VNET Group Q1 2026 Earnings Call Transcript

Quartr
Provided by Quartr
May 26, 2026

Key Takeaways

  • Positive Sentiment: VNET delivered a strong first quarter, with revenue up 19.8% year over year to RMB 2.69 billion and adjusted EBITDA up 30.6% to RMB 891.5 million, driven mainly by wholesale IDC growth.
  • Positive Sentiment: Wholesale momentum was very strong: capacity in service rose to 907 MW, utilization increased to 75.7%, and the company said it won 517 MW of wholesale orders year-to-date from AI-driven demand.
  • Positive Sentiment: Management said the wholesale business surpassed retail revenue for the first time, reflecting the shift toward larger AI and hyperscale customers. Retail IDC remained stable, with cabinet utilization at 64.1% and MRR per cabinet edging higher.
  • Neutral Sentiment: The company maintained its 2026 guidance, expecting total net revenues of RMB 11.5 billion-RMB 11.8 billion and adjusted EBITDA of RMB 3.55 billion-RMB 3.75 billion. Management also reiterated full-year CapEx of RMB 10 billion-RMB 12 billion.
  • Positive Sentiment: VNET highlighted improving liquidity and capital recycling, ending the quarter with RMB 8.8 billion in cash and investments and noting successful REIT listings that should support future growth. Management also pointed to strategic upside from CATL’s expected investment and potential synergies in energy storage, supply chain, and overseas expansion.
AI Generated. May Contain Errors.
Earnings Conference Call
VNET Group Q1 2026
00:00 / 00:00

There are 11 speakers on the call.

Speaker 4

Hello, ladies and gentlemen. Thank you for standing by for the first quarter 2026 earnings conference call for VNET Group, Inc. After the management's prepared remarks, there will be a question and answer session. Please note the Chinese line is in listen-only mode. If you wish to ask questions, please dial in through the English language line. Participants from our management include Ms. Sharon Liu, Rotating President, Mr. Peter Zhang, SVP of Operational Finance, Ms. Xinyuan Liu, Head of Investor Relations of the company. Please note that today's conference call is being recorded. I will now turn the call over to the first speaker today, Ms. Xinyuan Liu. Please go ahead.

Speaker 10

Thank you, operator. Hello, everyone, welcome to our first quarter 2026 earnings conference call. Our earnings release was distributed earlier today, you can find a copy on our IR site as well as on Newswire Services. Please note that today's call will contain forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. For detailed discussions of these risks and uncertainties, please refer to our latest annual report and other documents filed with the SEC. VNET does not undertake any obligations to update any forward-looking statements except as required under applicable laws. Please also note that VNET's earnings press release and this conference call include the disclosure of audited GAAP and non-GAAP financial measures.

Speaker 10

VNET's earnings press release contains a reconciliation of the audited non-GAAP measures to the audited GAAP measures. A summary presentation, which we will refer to during this conference call, can be viewed and downloaded from our IR website at ir.vnet.com. Next, I'd like to alert you that we will be utilizing text-to-speech technology powered by Neuolink.ai to deliver this call's prepared remarks by Ms. Sharon Xiao Liu, our Rotating President, and Mr. Peter Zhihua Zhang, our SVP of Operational Finance. The management team will join the Q&A session in person. Additionally, this conference is being recorded. A webcast of this conference call will also be available on our IR site at ir.vnet.com. Now let's get started with today's presentation. Ms. Liu, please go ahead.

Speaker 4

Good morning and good evening, everyone. Thank you for joining our call today. I'll start with an overview of our major accomplishments during the first quarter of 2026. We began this year with strong results, thanks to strong execution of our effective dual-core strategy and Hyperscale 2.0 framework. On the operational side, our wholesale IDC business delivered robust growth driven by strong customer demand and fast customer move-ins. As of March 31st, 2026, our wholesale capacity in service rose by 18 megawatts to 907 megawatts. In line with our plan to concentrate our capacity expansion deliveries in the second half of the year. Meanwhile, driven by customers' fast move-ins, wholesale capacity utilized by customers grew by 64 megawatts to 687 megawatts, bringing the utilization rate to 75.7%, up 5.6 percentage points quarter-over-quarter. Our retail IDC business continued to progress smoothly, supported by growing AI-driven demand.

