VNET Group Inc (VNET) 2019 Q2 法說會逐字稿

Good morning, and good evening, ladies and gentlemen. Thank you, and welcome to 21Vianet Group's Second Quarter 2019 Earnings Conference Call. (Operator Instructions) With us today are Mr. Alvin Wang, Chief Executive Officer and President; Ms. Sharon Liu, Chief Financial Officer; and Ms. Rene Jiang, Investor Relations Director of the company. I will now like to turn the call over to the first speaker today, Ms. Rene Jiang, IR Director of 21Vianet. Please go ahead, ma'am.

早上好，晚上好，女士們先生們。謝謝，歡迎參加21世紀集團2019年第二季度收益電話會議。（操作員指示）今天與我們在一起的是首席執行官兼總裁 Alvin Wang 先生；劉莎朗女士，首席財務官；公司投資者關係總監Rene Jiang女士。現在請今天的第一位發言者，21世紀互聯關係總監蔣若新女士發言。請繼續，女士。

Hello, everyone. Welcome to our second quarter 2019 earnings call. Before we start, please note that this call may contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and observations that involve known and unknown risks, uncertainties and other factors not under the company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or expectations implied by these forward-looking statements.

大家好。歡迎參加我們的 2019 年第二季度財報電話會議。在我們開始之前，請注意，本次電話會議可能包含根據 1995 年《私人證券訴訟改革法案》的安全港條款做出的前瞻性陳述。這些前瞻性陳述基於管理層當前的預期和觀察，涉及已知和未知的風險、不確定性和其他不受公司控制的因素，可能導致公司的實際結果、業績或成就與結果存在重大差異，這些前瞻性陳述所暗示的表現或期望。

All forward-looking statements are expressly qualified in their entirety by the cautionary statement, risk factors and details of the company's filing with the SEC. 21Vianet undertakes no duty to revise or update any forward-looking statements for selected events or circumstances after the date of this conference call.

所有前瞻性陳述均明確符合公司向 SEC 提交的警示性陳述、風險因素和詳細信息。21Vianet 不承擔在本次電話會議日期之後修改或更新針對選定事件或情況的任何前瞻性陳述的義務。

I will now turn the call over to Mr. Alvin Wang, CEO and President of 21Vianet.

現在我將把電話轉給21世紀互聯首席執行官兼總裁王文先生。

Thank you, Rene. Good morning, and good evening, everyone. Thank you for joining us for our earnings call today. During the second quarter 2019, our revenues increased to RMB 888 million and adjusted EBITDA increased to RMB 260.7 million. Both within our previously announced guidance range. Adjusted EBITDA margin expanded to 29.4% during the quarter from 26.7% in the prior year period. Hosting MRR per cabinet increased by 4.7% year-over-year in the second quarter of 2019 while decreasing sequentially due to the previously announced discontinuation of a major client's contract in early 2019.

謝謝你，雷內。大家早上好，晚上好。感謝您參加今天的財報電話會議。2019年第二季度，我們的收入增至人民幣8.88億元，調整後的EBITDA增至人民幣2.607億元。兩者都在我們之前宣布的指導範圍內。本季度調整後 EBITDA 利潤率從去年同期的 26.7% 擴大至 29.4%。2019 年第二季度，每個機櫃的託管 MRR 同比增長 4.7%，但由於此前宣佈於 2019 年初終止大客戶合同，環比有所下降。

Despite the macroeconomic uncertainties, we achieved meaningful progress during the quarter on 3 fronts: capitalizing on the growing demand for IDC solutions; upselling additional capacity to existing clients while adding new clients; expanding our capacity pipeline.

儘管宏觀經濟存在不確定性，我們本季度在三個方面取得了有意義的進展：利用對 IDC 解決方案不斷增長的需求；在增加新客戶的同時向現有客戶追加銷售額外容量；擴大我們的產能管道。

First through constant client dialogues and market monitoring, we discovered that the demand for IDC solutions is growing rapidly. On the one hand, large corporations are accelerating their business expansion to solidify their market leadership, thus elevating their demand for large-scale IDC solutions. On the other hand, small- and medium-sized companies are adapting to rapid market changes, thus requiring scalable and flexible IDC solutions. Our tailored IDC solutions are well suited for such market demand.

