Q2 2021 JinkoSolar Holding Co Ltd Earnings Call
Ladies and gentlemen, thank you for standing by for Chico's saw a holding company limited second quarter 2021 earnings conference call. At this time all participants are in listen only mode. After the management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded I would now.
I'd like to turn the meeting over to your host for today's call Ms. Ripple town <unk> Investor Relations manager. Please proceed ripple.
Thank you operator, thank you everyone for joining us today for Genco Solar second quarter 2020, while earnings conference call. The company's results were released earlier today and are available on the company's IR website at Www <unk> com as well as our newswire services. We have also provided a separate.
Mental presentation for today's earnings call, which can also be found on the IR website.
The call today from <unk> solar a mystery Shanda chairman of the board of Directors and Chief Executive Officer of Genco Solar holding company limited Mr. <unk> Miao, Chief marketing officer of jingles Solar Company limited, Mr. Penley, Chief Financial Officer of Genco Solar holding company limited and Mr Chair.
Chow Chief Financial Officer of Genco Solar Company limited Mr. Lee will discuss jingle solar business operations and the company highlights followed by Mr. Miao, who will talk about your sales and marketing and then Mr. Penny who will go through the financials. They will all be available to answer your questions.
The <unk> session that follows.
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 for what looking statements involve inherent risks and uncertainties as such our future results may be materially different from the.
Views expressed today further information regarding this and other risks is included in <unk> public filings with the Securities and Exchange Commission jingle solar does not assume any obligation to update any forward looking statements, except as required under the applicable law.
It's now my pleasure to introduce Mr. Engender, Chairman and CEO of Genco Solar holdings mutually will speak in Mandarin and I will translate his comments into English. Please go ahead Mr. Li.
Okay.
Hum.
Four months Alexander argues well my goodness Susanna lobbying.
Bye bye.
Switching to the margin.
You want the shampoo tea both of them.
Good question Jamie.
Are you building Guido.
Good.
Hum.
Joggers Sundance hometown.
Who thought it was just talking about Europe.
Income from Macquarie group umbrella funds ingredient to do ourselves.
Don't tell me about <unk>.
She is a critical need.
Ooh Ooh Ooh Ooh.
Do you do about it.
Okay.
Sure.
You've got some to go.
Somebody is going to do their jobs without call, we wouldn't be a cookbook Douglas who do that don't use them.
<unk> got some goldman to jump onto the cargo.
Once you do it with Julia that she's doing.
We are very pleased to have delivered a revenue of $24.0 billion and gross margin of 17, 1% as well as the significant increase in non-GAAP net profit quarter over quarter, despite very challenging market conditions.
In response to the sharp polysilicon price increases in May and June and there is a certain time GAAP in the transmission or price increases from upstream to downstream in the supply chain. We quickly increased our external sales of silicon wafers and proactively lower to the production volume module total shipments.
Revenue in the second quarter were approximately flat compared with the first quarter, where profit improved sequentially as practice, along the supply chain will land high but relatively stable, we say overall acceptance of module price increases continuing well into the second half of the ear demand.
For modules is gradually resuming and our module production volume increased remarkably month over month in the third quarter.
Yeah.
Incremental to what you thought the Gulf with.
But I would tell you there Jim.
Southern Europe.
Thank you very much.
In Europe, who you love all your good job income function.
We'll miss you.
Walker <unk> Dunlop change, where they're going they're funding well, Michelle who can work from.
Total NIM.
And then the Golden Goose.
Sounds good income.
Hum.
The goal for minimum pushing to ammonia.
You are correct counselor with Julien, but without bunin, she walked through a jungle. She may go to a Google comes huh, John Thank goodness.
Doing great.
Julia woman Gumina, a bunch a whole lot, but you saw.
So a woman June.
Yeah, I mean look we didn't go to college students as young husband tensor core.
Oh shoot where a woman that may go out of my life Yup.
Sure.
After a while it was the first PV enterprises to go global we have accumulated which experience and insights into the development and management of overseas supply chain.
This has given us the know how and capability to mitigate your risk since the beginning of the year, we have continued to optimize and improve our global supply chain management. So far we have announced a few strategic cooperation suggests a joint investment with Callaway Company limited in a high purity crystal.
Silicon project with annual capacity of 45000 metric tons and investment in inner Mongolia Cheetah.
Silicon material company limited a wholly owned subsidiary of <unk> Energy Company Limited and we have signed a strategic five year polysilicon supply agreement with worker can be a G. Rucker will supply polysilicon to single solar from its production sites in Germany, and the United States.
