Q1 2020 JinkoSolar Holding Co Ltd Earnings Call
[music].
Welcome to today's first quarter Twentytwenty Jinkosolar <unk> earnings conference call.
Please note that Oh participants won't be listen only mode for the first part of this call.
And afterwards, there won't be a question and answer session now.
Now I'm pleased to present mess recall Zhao Ming Zhao please begin.
Thank you operator, thank everyone for joining us today for Jinkosolar first quarter Twentytwenty earnings Conference call. The Companys results were released earlier today and a reasonable other companies IR website academic W. W. Duct jinkosolar that account as well as newswire services.
We have also provided supplemental presentation for todays earnings call, which can also be found on the IR website.
On the call today from Jinkosolar I missed the turn Comping, Chief Executive Officer, Mr., Chatty, Pal Chief Financial Officer underneath the Gener Miao, Chief Marketing Officer, Mr., Chen will discuss Jinkosolar operation and the company highlights followed by Mr. Miao, who will talk about your sales and marketing.
And then Mr. Gao who will go through the financials. They will all be available to answer your questions during the Q and a session that both.
Please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 forward looking statements involve inherent risks and uncertainties as such our future results may be materially.
Front from the views expressed today further information regarding this and other risks is included in Jinkosolar public filings with Securities and Exchange Commission Jinkosolar does not assume any obligation to update any forward looking.
Except as required under applicable law.
It's now my pleasure to introduce Mr. Chen company CEO of Jinkosolar Mr. Chen will speak in Mandarin and I will translate his comments into English. Please go ahead Mr. Chen.
Hey, Paul go its Idaho and here guys are conducting in Idaho.
Thank you will recall good morning, and good evening to everyone and thank you for joining us today.
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When it comes on to that sorry, chairmen say whats entirely total shipment of solar modules. During the first quarter was 3411 megawatts.
Excluding the impact of the disposal of overseas solar power plants. This quarter generated total revenues of $1.3 billion and our gross margin of 19.7% always seeing our guidance range for the quarter the call that liking pandemic impacted the solar industry, creating numerous.
Challenges from difficulties obtaining supplies of raw materials to logistics and transportation is election. Despite all this challenges we are still successfully achieving the highest historical shipments in the first quarter, which we believe demonstrates our strong ability to execute and corporate.
Flexibility to carefully Levy gate and adapted to our difficult global economic environment.
Two containment efforts accord across the country or our factories in China have reached full production in much Cogito, Hi, Russia and went together John.
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I think I told us once you sell your income Copel Quinsa is it's good assets, Oklahoma compliments on the major challenges so far during the first second quarter has being over 50 mind, the pandemic have impacted logistics to varying degrees.
And the cost project delays in most overseas markets in Malaysia immediately implemented measures to ensure the healthy and 50 of our employees while at the same time complying with government containment measures. This rapid response has brought our production back to normal safely by the end of April.
We replicated is healthy and safety measures for our employees in the U.S. and were able to keep production running smoothly throughout the pandemic with a global demand falling significantly and the price of raw material decline as a result of the pandemic, we've focused our attention on coordinating put back.
And logistics and sales to ensure we could fulfill new orders, while carefully controlling inventory levels.
Shipments of academics academic prevention material continue to be made from China to Malaysia, and the US facilities. We have been doing all we can to care for our employees clients suppliers and other business partners. During this challenging time.
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Recently, China's Ministry Nisthree Ministry of industry, and information technology began seeking public opinion for its draft to standard conditions of the TV manufacturing industry. The draft consultation will be used to raise the standards for new Butte production facilities in order to promote.
The application of new clean technology under this new standards, all existing production facilities will be required to implement industrial integration and accelerates the replacement of outdated equipment and infrastructure. This will help.
Accelerates the industrial application of new technologies, and it will benefit and strengthen leading manufacturers actually expand into scale.
In addition, hollysys governing the construction of ultra high voltage projects and a great obstruction capacities expansion will support the long term divestment of the industry. We believe governments around the world, which will increasingly rounds their focus to energy security and localization, especially.
After the call that 19 pandemic due to the congenial continued enhancement of the competitiveness of solar energy over traditional energy and the acceleration of global parity caused by the fall in the price of industrial Chen Joe Visa.
Demick, which will result in more countries implementing policies to support solar energy and will drive it's deeper penetration in the post a pandemic era in twentytwenty excess supply in a market, we'll wrap delays life updated production capacity out of the market and accelerate.
Application of technology is set to a better reduce levelized cost of energy.
Golar manufactures will find it harder to compete and we're exiting the market, which we will Kuwait and opportunity for larger global players to expand market share.
We expect global escalation to four by around 25% compared to two estimation at the beginning of the year due to impact the.
Due to impact is a corner virus epidemic is having our order book for the air remained strong and shipment rolling out, allowing us to reaffirm our guidance on total solar module shipments for the full year Twentytwenty mandate each in consumer product candidates you need so it was sometime 25 minutes auction.
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Faced the wins the Covidien 19, Pandemics, we make adjustment to.
No production and the management process and to facilitate take greater flow of information across our external network, which further improve the efficiency of our crisis management response.
Information sharing as I've stated capacity is removed from the market and with the accelerated adoption of high efficiency premium products by downstream partners standards for PV module and the components or enter the 500 award ultra high efficiency era earlier that.
Expected this out to high efficiency products also said higher standards for wafer quality and sale technologies that can be replicated across supply chains or the way from R&D to the mass production of modules.
I'll, let you remains central to strengthening our competitive age in the market.
We will continue to lead the industry offering innovative product set will generate solid returns.
Recommend for our clients by leveraging our high skilled R&D.
I think industry, leading research platform and ability to wrestling match produce newly developed.
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Recently, we launched a new Tiger Pro service module with maximum power output of 500 and a two what this breakthrough will fit new industry standard for power generation and efficiency and will support a wider array of installation scenario as the globe accelerate towards great parenting.
Pandemic infatuation technical standards for the industry the competitiveness of leading players products will drive further innovation, including energy technology as well of the world's largest solar module manufacturers, we are developing and adapting or products for project event.
Her engineering contractors and design Institute.
As well as downstream suppliers their feedback has been keen to assessing and mitigating technical risks when building our market oriented products, which strengthens our competitive position.
Positioning in short.
And then make has adversely impacted the industry sector. We are still on track to continue generating growth and expand our market share some environment or monetize ingredient on them using our season pass about zero.
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Capacity side, our in house mono wafer production capacity reached 18 Gigawatts in April sales capacity reached 10.6, gigawatts by the end first quarter, including including 800 megawatts Ultra high efficiency and pack sales that have the highest conversion efficiency comment.
The other market.
Module Sag module capacity was 16 gigawatts by the end of the first quarter with an additional nine gigawatts of the new high efficiency capacity expected to gradually be put into production in the second quarter. We will continue to make further we find these two managing cost and efficiency in twentytwenty.
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On an opinion Turner presents ordering at UGI forget that spot for US is Xerox Gen before turning over to dinner ever introduced our guidance based on our current estimate for the second quarter Twentytwenty total solar module shipments will be in the range of 4.2 to 4.25, Gigawatts total revenues will be either.
A range of 1.1 billion to $1.18 billion and gross margin will be in the range of 16% to 18%. We maintained our guidance on the total solar module shipments for the full year twentytwenty to be between eight.
220 Gigawatts.
Thank you Ms. Chen.
Total shipment of solar module switch to 3411 megawatts that historical high in Q1, despite the challenges Colgate Nitin created for our sales and production.