首先通過不斷的客戶對話和市場監測，我們發現IDC解決方案的需求正在快速增長。一方面，大型企業加速業務擴張，鞏固市場領先地位，對大規模IDC解決方案的需求上升。另一方面，中小型企業正在適應快速的市場變化，因此需要可擴展且靈活的IDC解決方案。我們量身定制的IDC解決方案非常適合這樣的市場需求。

On the new client front, we have added several notable clients that are both large scale and long tail, including a leading manufacturer of mobile devices and an auto finance company of a top global OEM. Both have signed long-term contracts that will take effect in the third quarter of 2019. They will help to accelerate our recovery from the impact of previous customer churn on our cabinet utilization. Furthermore, we expect that this customer's demands for cabinet capacity will improve our utilization rates significantly in the second half of 2019.

在新客戶方面，我們增加了幾家規模較大、長尾的知名客戶，包括一家領先的移動設備製造商和一家全球頂級整車廠的汽車金融公司。雙方均簽署了將於2019年第三季度生效的長期合同。它們將有助於加快我們從之前客戶流失對機櫃利用率的影響中恢復過來。此外，我們預計該客戶對機櫃容量的需求將在2019年下半年顯著提高我們的利用率。

On the wholesale front, we signed a memorandum of understanding in August with a major public cloud service provider in China to provide a number of cabinets. According to the MOU, all cabinets will be delivered by April 2020.

在批發方面，我們在8月份與中國一家主要的公共雲服務提供商簽署了一份諒解備忘錄，提供多個機櫃。根據諒解備忘錄，所有機櫃將於2020年4月交付。

Secondly, on the client relationship front we have been actively upselling additional capacity to existing clients. During the quarter, we expanded our service contracts and [sold] (corrected by company after the call) additional capacity for Qunar, Mtime, 51VR and SpeedyCloud. All those customers have found that our carrier neutrality and service reliability are highly desirable. Consequently as they expand their business volume, they require us to grow in tandem with them.

其次，在客戶關係方面，我們一直在積極向現有客戶追加銷售額外的產能。本季度，我們擴大了服務合同，並[出售]（公司在通話後更正）去哪兒、時光網、51VR 和 SpeedyCloud 的額外容量。所有這些客戶都發現我們的運營商中立性和服務可靠性非常理想。因此，隨著他們業務量的擴大，他們要求我們與他們同步成長。

Thirdly, we continue to make strides in expanding our cabinet capacity to meet the increasing market demand. For example, following our successful expansion into Chengdu at end of 2018, we completed the inspection of 500 retail cabinets in the city and brought them into our sales pipeline. Going forward, we also plan to add 1,000 cabinets to our sales pipeline during the third quarter of 2019 through our acquisition in the south of Beijing made in the previous quarter. We expect to complete four projects currently under construction by the fourth quarter of 2019.

第三，我們繼續在擴大機櫃容量方面取得長足進步，以滿足不斷增長的市場需求。例如，繼2018年底成功拓展成都後，我們完成了對該市500個零售櫃的檢查，並將其納入我們的銷售渠道。展望未來，我們還計劃通過上一季度在北京南部的收購，在 2019 年第三季度增加 1,000 個機櫃的銷售渠道。我們預計到 2019 年第四季度完成目前在建的四個項目。

To further increase our cabinets capacity and bolster our sales pipeline, we continue to [develop] our long-term hyper-scale data center in Jiangsu province during the second quarter. The Jiangsu campus boasts an estimated space of around 80,000 square meters and have the capacity to host over 8,000 high-powered density cabinets. We plan to install cabinets at this campus in phases. By the end of 2020, our first batch of cabinets at this campus should be ready for customer orders.

為了進一步增加我們的機櫃容量並加強我們的銷售渠道，我們在第二季度繼續在江蘇省[開發]我們的長期超大規模數據中心。江蘇園區預計佔地面積約80,000平方米，可容納8,000多個高功率密度機櫃。我們計劃分階段在該園區安裝機櫃。到2020年底，我們在該園區的第一批機櫃應該可以準備好接受客戶訂單。

Furthermore, we are restructuring our partnership with Warburg Pincus to enhance our pipeline capacity. As part of this restructuring, we'll not only receive cash payment but also ownership of a project under development in the Shanghai Waigaoqiao Free Trade Zone. We will use this project to increase our cabinets capacity, which will further augment our leadership in Shanghai and its satellite areas. This new location will have capacity to host 6,000 cabinets. The first phase of its construction is expected to include over 2,000 cabinets and to be completed by early 2020.