Speaker 4

Retail MRR per cabinet increased slightly to RMB 9,448 sequentially. Retail utilization rate remained stable at 64.1% during the first quarter. On the financial side, our total net revenues increased by 19.8% year-over-year to RMB 2.69 billion for the first quarter. Wholesale revenues remained the key growth driver, reaching RMB 1.06 billion, a significant year-over-year increase of 58.1%. Our adjusted EBITDA for the first quarter also increased by 30.6% year-over-year to RMB 891.5 million, driven by the strong growth of our wholesale IDC business. In addition, our premium reliable services continue to earn customer trust and gain market share, evidenced by multiple high-quality order wins totaling 519 MW year-to-date 2026. I will go through the details on the next slide. Moving on to our new order wins on Slide 5. Year-to-date 2026.

Speaker 4

Order momentum remains strong, with three wholesale orders secured totaling 517 MW, fueled by continued growth in AI-driven demand for high-quality data center resources. We secured two orders, 110 MW and 400 MW from an internet customer at separate data centers in the Greater Beijing area. Meanwhile, another data center in the Greater Beijing area won a seven-MW order from a local services customer. Furthermore, bolstered by AI-driven demand, we also secured new retail orders totaling approximately two MW across multiple retail data centers from customers in the local services, internet, and IT services sectors.

Speaker 7

This robust order momentum underscores our strengthened competitive positioning and growing ability to capture market share. At the same time, continued policy support for AI plus initiatives is reinforcing industry tailwinds. Authorities are promoting the development of large-scale, clustered green computing infrastructure, which is accelerating the broader adoption of computing power across industries and further expanding the addressable market. Meanwhile, driven by the AI industry's rapid progress, demand for AI-related computing power and data center resources is surging, driving the industry into a new growth phase. However, the effective supply of high-quality data centers remains relatively limited, constrained by utility and power quotas limitations in core regions. Against this backdrop, IDC players with long-term industry accumulation, sufficient resource reserves, and project deployments in core regions are best positioned to fully capture the structural opportunities arising from the expansion of AI demand.

Speaker 7

As a pioneer in AIDC, VNET is poised to benefit from these structural shifts. Our high-performance, large-scale data center clusters, coupled with a robust resource pipeline in core regions, represent a significant advantage. Furthermore, our proven track record in rapid delivery and operation and maintenance excellence are competitive strengths that are becoming increasingly difficult to replicate at scale. Supported by favorable policies and an ongoing structural transformation within the industry, we are confident in our ability to consistently capture emerging market opportunities and cement our leadership position. Now let's delve into our business updates, starting with our wholesale business on Slide seven. Our wholesale business continued to grow, with capacity in service increasing by 18 MW quarter-over-quarter to 907 MW.

Speaker 7

Utilized capacity grew by 64 MW sequentially to 687 MW, driving the utilization rate up to 75.7% from 70.1% last quarter, mainly attributable to customers' fast move-ins at NOR Campus 02A and NHB Campus 03. Our mature capacity utilization rate also reached 93.8%, a relatively high level. We have a clear growth path for our wholesale data center capacity. Let's move on to Slide 8. Our total wholesale resource capacity continued its upward trajectory, reaching 2.48 GW as of March 31st, 2026. Specifically, our capacity under construction rose to 516 MW with a pre-commitment rate of 85.8% year-to-date 2026. Capacity held for short-term and long-term future development grew to 697 MW and 359 MW respectively.

Speaker 7

It's worth noting that the majority of the capacity reserved for future development is driven by resources we have secured at our Wulanchabu IDC campus, demonstrating our ability to secure critical resources and rapidly scale capacity in strategic regions. Our secured resources provide us with a meaningful competitive edge, particularly given the tightening effective supply in the IDC industry, and reinforce our confidence in the long-term growth potential driven by AI-related demand. Moving to our retail IDC business on Slide 9. Our retail business progressed smoothly in the first quarter. Retail capacity in service increased to 50,170 cabinets from 49,863 cabinets last quarter. The utilization rate remained stable at 64.1% as of the end of March. MRR per retail cabinet slightly increased to RMB 9,448 this quarter. Turning to our delivery plan on Slide 10. We delivered 18 megawatts in the first quarter of 2026.