Which contributes to a long term stability of our supply chain and business growth. Meanwhile, the overseas wafer manufacturing facility, we'll start construction soon and will serve a protection facilities in Malaysia, and the United States when production ramps up.
Yeah.
Yeah.
Yeah.
But she could you walk the.
Dogs.
And total income.
Having quite a few of them done, but sometimes in the future. She was a youthful gene panel group on your dog.
Because on the yoga.
You can call that Todd mentioned, so with that I'd jump on comes up with a shotgun.
Yeah.
Hum.
P C N since I've been the corridor.
Well, that's going to cause a peaceful use the whole young yet.
Yeah.
And she danced with Telemundo cope with Dupont.
In terms of integrated operations over seven Gigawatts of a newly added capacity of larger sized sales has put into production during the second quarter to support the rapid growth in demand for large size products with.
The release of new capacity aided by the application of new technologies and the continuous optimization of our process. We are confident that optimizing integrated capacity structure will gradually be reflected in cost reductions drove in the second half of the year at the same time, so technology is a tough transition.
No stage bumpy type two and type and we are expanding the investment plan for N type cell capacity based on technical advantages and two years mass production experience.
Okay.
She is nodding yes.
We're going to be doing.
On T cells, because only the gun, but Jimmy Choo woman she's done zinc weekend.
So I don't see it.
Surely the amendments Oh.
Oh.
Adult use yet to go.
Once all these off.
So that's insourcing.
Junior building great guns towards him about sometimes even though he was just shy of about I think that's true.
So shop on yet.
You didn't mean you thought.
Some 40 for Judy T SEC.
So Doug that's because we've always believed that it sometimes it goes up there.
So you can get goulding for the Europe.
Good.
John could be the zynga.
Quite to the father or me is so you can use them love them.
You don't see them.
The Occupancies in both junior and you end up having you can haul module cope with it.
Hunt is a central.
Leading technology high quality products and reliable services form the foundation of our success and the growth of our market share worldwide with delays of maximum laboratory conversion efficiency of our large area N type mono crystalline silicon solar cell reached 25.
I've called 25% and the maximum laboratory conversion efficiency of our high efficiency module reached 23, 53%, both making history with new World record. This ear. The shortage of polysilicon highlighted is that economics of large size products.
We expect as a proportion of our life science product shipment to increase rapidly.
Second half of 2021, and the market penetration rate of large size products to further increase next year high module prices have also brought about the changes in the market structure. The uptake of the distributed generation business achieved rapid development with more flexible business models and lower sensitivity to.
Prices in response to this trend we have also raised the proportion of distributed business for the full year to around 40% of total shipments compared with 20 to 25 last year in order to meet the needs of customers facing different distributed application scenarios.
Well behind Youtube and wants and that's what we like to project booster about some football using food.
Yeah.
Hunting, who she thought other companies out there have been some weak off we should keep on Tiger.
You know somebody there I mean, you do just a bump we launched a bond you shouldn't she had about sort of the topic.
We've done quite a bit.
Oh, yes.
Susanna dumping product Lula balls on junior and sometimes that change will ensure warmongering Sonya.
And she's told Chancellor Tommy and publishing.
Julie Bloomberg Com Booth, who deal with a partner with them to truly yield.
Quite a good bogey.
When you go through by quarter and go get them.
He's also a chance for.
I do hope I'm jumping in here.
She was even there Bob.
Huawei going through the Europe.
Sure.
In Guam jobs.
Rob.
The PV industry has largely completed its transition from relying on policy subsidies to policies strategic support and their continuous cost reduction and product upgrades brought about by a chicken a technology innovations have continued to what's already mined we eat.
Back to the second half of 2021 through 2022 to be a big moment for solar installations top tier enterprises.
Expect it to grow even faster than the industry average and further increase market share with higher proportion of large size products and faster penetration of distributed generation markets in order to secure the annual growth rate of our global shipment, we signed a strategic cooperation agreements with.
Health Cosco shipping and mask at the same time in order to facilitate the rapid penetration of China's distributed generation business and the accelerated development of energy storage business. We recently signed a strategic cooperation agreement with <unk>.
Contemporary and Parex technology coating had tech and other industry leaders. The patent that was setup project teams to do John to research and divestment share resources and never went to their respective advantages to jointly promote further business development for solar plus energy.
<unk> solutions.
Are these yoga journal.
All right.