此外，我們正在重組與華平投資集團的合作夥伴關係，以增強我們的管道能力。作為此次重組的一部分，我們不僅將收到現金付款，還將獲得上海外高橋保稅區正在開發的項目的所有權。我們將利用這個項目來增加我們的機櫃容量，這將進一步增強我們在上海及其衛星地區的領先地位。這個新地點將可容納 6,000 個機櫃。第一期工程預計包括2000多個機櫃，預計於2020年初完工。

Going forward, we will continue to cautiously assess and prudently invest in our capacity expansion initiatives. Throughout the second half of 2019, our steadfast commitment to client relationship, flexible offerings and capacity expansion to further solidify our industry leadership, we are confident of our ability to capture the current market opportunities.

展望未來，我們將繼續審慎評估並審慎投資產能擴張計劃。整個2019年下半年，我們對客戶關係、靈活的產品和產能擴張的堅定承諾進一步鞏固了我們的行業領先地位，我們對抓住當前市場機遇的能力充滿信心。

Now I would like to turn the call over to Sharon Liu, CFO of our company, to give you more details on our financial results.

現在我想把電話轉給我們公司的首席財務官劉莎倫，向您提供有關我們財務業績的更多詳細信息。

Thank you, Alvin, and hello, everyone. Before we start our detailed financial discussion, please note that we will present non-GAAP measures today. Our non-GAAP results exclude certain noncash expenses which are not part of our core operations. The details of these expenses may be found in the reconciliation tables included in our press release. Please note that all of the financial numbers we are presenting today are in RMB terms and that percentage changes are on a year-over-year basis unless otherwise stated.

謝謝你，阿爾文，大家好。在我們開始詳細的財務討論之前，請注意，我們今天將介紹非公認會計原則措施。我們的非公認會計準則業績不包括某些不屬於我們核心業務的非現金費用。這些費用的詳細信息可以在我們新聞稿中的調節表中找到。請注意，除非另有說明，我們今天提供的所有財務數據均以人民幣計算，百分比變化均為同比變化。

During the second quarter, we ramped up our cabinet delivery capacity to satisfy an increased number of client orders and continued to grow our sales pipeline through strategic resource planning and prudent capital management. Our success in these areas and growing market demand have contributed to our strong balance sheet as well as year-over-year growth in our revenues and adjusted EBITDA.

第二季度，我們提高了櫃運能力，以滿足不斷增加的客戶訂單，並通過戰略資源規劃和審慎的資本管理繼續擴大我們的銷售渠道。我們在這些領域的成功和不斷增長的市場需求促進了我們強勁的資產負債表以及收入和調整後 EBITDA 的同比增長。

For the second quarter, our revenue increased by 7.2% year-over-year to CNY 888 million. Revenues benefits from client demand for scalable quality IDC services. Our hosting MRR per cabinet was CNY 8,663 in the second quarter of 2019, remained stable compared with the first quarter of 2019.

第二季度，我們的收入同比增長7.2%至8.88億元人民幣。收入受益於客戶對可擴展的優質 IDC 服務的需求。2019年第二季度我們每個機櫃的託管MRR為8,663元人民幣，與2019年第一季度相比保持穩定。

Adjusted cash gross profit, which excludes depreciation, amortization and share-based compensation expenses, increased by 10.9% to CNY 403.8 million from CNY 364 million in the same period of 2018. For the second quarter, we continue to add high-margin self-built cabinets to our sales mix and thus achieved greater economies of scale causing our adjusted cash gross margin to expand by 1.6 percentage points to 45.5% from 43.9% in the same period of 2018.

調整後現金毛利潤（不包括折舊、攤銷和股權激勵費用）從 2018 年同期的 3.64 億元人民幣增長 10.9% 至 4.038 億元人民幣。第二季度，我們繼續在銷售組合中加入高利潤的自建櫥櫃，從而實現更大的規模經濟，導致調整後的現金毛利率從去年同期的43.9%擴大1.6個百分點至45.5%。 2018.