Speaker 7

In line with our delivery plan, which concentrates the majority of the year's deliveries in the second half. We currently have eight data centers under construction, with seven in the Greater Beijing area and one in the Yangtze River Delta. We plan to deliver 516 MW of capacity over the next 12 months, around 250 MW during the second and third quarters of 2026, and around 266 MW during the fourth quarter of 2026 and the first quarter of 2027, with the majority allocated to our data centers at the Wulanchabu IDC campus to meet the strong demand from wholesale customers. In conclusion, our first quarter performance demonstrated both strategic effectiveness and execution strength. Looking forward, we will remain focused on advancing our dual-core strategy and Hyperscale 2.0 framework, further developing our scalable green data center clusters, and enhancing our comprehensive AIDC solutions to meet growing AI-driven demand.

Speaker 7

In parallel with our long-term strategy, we have also strengthened our shareholder base by welcoming new strategic investors. Affiliates of CATL have entered into a share purchase agreement to acquire up to approximately 38.1% of our shares from subsidiaries of Shandong Hi-Speed Holdings Group, with closing expected in the fourth quarter of this year. We would also like to express our sincere appreciation to Shandong Hi-Speed Holdings Group for their trust in our vision and years of partnership and support in our growth journey with CATL's entry. We believe that this new relationship will generate meaningful strategic synergies and bring opportunities for fruitful collaboration across technological innovation, supply chain, and next-generation AI data center development, enhancing our long-term competitiveness and growth momentum. Overall, we remain confident in capturing the growth opportunities ahead and delivering sustainable long-term value for all shareholders.

Speaker 7

I will turn the call over to our SVP of Operational Finance, Peter, for a further discussion of our operating and financial performance. Thank you, everyone.

Speaker 5

Good morning, and good evening, everyone. Before we start the detailed discussion of our financial performance, please note that unless otherwise stated, all the financials we present today are for the first quarter of 2026 and are in RMB terms. Furthermore, unless otherwise specified, all the growth rates I am reviewing are on a year-over-year basis. Let's turn to slide 12. In the first quarter, we continued to focus on high-quality development. Our total net revenues increased by 19.8% to RMB 2.69 billion, mainly driven by the rapid growth of our wholesale business. Our adjusted cash gross profit rose by 25.1% to RMB 1.21 billion, while our adjusted EBITDA also grew year-over-year by 30.6% to RMB 891.5 million. Let's look more closely at our top line.

Speaker 5

As you can see on slide 13, we have a new milestone this quarter as wholesale revenues have surpassed retail revenues for the first time. Wholesale revenues, our key revenue growth driver, increased significantly by 58.1% to RMB 1.06 billion for the first quarter, mainly attributable to activity at the NOR Campus 01 and NOR Campus 02A. Retail revenues increased by 5.4% to RMB 1.02 billion for the first quarter. Our non-IDC business revenues increased by 0.3% to RMB 606.6 million for the first quarter. During the first quarter, we maintained solid margins, thanks to ongoing efficiency enhancement initiatives. As shown on slide 14, our adjusted cash gross margin improved to 45% from 43.1% in the same period last year. Our adjusted EBITDA margin rose to 33.1%, compared with 30.4% in the same period last year. Moving on to liquidity on slide 15, we maintained robust and healthy liquidity.

Speaker 5

Our net operating cash inflow reached RMB173.7 million during the first quarter. Excluding the impact of RMB119.1 million in income tax related to capital transactions and other one-off items, the net operating cash inflow for this quarter would be RMB292.8 million. Our cash position remains solid, with total cash and cash equivalents, restricted cash, and short-term investments reaching RMB8.8 billion as of March 31st, 2026. Let's take a look at our debt structure on slide 16. We maintained our prudent approach to debt management. As of March 31st, 2026, our net debt to the adjusted last quarter annualized EBITDA ratio was 3.8, and total debt to the adjusted last quarter annualized EBITDA ratio was 6.1, both remaining at healthy levels. Our adjusted trailing 12 months EBITDA to interest coverage ratio was 5.8.