Aloha Union country, Google's, who goes on for them. So we thought it would get you up with you. If you don't do agenda for them both of them without good to work with you. He is literally just the log ins when you're making go to London.
Maldini five I'm thrilled with all but one.
That was a dog food here.
Hollywood All Union you woman, that's something we'd have to tender young adult boat.
Well go to Europe.
But you are adding a union the trillions of water or hungry pumpkin.
We also talked about with a view on that yeah.
Before turning it over to Gerry I would like to go over our guidance for the third quarter 'twenty 'twenty. One we expect total shipments to be in the range of five to five five gigawatt, including module shipment to be in the range of four quantified two five gigawatts for the third quarter of 2021 total revenue for the third quarter.
That is to be in the range of what I'm going to 24 billion to 130.
<unk> 37 billion U S dollars gross margin for the third quarter is expected to be in the range of 12% to 15% the annual mono wafer solar cell and solar module production capacity is expected to be to reach 32, 524, and 45 Gigawatts respectively.
By the end of 2021, the full year 2020, while shipments guidance, including wafer cell and module is still expected to be in the range of 25 to 30 Gigawatts.
Thank you immensely.
In the second quarter total shipments reached a five two gigawatt.
Sales of over one gigawatts wafer and cell shipped to China market.
In terms of module shipment by region Europe contributed the largest proportion of the module shipment this quarter.
Module shipments increased by more than 40% of year over year.
Shipments to China, and the United States remain stable sequentially.
The rapid developing Chinese market has been given.
Boosted by government policy.
Spector to.
Two countries.
A large proportion of shipments in the second half of this year and 2022.
Through continuously monitoring China market, the mountain and our customers' needs we have allocated for utility projects in the distribution market with different personnel products and the resources to support the coming strong growth.
Overall, the amount of from overseas market to remain strong in the second quarter benefiting from both increasing power consumption.
About <unk>.
Gradual recover of energy consumption level. Thanks.
Thanks to effective predominant control measures Amazon effective implementation of carbon emission reduction goals in major economies like Europe, and the United States.
In addition to the expected reduction in subsidies in some market has brought forward some amount.
We believe that Europe, and the United States, and India will become even bigger driving forces for the newly overseas installation.
So United States is one of our most important market.
Although the surprise has become more difficult.
Late due to.
Challenges with shipping on the policies in short term, we have made strategic in the long term commitment to adapt our resources and the infrastructure to better serve the U S market.
Our teams have already been proactively deploying researching and promoting suitable long term solutions that will allow us to continuously grow and to meet the needs of U S market.
We expect annual global installation in 2021 to be in the range between 150 to 160 gigawatt.
Some projects scheduled for this year have been delayed due to the following year due to higher cost in the supply chain.
Along with our new project in 2022.
Our nations in 2022 are expected to increase by over 30%.
We reiterate our total shipment guidance of 25 to 30 people come out for the full year 2021.
Looking forward as well.
We have a high degree of certainty on the future demand, we are striving to deliver faster shipment of gross compared with industry average.
To increase our global market share as well as reaffirm our competitive position and leading position in this industry.
In terms of product prices outside the United States markets have generally maintained a upward trend.
In terms of product structure, so propulsion off off of large size products have been rapidly increasing.
With 182 millimeter products accounting for approximately 50% of shipments in the second half of this year.
We are bullish about the development.
Of distributed generation market and they expect to up to 40% of total shipments this year it would be going to distributed generation market.
We will continue to explore the global market demand for the distributed generation based on market trends and customer needs.
And the proactively increase our presence in China, United States, Europe, and explore other potential markets.
With that I will turn it over to Pat.
Thank you Jennifer.
In the second quarter.
We remain flexible in adjusting shipments for wafers.
Our solar module according to the prevailing market conditions.
As a result, we achieved a relatively balanced performance in terms of shipments and profitability.
Revenue was basically flat with the first quarter of 'twenty, a new one.
Gross margin exceeded our expectations.
The changes we are drifting.
On the management and control operating expenses and income.
Chin.
Right.
They have proven to be effective.
Income from operations and net profit excluding nonrecurring.
Parents items increased significantly.
Compared with the first quarter.
And when they want.
For second half hopefully something wrong.
We expect raw material prices to further stabilize and production volumes to gradually increase.
Which combined with cost reductions, resulting from new production capacity.
And have a positive impact on profitability.
Let me go into more details about this quarter now.
Total revenue was $24.0 billion.
Sequentially flat.
Gross margin.
17, one percentage sequentially flat.
