center demand. This is what’s happening in the U.S., what’s happening in Europe, and also Southeast Asia and the Japan market already, but it’s just a start. In terms of the difference, I think the AI guys need more big capacity. Historically when we talk to cloud guys] demand, if we use a single deal size, let’s say internets always ask for 10 megawatts, 20 megawatts, that’s the maximum, and the cloud guys normally ask for, let’s say 30 megawatts, 40 megawatts. But now what we can see, the deal profile is totally different. A lot of our customers, they ask for 100 megawatts or 200 megawatts per campus, so that means they need more power capacity in one site, so this is one difference.
The second, of course, I think in general average power density goes very high, so we are well prepared for that. In terms of cooling, I think everybody knows once you get – if you want to get the level of your product per rack above 20kw per rack, it’s better to start to use–try to start to use the liquid cooling, right, so in terms of technology, we are very familiar with the liquid cooling because five years ago, we started to use the liquid cooling solution in China, so I think we’re prepared for catch-up AI demand in the future, whatever size–in terms of size, capacity of the size or power density, or cooling technology. We are all good at that.
Daniel Newman: Sara, your question about MSR, I always answer this in the same way. MSR can be affected by a number of different factors, it’s not just a reflection of change in market pricing. It’s also dependent on location and type of data center. Rather than talk about pricing on renewals, I always give some guidance or direction on the trend in MSR. I mentioned during the prepared remarks, over the past four quarters – that’s 4Q22 to 4Q23, the MSR decreased by 5%. Over the next four quarters – that’s 4Q23 to 4Q24, we expect the MSR to decrease by 3%. Most of that decrease is due to delivery of the backlog, a smaller part is due to lower pricing on renewals. But if we were to look further forward beyond 2024 to 2025, MSR is bottoming out, which means that as you project further into the future, our revenue growth will be mainly driven by the increase in net additional area utilized, with MRS decrease becoming less and then becoming flat.
Sara Wang: Got it, thank you.
Operator: Thank you for the questions. We have come to the end of the Q&A session. I would like to now turn the call back over to the company for closing remarks.
Laura Chen: Thank you once again for joining us today. If you have further questions, please feel free to contact GDS Investor Relations through the contact information on our website and Piacente Financial Communications. Bye, see you next time.
Operator: This concludes this conference call. You may now disconnect your lines. Thank you.