Over the past a few months, we have been carefully monitoring industrial divestments real time, Murphy said and the first hand client feedback, which provided us with Pete So that's an extended or how the for that makes is impacting our clients and allow us to offer better support.
At the things, we launched the emergency responders mechanism to give out so from our experience facing previous challenging and unpredictable markets turbos, which provided us with a flexible and the pragmatic who took atlas navigates during the crisis.
The impact of the pit that makes is expected to shrink global market demand by approximately 25% in 2020 210.
20 Gigawatts.
Nevertheless, our high quality products remained strong chemo and re affirmed our sinus up and your shipments in that range of 18 to 20 Gigawatts.
With our order book for the year growing and shipments rolling out we continue to drive growth.
The China market horse oversupplied in Q1, some of that delayed projects from 29 on now and that pressure to complete installation before the June thirtyth deadline, which is helping to stabilize module price its lately.
New beating around sport utility policy and Twentytwenty are expected to start construction in the third quarter, reaching peak installation in Q4.
In Twentytwenty greater capacity for solar power connection we have reached 48 point 45 Gigawatts.
Oh, hi voltage of projects are being Ics, hence if they for motivated by the government as a strategic importance source of energy integration and the power transmission from China West that to the coast coal.
Refis Overthe Laura.
According to the latest a policy from China NDRC, each province issued prior to set of Lois that non HEICO renewable generation ratio ranging from 5% to 25%.
In addition, reforming policy you'd actually see treating and distributed power treating Pat will also improve solar power utilization efficiency.
Celebrating the diversification of China's energy mix.
The distribution market in the U.S. has slowed during the pandemic shutdown in March well the construction of large scale powerhouses steel continued at.
Given the situation the U.S. department of Treasury announced that that ITC for Renewably investment that would receive one year extension.
Just a few weeks ago government of what junior sign a feel requiring to stay to achieve a 100% a carbon free power up by 2045, a number of large scale renewable energy projects continue to be it adequately found data from global financial institutions, Despite energy markets.
Facing unpredictable terminal.
Many European countries have become a using travel restrictions since may economy.
Our bouncing back and business are getting active again quotable awarded a one point 15 gigawatt of solar auction and 29 too.
Early Twentytwenty, Portugal announced another solar auction for 700 to 800 megawatts would be covered out within the year.
The Netherlands, amongst the attorney or net metering program to support it residential solar and lower annual electricity costs by 9% from Twentytwenty Street Retentive surgery.
According to the regulator home owners, who are we increased our PV systems will benefit from a reasonable re investment return.
Germany also lifted.
52 gigawatt to capital for the success of small scale solar project.
The market is expected to recovery recovered strongly in 2021.
The economics stimulus package, which includes renewable energy will soon be having.
A significant positive effect to across the whole Europe.
Turning to Asia, the Lockdown, India since March 31st travel restrictions have greatly impacted the flow of personnel and material.
The expansion of the Lockdown prolong these restrictions, which have further impacted the public transportation projects suspension, beating and the power costs operation.
Recently customs banks and other institutions began gradually returning to work.
Several large utility companies such as as you see I and the NCP see have extended the feeding guideline for PV power generation projects.
Pro Twentytwenty FCC I extended the beating that line for solar projects at a when the solar hybrid codecs totaling 8.7 gigawatts.
Given that the Lockdown has been list data, which resulted in PV projects getting back on track Deputy Prime Minister of in the issued a policy April to encourage the divestment of solar power projects.
According to the decision has certain Neil EFI team for all three type of solar energy systems projects.
Namely floating around the mountain and the roof top will be lower supply dynamics in Japan has gradually ease and Japanese government terminated the state Smith a statement of emergency on May 25th.
PV installations steel continue but at a much slower pace with completion of large scale projects delayed into 10 defining what.
Marketing Asia, such as Australia, Singapore, Malaysia, Philippines have slowed a kicked off.
The Brazilian market continue to signet to beat in the significantly impacted by the pandemic, which has affected approximately 70% of the installation.
The market downturn has forced the minutes more installers entities builders to a hot operations and some large scale projects to delay add to trend if anyone.
Middle East Africa region began opening up in fueling some businesses reopening and the construction activities are returning with limited labor mobility.
In conclusion, we are confident in long term growth prospects of the PV is industry. Despite all the short term challenges.
Going forward Jinkosolar will continue to adapt to our products and services to the needs of customers, who are increasingly demanding high quality, Puerto stable supply and a strong brand recognition.
The petrochemical will accelerate the removal of updates capacity and the leave only the strongest this danny.
We were recently recognized as a top performer after six consecutive year in the PV CEO, we TV module reliability scorecard and the was one of the only two global manufacturers to have been recognized as a top performer every year since 2014.
Being recognized as a top performer once again reflects our dedication and commitment to the research and development of high quality PV products.
Speaking over all the.
Of solar capacity in solar industry is invisible, but high efficiency in the products remain shortly short supply.
Competitive products underpins the marketing added a wedding and overall sustainable development.
As a leading market player Jinkosolar has always been customer oriented focusing on optimizing our past design and the reducing LC OE.
Recently, we launched the our latest take a pro series, reaching a maximum power output of 580 Watt peak it took place where online live streaming with approximately 200000 people from all of was awarded a participating in the us.
Not only did the Tiger Pro series gas significant exposure from this and also acted as milestone for the PV industry.
As the industry turns a page we will strengthen our position as the supplier of choice with lower sales to eat strongest system compact compatibility and the overall our economic value.
With that I will turn it over to chart.
Thank you again, resulting in the first quarter for our new line Reese our guidance.
Key financial indicators, including total revenue gross margin and net income of increased.
Significantly year over year. This is due to the continuous increase in the integration production level by the end of March we closed the sale of the two solar power plants with a combined capacity of 155 megawatts in Mexico.
This reduced the total that by about 421 million in us dollars on older for compasses, Richard release to 18 Gigawatts in April.
Which will support our expected total shipments 18 to 20 gigawatts for the full year.
Going into the details, including the sale of overseas solar power plants. Total revenues were 1.03 has been in US dollars an increase of 25% from the first quarter two is on land team.
Gross margin into to 19.7%.
Hello to 16.6% in Q1 last year.
With that was 100 million usanas compared to 49 million unit farmers need Q1 nastier.
Non-GAAP net income was 32 main gastars.
Significantly increase year over year. This translates into lung cancer diluted earnings for eight years of 65 cents.
Excluding this sale of overseas solar power plant total operating expenses accounted for.
406% total revenues compared to 11.9%.
Fourth quarter, or 2019, and shell, 0.5% first quarter 2019.
The sequential increase was primarily due to increasing shipping costs as a percentage of total revenue associated with a higher percentage of shipments to oversee mounted.
First quarter for new Twentyth.
Moving to the balances on the balance of cash and cash requirements for 600 million. Many us dollars compared to 895, many eurostars and though last year.
Accounts receivable turnover days were 66 days.
Compared to 94 days in Q1 last year.
Encourage some longer days for 110 days compared to 120 days in Q1 massive total debt was 1.8 billion Euro Sars compared to 1.9 billion units are.
Last year the bridge, one kind of $62 million was submitted to international Solar project.
Net debt was strong for one thing your Sars compared to 1000 units are at the end of Q4 2019.
Total capex for two new trend is expected to be around 300 Pacira your MSR.
This is use for the five gigawatts certain face amount over capacity added additional new nine Gigawatts model.
Yes.
Our module capacity.
This concludes our pre prepared remarks.
We are happy to take your crossings operator.
Thank you.
So ladies and gentlemen.
Well begin a question and answer session.
If you like to ask a question to the speaker.
Please press zero one on your telephone keypad.