Adjusted operating expenses, which exclude share-based compensation expenses and changes in the fair value of contingent purchase consideration payable, decreased to [CNY 161.3 million] (corrected by company after the call) from CNY 161.9 million in the same period of 2018. As a percentage of net revenues, adjusted operating expenses decreased to 18.2% from 19.5% in the same period of 2018 which showed the company's continuous efforts to realize operating leverage.

調整後的運營費用（不包括股權激勵費用和應付或有購買對價公允價值變動）從 2018 年同期的 1.619 億元人民幣減少至 [1.613 億元人民幣]（在電話通知後由公司更正）。調整後運營費用占淨收入的比例從2018年同期的19.5%下降至18.2%，顯示公司在實現運營槓桿方面的持續努力。

Adjusted EBITDA grew by 17.9% year-over-year to CNY 260.7 million, staying within the guidance range we provided in the previous quarter. Adjusted EBITDA margin increased by 2.7 percentage points to 29.4% from 26.7% in the same period of 2019.

調整後 EBITDA 同比增長 17.9% 至 2.607 億元人民幣，保持在我們上季度提供的指導範圍內。調整後 EBITDA 利潤率從 2019 年同期的 26.7% 增長 2.7 個百分點至 29.4%。

Net loss attributable to ordinary shares was CNY 102.1 million. Basic and diluted loss were CNY 0.15 per ordinary share and CNY 0.90 per ADS, each ADS represents 6 ordinary shares.

歸屬於普通股的淨虧損為人民幣1.021億元。基本虧損和攤薄虧損分別為每股普通股 0.15 元人民幣和每股美國存託股 0.90 元人民幣，每股美國存託股代表 6 股普通股。

Moving on to our balance sheet and the liquidity. At the end of the second quarter, our debt-to-asset ratio was 59% and our debt to adjusted EBITDA ratio was 3.2. We generated a positive net operating cash flow to CNY 127.1 million during the second quarter. As of June 30, 2019, we maintained a sizable cash position of CNY 3.25 billion. The sufficient cash will cover our expansion plans.

繼續我們的資產負債表和流動性。第二季度末，我們的資產負債率為 59%，債務與調整後 EBITDA 比率為 3.2。第二季度，我們產生了正的淨經營現金流，達到 1.271 億元人民幣。截至2019年6月30日，我們維持大量現金頭寸32.5億元人民幣。充足的現金將滿足我們的擴張計劃。

Going forward, our healthy liquidity and operating leverage will provide a solid foundation for us to seize growth opportunities and attract more clients in a broader range of locations in China. Furthermore, our financial leverage will enable us to continue expanding our nationwide capacity in a disciplined manner and bolstering our ability to secure low-cost funding.

展望未來，我們健康的流動性和經營槓桿將為我們抓住增長機會並在中國更廣泛的地區吸引更多客戶提供堅實的基礎。此外，我們的財務槓桿將使我們能夠繼續以有紀律的方式擴大我們的全國產能，並增強我們獲得低成本融資的能力。

Due to the growing market demand and our expanding cabinet capacity, we are raising our 2019 CapEx plans to a range of CNY 1.4 billion to CNY 1.6 billion with the additional CNY 600 million investment for IDC capacity expansion beyond 2019 including investment for the wholesale project and the Shanghai Waigaoqiao project.

由於市場需求不斷增長，機櫃容量不斷擴大，我們將 2019 年資本支出計劃提高至 14 億元至 16 億元人民幣，並額外投資 6 億元人民幣用於 2019 年之後的 IDC 擴容，包括批發項目和上海外高橋項目。

Turning to our guidance, we expect net revenue for the third quarter of 2019 to be in the range of CNY 950 million to CNY 980 million, and adjusted EBITDA to be in the range of CNY 250 million to CNY 270 million. For the full year of 2019, we maintain our previous guidance for the net revenue to be in the range of CNY 3.76 billion to CNY 3.86 billion and adjusted EBITDA to be in the range of CNY 1 billion to CNY 1.1 billion.

