Chindata Group Holdings Limited (NASDAQ:CD) Q2 2023 Earnings Conference Call August 31, 2023 8:00 AM ET Company Participants Don Zhou - Investor Relations Nick Wang - Chief Financial Officer Zoe Zhuang - Senior Vice President, Finance Conference Call Participants Yang Liu - Morgan Stanley Sara Wang - UBS Mingran Li - CICC Operator Good morning and good evening, ladies and gentlemen. Thank you for joining, and welcome to Chindata Group Holdings Limited Second Quarter 2023 Earnings Conference Call. We will be ...

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Chindata Group Holdings Limited (NASDAQ:CD) Q1 2023 Earnings Conference Call May 31, 2023 8:00 AM ET Company Participants Don Zhou - IR Nick Wang - CFO Zoe Zhuang - SVP, Finance Conference Call Participants Yang Liu - Morgan Stanley Sara Wang - UBS Mingran Li - CICC Edison Lee - Jefferies Operator Good morning, and good evening, ladies and gentlemen. Thank you for joining, and welcome to Chindata Group Holdings Limited First Quarter 2023 Earnings Conference Call. We'll be hosting a question-and-answer sessi ...

Financial Performance - Revenue for Q1 2023 was RMB1,443.5 million, representing a 56.8% year-over-year growth[2] - Net income for Q1 2023 was RMB253.0 million, reflecting a 167.5% year-over-year increase[2] - Adjusted EBITDA for Q1 2023 increased by 64.6% year-over-year to RMB813.8 million, with an adjusted EBITDA margin of 56.4%[2] - Operating income in Q1 2023 increased by 81.3% to RMB456.1 million (US$66.4 million) with an operating income margin of 31.6%[16] - Net income in Q1 2023 rose by 167.5% to RMB253.0 million (US$36.8 million), resulting in a net income margin of 17.5%[17] - Adjusted net income in Q1 2023 grew by 77.9% to RMB315.8 million (US$46.0 million), achieving an adjusted net income margin of 21.9%[20][21] - Revenue for the three months ended March 31, 2023, was RMB 1,443,547, representing a 3.7% increase from RMB 1,390,254 for the previous quarter[39] - Net income for the same period was RMB 252,972, a significant increase of 116.7% compared to RMB 116,462 in the previous quarter[39] - Adjusted EBITDA for the three months ended March 31, 2023, was RMB 813,800, reflecting a margin of 56.4%[44] - Operating income increased to RMB 456,110 for the three months ended March 31, 2023, up from RMB 309,376 in the previous quarter, marking a 47.5% increase[39] - The net income margin improved to 17.5% for the three months ended March 31, 2023, compared to 8.4% in the previous quarter[44] Capacity and Utilization - Total capacity reached 898MW by the end of Q1 2023, a 27.6% year-over-year increase[3] - Utilized capacity grew by 12MW to 537MW, representing a 56.1% year-over-year growth, with an overall utilization ratio of 84%[7] - Total contracted and "Indication of Interest" (IOI) capacity increased by 16MW to 816MW, a 31.8% year-over-year growth[3] Guidance and Outlook - The company reiterated its 2023 revenue guidance of RMB5,880 million to RMB6,080 million and raised its adjusted EBITDA guidance to RMB3,100 million to RMB3,220 million[2] - The company updated its full-year 2023 revenue guidance to RMB5,880 million – RMB6,080 million, reflecting a 29.2-33.6% increase over 2022[24] - Adjusted EBITDA guidance for 2023 was revised to RMB3,100 million – RMB3,220 million, indicating a 31.0-35.6% increase over 2022[24] Expenses and Cash Flow - Total operating expenses in Q1 2023 decreased by 1.4% to RMB167.1 million (US$24.3 million) from RMB169.5 million in Q1 2022[15] - Research and development expenses in Q1 2023 were RMB24.9 million (US$3.6 million), a 29.5% increase from RMB19.2 million in Q1 2022[15] - Selling and marketing expenses in Q1 2023 decreased by 4.3% to RMB21.4 million (US$3.1 million) from RMB22.4 million in Q1 2022[15] - Cash generated from operating activities reached RMB 693,276 for the three months ended March 31, 2023, compared to RMB 389,401 in the previous quarter, an increase of 78.1%[41] - The company reported a net cash increase of RMB 1,705,045 for the three months ended March 31, 2023, compared to a net decrease of RMB 923,708 in the previous quarter[41] - As of March 31, 2023, the company had cash, cash equivalents, and restricted cash of RMB5,769.3 million (US$809.3 million), up from RMB4,064.2 million as of December 31, 2022[22] Awards and Recognition - The Lingqiu campus received the Data Center Design and Construction Award, highlighting the company's commitment to environmentally friendly practices[8] Financial Health - The company maintained a pre-tax ROIC of 18.7% by the end of Q1 2023, reflecting strong financial health[5] - Basic earnings per share for the three months ended March 31, 2023, was 0.35, up from 0.16 in the previous quarter[39] - The company experienced a foreign exchange gain of RMB 2,045 for the three months ended March 31, 2023, compared to a loss of RMB 4,174 in the previous quarter[39]