To come so please press Devin too.
Okay.
Yes.
Our first question is from.
For the Sean and Roth Capital Partners. Please go ahead.
Hi, everyone. Thank you for the questions.
The first one is on pricing. So we calculate an implied modulator fee of about 30 cents per watt in Q1 follow blended basis for you.
And I think based on the guidance.
Pricing.
If you closer to 26.2 cents for Q2. Thanks. So this just maybe 30% sequential decline.
And we accurate with these numbers bankruptcy and comment on what we might be missing specifically, yes.
How much.
In Q1 did you have for module only Roger for example.
Yes, yeah, Phil So it is Jenna excellent question.
Yes for the Q.
The ASP as compared with Q1 of Q2, where we're seeing now because of market turbulence and also the predominantly impacts the market price job by around.
Lets say, 10%.
Sorry, if we look into our Q2 two.
Pricing, so I wouldnt, yes, I think a with a a round that rank as well so compared with Q1, the ASP Q2 SP were expected to.
By approximately a high single digit.
Ranch.
Okay.
And then.
How do you expect that limited pricing trends in Q3, you expect to another drop as well or and that you see the stability more in Q4.
No what do you see ahead. Thanks.
Yeah sure for them or our strategy is obvious the follow the market so were not against some markets or when we see the market prices.
Striping definitely you know our pricing will job.
That's a that's our strategy I think everyone will follow that not only genco.
So the number why say, it's hard to define right now what's the exact numbers for Q3 is due to our at April two two to talk about the Q3 final pricing, but from the observation that market price side, we deal with.
With these few of the expectation from the.
From all the customer and that they expect that market price continuing to to job compared with Q2, but actually when we look into the whole year pricing.
I still believe sale will be some bounce back eyes at late Q3, or Eva early Q4 requires the us.
Expected a strong demand in China rush by the year end.
There will be kind of shorten supply by that time.
Okay. Thanks, John.
And then.
From a housekeeping standpoint.
Can you share what the Capex depreciation was.
Q1.
Yes.
Oh.
Yes fell by the depressing no the cost droplet.
Per quarter, roughly 40 million you asked honors.
And the Capex is runner is roughly 100 million you asked the owners.
For the first quarter great.
Okay. Thanks, Charles having one bigger picture question in your prepared remarks, you commented that said dropped.
Hi, T. policy.
Sure drive capacity and lower can you comment a little bit more on how you expect this policy to work and how do you expect this to impact the industries.
I can see.
Marginal capacity expansion going away. So I was wondering if you could since common more on what you see as the impact from this policy and when you expect it to be.
I mean official thanks.
Okay.
So you're talking about Itcs right.
No im talking about the.
Ministry of.
Industry policies to.
For all the industry to have higher efficiencies in the capacity expansion.
It means a China manufacture and let's say industry standards thing right.
That's right yeah.
Yeah, I think you know this is.
Yes, no standard and the which is in current continuing courage to.
Ladies taking advantage adoptions.
The.
There's a lot you know threshold, which is a minimum.
Cinnamon.
Fish vote and.
If the industry participants onto expanded capacity and the and I think all in all I can if it were a positive.
For the industry consolidations, and particularly the tier one companies given their technology advantage and that will lead.
Lead the compasses managing to to me to the.
Anticipated destined for growth and the either.
Future and the for the tier two tier three companies and it's.
It's a under pressure and.
It is not only from the customer perspective, right a lot of.
On tier one companies is leading to the product and we are promoting over 500 watts modules and tier and tier two tier three companies and they are under pressure and the from the supply perspective, the government wants to be able to.
Policies and which is.
It's a positive for for the leading companies renter negative for the.
The tier two tier three companies.
Okay. Thank you very much I'll pass it on.
Thank you.
Our first quarter next question is from.
Tony Sammy at Apio staff. Please go ahead.
Hi, Thanks management as Tony from Yossi I have two questions first is regarding on the order book run. So among the 4.2 to 4.5 Gigawatts you've been talking for Q2 could you give us some color regarding how much of that would come from domestic orders now how much for overseas and how about that makes movement in the second half maybe.
Hi.
Yes, so you're talking about this number right.
[noise]. So I will assume you got a young men are you asking your questions. Many about the China mix. During the Q2 and also address up year says shipment of plant right from my observations. So Q2 Q2 number could to number for the.
Shifting to make such China will be China will occupy not significant number.
What we're the number one brand were looking at around let's say 10 to 15.
Percent, sorry, however, it will in a rapidly growing up.
Especially when the China markets start to boom by the second half way expects to a weaker than the ratio will be higher have higher even by the peak time of the Q4 were expecting that number could be either 30% to UN club.
For the total year I'll.
Our our target China market it will still taking a.
Pretty let's say a fair ratio compared with all the other regions for we are having so approximate was.
A quarter of our total shipment is expected to ship in China.
Great.
And my second question is regarding the financials. So looking at your results in the Q1 actually or the revenue and gross profit quite in line with your previous guidance, but the net profit on struck by the change in fair value of assignment derivative products. So in the second quarter actually we have seen the RMB the steel weaker year on year. So should we expect more credible.
Losses of fair value change thing in the quarter. Thank you.
Okay.
The change of fair value eluted to car loan foreign linked to the our international politics.
The interest swap and the that is a significant nexi, having first quarter because of the or in the low even close to zero. The U.S. Fisher rates and the is a I think it is a long time and the is the the long term.
The United States services.
Is the is the bombing is done the level.
And for the.
Currency.
The currency for Ford currencies are too low power sales orders and the because the R&D is on expected to be depreciated and the first quarter.
Particularly given the recent concerns right between and the you asked on China and the nice.
And.
RMBS stabilized and relatively appreciated so we don't expect significant impacting in second quarter.
And for the fifth as.
Hi manager the instruments.
I am Menzies.
As a two items and we do expect significant impact in Singapore.
Great. Thanks for Kinda I, probably don't.
Thank you.
So once again, ladies and gentlemen, that's a funding munda fly to ask a question to the speaker.
Please price they wrote one on your telephone keypad Chief Counsel, please never too.
Our next question from Brandy at Goldman Sachs. Please go ahead.
Hey, guys. Thanks for taking the question.
Maybe just a follow up a little bit on an earlier question just on the gross margin.
You are guiding down about 250 basis points at the midpoint of in the second quarter versus the first quarter.
No pricing really started falling in late March and April so we've heard from other companies that a lot of Latin volumes could flow Moines re queue.
As opposed to.
Real time intensive so.
Is it fair to assume gross margin is on again, continuing with you about how should we think about saving more.
Mhm.
No the decline on gross margins second quarter reflected the.
Slowing.
Very weak demand.
Particular from international markets.
Second quarter.
And the factory.
No we discussed as hps downward trend.
And given the.
The market situation, it's a market situations based fees to continually down there.
And the but however.
From the cost perspective.
Improving at the same time, so even the you know the third quarter.
Thank you know the second half year, the close monitoring and the continued to be on repressive, but yes. We are trying to do you know to achieve relatively stable growth Mandy.
The compared to the second quarter.
And because particular founder.
And we.
We rapidly.
And our capacity on mono wafer.
We are expecting to improve our integrated production cost and.
Throughout the.
China is periods and the which were offsets.
The next next impact of the.
The ASP downwards and the second half.
[noise] [noise], Okay. That's helpful.
And then Charlie just a question around the the inventory I know.
On top security, we have a pretty big move up in inventories from foresee the once you seemed a little bit figures.
This year and this is Mike Thanks, Tom accounts receivable was put the cloud of so.
You know if this was just the shipment timing issue I would have thought they kind of mixed together so.