就我們的指引而言，我們預計2019年第三季度的淨收入將在9.5億元人民幣至9.8億元人民幣之間，調整後的EBITDA將在2.5億元人民幣至2.7億元人民幣之間。對於2019年全年，我們維持之前對淨收入37.6億元人民幣至38.6億元人民幣的指引，調整後的EBITDA在10億元人民幣至11億元人民幣的範圍內。

This forecast reflects our current and preliminary views on the market and operational conditions, which are subject to change. This concludes our prepared remarks for today. Operator, we are now ready to take questions.

該預測反映了我們對市場和運營狀況的當前和初步看法，這些看法可能會發生變化。我們今天準備好的發言到此結束。接線員，我們現在準備好回答問題。

(Operator Instructions) First question comes from the line of Yang Liu from Morgan Stanley.

（操作員指令） 第一個問題來自摩根士丹利的Yang Liu。

I have 3 questions here. First congratulations on the first wholesale deal. Could management elaborate more about the size of the wholesale deal and the location, economics, et cetera, whether it is on the JV with Warburg Pincus or fully under 21Vianet (inaudible) The second question is that in terms of the wholesale progress, what is the future outlook here? whether management expect to sign more contracts in the following quarters this year or next year?

我這裡有3個問題。首先祝賀第一筆批發交易。管理層能否詳細說明批發交易的規模以及地點、經濟狀況等，無論是與 Warburg Pincus 的合資企業還是完全在 21Vianet 旗下（聽不清） 第二個問題是，就批發進度而言，什麼是這裡的未來前景如何？管理層是否預計在今年或明年接下來的幾個季度簽署更多合同？

And the third one is outlook for the selling activity for the retail data centers, especially the early look of the new pipeline that VNET plans to release in fourth quarter this year. And also current utilization rate is not particularly high. I would like to hear your view on the starting activity of the retail data centers.

第三個是零售數據中心銷售活動的展望，特別是VNET計劃在今年第四季度發布的新管道的早期外觀。而且目前的利用率也不是特別高。我想听聽您對零售數據中心啟動活動的看法。

Hi, this is Alvin here. Thank you for the questions from Liu Yang. Actually it's -- first of all -- the first question regarding the wholesale products, we do receive for a nonbinding memorandum of understanding from 1 leading public cloud provider. Actually the list of products is not very big, actually it's a few hundred cabinets. So we have -- both sides agree this project will be the beginning of the long-term strategic cooperation. And this project will be -- basically the term will be around 8 years, and it will renew annually of after or we can negotiate.

嗨，我是阿爾文。謝謝劉洋的提問。實際上，首先，這是有關批發產品的第一個問題，我們確實從一家領先的公共雲提供商那裡收到了一份不具約束力的諒解備忘錄。其實產品清單不是很大，也就幾百個櫃子。所以我們雙方都同意這個項目將是長期戰略合作的開始。這個項目的期限基本上是 8 年左右，之後每年都會更新，或者我們可以協商。

And this project is in the area close to Shanghai, and the whole project is fully owned by 21Vianet. And also looking forward, we have as we mentioned before, we do have very strong customer engagements with leading customers from top public cloud service providers and also leading Internet players and also some other financial institutes. So looking forward, so we have very strong confidence we can secure at least another wholesale project in the coming 1 or 2 quarters. And of course, we are very optimistic, in the coming years to come we can establish our position in the wholesale segment.

而該項目位於上海附近地區，整個項目由21Vianet全資擁有。展望未來，正如我們之前提到的，我們確實與頂級公共雲服務提供商、領先的互聯網參與者以及其他一些金融機構的領先客戶建立了非常牢固的客戶互動。展望未來，我們非常有信心在未來一兩個季度至少獲得另一個批發項目。當然，我們非常樂觀，在未來幾年我們可以確立我們在批發領域的地位。

And the third part -- the third question regarding the utilization rates and the retail pipeline. And we do have a pressure from the customer churn in the first quarter and second quarter. And as we mentioned before, we already signed a medium to large size contract with a few leading customers. So our utilization rates will recover in the second half of this year and so we expect that in the second half we can ramp up another -- around 2,000 cabinets added into our utilized capacity.

