GDS Holdings (NASDAQ: GDS; HKEX: 9698) said it plans to develop a hyperscale data centre campus in Johor, Malaysia.

The company added that it has entered into a definitive agreement to acquire greenfield land in the Nusajaya Tech Park in the outskirts of Johor Bahru, the capital of the Malaysian state of Johor, and adjacent to Singapore.

According to the initial design, GDS intends to develop the site into a data centre campus comprising a total net floor area of approximately 242,200 sq ft, with 54 MW of total IT power capacity.

The first phase of the development, with an IT power capacity of 18 MW, is expected to be completed in early 2024.

William Huang, GDS Chairman and CEO, said: “We are very excited to take the first major step in the execution of our regionalization plan with this strategically located project in Johor.

“Our home market Chinese customers see great potential for digital transformation in Malaysia and the South East Asia region. They are strongly supportive of our development strategy.”

Also commenting, Dato’ Haji Hasni bin Mohammad, Chief Minister of Johor, added: “We are thrilled to welcome this investment from GDS and the data center expertise they bring to Johor.

“Their presence in the Nusajaya Tech Park is the perfect complement to our agenda to drive development in digital transformation and solidifying Johor’s strategic location as a hub for regional growth.”

Malaysia’s Digital Investment Office (DIO), a collaborative effort between Malaysian Investment Development Authority (MIDA) and Malaysia Digital Economy Corporation (MDEC) which is entrusted to spearhead digital investment in Malaysia and plans on attracting 50 billion ringgit (US$11.84 billion) in investments towards the nation’s digital economy, have also spoken of the project, highlighting the key importance of digital infrastructure to the development of Malaysia.

Arham Abdul Rahman, CEO of MIDA, said: “The data centre industry has been a key aspect in building the country’s digital economy, especially in new job creation and inspiring digital upskilling of the local workforce and businesses.

“Therefore, we are indeed supportive of having GDS embarked on this expansion journey that witnesses the Company’s commitment and confidence in Malaysia in line with the Government strategies to propel Malaysia’s progression to becoming a regional data centre hub.”  

Surina Shukri, CEO of MDEC, added: “GDS’s presence in Malaysia will fortify our competitive advantage in attracting more data centre investments and strengthen the data centre ecosystem in line with the goals of the Malaysia Digital Economy Blueprint (MyDIGITAL).”

GDS’ last quarterly results showed the company’s performance to be in line with the global trend of positive and high growth for data centre businesses.

Net revenue in the first quarter of 2021 was RMB1,706.0 million (US$260.4 million), a 37.5% increase over the first quarter of 2020 of RMB1,240.4 million and a 4.6% increase over the fourth quarter of 2020 of RMB1,631.6 million.

Service revenue in the first quarter of 2021 was RMB1,704.5 million ($260.2 million), a 38.3% increase over the first quarter of 2020 of RMB1,232.6 million and a 4.7% increase over the fourth quarter of 2020 of RMB1,627.5 million.

The company explained the increase over the previous quarter was mainly due to full quarter revenue contribution from additional area utilised in the previous quarter and the contribution from 173,900 sq ft of net additional area utilised in the first quarter of 2021 which mainly related to the Shanghai 19 (SH19) Phase 1, Guangzhou 6 (GZ6), Beijing 8 (BJ8), Langfang 2 (LF2) and Huailai 1 (HL1) data centres.

Revenue from IT equipment sales was RMB1.5 million (US$0.2 million), compared with RMB7.8 million in the first quarter of 2020 and RMB4.1 million in the fourth quarter of 2020.

Gross profit was RMB396.9 million ($60.6 million) in the first quarter of 2021, a 13.3% increase over the first quarter of 2020 of RMB350.3 million, and a 7.7% decrease over the fourth quarter of 2020 of RMB430.0 million.

As of the end of the first quarter of 2021, GDS’ data centre portfolio comprised 3,580,000 sq ft,  compared with 2,475,000 sq ft at the end of the first quarter of 2020 and 3,426,000 sq ft at the end of the fourth quarter of 2020, an increase of 44.6% Y-o-Y and 4.5% Q-o-Q. The area under construction at the end of the first quarter of 2021 was 1,740,000 sq ft.