Are you seeing some cancellations on on modules and are you having to kind of re market, though it will begin to see something with.
Yes, the a AR and inventory balances did itself yes.
[laughter].
No because we have no we target 18 to 20 Gigawatts rights quarter on average we are where we are planning.
Four gigawatts of five gigawatts, so the inventory levels will be.
Later by nature, the inventory levels will increase and the.
Slightly.
Quarter by quarter, and the first quarter the entry level is taking higher.
Features long foundry discos, because the China.
Is the time, China's and the we have 400 megawatts 500 megawatts.
Shipped to do through the second quarter and the.
And the swaps or the you know the second quarter, given the challenger International demand, we proactively manage our operating and the truly come told the inventory levels and we faced strong order cancellations or delayed ads we swiftly.
No shift.
Since the hour.
Those are our production.
Particular customers on new customers and and release with less impact from.
The virus so we.
In General I think you know the inventory levels will be worry.
Healthy level and better given our.
Targeted 18, gigawatts in the Gigawatts and when factoring the inventory level will increase a little bit swap into the next.
Two quarters.
Okay fair enough. Thanks, a lot that.
Thank you.
Thank you, Sir ladies and gentlemen, like to ask question to the Speaker. Please press zero one on attachment keypad to cancel thanks, Chris there too.
Our next question there how do you see I Ccgts. Please go ahead.
Hey, Charlie.
Thanks for taking my question crashing on the first.
Could you please give us some color on the the older visibility in the three core the and the fourth quarter and.
So how would we see if we can see further like it should.
The project, which delay ill jump in cans, though in the second quarter due to the foreign buyer will move to the like a second half or may be friends hopping that next year. So how we look at lifting and the second question is that we are seeing some strong demand in in May.
And I in China that coming from the as you got that.
Modules and maybe other way out for high efficiency.
So could you give us some more color around a lot maybe book the product mix, what we will have in maybe the detect a second quarter, how what the our mix coming from the high fishing, the moderate and how important the maybe that we're making it a normal.
The moderate.
We have up advantage on that thank you.
Okay.
Okay. So is this is gena.
Thanks, a lot of questions, Chris say about Europe.
A question about.
Although visibility is I think a we have.
We have built up a very strong order book over comparable I think Oh what.
Lets say three quarters or order book has been for few so we're very confident to too.
Achieve our target a intended hendi I think thats part of the reason why we Ah we keep our guidance intended 20 as the 18 to 20 gigawatts at that without any change.
For a further market.
For the past some possible market delay we have seen so some of the some regional or some countries that has has a shoulder the tolerance to delay part of the project is a into let's say two quarters the U.S. three quarters.
Especially if for some regions like or countries like especially like India I you know.
Which is six was expected to have a installation off our 10 gigawatt intended trendy, but with the current locked down law. We believe that the market size will be less than 10 event, you know somewhere around five to six.
For sure it those projects has not been canceled.
The majority of those project will get delayed into 2021, that's why I think the I'll agree.
In our previous let's say or especially our previous speaking we we also show our comp that's about as the strong demand and 2021. That's also part of our reason why we continue to expand our a high efficiency capacity.
So your second question about the China demand, especially the double glass demand.
We see a double glass or do glass or per Doc has a certain let's say a advantage.
Especially in some some environment.
But the weekly not.
I have personally I do not see such products have become a you anywhere so stand on our industry standard product yes.
When I look into our Q1 book.
We see less stuff.
5% off of our total shipment is above us and the.
Which is a let's say a very very few number compared with our total shipments.
We sat with China demand picking off by the second half, we believe that ratio will be higher but honest became I do not believe such Florida will become a let's say a center production in short term, but in long run with some more technology challenges be Sop and.
I believe such product has a promising future.
Yeah I'll answer your question.
Yeah, Yeah, I have a hoopla mcclatchy.
First the that currently like of for example, but that the order from India is delayed for like two or three quarter. So will that be renegotiating our modest five oh, we we will all that these osha. Please.
Previous setting price that's my follow up question and the second is that.
Maybe I should also with Verizon My question. So I wasn't a jet make a example on that or do you got a moderate the trying to have high demand, but actually what I will not be back we publish the kind of structure a demo increasing high producing more just maybe in China is the double glasses.
Being that the overseas do it like.
Hi, good other other kind of product, though we we also have like Wong right, it's not a double gaza's, but they mobileye. So so in generally how will we see in the lows hi machines be mortgages will we see a much more.
Hi, a demand growth than a normal you appreciate the modules are so how we see that and that the sandy Chen.
In the core, though and maybe second quarter.
Thank you for your follow up question about to protect sign.
Contrary I find so our I think from what I see.
95 over 95% of a contract signed a has been honor and the we have both parties I respect the so contractual obligations and the we continue with the execution of the contract that you but.
We have some pedometer impact on it and the for for a very few contract that has to be renegotiate or even canceled it be course of this we caught a force majeure.
But oh, we still believe even though.
It's not a you know requires a car customer Wanna RB charge on the market price change, it's really bequests offset.
What is happening for their project and all from there.
As their home that.
You are sick set kind of follow up question about double glass, we believed that the money in China.
For the double bass Port Arthur is increasing staff.
With sorry to say I don't have that our presentation a number on my hat or we can give you some feedback after after our call right.
Okay. Okay. Thanks manager that that's all my questions. Thank you.
Thank you.
Thank you that's all for todays conference call. Thank your for your participation.
You can disconnect.
[music].
[music].
[music].
Welcome to today's first quarter once you're trying to Gencos <unk> earnings conference call.
Please note that all participants well being listen only mode for the first part of this call.
But there won't be a question and answer session.
Now I'm pleased to present, that's recall job.
Yes, John please begin.
Thank you operator, thank everyone for joining us today for Jinkosolar first quarter <unk> conference call. The companies Weve dogs were released earlier today and a reasonable other companies <unk> website at www dot jinkosolar to calm as well as I'm used to wireless services.
We have also provided supplemental presentation, what's your base out of coal, which could also be found on the IR website.
On the call today from Jinkosolar I missed the train copy Chief Executive Officer lift the tragedy, how chief Financial Officer, Mr., Gener, Miao, Chief marketing officer need for traveling disgust Jinkosolar [laughter] operation and the company highlights followed by Mr. Miao, who will talk about your sales and marketing.
And then if that's how we'll go through the financials.
It will all be available to answer Mcclatchy has given me the Q and especially in the fall.
Please note that at today's discussion will contain forward looking statements made under the safe Harbor provision so that U.S. private Securities Litigation Reform Act liking that you five for what lucky stainless in will be heringer risks and uncertainties as such our future results may be like Chile.
Different from the views expressed it today.
The information regarding these and other risks include it in Jinkosolar public filings with the Securities and Exchange Commission Jinkosolar does not assume any obligation to update any forward looking statements, except as required under the applicable.
It's now my pleasure to introduce me for turn copy Thielke Jinkosolar Newpage I will speak in Mandarin and I will translate his comments into English. Please go ahead mr. Chen she's yet at all.
Oh, gosh, I got that turned out to dinner.
Thank you away Paul Good morning, and good evening to everyone understands what you only have today you know comes with regard to order suggested that you see solid bacardi to so what they're going to Kinda Asia, Yes are there should be as far as you make him.
I really haven't been security into good has to go drill for watching and show you see.
Wishing wage in Asia.
As you know problems are you sure about an accident Connie I want to ensure that you look outside.
And your Causata shipyard for quality, Oh, my gosh and use those young each of the torn down and use a single.
I don't want aging, that's not a hot or cold.