Speaker 5

We prioritize long-term debt maturity planning in our debt and strategic management to ensure the security of debt repayment. Currently, the company's short- and medium-term debt maturing in 2026-2028 comprises 45.8% of our total debt. Turning now to CapEx spending on slide 17. Our CapEx was RMB 1.91 billion in the first quarter, with the majority allocated to the expansion of our wholesale IDC business. We continue to expect our CapEx for the full year 2026 to be in the range of RMB 10 billion-RMB 12 billion, mainly to support our planned delivery of 450-500 megawatts in 2026. We continued to advance our asset monetization strategy and made meaningful progress during the first quarter.

Speaker 5

As we mentioned on our last call, in March 2026, two of our private REIT projects were successfully listed on the Shanghai Stock Exchange, with a combined offering size of approximately RMB 6.36 billion and an EV to EBITDA multiple of around 13 times to 14 times. By establishing a scalable, efficient capital recycling model, these REIT listings give us an advantage in this inherently capital-intensive industry, allowing us to reinvest in new project development. We expect to realize no less than RMB 2 billion in total cash proceeds from our REIT-related initiatives this fiscal year. Substantially strengthening our liquidity position and setting a new benchmark for sustainable growth in digital infrastructure. Now moving to our full year guidance for 2026 on Slide 18. As we expect strong demand from our wholesale IDC customers and ongoing operational efficiency gains throughout 2026.

Speaker 5

We expect total net revenues to be in the range of RMB 11.5 billion-RMB 11.8 billion. A year-over-year increase of 15.6%-18.6%. Adjusted EBITDA to be in the range of RMB 3.55 billion-RMB 3.75 billion, representing a year-over-year increase of 19.2%-25.9%. The above outlook remains unchanged from the previously provided estimates. Before I conclude, I'd like to briefly update you on our ESG efforts. Sustainability remains important to our business strategy, supporting our operational excellence and long-term growth. In April, we published our sixth ESG report, highlighting our ESG progress and achievements in 2025. Our average annual power usage efficiency improved to 1.24 in 2025 compared with 1.27 in 2024. Total renewable energy consumption accounted for 36% of total resources utilized by VNET in 2025, compared with 18% in 2024. These accomplishments also won continued recognition from leading ESG rating agencies.

Speaker 5

We were included in the global edition of the S&P Global Sustainability Yearbook for 2 consecutive years, 2025 and 2026, and were also selected for the China edition for 4 consecutive years, where we were once again recognized among the top 1% in IT services industry. Going forward, we will deepen our commitment to sustainability, strengthening our investments in intelligent infrastructure and green data center operations to create long-term sustainable value. To sum up, we delivered robust first quarter results reflecting continued strong execution and strategic direction. Looking ahead, we will stay focused on strengthening our core capabilities to capture the opportunities arising from accelerating AI adoption and digital transformation, delivering sustainable, high quality growth and creating long-term value for all stakeholders. This concludes our prepared remarks for today. We are now ready to take questions.

Speaker 4

Thank you. We will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you were to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. For the benefit of all participants on today's call, please ask your question to management in English and then repeat in Chinese. Your first question comes from Tom Tang from Morgan Stanley.

Speaker 9

Thank you management for the opportunity to ask a question. Again, congratulations on a very strong result and winning the over 500 megawatt order. My question is on the delivery pattern of the new order. How should we think about the time or the pattern we're going to deliver this 500 megawatt order. On a quarterly basis, when we will see a significant impact to our revenue and EBITDA from this new order? Are we going to see upside to our current full year CapEx guidance given we are winning a very large amount of orders?

Speaker 7

Thank you, Tom, for your question. This is Sharon. With regard to the 500 megawatts new orders, we are planning to deliver these new orders in the next two to three years, effectively from 2026 throughout 2028.

Speaker 7

We are going to deliver the very first batch in the first second half of 2026, based on the pace of our customers moving in pace. So that will translate into some positive impact on our next three years' EBITDA. Also, we are not going to adjust our CapEx guidance for the full year of 2026, because the CapEx guidance we give is actually based on our annual delivery target of 550 to 500 MW. Therefore, we are going to keep our annual CapEx guidance untouched.