第三部分——關於利用率和零售渠道的第三個問題。第一季度和第二季度我們確實面臨客戶流失的壓力。正如我們之前提到的，我們已經與一些領先客戶簽署了中型到大型合同。因此，我們的利用率將在今年下半年恢復，因此我們預計下半年我們可以再增加大約 2,000 個機櫃的利用率。

And also regarding our under-construction projects, we have a strong confidence we can deliver the capacity by the end of this year. And also we already received very strong pre-commitments or very strong sales pipeline coverage from our leading customers, Internet players and also financial institutes as well. Thank you.

對於我們在建的項目，我們有信心能夠在今年年底前交付產能。而且我們已經從我們的主要客戶、互聯網參與者以及金融機構那裡收到了非常強有力的預先承諾或非常強大的銷售渠道覆蓋。謝謝。

Next question comes from the line of Rex Wu from Jefferies.

下一個問題來自 Jefferies 的 Rex Wu。

So I have 2 questions now. So first is can you elaborate more about the partnership with the JV partner Warburg? What's the cost for buying back Waigaoqiao data center and what is planned for, is this plan for wholesale or retail? And my second question is regarding to the retail business, just housekeeping, so whether have you seen any potential customer churn -- have similar reason as your churn in Q1 and Q2 in the next couple of quarters.

所以我現在有兩個問題。首先，您能否詳細介紹一下與合資夥伴華平的合作關係？回購外高橋數據中心的成本是多少？計劃是什麼？這個計劃是批發還是零售？我的第二個問題是關於零售業務，只是內務管理，所以您是否看到任何潛在客戶流失 - 與您在接下來的幾個季度第一季度和第二季度的流失原因類似。

Okay. Thank you, Rex, this is Sharon. I will answer your first question about our partnership with Warburg Pincus. Based on our agreement, the joint venture 2 will distribute its asset and projects to 21Vianet and Warburg Pincus on a pro rata basis which we own 49% of equity share. So the total cost will be in the range of CNY 400 million to CNY 500 million. But the final price will depend on the auditor's report. So currently, we have not the exact amount. And for the Shanghai Waigaoqiao project, it will deliver at least 6,000 cabinets for the wholesale customers and the tailored retail customers. And currently, we have attracted the potential customers from the Internet and the finance verticals. Thank you.

好的。謝謝你，雷克斯，這是莎倫。我將回答你關於我們與華平投資集團合作的第一個問題。根據雙方協議，合資公司2將其資產和項目按比例分配給21Vianet和華平投資，其中我們擁有49%的股權。因此，總成本將在4億元至5億元人民幣之間。但最終價格將取決於審計報告。所以目前我們還沒有確切的數額。而上海外高橋項目，將為批發客戶和定制零售客戶提供至少6000個櫃子。目前，我們已經吸引了來自互聯網和金融垂直領域的潛在客戶。謝謝。

Regarding the retail business. Currently we have very strong customer demand from retail customers, especially in the -- from the top leading Internet players. And also looking forward, we haven't -- we have no -- we haven't seen any big risk to have a big customer churn in the coming quarters. Thank you.

關於零售業務。目前，我們有來自零售客戶的非常強勁的客戶需求，尤其是來自頂級領先互聯網公司的客戶需求。展望未來，我們沒有——我們沒有——我們沒有看到未來幾個季度出現大客戶流失的任何大風險。謝謝。

(Operator Instructions) Follow-up questions from Rex Wu from Jefferies.

（操作員說明）來自 Jefferies 的 Rex Wu 的後續問題。

Just a follow-up question on the Q2 result. So we saw the adjusted cash profit actually increase 10.9% year-over-year. I think that's one of the major driver for improving adjusted EBITDA margin. So like, can you elaborate a little more about the improvement on the cash gross margin? And can you -- do you have any guidance for the EBITDA margin long term, like when they will break 30%? I think since your organization is going to improve in the next 2 quarters I think it's very likely it will go over 30%, I assume.

