GDS Holdings continued to expand in China, and didn’t rule out the possibility of a large data center acquisition in this quarter's earnings report.
The company announced net revenues of RMB1,706.0 million ($260.4 million) for the quarter ending March 2021. The company saw a net loss of RMB 278.7 million ($42.5 million), but adjusted EBITDA of RMB 817.9 million ($124 million).
The company had a busy quarter, opening two new facilities, closing two data center acquisitions, and starting work on a number of new developments.
“During 1Q 2021, we started the construction of five new data centers on land and buildings, which were previously held for future development,” said GDS founder, chairman, and CEO, William Huang in the earnings call. “And at the same time, we tucked up our resource pipeline with greenfield land purchase at various locations on the edge of Shanghai and Beijing.”
Huang said the company has over 500,000 square meters (5.38 million sq ft) of capacity held for future development, more than 90 percent of which is greenfield land owned by the company complete with power infrastructure. The company has around RMB3.3 billion ($498 million) of investment tied up for future projects.
The company had two data center acquisitions close – Beijing 15 and Tianjin 1 – as well as new data centers coming into service with Beijing 8 and Huailai 1. This follows a number of new facilities that come online in the previous quarter; Shanghai 13, Shanghai 14 Phase 1, Shanghai 16, Beijing 7, and Langfang 8, as well as closing deals for Beijing 9 and Shanghai 19 Phase 1.
Huang said BJ15 brings over 19,000 sq m (204,000 sq ft) of capacity with 100 percent committed and 80 percent utilized. The company is also building a new facility (BJ16) on the same site. While still under construction, TJ1 will yield a net floor area of approximately 14,000 sq m (150,000 sq ft) and is expected to come into service in Q2 2021.
The company claims it won six ‘hyperscale’ orders in Q1 2021, including an anchor tenant in its Hong Kong 1 data center, which will take 45 percent of that facility when it enters service in 2022. The same customer has reportedly shown strong interest in anchoring the Hong Kong 2 data center which due to come online in 2023. The company also gained ‘a large cloud customer in the financial service industry’ as an anchor tenant in its Chongqing 1 data center.
On the subject of sustainability, COO Jamie Khoo said the company “may consider” investing directly in renewable power projects. However, as the company would want projects which are located close to data centers, this could be difficult to source in some markets.
“There's always the fallback of buying renewable energy certificates internationally, if not in China,” he said.
GDS comes to Singapore?
By the end of this year, GDS expects two enter one or two further new markets in China, and hopes to enter into Singapore if it can.
“However, as the Singapore government is not approving new projects, we are looking for alternative ways of establishing our presence in the Singapore market,” said Huang, who added the company is also considering ‘complimentary options’ in neighboring countries.
When asked about the reports the company is considering acquiring GLP’s data centers business, CFO Dan Newman, Chief Financial Officer said the company generally acquires single-site assets rather than ‘platform acquisitions’ but seemingly didn’t rule out that it was a possibility.
“I think platform acquisitions probably have to look at the valuation in a different way. We'd have to assess, what synergy is, what the strategic benefits are and so on, but very open-minded about that. So I think, we have a window of opportunity given the position that we've established to really try to do some more significant deals.”