Financial Risks and Regulatory Compliance - The company is exposed to foreign currency risks due to a substantial portion of revenues and expenses being denominated in Renminbi, which may negatively impact financial results when translated into U.S. dollars[185]. - Compliance with U.S. public company regulations is expected to increase legal and accounting costs, potentially impacting financial results[192]. - The company may incur significant costs related to compliance with the Sarbanes-Oxley Act, diverting management's attention from core operations[192]. - Changes in China's economic and political conditions could materially affect the company's operations and financial results[204]. - The evolving legal environment in the PRC may materially affect the company's business and prospects, potentially leading to a decline in the value of its ADSs[206]. - Future regulatory changes could impose additional compliance requirements that may adversely affect the company's operations[236]. - The company may face uncertainties regarding the approval and filing requirements from the CSRC for future financing activities[259]. - The company faces potential penalties from the CSRC or other PRC governmental authorities if it fails to obtain necessary approvals for offshore equity or debt financing activities[261]. - The company must comply with SAFE regulations regarding offshore investment activities, which may expose it to liabilities if not adhered to[268]. - The company is subject to fluctuations in the Renminbi exchange rate, which could adversely affect its financial condition and the value of dividends payable in foreign currencies[265]. - Future restrictions by the PRC government on foreign currency access could limit the company's ability to pay dividends in foreign currencies[266]. Operational Challenges and Market Conditions - The merger of Chindata and Bridge Data Centres in 2019 has resulted in a limited operating history, making it challenging to predict future performance and financial prospects[189]. - The company faces risks related to natural disasters and health epidemics, which could disrupt operations and adversely affect financial condition[196]. - Political tensions between the United States and China could reduce trade and investment levels, negatively impacting the company's business and financial condition[197]. - The company faces challenges from third-party contractors who may pass on their increased labor costs, potentially raising service costs[283]. - Rising inflation and labor costs in China are expected to negatively impact profitability and growth, with average wages anticipated to continue increasing[281]. Corporate Structure and Governance - The company operates through a VIE structure, which may face regulatory scrutiny and could affect the enforceability of contractual arrangements[198]. - The registered shareholders of the VIEs may have conflicts of interest that could adversely affect the company's control and economic benefits from the VIEs[231]. - The company has no arrangements to address potential conflicts of interest between the shareholders of the VIEs and itself[232]. - The company relies on contractual arrangements that have not been tested in a court of law, which may limit its operational control[228]. - The company may lose the ability to use and enjoy the assets of the VIEs if they undergo bankruptcy or liquidation, which could materially and adversely affect its business[239]. - The company has the right to prevent unauthorized voluntary liquidation of the VIEs by requesting shareholders to transfer their equity ownership interests[240]. Taxation and Financial Implications - The company is subject to PRC value-added tax rates ranging from 6% to 13% on revenues generated from its contractual arrangements with the VIEs[227]. - The withholding tax rate of 10% applies to dividends payable by mainland China companies to non-PRC-resident enterprises, which could limit the company's ability to grow[253]. - The PRC Enterprise Income Tax Law imposes a 10% withholding tax on dividends payable to non-PRC investors, which could adversely affect non-PRC shareholders[296]. - The company may face uncertainties regarding the reporting and implications of past and future transactions involving PRC taxable assets, potentially leading to additional tax liabilities[294]. - Compliance with PRC regulations regarding indirect transfers of equity interests may result in unfavorable tax consequences for the company and its non-PRC shareholders[295]. Shareholder Rights and Market Dynamics - The company does