De Xiang (00199) acquires 16,500 mu of new energy land in Nantong: Ambitions from electricity and computing power to Neocloud

After hours on July 2nd, ITC PROPERTIES (00199) announced the acquisition of a 20% stake in PYI Investment for a total consideration of approximately 337 million Hong Kong dollars, with a net consideration of approximately 215 million Hong Kong dollars. They also gained the right of director appointment and control over major matters, as well as the priority right to increase their stake at the same price in the next 6 months. Since announcing concrete artificial intelligence infrastructure and computing power strategic measures in May, ITC PROPERTIES has garnered market attention, with its stock price rising by approximately 150%. The substantial assets of PYI Investment, the target of the acquisition by DeXiang, are land in Rudong County, Nantong City, Jiangsu Province, totaling 16,500 acres, approximately 120 kilometers from Shanghai. The most interesting aspect of this announcement is not the financial skills of the "shell king" but rather the emerging strategic ambitions. The 40+ page announcement consistently revolves around green energy and computing power centers. The land resources are large-scale and available for contiguous development; there is a confirmed reserve of geothermal fields capable of generating electricity and cooling; the local area has wind, solar, hydrogen, and LNG cooling resources forming a multi-energy complementary system; located in the central area with advantages in fiber optic networks and low latency. All indicators point towards a firm computing power strategic blueprint, rather than the traditional logic of real estate development for land acquisition. The description of the target assets in the announcement implies that whether constructing a standalone data center or expanding a large-scale computing power park, there is sufficient space in which they can make their own decisions. The key cost centers and technical thresholds of computing power centers energy and cooling already have green solutions in place. The multi-energy complementary system signifies that the project not only has green energy sources but also has the potential to build comprehensive energy solutions, with an extremely high proportion of green energy. The announcement doesn't explicitly mention the "computing power center plan" but has become a tacit understanding among the readers. Land, electricity, cooling, network, location, and demand, when viewed individually, are descriptions of the due diligence results of the assets. But within our context, it can only be interpreted as one thing: ITC PROPERTIES is paving the way for its flagship computing power center. By combining the various strategic layouts of ITC PROPERTIES over the past period, I believe that what they are truly doing is not like Range Intelligent Computing Technology Group, which simply excels in land acquisition and replicating AIDC developers, nor is it an "real estate + AI" concept, but is more akin to global computing power operators like CoreWeave and Nebius the new Neocloud. From RuiKai to Nscale, DeXiangs ambitions go beyond just AIDC The most vital change in ITC PROPERTIES over the past half-year is the introduction of a new major shareholder, Reynold Lemkins from RuiKai Group, bringing an international perspective to their technology asset evaluations. He values not how traditional real estate companies revitalize their inventory and debt restructuring but rather how the rise of global AI infrastructure is fundamentally redefining their pricing. From land, electricity resources to computing power supply, Reynold has outlined a strategic transformation path for ITC PROPERTIES. RuiKai Group is a private investment institution that extensively invests in top-tier primary markets GP, as well as secondary market opportunities in Hong Kong and the US. They have maintained cooperative relationships with the Milken Institute founded by the former "Bond King" Michael Milken, the Greenwich Economic Forum, the global top family network FBN, and AFLF, giving DeXiang a global and forward-looking perspective. I believe that their previous announcement of participating in a private round investment in Nscale, the unicorn company under Nvidia's Neocloud, was not an isolated action. It indicates that DeXiang is consciously understanding Neocloud's industry language and capital market logic, and is linking up with the global GPU ecosystem. Neocloud is not just a simple AIDC or a regular public cloud and cloud service provider, but instead a new type of AI infrastructure operator that reorganizes power supply, GPU, data centers, cloud platforms, customer orders, and capital leverage around AI computing power demand. In another word, to understand DeXiang's strategic intentions and make accurate value judgments, we should place them in the context of Neocloud. Every DeXiang announcement made in the past three months has been revealing pieces of their grand puzzle. This acquisition is possibly a significant hint of DeXiang's Neocloud puzzle surfacing. In the next four to five months, we are likely to see more signals from DeXiang regarding the release of cloud platform capabilities. DeXiang's new puzzle: NanTong's gigawatt-level green intelligent computing center Assessing a company's potential as a Neocloud entity cannot just be based on having an AI concept or purchasing numerous GPUs. It involves looking at several core pieces: power capacity/megawatts and land resources, GPUs and customer orders, cloud platforms, and scheduling capabilities, as well as project financing capabilities. Among these, the most fundamental and hard aspect is power capacity/megawatts and land resources. In the Neocloud, electricity won't just float in the air but will eventually come back to earth. Neocloud companies in Europe and the US have already made this logic very clear. The likes