GDS Holdings, the largest carrier-neutral data center operator in China, today announced its Q2 2021 earnings and provided updates on its data center portfolio, utilization, leasing, development pipeline, and geographic expansions in Malaysia, Macau, and Hong Kong.

Financial Performance in Q2 2021 – GDS Holdings

In Q2 2021, GDS Holdings reported revenue of RMB1,864m ($289m), a 9.3% increase quarter-over-quarter, and adjusted EBITDA of RMB896m ($139m), a 9.5% increase quarter-over-quarter. Therefore, the company’s EBITDA margin was 48.1% in Q2 2021, a ~10 bps improvement quarter-over-quarter.

GDS’ revenue growth was attributable to new capacity brought on-line organically and through acquisition at its Shanghai 10 (SH10), Shanghai 14 (SH14) Phase 1, Langfang 6 (LF6), Chengdu 2 (CD2) Phase 1, and Beijing 15 (BJ15) data centers.

Operational Performance in Q2 2021 – GDS Holdings

Portfolio

In Q2 2021, GDS brought 61.4k sqm (660k sqft) of area into service. In turn, the company’s total capacity reached 555k sqm (6.0 million sqft), of which 394k sqm (4.2 million sqft) was in service and 161k sqm (1.7 million sqft) was under construction.

Utilization

In Q2 2021, GDS’ utilized space by customers increased by 29.4k sqm (316k sqft). Additionally, the company’s utilization rate for area in service was 69.0% as of Q2 2021, a 3.9% decline quarter-over-quarter.

Notably, the company’s commitment rate for area in service was 95.9% as of Q2 2021. Therefore, as new lease commencements occur, GDS’ utilization rate should move closer towards its commitment rate.

Monthly service revenue (MSR) per sqm declined 0.4% quarter-over-quarter to RMB2,416. For full-year 2021, GDS expects that monthly service revenue (MSR) per sqm will decline by a low single-digit percentage year-over-year.

Leasing

During Q2 2021, GDS signed a total of 98+ megawatts of power capacity, across 44.8k sqm (483k sqft).

Of this total, GDS signed three hyperscale leases, comprising 62.6 megawatts of power capacity, across 24.7k sqm (265k sqft). Specifically, these hyperscale leases include:

  • LF13 (Langfang): 14.1 megawatts of power capacity, across 5.7k sqm (61k sqft) of area. This ‘land and expand’ lease was with an existing customer which already has a significant presence with GDS
  • BJ16 (Beijing): 15.0 megawatts of power capacity, across 7.5k sqm (81k sqft) of area. This lease was with a new customer, particularly a cloud service provider focused on government and state-owned enterprises (SOEs)
  • CS2 (Changshu): 33.5 megawatts of power capacity, across 11.5k sqm (123k sqft) of area. This lease was with a new customer, particularly a large internet company

Additionally, 19.2k sqm (206k sqft) of GDS’ Q2 2021 leasing was attributable to customer agreements from the closing of acquisitions.

Backlog

Overall, GDS continues to grow its backlog, which reached 198k sqm (2.1 million sqft), up 8.5% quarter-over-quarter.

Development Pipeline – GDS Holdings

GDS’ total development pipeline as of Q2 2021 stood at 534k sqm (5.75 million sqft). Notably, land acquisitions added 50k+ sqm (538k sqft) of developable capacity in Tier 1 markets during the quarter.

Shanghai – Developed and Developable Capacity

In the Shanghai market, GDS has 28.8k sqm (310k sqft) held for future development at downtown sites. Additionally, the company has 119k sqm (1.3 million sqft) held for future development at three edge of town sites in Changshu Province.

GDS Holdings Shanghai Developed and Developable Capacity Q2 2021
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Beijing – Developed and Developable Capacity

In the Beijing market, GDS has 14.7k sqm (158k sqft) held for future development at downtown sites. Additionally, the company has 133k sqm (1.4 million sqft) held for future development in Langfang and other edge of town locations.

GDS Holdings Beijing Developed and Developable Capacity Q2 2021
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Geographic Expansion – Malaysia, Macau, Hong Kong

During Q2 2021, GDS made geographic expansions in Malaysia (to access Singapore), Macau, and Hong Kong. Notably, GDS has identified 200+ megawatts of demand from Chinese customers for the Southeast Asia market, within the next five years.

Nusajaya Site, Johor, Malaysia

In July 2021, GDS announced its acquisition of a greenfield site in the Nusajaya Tech Park, Johor, Malaysia, which is immediately adjacent to Singapore. At this site, the company will develop a data center campus comprising 54 megawatts of total IT power capacity across net floor area of 22.5k sqm (242k sqft). GDS will deliver the first phase of the development, with an IT power capacity of 18 megawatts, by 2024.

Additionally, the Nusajaya site is adjacent to Telekom Malaysia’s main regional data center. In turn, this allows GDS to leverage Telekom Malaysia’s low-latency network into Singapore and the rest of Malaysia.

Finally, GDS notes that demand in Southeast Asia is being driven by Chinese hyperscale customers.

Macau

GDS Holdings formed a joint venture with a local partner to acquire a brownfield site in Macau for its re-development into a data center. Specifically, GDS will be the majority shareholder in the joint venture with an 80% ownership interest, while the local partner will own the remaining 20%.

The site is located opposite to the Zhuhai Hengqin Free Trade Zone. Once developed, GDS Holdings’ Macau site will comprise nearly 20 megawatts of power capacity across net floor area of 7.6k sqm (81.8k sqft).

Hong Kong 4 (HK4)

GDS Holdings agreed to acquire an existing industrial building located in Kwai Chung, Hong Kong, for its re-development into a data center, known as Hong Kong 4 (HK4). Specifically, the building is located close to GDS’ existing Hong Kong 1 and Hong Kong 2 data centers, forming a cluster in the Kwai Chung area.

GDS Holdings Hong Kong 4 HK1 HK2 HK4 Data Centers

Hong Kong 4 will comprise net floor area of 7.2k sqm (77.5k sqft) and will be delivered in 2025. Moreover, GDS is forming a cluster in Kwai Chung, Hong Kong with three data centers in close proximity, comprising aggregate net floor area of 21.0k sqm (226k sqft).

Separately, GDS signed a heads of terms agreement to lease a building shell, to be named Hong Kong 3 (HK3). Overall, GDS Holdings has a secured pipeline with nearly 80 megawatts of power capacity, through to 2027, in Hong Kong.

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