not expect to pay dividends in the foreseeable future, relying on price appreciation for returns on investment[326]. - The dual-class structure may prevent inclusion in certain stock market indices, potentially affecting trading price and liquidity of the ADSs[322]. - Significant sales or perceived potential sales of ADSs could lead to a decline in market price[329]. - The trading volume and price of ADSs may be influenced by fluctuations in quarterly results and changes in financial estimates by analysts[318]. - The company retains discretion over dividend declarations, which may depend on future operational results and cash flow[327]. - Holders of American Depositary Shares (ADSs) may experience dilution in their holdings due to limitations on participation in future rights offerings[338]. Legal and Jurisdictional Issues - The company is incorporated under Cayman Islands law, which may complicate legal actions against it or its directors in the U.S.[350]. - The company's fifth amended and restated articles of association provide that U.S. federal courts will have exclusive jurisdiction for disputes arising under the Securities Act or the Exchange Act[357]. - The deposit agreement limits ADS holders' rights to pursue claims against the depositary, including waiving the right to a jury trial[342]. - The depositary may close its books at any time, which could limit the transferability of ADSs[349]. - Certain corporate governance practices in the Cayman Islands differ significantly from those in the United States, potentially affording less protection to shareholders[355]. Auditor and Compliance Concerns - The company’s auditor, Ernst & Young Hua Ming LLP, is subject to PCAOB inspection issues, which could lead to delisting of its ADSs if not resolved[308]. - The SEC may prohibit trading of the company's shares if its auditor is not inspected for two consecutive years under the Holding Foreign Companies Accountable Act[307]. - The company has been identified as a "Commission-Identified Issuer" due to PCAOB inspection limitations, impacting its ability to trade in the U.S. market[308]. - The inability of the PCAOB to conduct inspections could lead to a loss of investor confidence in the company's financial statements[312].

Financial Data and Key Metrics Changes - Revenue in Q4 2022 was RMB 1,390.3 million, representing a 77.8% year-over-year growth, while full-year revenue reached RMB 4,551.7 million, a 59.6% increase year-over-year [7][23] - Adjusted EBITDA for Q4 2022 was RMB 720.9 million, a 78.4% year-over-year growth, with a margin of 51.9%. For the full year, adjusted EBITDA was RMB 2,374.2 million, a 67.3% increase year-over-year [7][28] - The company expects full-year 2023 revenue to be between RMB 5,880 million and RMB 6,080 million, and adjusted EBITDA to be between RMB 3,000 million and RMB 3,110 million, indicating around a 30% increase from 2022 [7][32] Business Line Data and Key Metrics Changes - The company added 1 new project with an additional 50 megawatts of capacity in Q4 2022, bringing total capacity to 871 megawatts and total data centers to 32 [5][9] - Utilized capacity increased by 71 megawatts in Q4, totaling 525 megawatts, with a solid utilization rate of 86% [6][13] - The commitment rate for total capacity reached 92% by the end of Q4, compared to 85% in the previous quarter [12] Market Data and Key Metrics Changes - The company reported a 35.9% year-over-year increase in total client commitment, with 211 megawatts of client commitment received in 2022 [11] - Overseas business contributed to 9% of total utilized capacity in Q4, up from less than 5% in previous quarters [14][22] - The company is focusing on the Southeast Asian market, with significant projects in Malaysia and India ramping up steadily [20][35] Company Strategy and Development Direction - The company is actively participating in the national East Data West Computation Plan, planning a 150-megawatt campus in Gansu Province [18] - The management emphasized the importance of leveraging energy resources and maintaining operational efficiency to support future demand [20][36] - The company aims to achieve an additional 120 to 150 megawatts of lift capacity in the next two years, with a focus on existing anchor clients [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum from existing clients and the long-term demand driven by emerging AI technologies [19][41] - The company is prepared for potential explosive growth in demand due to advancements in AI, particularly with clients involved in AI computing [44] - Management highlighted the importance of maintaining a healthy financial profile and operational readiness to meet future demand [31][36] Other Important Information - The company