Disposal and impairment loss on property plant and equipment in the second quarter decreased significantly.
<unk> was the first quarter of 2021.
Total operating expenses.
In the second quarter.
102.
$58.0 million, which accounted for 12 six percentage of total revenues.
In terms of absolute amount and propulsion.
It's supposed to improve significantly compared with the first quarter of calendar 'twenty one.
Excluding shipping costs.
We expect operating expenses as a percentage of total revenues to remain stable.
The effective management and control operating expenses increased income from operations too.
$7.0 million up to Hungary.
And nine percentage sequentially.
Operating margin increased to.
4.5 percentage from one nine percentage in the first quarter I'll turn it on day one.
EBITDA was one.
<unk> hundred $43 million compared with 123 million in the first quarter.
Fundamentally wrong.
Net income was pinpoint 3 million.
Non-GAAP net income was $47.0 million up six.
Significantly sequentially.
Non-GAAP diluted earnings per ads increased two point 89.
We continue to optimize our hedging against the foreign exchange risks.
I called it a net exchange losses.
0.7 minutes.
Significant reduction from a loss of <unk>.
$5.0 million in the first quarter of funded when they walk.
Moving to the balance sheet.
At the end of second quarter, our balance sheet on cash and cash equivalents.
Was one point or one penny.
Approximately flat with the first quarter alternate something wrong.
<unk> receivables due from certain parties improved significantly sequentially.
And we will continue to work on improving liquidity.
Yeah.
Hey, I'll turnover days were 62 days.
Compared with 68 days in the first quarter of 221.
Inventory turnover days were 138 days compared with 126 days in the first quarter of 2021.
Total debt was $15.0 billion at the end of second quarter.
Compared to 2.687 billion.
At the end of first quarter.
Although total depth.
67, 6 million was related to international solar projects.
90 days.
It was $13.0 billion compared with one point 59 billion at the end of the first quarter of calendar 'twenty one.
This concludes our prepared remarks, we are happy to take your questions. Operator. Please proceed.
We will now begin the question and answer session audio participants whose question to pose please press star one on your telephone keypad and you will be placed in the queue to cancel the queue. Please press two to once again zero one on your telephone keypad now.
Our first question.
It's from Mr. Philip Shen.
From Roth Capital Partners. Please go ahead Sir.
Hi, everybody and thank you for taking my questions.
I'd like to ask about your view of the anti circumvention.
Southeast Asia E D C V tariffs.
That could come around so.
Government of Commerce.
Takes on the case in the coming weeks.
What would you expect to do would you continue to ship into the U S.
And if so.
How would you mitigate that risk of retroactive tariffs or is there a possibility of that.
Stop shipping into the U S.
Okay.
This is hardly a speaking and no to.
To mitigate the risk.
No none at the risk of you are talking about.
Let's say.
China right on this solar industries.
We have accelerated the process too.
To build a more strong supply.
Supply chain and integrated production in line, although China.
And.
I think you know.
<unk>.
Yes.
The silicon arrangement at least won't Walker and we have began to build the.
Of around seven Gigawatts wafer capacities in Belgium them too.
To match, our capacity in existing capacities in Malaysia, and the U S. So from the let's say the immediate term we're optimistic and we will continue to serve you know our U S.
So I could bore you know U S customers and therefore the conversion the conversion you are talking about the risk still in the early stage.
It did have some uncertainties.
We are you know.
Following up to that.
Uh huh.
The event on the coast.
Keep in touch with our customers.
Okay. Thanks, Charlie.
It's a tough situation and <unk>.
You brought up the silicon arrangement with Walker.
And there are seven gigawatts of where Europe and Vietnam.
Uh huh.
I think in the anti circumvention case.
The junior.
Facility as mentioned and in that case, and so if they do take the caisson.
Uh huh.
Our wafer facility in Vietnam would you consider continuing to experience that.
So we built that facility out or is there a chance that.
You might slow things down there.
No. We don't have further plan to expand the capacity on the wafer out of China.
The first step and we want to have.
You know.
Relatively comparatively less to build up the integrated including the silicon right.
China to make sure that to mitigate the risk to zero and we think we are well.
Positioned to mitigate.
This risk.
Okay, Great and then how much with the W. R O enforcement, how much product has not made it.
How much of your product from Malaysia has not made it to the U S shores, thus far.
And what is the impact of that.
On our Q3 results because you know I think in your prepared remarks, you talked about.
So opex should be.
Flat ahead.
Except for excluding shipping costs.
So.