That goes on to that sorry, 10 minutes it wasn't tightly.
I will shift like solar modules during the first quarter was 3411 megawatt excluding the impact of the disposal overseas solar power plant.
This quarter generated total revenues of 1.0 sleeping at U.S. dollar Endo gross margin of 19.7% always seen all guidance range for the quarter. The call. They liked him danica impacted the solar industry <unk> 18, numerous challenges from difficulties appealing supplies the raw materials.
Two logistic and transportation is election. Despite all these challenges we are still successfully achieving the highest historical shipments in the first quarter, which we believe demonstrates our strong ability to execute and corporate wage flexibility to carefully navigate and adapted to our difficult globe.
Full economic environment sex to containment efforts of course across the country all factories in China have reached full production and much Argento, Hi, Russia and went to the other terms huh.
1000 thought those will push outs wish him well tones and do that one is no push on retention.
Well minimalist sharpened shares or how do you touched on that and what I'm trying to tender in terms of coffee some.
Bonnie.
Charlie you can take sentiment that sounds like a C or D wave for turns out.
Hi, This is John check on the on jump money that's question.
Got it might go comes from your shot up I've done it turns out at some timing.
Yeah, they change as she had an engine shopper.
Switching to that Nintendo Cabot shop, you almost have done that should at some point audience shares.
Catches your what you're thinking about assumption Entercoms quote and quote you that you did well unless there's only a function.
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Well, some dunkel chairman glaucoma Ashok Im talking some he wishes.
Sure that took a social license fees, so young cook.
So it gets you dockets, Oklahoma complement one.
The major challenges so far during the first second quarter has being over safety mind, the pandemic have impacted logistics to varying degrees.
And of course, the project delays in most overseas markets in Malaysia late immediately implemented measures to ensure the healthy and safety of our employees while at the same time complying with government containment measures.
Who I've had to response has brought to our production back to normal safely by the end of April laser blockade you did is healthy and safety measures for our employees in the U.S. and were able to keep production running smoothly loves the pandemic with a global do you mind falling significantly and the price of raw material declines.
As a result over the pandemic, we've focused our attention oncogene 18 production logistics and sales to ensure likud for failing you all just while carefully controlling inventory levels.
Shipments of academic academic prevention Luckier, we continue to be made from try not to Malaysia, and the U.S. facilities. We have been doing all we can to care for our employees clients suppliers and other business partner during this challenging time.
James someone comes remote offices on your grip on chart, Jim Congrats on JJ.
Good luck on quality machines or time, then among cheese and.
It doesn't seem to sort of England.
Oh Gosh I know, it's on that suggests that's Uh huh.
Looking at some Josh local sourcing.
So just I will take us into sort of Hulu.
Okay got you still got Georgia in way.
There is unconstitutional thoughts on that I called out just has shown that comes into play on that center, yes, I think.
Well my family each in coal.
So quotes out there when it comes up onto long up on do you have coming on gentlemen.
Very well, what's actually minutes on excellent somebody's, Michigan.
Your divergence yet I know chocolate shot with that change from following another trial switching jobs.
[laughter] push off without the let's hope that well essentially looking on yeah, I'm assuming you're.
We anticipate that touches on them.
Can you.
Congrats on the question.
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Bundled them something to.
Jostled server.
What's your thought leaders will shine kintex sources on you sense, yet as something that you don't know senior parties and well among.
I've done in other since our issue.
Yes, thats on divestiture, so you're doing their job.
Quick shots on you have in fashion.
I'm trying to get a chance on which and I think I'm just thinking my Soapbox Merrill.
It's a trend and so we're not seeing yeah.
Listen to they try not to Lynch Nisthree Ministry of industry and information technology began seeking public opinion for its draft standard condition. So the PV manufacturing industries. The draft comes location will be used to laces standards for new Butte production facilities in order to promote.
The application of new clean technology under this new standards, all existing production facilities will be required to implement industrial integration and accentuates the replacement or updated equipment and infrastructure. This will help.
Extend awaits the industrial application of new technology, and it will benefit as Jason leading manufacturers.
Ben to scale. In addition, hollysys governing the construction of ultra high will teach projects antiquated obstruction capacities expansion will support is a long time to beds myself. The industry, we believe governments around the world, which will increasingly well their focus to energy security and it locally.
In addition, especially after the call. The 19 pandemic go through the continued continued enhancement of the competitiveness of solar energy over traditional energy and ducks in a ratio of global Alipay caused by the full in the price of industrial Chen Joe Visa.
Danek, which will result in more countries, including policies to support solar energy and will drive deeper penetration as opposed to panic era in twentytwenty excess supply in the market. We're rapidly slice of day to production capacity out over the market and et cetera right.
Okay show of technologies set you up better reduce levelized cost of energy smaller manufactures will find it hard to to compete and we're exiting the market, which we will Kuwait.
Opportunities Lago global players to expand market share.
We expect global installation to four by around 25% compared to two estimation at the beginning of the year due to impact the.
Impact is our core level Iris and dynamic is having our order book for the air remained strong and shipment will bring out, allowing us to reaffirm our guidance.
Total solar module shipments for the full year twentytwenty they each month.
Got it can go that can leave it with some of our quantify maybe touch on clip with according studio.
So my general lifetime wishing pick one she's on issuing should contact Michelle.
Then over time, then assumes of switching.
Okay, I'm going to John's we'll take our.
Yes, again im changed quite a few she's got mentioned I will tell us.
Non-GAAP only kind of oxygen thats, one downtime you would think they agree that once you have changed.
So I wanted a cohesive going up in Colorado.
Yes, its yet from the and bought back downtime and you mentioned current Andy Pease go looking cardiologists.
How about this in general I mean, it seems only keep Antonio.
And John says you can get Sarnia youre to that.
I think.
Hmm payback for wind farm cash out of time do care about chief.
So as you can just naturally occur without actually Josh worried at Tempe things from Barclays.
I was happy questionnaire.
Our Union project.
The way the call the 19 and dynamic we make adjustment to.
No production and management process and the subsidy pay take greater flow of information across our external network, which further improve the efficiency of our collective management to respond.
Information sharing.
Oh stated capacity is removed from the market and with the accelerated adoption of a high efficiency premium.
Slide downstream partners.
Tenders for PV module and the components or enter the 500 award ultra high efficiency era earlier than expected. This out to high efficiency products also said higher standards for wafer quality and sales technologies that can be replicated across supply chain older away from R&D.
Through the mass production of merger technology, we midstream tool to strengthening our competitive edge in a market, where we will continue to lead the industry offering innovative products that will generate solid returns.
You bet demand for our clients by leveraging our high skilled RMB.
Teen industry, leading research platform and then.
Good day to Rex Lane mass produce newly developed.
Cutting edge products.
Well no bubble up tick up only could dialing back Barcelona Shane.
Hello.
Hi, guys Yanacocha on the Gulf only Johnson Enlink Shibani project.
Sort of change of congrats on good familial.
Switching jobs on the her units useful crushing number thats, having so many things some confusion.
So they tend to answer that its begin comes on.
That's one thing that I have a feedback.
Some kibosh on contracts in Barcelona, So do you ever since we started accordingly.
So my.
Since our IPO shot we saw that she's on how many things only the ocean.
Great features a function.
You can be a higher 20, fourxseven that that I'm sure filming Sir.
How about you know each alcohol. So that is upon us is on in Virginia, which isn't so much.
Recently, we launched a new Tiger Pro service module with maximum power output of 580 Watt. This breakthrough will fit new industry standard full power generation and efficiency and it will support a wide array of installation scenario as the globe accelerate towards glitch, how we can.