只是關於第二季度結果的後續問題。所以我們看到調整後的現金利潤實際上同比增長了10.9%。我認為這是提高調整後 EBITDA 利潤率的主要驅動力之一。那麼，您能否詳細說明一下現金毛利率的改善情況？您對 EBITDA 利潤率長期有什麼指導嗎，比如什麼時候會突破 30%？我認為，由於您的組織將在接下來的 2 個季度內有所改善，我認為它很可能會超過 30%。

Thank you, Rex. Our cash gross margin increase was mainly due to our mixture shift from the partner data center to the self-built data center, that is the main driver of our cash gross margin. And for the second half of this year, especially for Q4 as we will deliver additional 600 cabinets -- 6,000 cabinets to the market and the related costs and expenses we'll recognize in our income statement, so Q4, our EBITDA margin will be lower. Thank you.

謝謝你，雷克斯。我們的現金毛利率增長主要是由於我們從合作夥伴數據中心向自建數據中心的混合轉移，這是我們現金毛利率的主要驅動力。今年下半年，特別是第四季度，我們將向市場額外交付 600 個機櫃——6,000 個機櫃，相關成本和費用我們將在損益表中確認，因此第四季度，我們的 EBITDA 利潤率將會較低。謝謝。

Sorry, can I just follow up? So like where do you see the demand in 2020 for the new retail cabinets? Like is that like mainly driven by few customers -- just a number of customers or it's very diversified?

抱歉，我可以跟進一下嗎？那麼您認為2020年新零售櫥櫃的需求在哪裡呢？就像這主要是由少數客戶驅動的——只是一些客戶還是非常多元化？

Hi, this is Alvin here. Thank you for your question regarding the customer demand. If we look at the market dynamic, we do see very strong kind of a trend that the leading players, especially in the Internet domain, will take even bigger market share so which means that from our customer mix that we see the major demand for our cabinet capacity were from fewer customers than before. But still that's one of the key strengths of 21Vianet is that we have very strong retail customer base and we have very strong coverage.

嗨，我是阿爾文。感謝您提出有關客戶需求的問題。如果我們觀察市場動態，我們確實看到一種非常強烈的趨勢，即領先的參與者，特別是在互聯網領域，將佔據更大的市場份額，這意味著從我們的客戶組合中，我們看到了對我們產品的主要需求。櫃子容量來自比以前更少的客戶。但這仍然是 21Vianet 的主要優勢之一，那就是我們擁有非常強大的零售客戶群，並且我們的覆蓋範圍非常強大。

So going forward, we will pursue both smaller and high-growth retail customers and also leading customers, not only the public cloud players but also the big Internet players, very strong Internet-- sorry, very strong state-owned enterprises and, of course, financial sector, et cetera. Thank you.

因此，展望未來，我們將追求規模較小、高增長的零售客戶，也將追求領先客戶，不僅是公有云廠商，還有大型互聯網廠商，非常強大的互聯網——對不起，非常強大的國有企業，當然還有、金融領域等。謝謝。

(Operator Instructions) We have a question from the line of Stella Li from Citi.

（操作員指令） 我們收到來自花旗集團的 Stella Li 的問題。

I just want to clarify, firstly, how much cabinets do we expect to deliver in the second half of this year and then how much for next year? Can you clarify the numbers again? And also you mentioned that we expect to raise our CapEx guidance to CNY 1.4 billion to CNY 1.5 billion this year. I want to know for this additional CNY 600 million, and you mentioned for the capacity beyond 2019, is this originally expected for our 2-year guidance? Or this is new cabinets and new CapEx in addition to our guidance give out previously.

我想先澄清一下，首先我們預計今年下半年交付多少機櫃，明年交付多少機櫃？你能再澄清一下這些數字嗎？您還提到，我們預計今年將資本支出指導提高至 14 億元至 15 億元人民幣。我想知道您提到的2019年以後的新增產能6億元人民幣，這是否是我們2年指導的最初預期？或者，除了我們之前給出的指導之外，這是新的機櫃和新的資本支出。

And then another question is I see the financial outlook for the third quarter. We expect our revenue to go up to CNY 950 million to CNY 980 million. However, the EBITDA margin is in the range still similar to second quarter. So I want to know what are the reasons for the lower EBITDA margin for third quarter outlook.