completed a $300 million senior notes offering in February 2023, which will support product development in China and overseas [6][16] - A one-off long-lived asset impairment cost of around RMB 83.5 million was recorded due to the decision to discontinue the Chinidea manufacturing business line [24][50] Q&A Session Summary Question: Breakdown of the 120-150 megawatt new booking in the next 2 years - Management indicated that 80% of the new bookings will come from existing key anchor clients, with 70% from China and 30% from overseas [38] Question: Impact of AI and data science on demand - Management believes that AI technologies will significantly increase computing power demand, benefiting the data center industry [41][42] Question: CapEx guidance for 2023 and revenue/EBITDA assumptions - CapEx is forecasted to be around RMB 5 billion, based on current business plans and project delivery schedules [49] - Management stated that the 30% revenue and EBITDA growth forecast is conservative, reflecting existing contracts and execution under construction [51][52]

Revenue Growth - Total revenue for Q4 2022 increased by 77.8% YoY to RMB1,390.3 million (US$201.6 million), driven by robust growth in colocation services[13] - Fiscal year 2022 revenue reached RMB4,551.7 million (US$659.9 million), representing a 59.6% YoY growth and exceeding guidance by 2.7%[2] - The company set its 2023 total revenue guidance at RMB5,880 million – RMB6,080 million, a 29.2-33.6% increase over 2022[25] Profitability Metrics - Adjusted EBITDA for Q4 2022 grew by 78.4% YoY to RMB720.9 million, with an adjusted EBITDA margin of 51.9%[5] - Gross profit for Q4 2022 increased by 64.4% YoY to RMB569.7 million, with a gross margin of 41.0%[16] - Operating income in Q4 2022 increased by 39.7% to RMB309.4 million (US$44.9 million) with an operating income margin of 22.3%[18] - Net income in Q4 2022 increased by 1.6% to RMB116.5 million (US$16.9 million) with a net income margin of 8.4%[19] - Adjusted net income in Q4 2022 increased by 65.2% to RMB236.2 million (US$34.2 million) with an adjusted net income margin of 17.0%[23] Capacity and Utilization - Total capacity increased by 50MW to 871MW by the end of Q4 2022, reflecting a 29.4% YoY growth[3] - Utilized capacity rose by 71MW to 525MW, representing a 72.5% YoY increase, with an overall utilization ratio of 86%[10] - The company received a total of 211MW client commitments in 2022, resulting in a year-end total client commitment of 800MW, a 35.9% YoY increase[6] - Commitment ratio for total capacity was 92% by the end of Q4 2022, indicating strong demand and client confidence[7] Expenses - Total operating expenses in Q4 2022 increased by 108.3% to RMB260.4 million (US$37.7 million) from RMB125.0 million in Q4 2021[17] - For the fiscal year 2022, total operating expenses increased by 34.3% to RMB704.4 million (US$102.1 million) from RMB524.5 million in 2021[17] Cash and Assets - As of December 31, 2022, the company had cash, cash equivalents, and restricted cash of RMB4,064 million (US$589.3 million)[24] - Total assets as of December 31, 2022, were RMB 23,100,231 thousand (US$ 3,349,219 thousand), up from RMB 18,681,951 thousand in 2021[38] - Cash and cash equivalents at the end of the period were RMB 4,987,934 thousand (US$ 589,258 thousand), down from RMB 5,241,002 thousand at the beginning of the period[40] Comprehensive Income - The company reported a comprehensive income of RMB 609,090 thousand (US$ 88,309 thousand) for the year ended December 31, 2022[39] Research and Development - Research and development expenses for the year ended December 31, 2022, were RMB 83,496 thousand (US$ 12,106 thousand), compared to RMB 75,344 thousand in 2021, indicating continued investment in innovation[39] Debt and Financing - A $300 million senior notes offering was completed on February 23, 2023, to support project development, with a coupon rate of 10.5%[3] Other Financial Metrics - Basic and diluted earnings per ADS in Q4 2022 were RMB0.32 (US$0.04) and for the fiscal year 2022 were RMB1.78 (US$0.26)[21] - The adjusted EBITDA guidance for 2023 is set at RMB3,000 million – RMB3,110 million, a 26.4-31.0% increase over 2022[25]