And then make if you factor lasers technical standards for the industry. The competitiveness of leading players product will drive further innovation, including energy technology as well the world's largest solar module manufacturers, we are developing and adapting our products for project event.
Her.
Engineering contractors and design if you.
I will ask downstream suppliers. Your feedback has been keen to fishing and mitigating technical risks when building our market oriented products reach strengthen our competitive position.
Positioning in short.
And then make has adversely impacting the industry sector. We are still on track to continue generating gross and expand our market share.
Yes.
I think we've gotten them using our secret when potash somebody Sheila.
Yes, it's how much as a dual incidentally when youre.
No problem, which has since I got to or starting to it got a barbacoa.
And she gets done.
Yes, I Mckenzie to the whole salute youre seeing where your target Joe Joe what I called out suggestions on it.
Well should hold on getting it from a quick thats another template high quality consignments and ensure that saw junior products using.
Capacity side, our in house mono wafer production capacity, which 18 Gigawatts April sales capacity, which 10.6 gigawatts by the end first quarter, including including 800 megawatts Ultra high efficiency and type sales that have the highest conversion efficiency Kevin today.
The market.
I'll, just say module capacity was 16 gigawatts by the end of the first quarter without additional nine gigawatts over the new high efficiency capacity expected to gradually be put into production.
Second quarter, we will continue to make further we find these two managing cost and efficiency twentytwenty.
And then at the chair Jess I wish I could see dungeness.
Yes, you ought to consider for example, what FX with your op cost advantage with you on for Jim.
Yes, and thus are you, making darcy debt by making good money reset balance I never thought patterns above one Jim.
I'll now turn hands, we tend to order that you chip will get feshbach gosh, Xerox Jay before turning over to dinner I will introduce our guidance faced I'll comment to estimate for the second quarter 220, total solar module shipments will be in the range of for public in two to 4.25, Gigawatts total revenues will be either.
Range of 1.1 billion to $1.8 billion and gross margin will be in the range of 16% to 18% we maintain our guidance on the total solar module shipments for the full year tend to turn pay to be between.
210 Gigawatts.
Thank you Ms. Chen.
Total shipment of solar module switch to 3411 megawatts that historical high in Q1, despite the challenges Covidien I think created for our sales and production.
Over the past a few months, we have been carefully monitoring industrial divestments real time Murphy trends and the first hand client feedback, which provided us with the so that understanding how the dynamics impacting our clients and allow us to offer better support.
As a thing we launched the emergency responders mechanism give out from our experience facing previous challenging and predict phone market.
Which provided us with flexible and the programmatic who took atlas navigate during the crisis.
The impact of the pit that bank is expected to shrink global market demand.
Maybe 25% Twentytwenty 210.
Good.
Yes.
Nevertheless, our high quality products remained strong chemo and re affirmed our guidance up and your shipments in that range of 18 to 20 Gigawatts.
With our order book for the year growing and ship finance Rolling out we continue to drive growth.
The China market horse oversupplied in Q1, some of that delayed projects from 2019 on now under pressure to compensate installation before the June thirtyth deadline, which is helping to stabilize module prices lately.
Neil beating around sport utility pumping twentytwenty are expected to start construction in the third quarter, reaching peak installation in Q4.
In Twentytwenty greater capacity for solar power connection will reach 48 point 45 gigawatt.
Oh, Hi voltage a project.
Hence if they promoted by the government as a strategic importance source of energy integration and a power transmission from China us west that to the coast coal Refis Overthe Laura.
According to the latest a policy from China NDRC, each province is they require second lowest non HEICO renewable generation ratio ranging from 5% to 25%.
In addition, reforming policy you actually see treating and distributed power exceeding plan will also improve solar power utilization efficiency celebrating the diversification of China's energy mix.
The distribution market in the US has slowed during the pandemic shutdown in March well the construction of large scale powerhouses steel continued at the.
Given the situation the U.S. department of Treasury announced that that ITC for renewable investments that will receive one year extension.
Just a few weeks ago government off what GGR signed a deal requiring the state to achieve a 100% carbon free power up by 2045, a number of large scale renewable energy projects continue to be it adequately found data from global financial institutions. Despite the energy markets.
Facing unpredictable terminal.
Many European countries have become a using travel restrictions since may.
Economies, there are bouncing back and business are getting active again.
We were awarded a one point 15 gigawatt of solar Oxy and 20 nineties.
Today, Twentytwenty, Portugal announced another sorta auction for 700 to 800 megawatts will be covered out within the year.
The Netherlands, amongst the attorney or net metering program to support it residential solar and lower annual electricity costs by 9% from Twentytwenty Street, depending surgery.
According to the regulator home owners, who are leaning to install PV system. So we'll benefit from a reasonable re investment return.
Germany also lifted.
52 gigawatt of capital for the success of small scale solar project.
The market is a spectator three recovery recovered strongly in 2021.
Economics stimulus package, which includes renewable energy will soon be having.
Significant positive effect across the whole Europe.
Turning to Asia, the Lockdown, India since March 20 force travel restrictions have greatly impacted the flow of personnel and a material.
The expansion of the Lockdown prolong these restrictions, which have further impacted the public transportation projects acentia, beating and the power plant operation.
Recently customs banks and other institutions, we can gradually returning to work.
Several large utility companies such as you see right at the end CPC has extended the beating guideline for PV power generation projects.
Pro Twentytwenty FTC extended at the beating dead line for solar projects at a when the solar high brief codecs totaling 8.7 gigawatt.
Given that the lockdown has been less data, which resulted in PV projects getting back on track.
Okay Prime Minister of previously issued a policy April to encourage to divestment of solar power projects.
According to the decisions certain new Fi teeth for all three type of solar energy systems projects.
Namely floating around the mountain.
And the roof top will be lower.
That makes and Japan has gradually disease and Jeff Thanks government that terminated at the state.
Statements of emergency on May 25th.
PV installations steel continue but at a much slower pace with completion of large scale projects delayed into 10 defining what.
Marketing Asia, such as Australia, Singapore, Malaysia, Philippines have slowed it kicked off.
The Brazilian market to continue to seek to beat in the significantly impacted by the pandemic, which has affected approximately 70% of the installation.
The market downturn has forced diminished more installers and this is builders to a hot operations.
Large scale projects to delay and two cents if anyone.
Middle East Africa region began opening up in fueling some businesses reopening and the construction activities are returning with limited labor mobility.
In conclusion, we are confident in long term growth perspective of the PV industry. Despite all the short term challenges.
Going forward Jinkosolar will continue to adapt to our products and services to the needs of customers increasingly demanding high quality, Florida stable supply and a strong brand recognition.
The petrochemical will accelerate the removal of outdated capacity and the leave only the strongest Danny.
We were recently recognized as a top performer up to six consecutive year in the PB.
We see the module reliability scorecard and was one of the only two global manufacturers, who have been recognized top performer every year since 2014.
Being recognized as a top performer once again reflect our dedication and commitment to the research and development of high quality PV products.
Speaking over all the.
Okay solar capacity in solar industry is visible, but high efficiency TV products remain shortly short supply.
Competitive products underpins the marketing.
Hey, the wedding and the overall sustainable development.
As a leading market player Jinkosolar has always been customer oriented focusing on optimizing our past design and the reducing LC OE.
Recently, we launched our latest Tiger Pro series, reaching maximum power output of 580 Watt peak.
It took place where online live streaming with approximately 200000 people from all of was award of participating in the USA.
Not only the Tiger Pro series gas significant exposure from.
And also acted as milestone for the PV industry.
