Tom Tang

Tom Tang from Morgan Stanley inquired about the 2026 market outlook, including overall order tendering and the impact of domestic chip advancements. He also asked for an update on the timeline, cash recycling, and financial statement impact of the recently filed private REITs.

Answer

Rotating President Ju Ma stated that the 2026 market is expected to be stable with moderate growth, driven by detailed, quarterly customer planning. He also noted the rapid progress and increasing competition among domestic chip players, which will offer more choices and certainty for customers. CFO Qiyu Wang explained that two new private REITs projects, focused on wholesale IDCs, are under exchange review, expected to have better valuation multiples than the first project. VNET will continue to consolidate these projects, so there will be no impact on revenue or EBITDA, with issuance targeted for Q1 next year.

Tom Tang inquired about VNET's 2026 market outlook, including the impact of domestic chip advancements, and sought an update on the timeline, cash recycling, and financial statement effects of the recently filed private REITs.

Answer

Rotating President Ju Ma stated that VNET anticipates a stable market with moderate growth in 2026, driven by detailed customer expansion plans and increasing adoption of domestic chips. CFO Qiyu Wang explained that the two new private REITs, focused on wholesale IDCs, are under exchange review with expected superior valuations. He confirmed VNET would continue to consolidate these projects, avoiding impact on revenue and EBITDA, with a target issuance by Q1 next year.

Tom Tang from Morgan Stanley inquired about VNet's expectations for future customer demand and order patterns, particularly following NVIDIA's resumed chip shipments to China.

Answer

VNet Management responded that the market is active, with strong AI-driven demand in key regions like the Greater Beijing area. They are closely watching for new orders around September, which are expected to have a six-month delivery timeline, and are in active communication with clients regarding potential AI-related projects beyond the recently announced 20 MW wholesale order.

Tom Tang requested more detail on the fourth-quarter outlook, focusing on demand trends for the wholesale business and whether to expect more new orders from AI training or other transitional demands.

Answer

Rotating President Chenggang Shen responded that based on current guidance, the wholesale business is expected to grow at a faster pace in Q4, while retail and non-IDC businesses will remain relatively flat. He expressed confidence in meeting the full-year delivery targets and operational plans.

Tom Tang inquired about the business outlook for the fourth quarter, any observed changes in customer behavior due to potential U.S. tariffs, and the expected stability of the gross profit margin given the increasing revenue contribution from the Smart Solutions segment.

Answer

CFO Alex Yang stated that while full Q4 visibility is not yet clear, the company is optimistic and sees it as a stable season. Regarding tariffs, she noted that customers have been relocating supply chains for years, but China's role remains significant, and Tuya adapts by serving customers globally. On margins, she explained that while the growth of Smart Solutions will gradually decrease the overall company gross margin, it is a healthy trend as each segment is competitive and operating leverage is maintained, leading to higher total gross profit.