Financial Data and Key Metrics Changes - Revenue for Q3 2022 was RMB1,202.7 million, representing a year-over-year increase of 52.4% [9] - Adjusted EBITDA grew by 66.8% year-over-year to RMB614.5 million, with a margin of 51.1% [9][19] - GAAP net income reached RMB241 million, a 207.4% increase year-over-year, with a net margin of 20% [9][18] Business Line Data and Key Metrics Changes - Total capacity increased by 45 megawatts in Q3, reaching 821 megawatts, with 579 megawatts in service [8] - Client commitment rate remained strong at 85% of total capacity, with 96% of in-service capacity committed by clients [11][12] - Utilized capacity increased to 454 megawatts, reflecting a utilization rate of 78% [13] Market Data and Key Metrics Changes - The Greater Beijing region accounted for 75% of total capacity and 94% of utilized capacity, with the highest utilization ratio of 83% [15] - APAC projects now represent 49% of total construction capacity, indicating a growing focus on emerging markets [15] Company Strategy and Development Direction - The company aims to leverage its advantages in hyperscale business and continue investments in R&D to enhance competitive power [6][7] - Expansion plans include a focus on the APAC emerging markets, with significant capacity under construction in Malaysia and India [14][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained demand, with a target of 120 to 150 megawatts of new orders annually [24][25] - The company anticipates stable power prices in the near term, with a strategic advantage in regions with abundant power supply [29] Other Important Information - The company celebrated the opening of the MY06 project in Malaysia, which has a design capacity of over 100 megawatts [14] - The company issued its third annual ESG report, emphasizing a strategy focused on zero carbon and sustainable development [16] Q&A Session Summary Question: Demand outlook and sustainability - Management confirmed no pull forward in demand and expects sustainable growth of 120 to 150 megawatts annually, with strong demand from both China and overseas markets [24][25] Question: Electricity cost trends - Management indicated that electricity costs have risen to over 30% of revenue but expect stability in the near term due to advantageous locations [27][29] Question: Move-in rate and revenue contribution from overseas - The ramp-up rate for the MY06 project is strong, with expectations for increased overseas revenue contribution in the coming years [30][32] Question: Power costs and gross margin - Management explained that the increase in power costs is due to changes in the charging mechanism in Hebei, but overall EBITDA margins remain healthy [34][36] Question: Rental price trends - Domestic contract pricing has remained stable, while overseas pricing is competitive with a pass-through model for power costs [39][41]

Revenue Growth - Revenue for Q3 2022 increased by 62.4% YoY to RMB1,202.7 million (US$169.1 million), driven by robust growth in colocation services[19] - Total revenue for the three months ended September 30, 2022, was RMB 1,202,703, representing a 62.3% increase from RMB 740,768 for the same period in 2021[45] - The company raised its full-year 2022 revenue guidance to RMB4,330 million – RMB4,430 million, reflecting a 51.8-55.3% increase over full year 2021[31] Profitability - Net income for Q3 2022 rose by 207.4% YoY to RMB241.0 million, achieving a net income margin of 20.0%[2] - Operating income in Q3 2022 increased by 72.2% to RMB317.5 million (US$44.6 million) with an operating income margin of 26.4%[24] - Adjusted net income in Q3 2022 increased by 162.8% to RMB294.3 million (US$41.4 million) with an adjusted net income margin of 24.5%[28] - Net income for the three months ended September 30, 2022, was RMB 241,036, compared to RMB 78,406 for the same period in 2021, reflecting a 207.5% increase[45] - The net income margin improved to 20.0% for the three months ended September 30, 2022, compared to 10.6% in the same period of the previous year[50] EBITDA Performance - Adjusted EBITDA for Q3 2022 increased by 66.8% YoY to RMB614.5 million, with an adjusted EBITDA margin of 51.1%[2] - Adjusted EBITDA for the nine months ended September 30, 2022, reached RMB 1,653,311, up from RMB 1,014,664 in the previous year, indicating a year-over-year increase of 62.8%[50] - The adjusted EBITDA margin for the three months ended September 30, 2022, was 51.1%, slightly down from 52.4% in the previous quarter[50] Capacity and Utilization - Total capacity grew by 45MW to 821MW by the end of Q3 2022, representing a 39.7% YoY increase[3] - Utilized capacity increased by 53MW to 454MW, reflecting a 69.3% YoY growth, with an overall utilization ratio of 78%[9] - Total contracted and Indication of Interest (IOI) capacity reached 700MW, marking a 41.9% YoY increase[8] Expenses - Total operating expenses in Q3 2022 increased by 11.4% to RMB148.7 million (US$20.9 million) from RMB133.5 million in Q3 2021[22] - General and administrative expenses in Q3 2022 increased by 36.1% to RMB116.1 million (US$16.3 million) primarily due to higher share-based compensation and professional fees[22] - Research and development expenses in Q3 2022 decreased by 18.6% to RMB17.5 million (US$2.5 million) compared