另一個問題是我對第三季度財務前景的看法。我們預計收入將達到 9.5 億元至 9.8 億元人民幣。然而，EBITDA 利潤率仍處於與第二季度相似的範圍內。所以我想知道第三季度 EBITDA 利潤率較低的原因是什麼。

Thank you, Stella. This is Alvin. Thank you for your questions. I will take the first one regarding the capacity expansion. So as we disclosed before this year that we aim to increase our capacity by 6,000 to 8,000 cabinets. And we already delivered 500 in the first half this year and also that we have a firm plan to deliver another 1,000 in Q3 -- by the end of Q3 this year, and which means that we have another 4,000 -- 4,500 to 8,000 around cabinets to deliver by the end of this year. And going forward, the next year that's currently that we aim to deliver 15,000 cabinets. And I'd like to turn to Sharon to answer your second and third questions.

謝謝你，斯特拉。這是阿爾文。謝謝您的提問。我講第一個關於產能擴張的問題。正如我們今年之前所披露的，我們的目標是將容量增加 6,000 至 8,000 個機櫃。今年上半年我們已經交付了 500 個，而且我們還有一個堅定的計劃，在第三季度再交付 1,000 個——到今年第三季度末，這意味著我們還有另外 4,000 個——4,500 到 8,000 個左右的機櫃將於今年年底交付。展望未來，我們的目標是明年交付 15,000 個機櫃。我想請莎倫回答你的第二個問題和第三個問題。

Hi, Stella. This is Sharon. Regarding your questions on the CapEx guidance, we reached another RMB 600 million for our other projects. This is the new additional CapEx for the projects, which includes the Shanghai Waigaoqiao, which will deliver the first phase by early next year and also the CapEx for the wholesale projects. And your third question is about our EBITDA margin. As in Q3, our utility costs will increase due to the high temperature, so we provide an EBITDA guidance just in the same range of the Q2. Thank you.

嗨，斯特拉。這是莎倫。關於您關於資本支出指導的問題，我們為其他項目又籌集了 6 億元人民幣。這是這些項目新增的額外資本支出，其中包括將於明年初交付第一期的上海外高橋項目以及批發項目的資本支出。你的第三個問題是關於我們的 EBITDA 利潤率。與第三季度一樣，我們的公用事業成本將因高溫而增加，因此我們提供的 EBITDA 指引與第二季度的範圍相同。謝謝。

(Operator Instructions) Follow-up questions from Stella Li from Citi.

（操作員說明）花旗銀行 Stella Li 的後續問題。

Just want to clarify, you mean the higher utility costs in 3Q expected, does this make it incurred that every summer or every 2Q or 3Q that we are expecting to see this? And then usually what's the impact on the financials? And also another question, the hosting MRR for the second quarter, if we compare to the first quarter, it's actually slightly lower. Is there any expectation for this trend for 3Q and 4Q for this hosting MRR?

只是想澄清一下，您的意思是預計第三季度的公用事業成本較高，這是否會導致我們預計每年夏天或每個第二季度或第三季度都會出現這種情況？那麼通常會對財務產生什麼影響？還有一個問題，第二季度的託管MRR，如果我們與第一季度相比，它實際上略低。對於這個託管MRR第三季度和第四季度的趨勢有什麼預期嗎？

Thank you, Stella. The utility cost was always high during summer time obviously from June to September, that's why our EBITDA guidance is more conservative. And for the MRR, company believes that the MRR will be stable in the second half of this year. And we expect our MRR per cabinet to remain at 8,700 level in the second half of this year.

謝謝你，斯特拉。夏季期間，從六月到九月，公用事業成本總是很高，這就是為什麼我們的 EBITDA 指導更為保守。對於MRR，公司認為今年下半年MRR將保持穩定。我們預計今年下半年每個機櫃的 MRR 將保持在 8,700 的水平。

We have no more questions from the line. I would like to hand the call back to the management for closing remarks.

我們已經沒有更多的問題了。我想將電話轉交給管理層以供結束語。

Thank you for joining our call. If you have any further questions, please feel free to contact IR. We look forward to speaking with everyone next quarter.

感謝您加入我們的通話。如果您還有任何疑問，請隨時聯繫 IR。我們期待下個季度與大家交談。

Thank you, ladies and gentlemen, that does conclude the conference for today. Thank you for your participation. You may now disconnect your lines.

謝謝女士們、先生們，今天的會議到此結束。感謝您的參與。您現在可以斷開線路。