As the industry turns a page will strengthen our position the supplier of choice with lower sales to eat strongest system compact.
Compatibility and the overall our economic ladder.
With that I will turn it over to chart.
Thank you again, our results in the first quarter.
Hi, guys.
See financial indicators, including total revenue gross margin and net income increased significantly year over year. This is due to the continuous increase.
Integration.
And the level by the end of March we closed the sale of the two solar power plant with a combined capacity of 155 megawatts.
Mexico, which reduced the total that by about 421 million you ask honors Anova compasses, Richard reach to 18 Gigawatts in April which will support our expected total shipments 18 to 20 gigawatts for the full year.
Going into the details, including the sale of overseas solar power plants total revenues were 1.03 thin in US dollars increase all 25% from the first quarter 2019 gross margin in 2% to 19.7%.
Compared to 16.6%.
Q1 last year.
EBITDA was 100 million us on us compared to $49 million fuel long nastier.
Significant increase year over year this translates into London diluted earnings per.
65 cents.
Joining us sale of.
Oversee solar power plant, so thoughtfully census accounted for.
6% total revenues compared to 11.9%.
Fourth quarter over 2019.
On 5% first quarter 2019.
The sequential increase was primarily due to increasing shipping costs as a percentage of total revenue associated with a higher percentage of shipments.
We're seeing mounted.
First quarter, it's an incentive.
Moving to the balances on the balance of cash and cash equivalents were 600 coming into us dollars.
To 895, many us ours.
And though not Steve.
Accounts receivable some lower days for 66 days.
Compared to 94 days in Q1 non Steve.
Inventory at some longer days for 110 days.
For 120 days in Q1 last year.
That was one point anything Youre Sars.
Yes, So 1.9 billion units are.
Last year.
Well suited to know your centers was submitted to international Solar project.
Net debt was strong for one thing you asked are compelled to lump in the US are at the end of Q4 2019.
Total Capex 14 incentive is expected to be.
Brands through kind of fits into your MSR.
Which is to use for the five gigawatts second phase a mono wafer capacity.
Additional new nine Gigawatts model.
Onto a composite.
This concludes our pre prepared remarks.
I wanted to take your crossings operator.
Thank you.
Ladies and gentlemen.
Well begin a question and answer session.
If you like to ask a question to the speaker.
Please press zero one on your telephone keypad.
To come so please press there too.
Okay.
Yes.
Our first question is some.
Sean.
Capital Partners. Please go ahead.
Hi, everyone. Thank you for the questions.
The first one is on pricing. So we calculate an implied modulators fee of about 30 cents per watt in Q1 on a blended basis for you.
And I think you're sort of guidance.
Pricing.
Might be exposed to the 26.2 cents for Q2.
So this just maybe 30% sequential decline.
We accurate with these numbers across your comment on what we might be missing specifically dose.
How much.
In Q1 did you have for module only Roger for example.
Yes, so so just trying to thanks, sorry question.
Yes for the Q.
The ASP compared with Q1, Q2, where we're seeing now because of market turbulence and also the pad I'm going to impact the market price job by around.
Lets say, 10%.
Sorry, if we look into our Q2 two.
Pricing, so I wouldnt, yes, I think aware around that rent as well so compared with Q1, the ASP Q2 SP were expected to.
Job by approximately a high single digit.
Ranch.
Okay and then.
How do you expect that limited pricing trends into Q3, you expect to another drop as well or.
Do you see the stability more Q4.
Hi.
Thanks.
Yeah sure for them.
Our strategy is obvious the follow the market. So we're not against the market. So our when we see the market prices.
It's dropping definitely you know our pricing will job.
Yes, that's our strategy I think everyone will follow that not only genco.
So the number why say, it's hard to define right now what's the exact numbers for Q3 is due to our day to talk about Q3 final pricing, but from the observation Submarket price side, we see.
With these few of the expectation from the.
From all the customer and that takes the fact that market price continuing to two job compared with Q2, but actually when we look into the whole your pricing.
I still believe therell be some bounce back to eyes at late Q3, or Eva early Q4, because the us.
Expected a strong demand in China, Rosh by the year end.
There will be kind of shorter supply by that time.
Okay. Thanks, Jennifer.
And then.
From a housekeeping standpoint.
Can you share what the Capex depreciation was since Q1.
Yes.
[music].
Yes fellow.
Depreciation no the cost droplet.
Per quarter, roughly 40 million you asked honors.
And the Capex is.
Roughly 100 million Restauranteurs.
For the first quarter great.
Okay. Thanks for having one bigger picture question in your prepared remarks, you commented that said dropped.
T policy.
Should drive capacity, a lower can you comment a little bit more on how you expect this policy to work and how do you expect this to impact the industries.
I can see.
Marginal capacity expansion going away. So I was wondering if you could just comment more on.
What you see as the impact of this policy when you expect it to be.
Beneficial thanks.
Okay.
So you're talking about ITC correct.
No im talking about the.
Ministry of.
Industry policies to.
For.
The industry to.
Higher efficiencies in the capacity expansion.
It means a China manufacturer led the industry status thing right.
That's right yes.
Yes. Thanks, Anthony this is a national standards, and which is encouraging continuing encouraged.
No led us to take an honest adoptions.
On the.
There's a lot or switch code, which is a minimum minimal.
Fish vote on the if.
There's a participants onto expanded capacity and the and I think all in all our incentives.
We're a positive.
For the industry consolidations.
Good.
The tier one companies given their technology advantage and that will.
Lead the compasses managing to to me to.
Anticipated assess than both gross and either.
Future and the for the tier two tier straight companies and it's.
It's under pressure and.
It's it's not only from the customer perspective, right a lot of.
Sure One company this leading to the product and we are promoting over 500 watts modules and tier and tier two tier three companies and they are under pressure and the from the supply perspective, the government wont to be able to.
Policy Center, which is.
It's a positive full for the leading companies went to negative for the.
The tier two tier three companies.
Okay. Thank you very much I'll pass it on.
Thank you.
Our first quarter next question is from.
Tony Sorry at Apio staff. Please go ahead.
Hi, Thanks management as Tony from be OCI Im two questions first is regarding on the order book front. So among the 4.2 to 4.5 Gigawatts you've been talking for Q2 could you give us some color regarding how much of that will come from domestic orders now how much from overseas and how about that makes movement in the second half maybe.
Thanks.
Yes, sorry, I'm talking about this number right.
Hi.
Okay.
So I will assume you got your Mitch you ask your question you asked me about the China mix during Q2 and also address up your says shipment of plant right from my observation. So Q2 Q2 number could to number for the shipment mix that China will be China will give.
Hi.
A significant number.
What we're the number one brand were looking at around let's say 10 to 15.
Percent, sorry, however, it will.
Rapidly going up.
Especially when the China markets start to buoyed by the second half wed expect to.
The ratio will be higher have higher even by the peak time of Q4, we're expecting that number could be.
Even 30%.
For the total your I'll.
Our our target China market it will still taking.
Pretty let's say a fair ratio compared with all the other regions that we are having so I would approximate was sorry, a quarter of our total shipment is expected to ship in China.
Great and.
And my second question is regarding the financials. So looking at your results in the Q1 actually or the revenue and gross profit quite in line with your previous guidance, but the net profit on struck by the changes in fair value of assignment derivative products. So in the second quarter actually we have seen the RMBS steel weaker year on year. So should we expect more kind of.
Fifth OFAB battery change thing in the quarter. Thank you.
Okay.
The change of fair weather into two parts one part is linked to the our international politics.
The interest rate swap and that is a significant next impact first quarter because of the or low even close to zero.