to RMB21.5 million in Q3 2021[22] Cash and Assets - Cash, cash equivalents, and restricted cash as of September 30, 2022, were RMB5.0 billion (US$701.2 million), down from RMB5.8 billion as of June 30, 2022[29] - Total current assets decreased to RMB 6,347,323 as of September 30, 2022, from RMB 7,456,725 as of December 31, 2021[43] - Total liabilities decreased to RMB 8,567,319 as of September 30, 2022, from RMB 11,580,939 as of December 31, 2021[43] - Total non-current assets decreased to RMB 12,334,628 as of September 30, 2022, from RMB 14,806,755 as of December 31, 2021[43] Innovation and Technology - The company celebrated the grand opening of project MY06 in Johor, Malaysia, with a designed capacity over 100MW, including 19MW recently put into service[12] - The company’s hybrid evaporative cooling technology won a national-level award, demonstrating its commitment to innovation and efficiency[16] - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[51] Shareholder Returns - The company reported a basic earnings per share of RMB 0.33 for the three months ended September 30, 2022, compared to RMB 0.11 for the same period in 2021[45]

Financial Data and Key Metrics Changes - Total capacity expanded to 776MW, an increase of 72MW during the quarter, with 30 data centers in the asset portfolio [6][7] - Revenue for the quarter was RMB1,038.1 million, representing a 51.2% year-over-year growth [8][21] - Adjusted EBITDA was RMB544.3 million, a 60.8% year-over-year growth with a margin of 52.4% [8][24] - GAAP net income reached RMB199.6 million, a 206.3% year-over-year growth, with a historical high margin of 19.2% [8][22] Business Line Data and Key Metrics Changes - Total utilized capacity increased to 401MW, a 59.6% year-over-year growth [14] - Contracted and indication of interest capacity increased by 32MW during the quarter to 619MW, leading to a commitment rate of 84% [7][11] - 95% contracted & IOI ratio for in-service capacity, consistent with the previous quarter [11] Market Data and Key Metrics Changes - APAC emerging market capacity deployment accounts for around 15% of total capacity, with 89% of this capacity committed by clients [15] - The company has 117MW capacity either in service or under construction in Southeast Asia, targeting international customers like Microsoft and Google [34] Company Strategy and Development Direction - The company is focusing on the East Data, West Computation Policy to strengthen its foothold in key regions [16] - A new agreement with the local government in Datong, Shanxi Province aims to expand capacity to over 500MW, potentially making it the largest IDC campus in Asia [17][42] - Strategic partnership with Taiji Computer aims to leverage each other's strengths in technology and market access [18][35] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained demand from clients, with a conservative approach to forecasting ramp-up speeds [29] - The company maintains its full-year revenue and adjusted EBITDA guidance despite market fluctuations [40] - Management is optimistic about the Southeast Asian market, anticipating balanced demand and supply in the future [34] Other Important Information - The company closed a US$500 million syndicated loan to support further expansion [8][20] - Recent development of a waterless cooling technology, X-Cooling, aims to improve energy and water efficiency in data centers [19][68] Q&A Session Summary Question: Outlook for utilization rate ramp-up - Management indicated that the current ramp-up speed reflects strong business demand, but they will maintain a conservative nine-month forecast for moving rates [29] Question: Potential customers in Southeast Asia and competitive landscape - Management is optimistic about opportunities in Southeast Asia, with significant capacity already in place to serve international clients [34] Question: Expansion plan in Datong and utility costs - Management confirmed plans for a 500MW capacity in Datong, with adequate power supply in main campuses despite regional shortages [39][42] Question: Tax rate volatility - The tax rate varies due to operations in different countries and specific tax policies, with a compound effect from various jurisdictions [49][51] Question: Impact of market conditions on business - Management emphasized a cautious approach to forecasting, relying on actual commitments rather than industry trends [56] Question: Plans for green energy projects - The company will collaborate with partners for ecological power development in Datong, focusing on local resource utilization [64] Question: Adoption of X-Cooling technology - Management confirmed that the technology balances cost and efficiency, with significant potential for water savings [68]