Speaker 10

Next question, please.

Speaker 4

Your next question comes from Edison Lee with Jefferies.

Speaker 1

Hi, thank you for taking my questions. I got two questions. Number one is that now that CATL has become a strategic investor in VNET, can you maybe share with us how investors should think about the synergies going forward? Previously, I think that Shandong Hi-Speed has been building some green power plants in Wulanchabu to help supply to your data center campus, I wonder if that is ongoing and whether there will be any change to that. That's number one. Number two is can you comment on the pricing situation now that you have won pretty big projects, in fact, what are you seeing in terms of pricing trend in the market? Whether you think pricing in 2027 will actually be stable or even going up?

Speaker 7

非常感谢给我提问的机会。我有两个问题，第一个问题就是关于你们新的这个投资人，就是CATL。其实能不能就是展开一些你们跟CATL将来的这个协同效应到底是在哪些领域？然后之前山东高速在这个武汉不应该需要跟你们去建一个就是绿电的一个合作的计划，我想知道这个计划现在的进展是什么样，然后未来有没有一些改变？这也是第一个问题。第二个问题就是关于这个价格的问题，就是现在从下半年来看，你觉得整个行业的价格连2027年的现在的这个趋势，你觉得是有机会涨价还是维持平稳？好，谢谢。

Speaker 10

好的，谢谢Edison的提问，我来回答您的两个问题。第一个就是确实是公司在季报里也披露了未来CATL会成为公司的战略股东，如果这个CATL和山高控股去顺利地完成交割，那我们觉得未来在战略协同上还是和CATL会有很多的领域可以去探讨的，比如说IDC的储能，比如说IDC研发中台，还有供应链的协同等等方面。那在技术与资源的协同上，其实依托于这个电力产业的资源、储能等等的这些能力，再叠加上其实CATL在整个产业链的上、下游都有各种的布局，包括一些高压直流的供电技术，那未来会和我们在供应链侧，在这个高压直流、绿电直变方面，大家会有更多的协同的机会。另外在产业的场景上，因为实际上我们现在是有接近1 GW，如果今年顺利的交付之后是接近1.5 GW的容量，可以为CATL那边的一些落地场景提供一个非常好的助益，那我们将来可以在一些相关的能源产品上积累更多的一些运营数据，更多的实际操作的实力，来实现一个双向的赋能。那提到这个山高控股，我们之前和山东高速在绿色能源方面是保持了非常良好的沟通与合作。在此也是非常感谢山高控股在过去对于公司的支持，以及在整个绿色能源合作领域对于公司的支持。那未来公司还是会继续围绕着这个绿色低碳的方向去发展，去拓展和山高的合作的机会。那未来其实在绿色能源、数字基础设施发展方面，还是会有多方的资源的协同的。我们会采取一些比较审慎的市场化的原则，基于商业的合理性，以及这个资源的匹配程度，最重要的是，其实我们是要以客户的需求为中心，去动态地推进我们双方的合作。那相信我们双方的目标其实都是要提升能源的效率，增强绿色能源的竞争力，保持这个长期合作的关系。这是第一个问题，就是和股东们的一些战略协作。那第二个问题是关于这个价格趋势的。实际上就像公司披露的，我们这个季度也是拿到了客户非常大的订单，也是一个两到三年的一个交付的节奏。我们还是能看到，其实今年整个市场从客户需求的角度来说还是很旺盛的，从年初到今年的这个Q1、Q2都会有比较大的一个锁定当期已经锁定未来资源的订单的出现。客户其实续签的意愿是很强的，都是通过这种长期的协议来锁定我们像互联这样的大的供应商的未来的资源。我们现在预期价格是会保持稳定的。当然我们也很期待如果未来供需会有进一步的变化，价格可以回暖。但是目前在这个阶段，我们还是觉得价格会比较稳定。谢谢。