Fisher rates and the is saying is.
Long time and.
That is.
The long term.
Fisher races.
It is the bombings is done the level and therefore the.
Currency.
The currency or forward currencies to knock hours sales orders and because the R&D is on expected to be depreciated and the first quarter.
Particularly given the recent concedes between.
You asked on China and the night.
And.
R&D is stabilized and relatively I appreciated. So we don't expect significant impact second quarter and for the.
The manager.
Instruments.
Missy.
Two items and we don't expect significant impact is looking for.
Okay, great. Thanks for Colorado Casino.
Thank you.
So once again, ladies and gentlemen that funding Monday July to ask a question to the speaker.
Please press zero, one I'm going to have some keypad Chief Counsel. Please proceed.
Yes.
Our next question is from Brandy at Goldman Sachs. Please go ahead.
Hey, guys. Thanks for taking my question.
Maybe just a follow up a little bit on an earlier question just on the gross margins.
You are guiding down about 250 basis points at the midpoint for them to second quarter versus the first quarter.
No pricing really started falling in late March and April so.
We've heard from other companies that a lot of Latin volumes could flow more into the Q.
As opposed to.
Real time into Q. So is it fair to assume gross margin is on again quenching with you about how should we think stuff.
Yes.
[music].
No the cloud gross margin second quarter reflected the.
Slowly.
Great great demands.
Particularly on the international market.
Second quarter.
The factory.
We discussed as fees downward trend.
Given the.
The larger situation, it's a market this ratio based fees continued EBITDA numbers and the but however.
From the cost perspective.
Improving at the same time, so Jay will.
The third quarter I think the second half year to close monitoring and the continued to be on repressive but.
Yes, we are trying to it.
She is relatively stable gross monte and the compared to the second quarter.
And the because particularly from the.
And we.
We rapidly expand our capacity on mono wafer and we we are expecting to improve our integrated production costs and.
So the.
China is periods and the which were offsets.
The next next the impact of the.
Pete downwards and.
Yes.
Okay. That's helpful.
And then Charlie just a question around the.
Inventory I know.
Last year, we had a pretty big move up in inventories from foresee the once you it seemed a little bit figures.
This year.
Thanks, If I think some accounts receivable was put the collaboration so.
This is just the shipment timing issue I would've thought they kind of mixed together so.
Are you seeing some cancellations on modules.
Are you having to kind of the market those.
Can you give us some for what Boston.
They are.
The play balances did itself yes.
Yes.
No because we have.
Target 18 to 20 Gigawatts rise quarter on average we are where we are planning.
So gigawatts of five gigawatts, so the inventory levels will be.
Lakeshore by nature of the inventory levels will increase and the.
Slightly.
Quarter by quarter, and the first quarter inventory level is taking higher.
Asia longstanding discos features the China.
His appliance China's and the we have 400 megawatts 500 megawatts.
Shipped to do.
Second quarter and.
And the swaps or the.
The second quarter, given the challenger international demand, we actively manage our operating and the truly come told the inventory levels.
We faced some order cancellations or delays as degree it's riskless shifted into the hour.
Our production.
Particularly as customers or new customers.
Release of weighs less impact from.
The virus so we.
In General I think you know the inventory levels will be worried.
In healthy level and by the given Oliver.
Targeted 18, gigawatts in the Gigawatts and looking when factoring that into level will increase a little bit slower onto the next.
Quarters.
Okay fair enough. Thanks, a lot that.
Thank you.
[music].
Thank you, Sir ladies and gentlemen, you try to ask question to the Speaker. Please press the zero one unintentional keypad to come so thanks, Chris.
Two.
Our next question how do you see ITC. Please go ahead.
Hey, Charlie.
Thanks for taking my question I have two questions the first.
Would you please give us some color on the.
The order visibility in the three quota and the fourth quarter and.
So how would we see if we can see further like you said.
The project, which delay ill jump in cans, though in the second quarter due to the foreign buyer well move to the like second half all may be press happening that next year. So how we look at these things and the second question is that we are seeing some strong demand in in.
Mainland China that coming from the do you got this.
Modules and maybe other way up a high efficiency.
So could you give us some more color.
Maybe book the product mix, what we will have in maybe the that.
Second quarter, how was the our mix coming from the high efficiency moderate and how important that maybe the remains at a normal.
The modest.
And we have a percentage on that thank you.
Okay.
Okay. So as this is Jenna sex other question, Chris about Europe.
A question about.
Although visibility I think we have.
We have built up a very strong order book over comparable I think all of US, let's say three quarters.
Oh, the book has to be fulfilled so we're very confident to too.
Achieve our target intended hendi I think thats part of the reason why we we keep our guidance intended 20 at the 18 to 20 gigawatts at that without any change.
For for the market.
For the parts of possible market delay, we have stance on some of the some regional or some countries has had the show the tolerance to delay part of the projects.
Into that say two quarters, the U.S. three quarters, especially for some regions like or countries like especially like India.
I.
I wish it was expected to have a installation off our 10 gigawatt intended trendy, but with the current lockdown law, we believe that the market size will be less intense even somewhere around five to six.
For sure. It's those projects has not been castle.
The majority of those project will get delayed into 2021, and Thats why I think the olive tree.
In our previous.
Let's say.
Especially our previous.
Became we also show our comp desktop out as the strong demanding 2021.
That's also part of our reason why we continue to expand our.
Hi efficiency capacity.
So your second question about the China demand, especially the double glass demand.
We see a double glass or do glass or per Doc has.
Research and Thats a advantage.
Especially in some.
Some environment.
But the weekly not.
I have personally I do not see such prototype become you anywhere so standard our industry standard product yes.
When I look into our Q1 book, we see less than.
5% off of our total shipment is double of us and the.
Which is let's say a very very few number compared with total shipments we sat with China.
The amount of picking up by the second half, we believe that ratio will be higher.
But Ah Onez, we can't I do not believe such Florida will become a let's say a standard product in short term, but in long runway some more technology challenges be sop and.
I believe such product has a promising future.
Yes ill answer your questions.
Yes, I have a two follow up question.
Is that you like for example, but the order from India is delayed for like two or three quarters, so will that be.
Renegotiating, our modest pipe Oh, we will all that detail ship disease.
Previous setting price. That's my first follow up question and the second is that.
Maybe I should ask for with Verizon My crashing so I.
Ill.
Just make example on that deal got to moderate the in China have high demand actually what I will not be but we see a kind of structure.
You might increase being a high producing more just maybe in China is the double glass maybe into the overseas do it like like other other kind of product. We also have like Wong right. It's not the double gaza's update mobileye. So so in general.
I will we see in the lows hi, fishing be modules will we see a much more.
Hi, a demand growth than normal efficiency modules, so how we see that and the different sandy Chen.
In the core, though and maybe second quarter.
Thank you for your follow up question about protect sign.
Contracts signed so our I think from what I see.
95 over 95% of a contract signed a has been honor and we both parties I respect the contractual obligations and we continue with the execution of the contractor event.
We have some pedometer impact on it and the for for a very few contractor has to be renegotiate or even casso to be course of this we caught a force majeure.
But.
We still believe you know.
It's not it.
Requires a car customer Wanna RB charge on the market price change is really bequests ups.
What is happening for project and off from there.
As their home that.
You are set kind of follow up question about double glass, we believe that demand in China.
For the double that product is increasing staff.
Yes.
Sorry to say I don't have that percentage number on behalf we Kay.
Give you some feedback after after our call right.
Okay. Okay.
Thanks managing.
That's all my questions. Thank you.
Thank you.
Thank you that's all for todays conference call. Thank you all for your participation.