of CoreWeave, a seemingly AI cloud service provider on the surface, are actually selling GPU power and cloud platform capabilities, but their real barrier is not just acquiring more GPUs, it's having a large-scale AI computing center that provides stable and adequate power, high-density cooling, and physical infrastructure that can accommodate future expansions. These companies then use cloud platforms to manage rapid growth. This is why the assets of NanTong, Rudong being acquired by DeXiang are worth special attention. Within DeXiang's Neocloud development path, this asset could potentially serve as the 'foundation' for a flagship computing power center. The value of the acquisition target is not just plain land but a combination of large contiguous land, geothermal resources, geothermal power generation and cooling, offshore wind power, photovoltaics, LNG, multi-energy complementarity, and its strategic demand position in the Yangtze River Delta area. Large-scale, contiguous developable land, spanning over 16,500 acres roughly as large as 15 football fields signifies that a large-scale computing power park could be established in the future. Geothermal wells, geothermal resources at 108 degrees Celsius and 92 degrees Celsius, and even a future 150-degree heat source, all contribute to a significant carbon reduction effect, pointing towards stable power sources and strong government support for green energy. Geothermal refrigeration directly corresponds to the core operating technology of computing power centers cooling. More importantly, this area is not limited to geothermal resources. The announcement repeatedly mentions offshore wind power, photovoltaics, LNG, and a multi-energy complementary system in Rudong. This information is crucial, as it suggests that these assets are not just one-dimensional energy projects but are situated in an area with abundant comprehensive energy resources. The ratio of green energy sources is high enough to accommodate a large-scale green computing power center. For Neocloud companies like DeXiang, such assets are particularly rare. As AI computing centers develop further, the market will no longer focus solely on the number of cabinets but will look at megawatts, electricity costs, the proportion of green energy, cooling efficiency, and expansion space. A project with several hundred megawatts may only be a pilot; it is only projects in the hundreds of megawatts that can truly become flagship projects. Therefore, the true potential that DeXiang has opened up with this announcement is the possibility that NanTong, Rudong could potentially house a gigawatt-level green computing power center in the future. This judgment isn't baseless. On one hand, the land, green energy, geothermal, refrigeration, and multi-energy complementary conditions outlined in the announcement are sufficient to support such a center, with a particular emphasis on reserving 2 million square meters of land for a green smart computing center. This amount of land is large enough to host a computing power center with a load of at least a gigawatt. On the other hand, the computing power team, previously disclosed by DeXiang, has experience in constructing and operating computing centers above 400MW and has been acknowledged by European and American foreign institutions. With such a professional team that has managed large-scale computing power centers, securing a base with self-sufficiency, ample green energy, and ample space indicates a plan for significant expansion. This is likely an important attraction for the team led by Cao Xinwei, who was willing to leave AsiaPac to join DeXiang. It seems more like DeXiang is laying the foundation for its Neocloud strategy, having already secured a seat on the board of directors, and possessing the authority to make decisions and develop. I believe DeXiang will adopt a more aggressive approach in subsequent investments, construction, and operations, using a more competitive structure to achieve maximum benefits by amplifying their stake in the most profitable areas. GPUs and customer orders are no longer a hidden "secret" For a listed company intending to transition towards Neocloud, GPU capacity and customer order capacity are two core pillars that determine whether their strategy can progress from a concept to a proven business model. The former determines if the company truly possesses AI computing power supply capabilities, while the latter determines if these computing power assets can be converted into revenue, cash flow, and valuation support. The ability to acquire GPUs is a scarce resource. Whether an enterprise can obtain stable GPU resources often determines if they can deliver customer orders as planned, expand computing power capacity, and capitalize on market opportunities. In a time where AI computing prices, customer orders, chip supplies, and depreciation cycles are rapidly changing, blindly increasing capacity may turn into a risk. Approaching GPU procurement based on customer demand can help mitigate uncertainties in capital expenditure and returns. Therefore, for a company building their Neocloud business, the smarter approach would be to establish the supply chain, deployment, delivery, and customer usage scenarios, before gradually increasing capacity based on orders and project financing. DeXiang currently seems to be in such a state: they have started delivering their first computing power operation services, and the significance of this is not to tell the market how many cards DeXiang has but rather that they have gone through a real commercial environment sourcing cards, deploying, delivering, and servicing customers, albeit on a small scale. The real large-scale GPU supply chain and deployment rhythm will still require further announcements for verification; but from the actions that have already been disclosed, DeXiang seems to have a path forward, cautiously testing the market, understanding