Speaker 7

Thank you for your question. As we have disclosed in our quarterly report that the CATL's affiliate is going to become our strategic shareholder, sealed the deal with Shandong Hi-Speed Holdings Group closed successfully. We see synergies across several areas. We see that in our AIDC energy storage, we see the synergy in the supply chain, specifically the synergy that we saw in technology and resources. To elaborate, we are going to leverage CATL's extensive supply chain resources, energy storage, and dispatch capabilities, augmented by their proprietary high-voltage DC technology through their own investments. We are going to significantly enhance our data center's power stability and dynamic frequency regulation. I think this integration is vital to supporting the robust operational demands of hyperscale AIDC clusters, directly sharpening our long-term competitive edge. Also the synergy we saw in commercial and operational side.

Speaker 7

VNET, if we deliver the rest of the wholesale AIDC targets this year, this is going to bring our total wholesale capacity and service to 1.5 gigawatts. This provides CATL with concrete use cases which can feed back into their businesses. Also with our collaboration, we are going to accumulate a lot of critical operational data. This will also drive the mutual ecosystem value. With regards to our prior collaboration with the Shandong Hi-Speed Holdings Group in terms of the green energy integration, we have maintained a fairly good communication and collaboration with Shandong Hi-Speed Holdings Group in terms of the green energy development, and we extend our gratitude to their support in this regard. Going forward, VNET will continue to pursue the development of green and low-carbon data centers. We will actively evaluate or explore cooperation opportunities and expand our cooperation on that side.

Speaker 7

On top of that, the green energy and the digital infrastructure development takes the coordination of multiple parties. We, VNET, will continue to remain committed to the principles of prudent and market-oriented approach. We want to assess collaboration opportunities based on its economics. At the end of the day, we want to match resources that can best serve our customers' needs. Our goal is to increase our energy efficiency and promote our competitiveness in the green energy space. That is the question on the new strategic investor, as well as our collaboration with the Shandong Hi-Speed Holdings in terms of the green development. Now coming back to the question on pricing. As we have disclosed in our earnings report that we have secured large orders that is going to be delivered within the next two to three years.

Speaker 7

According to our observations, we have seen fairly strong demand from our customers in terms of premium and quality AIDC resources. We're seeing that through Q1, also straight into Q2. I think for now, all of these customers are signing long-term contracts with us so as to secure these quality resources from us. We expected the price to stable at the moment, and shall the supply and demand dynamics improve in the future, we might see the possibilities of prices trending upward as well. Thanks.

Speaker 10

Next question, please.

Speaker 4

Your next question comes from Timothy Zhao with Goldman Sachs.

Speaker 8

Great. Thank you very much for taking that question, and congrats on the solid results. My question is regarding the wholesale capacity reserves that you have. I noticed that in the first quarter, the company added another 300 MW capacity for the wholesale data centers. Just wondering if you have any targets for your capacity reserve for this year and probably in the midterm. Out of that 1.3 GW capacity that you have in terms of expansion pipeline and the capacity under construction, just wondering if you can share what proportion of that already received the power quotas approval from the government. Thank you.

Speaker 10

汤姆，谢谢你的问题。对于公司未来的储备和策略来说，中长期来看，我们还是会继续加大资源的布局。公司目前资源布局主要还是会未来集中在内容长三角以及东数西算的核心节点上。我们的目标是获取GW级别以上的资源。那在后续的季报里，随着我们去获取这些资源，我们也会逐步地去披露。从公司的角度来说，刚才您也问到了，所谓的资源，其实我们包含土地，也是包含能评指标的。实际上国家有窗口指导的政策，其实窗口指导政策，我们说现在从流程上还是已经理顺了，因为已经批过两批了。那从实际落地的角度呢，其实我们有四个项目已经顺利地通过了窗口指导，我们其他的几个项目也拿到了能评的扩容。公司对于未来我们在资源储备，无论是土地还是能评，还是非常有信心的。我们正在积极地做资源的拓展，尤其是GW级的基地，后续会逐步地披露给资本市场。谢谢。

Speaker 7

Thank you Timothy for your question. The company's strategy in the medium to long term is that we are going to increase our efforts in acquiring more resources. According to the company's plan, we are going to acquire gigawatt worth of resources primarily in Inner Mongolia, Yangtze River Delta, as well as the key notes along the Eastern Data, Western Computing route. We are going to disclose the resources acquired in the subsequent quarterly results. Speaking of the resources, that consists of both land as well as power quotas. As you may know, there is window guidance imposed by the government. Right now we have seen that whole flow being tested already, because at VNET, we got four of our projects approved by the government and with others being reviewed at the moment.

Speaker 7

The company is quite confident in acquiring more resources in terms of the land as well as our power quotas. The company is, like I said, actively exploring and acquiring potential more resources along the few regions that I've mentioned. Thank you.

Speaker 10

Next question, please.

Speaker 4

Your next question comes from Mingran Li with CICC.

Speaker 3

Thanks management for taking my question. Really appreciate it. I have questions about our overseas business regarding the CATL proposed strategic investment. Could you share any thoughts on how this partnership might shape your overseas expansion strategy?

Speaker 10

我翻译一下。感谢各位朋友今天的提问，也祝贺非常强劲的第一个月度业绩。这边想请教一下，其实关于宁德战略入股后，公司在出海方面有什么样的战略规划和布局考量？谢谢。明然，谢谢你的问题，就是问到出海的布局。实际上，坦白讲，由于我们和这些头部客户有非常良好的客户关系，其实我们也是一直接到头部客户关于我们海外资源的反向的询问。公司其实也正在比较积极地布局海外的一些资源，包括东南亚还有其他区域的一些资源。如果未来有一些进一步的消息，我们会和资本市场再去沟通。另外，随着宁德成为互联的战略投资方，实际上我们未来由于宁德在全球都有布局，我们未来在一些供应链和绿色能源方面都可以有进一步的合作，这对公司的海外战略也是大大的助力的。谢谢。Thank you, Ming Ran, for your question. With regard to our overseas deployment, we maintain a fairly close relationship with our leading or key clients or customers, and they have been sending inquiries on our resource acquisition or planning in overseas.

Speaker 10

The company is actively preparing and looking for potential resources in overseas. Specifically, we're talking about resources in Southeast Asia as well as other areas. Shall there be any further updates, we will communicate them with you in a timely manner going forward. With regard to the new strategic investor of the CATL, because they have a global presence and they have matured capability in supply chain as well as green energy, I believe these will be a fairly good complementary.

Speaker 5

This will complement to our advantages also in terms of the business we're going to conduct in overseas countries. Thank you.

Speaker 10

Next question please.

Speaker 4

Your next question comes from Daley Lee with BofA Securities.

Operator

Hi, management, thanks for taking my question. I have one question regarding our financing channels. With our full year guidance for the CapEx, how do we see the operating cash flow and also the financing channel like REITs to finance our CapEx? Could management share our future REITs project, which will be our plan?

Speaker 10

好的，感谢管理层提我的问题，我这边翻译一下。这边想请教关于我们融资结构的一个计划，比如说我们全年的CapEx计划，我们也有比较强的现金，还有operating cash flow，也有REIT项目，想问一下我们整个的一个预算是怎么样的？未来对我们REIT项目有怎样的计划？谢谢。

Speaker 5

[Foreign language] Thanks for your question. Our full year CapEx guidance for 2026 is based on the annual delivery target of 450 to 500 MW. We have a very diversified financing channels, both from the project level as well as the traditional financing channels. All of them serves the same purpose of supporting our full year delivery target. In terms of the ABS or asset-backed securities, we have successfully issued two of them in the first quarter and we are continuing our efforts in this regard. Thank you.

Speaker 10

Next question please.

Speaker 4

Your next question comes from Ethan Zhang with Nomura.

Speaker 2

Okay, thanks for the opportunity to asking the question. I got two questions. The first one is a follow-up on the land reserve strategy. Could management give us more color on our current reserve in the Inner Mongolia region, as well as what's our thoughts on the demands in other data center with the computing hub cities? My second question is, could management give us some color on the potential listing in Hong Kong market?