the business model, and gradually ramping up. Compared to GPUs, what's more crucial is customer orders. DeXiang has visible pathways in terms of customer orders. The first pathway is the large-scale computing power park customer organization capabilities brought in by Cao Xinwei's team. It was observed in the Huatai Strategy Conference that Sun Wenzheng, a former colleague of Cao Xinwei and ex-China General Manager of AsiaPac, has joined DeXiang as the Chief Operating Officer of Dexiang. Together, they previously led the Tianjin and Taicang super large-scale IDC parks, secured over 404MW of compliant power, managed over 46,000 racks, and signed contracts with major internet companies. Reuniting the original team from AsiaPac is just a matter of time before disclosing their previous clients. The second pathway is through the capital and industry ecology of major shareholder RuiKai. RuiKai has been fairly active in the capital markets, investing in and engaging with several AI model companies, as well as various traditional groups with AI transformation needs. These future companies are potential clients with high token consumption, high computing power demands, and high inference needs. DeXiang has a natural advantage in importing these client demands. So, in terms of DeXiang's Neocloud capacity architecture, they've already given us quite a few clues in their scattered announcements over the past two months. The greater surprises are likely hidden in a puzzle that we have yet to uncover. Cloud Computing: DeXiang's next most anticipated surprise In the Neocloud, "cloud services" encapsulate GPU computing power, servers, network, storage, scheduling systems, model running environments, and billing systems into AI infrastructure services that customers can directly access. It includes elements like Kubernetes, scheduling systems, development tools, enterprise private deployment, API calls, and industry AI application environments, allowing customers to purchase computing power and model running services by the hour, month, year, or call, similar to using cloud services to access GPU computing power. To implement this, the key requirements are to have a complex CTO and engineers with GPU clusters, cloud platforms, AI systems, heterogeneous computing, and engineering delivery capabilities. This is the one area where DeXiang has yet to fully unveil its potential game-changer. In the context of China, JiLiu Technology and SiluFlow can be seen as two representative samples of AI infrastructure. JiLiu Technology represents a technological route focused on low-level computing clusters and high-performance networks. Its founder and CEO, Hu Xiaohe, holds a doctoral degree in engineering from Tsinghua University and was a postdoctoral researcher in network security. SiluFlow, on the other hand, represents a path that lowers the costs of large model computation and calls through algorithm, system, and hardware innovation. Its founder and CEO Yuan Jinhui, holds a doctoral degree in engineering from the Department of Computer Science at Tsinghua University and was involved in postdoctoral research in computational neuroscience. JiLiu Technology disclosed a Series D financing round with a post-money valuation of approximately 9.16 billion RMB. Domestically and abroad, many Neocloud companies have strong ties to professors, doctors, and laboratory spin-offs. What kind of outstanding performance can we expect from DeXiang in this area? Clues can be found in the background of their new shareholders: strategic shareholder Wu Jiezhuang, a postdoctoral fellow in computer science from Tsinghua University, with research in Proactive Computing; and major shareholder Liu Haoran, currently the President of RuiKai Group China, who graduated from the University of Hong Kong and MIT, and has a wide network among top universities. Perhaps we can anticipate that DeXiang will soon announce a top-tier academic expert in line with the founders of JiLiu Technology to lead their cloud computing product. This could potentially be one of the most explosive areas for DeXiang's future valuation increase. Hong Kong's market is lacking a true Neocloud target Revisiting the initial question: what does this announcement from ITC PROPERTIES truly signify? It is certainly an acquisition announcement, but it also seems like a puzzle for investors to solve. NanTong, Rudong has proven its capabilities in electricity and land resources, with the first computing power service verifying GPU deliveries. Cao Xinwei's team brings customer and project experience, and the new shareholder, RuiKai, has injected a global AI perspective into DeXiang's DNA. In the past, Hong Kong's market hasn't lacked AI concepts or data center companies, but a true Neocloud target that combines a listing platform, heavy asset entry, green energy resources, cloud computing research capabilities, a global AI vision, and capital organization capabilities has yet to emerge. In a sense, ITC PROPERTIES is becoming one of the most Neocloud-like companies in the Hong Kong market. Overseas markets have already placed their bets on this track with tangible investments, such as CoreWeave, one of the most representative Neocloud companies globally, with a market value of approximately 47 billion US dollars; and Nebius, positioned as an AI cloud platform, with a market value of approximately 58 billion US dollars. The market may not have to provide DeXiang with a definitive answer right now, but it should start viewing them in a different light, no longer just as a traditional real estate stock, and certainly not as a simple AIDC concept company. If over the next four to five months, DeXiang continues to release signals around electricity, GPUs, customer orders, cloud platforms, and project financing, then looking back at this NanTong, Rudong acquisition announcement might truly be the beginning of DeXiang revealing its hand as a Neocloud player.