Speaker 2

我可以翻译一下两个问题，第一个还是关于我们土地储备的一个问题，可不可以让管理层给我们再讲一讲，我们在内蒙现在的储备以及我们怎么看在中枢计算其他的节点的需求，以及我们的计划。第二个是可不可以给我们分享一下在香港上市的一些可能或者想法，谢谢。

Speaker 10

好的，Ethan，谢谢你的问题。关于第一个问题，其实公司的整个的土地的储备情况，我们刚才在分享整体的资源储备的时候也提到了，中长期来看，公司的资源布局还是会在内蒙、长三角以及东数西算的核心节点上，我们去布吉瓦级的基地。一个吉瓦级的基地对应的就是大概1000亩的土地。从土地储备的角度来说，我还想说明一点的是，其实鉴于这些地区的地价都比较便宜，整体上我们土地储备的CapEx占整个项目CapEx只是lower single digit这么一个range，所以公司肯定会积极地去做土地资源的布局。第二点是关于香港IPO的。我刚才回应一下Peter关于公司融资节奏的融资方式的解读。其实我们有各种各样的上市公司层面的，也有资产平台，包括资产层面的各种融资，公司策略上还是会提前做融资来应对我们后续不管是CapEx还有一些CB的还款的计划。其实公司也一直在积极地探索香港上市的可行性方案，这个本来也是公司的多样化的融资渠道之一，可以用来优化公司的资本结构，更好地支撑公司的长期的战略发展，包括去夯实我们国际投资者的基础。但是相关的香港上市的事项还在评估当中，公司在有明确的进展之后再及时地披露给资本市场。谢谢。

Speaker 7

Thank you, Ethan, for your question. With regard to your question on our land reserve strategy, like I said, in the medium to long term, VNET is planning to acquire one gigawatt's worth of campuses in Inner Mongolia, Yangtze River Delta, as well as the East Data, West Compute hubs. To give you a specific number, the one gigawatt's worth of campus roughly translates to 1,000 acres of land. Given the prices of the land is quite cheap, in actual percentage-wise, the CapEx for acquiring land will account for only low single digits of our total full-year CapEx. The company would proactively acquire land to prepare for our reserve capacity. To add on to the question in terms of financing channels, as a listed company, we have diversified financing channels, both from the listed company perspective as well as the asset level.

Speaker 7

The company is proactively raising funds to support our CapEx as well as our debt repayment. Now moving on to the potential listing in the Hong Kong Stock Exchange. We have been actively exploring the feasibility of potential Hong Kong listing as part of our efforts to optimize our capital structure and better support the company's long-term strategic development while broadening our international investor base. We will communicate with the public market in a timely manner once there is a more defined plan or any definitive progress. Thank you.

Speaker 10

Next question, please.

Speaker 4

Your next question comes from Sara Wang with UBS.

Speaker 6

Hi. Thank you for the opportunity to ask a question. Again, congratulations on the solid results. I have actually one question. I noticed that the commitment and pre-commitment rate of our resources is already quite high. On top of that, we have another 1 gigawatt resources held for future development. May I ask for this 1 gigawatt, what is the expected average lead time from order to delivery? At the same time, how shall we think about the unit CapEx, say, CapEx per megawatt, and how shall we think of the trend going forward? Thank you, Sara, for your question. A clarification on the company's strategy. We are planning to acquire gigawatt level worth of resources in the three key regions, like I mentioned. We are going to disclose the updates going forward. Moving back to the unit CapEx.

Speaker 7

For one megawatts of unit we deliver, the unit CapEx is around RMB 20,000 per kilowatt. That is achieved thanks to our supply chain capabilities as well as our large-scale batch procurement. That is for the unit CapEx per kilowatt. Now moving on to the pre-commitment rate. We are quite confident in maintaining a fairly high pre-commitment rate, and we have now disclosed our data as of Q1 2027. In terms of the 500-megawatt order we secured, we are going to deliver them in batches. We are going to keep updating the market on the orders we have locked in as well as the pace of their delivery. All in all, we want to say we are fairly confident in maintaining or securing a high pre-commitment rate for our capacities to be delivered. Thank you.

Speaker 4

There are no further questions at this time. Ladies and gentlemen, that concludes our conference for today. Thank you for participating. You may now disconnect your lines.

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