To what degree you know how how much part of it has been not able to get to the onshore and then how much is it cost in Europe to store that product because my understanding is it can be quite expensive.
Have you been able to find.
Other markets for that product or do you expect to wait.
So that product to make it to the U S. Thanks.
Yeah.
Hum.
Yeah, we did have some modules stopped by the U S CBP and to request additional documentation and the.
We're still in the process.
Preparation so relevant documentations.
At this stage.
You know cautiously optimistic for the results.
And it didn't have because it is it's going to take time. So it did have some known.
Packed all our shipments to the U S market.
And.
In terms of the storage we did have additional you know what.
We are expecting.
To incur additional storage for the human trees and waiting for the preparation of the relevant Documentations and.
Back to question now is solar and more you know.
Demand is pretty strong.
No I think it's a it's not it's not a demand issue. It's just you know globally. It's just the supply you know supply chain in Europe.
Higher supply chain costs and production.
Capacity bottleneck.
Okay.
Sorry to ask the question again, but can you quantify how much product.
It has not been able to make it to the U S and.
What's the cost might be to.
Mhm store that.
Well you can process evaluation.
And of course, it did have a Saturday you now have negative impact on the shipments of U S as fast.
Gross margin even in a net profit, but it is in the short term but.
We're not in a position to discuss the detailed number.
Okay I really appreciate you taking.
Taking my questions I know I know, there's some tough questions.
With that I'll pass it on.
Sure. Thank you.
Thank you. Our next question is from Credit Suisse. Mr. Jeremy tell please go ahead Sir.
Hello. Thank you for taking my questions. This is dan or something else yes.
Just two questions. So firstly.
Can you share with us what do you feel are multiple clients onto OCA into the fourth quarter of this year.
Especially after the reason to upstream.
And what do we think is a maximum kind about module paisano camera developers out in China.
Sure. Thank you Gary for your questions. This is Jennifer.
Regarding the market price, we haven't seen the latest changes are from the upstream.
<unk> side of life, the polysilicon price change and as the EPA price change.
Sometimes those glass price changes of course as well. So we are anticipating the module price will not be able to accept the order of course, because there are certain you know bottleneck on the ceilings for the downstream players so far and the customers to adopt to August.
So in all of our observations of latest I think tenders by some of Chinese Soe's number our just released today and yesterday, we have observed the August tier one players.
About one point to 80 RMB per watt peak, sorry, if we make it a more specific I think the range is somewhere between $83.0 to 186.
That should be a profit.
Our flagship price so for the rest of 'twenty one.
Okay. Thank you. So my second question was on.
Can management share with us a little bit more information on our corporation with a C. A T O. So just wondering if he has any kind of a numerical target.
We started with this medicine.
The other operations and my last question Todd Hitchcock.
Company can share with us some updates on the subsidy regulation I think.
Yeah.
Alright.
Yeah. Thank you for your question I guess or further cooperation with the August.
Storage battery companies, including Ctr, Gaucher, and others I think that that's a very strategic move.
Pre prepare remarks, we emphasize that that is our long term strategy prepare for the future because with a grid parity ongoing we are anticipating a massive integration of renewable sector, especially in PV industry to be happening in the next coming years and.
Because of the nature of the PV solar power.
Our generation system, and the storage or use a mask for the whole industry saw further growth. That's why we have established partnerships with key players in the storage sector.
Sectors to make sure that we're well well prepare for that and make it a more specifically and we are we trying to research and development together with some of the resources Sherry and leverage each other's respective wantage too.
Joining a promoter.
Future business development for the solar plus.
Plus energy solutions.
And the next question I think Charlie will take that.
The IPO process is still in Europe.
On the track and.
What are your submitters as application to some high stock since by the end of June and.
So today.
If you are processed by the regulators.
Yeah. Okay. Thank you for taking my question.
Thank you.
Thank you.
Thank you. Our next question comes or our capital Mr. Rajeev. Please go ahead.
Yes, Oh.
Good morning, good evening.
I had a few questions.
The first question is about the gross income you guys did a very good job.
Improving the gross income number from the second quarter from the first quarter.
And balancing the mix of wafers and modules to get there.
Is it reasonable to think that you know obviously, there's a lot of dynamics that gross income will continue to grow in the third quarter.
Even you are reaching a sharp V. The amount of the modules that you would ship relative to wafers themselves I'm not talking about the gross margin number but the gross income itself.
Is it reasonable to think that that will continue to increase in the third quarter.
Mhm.
So you'll have two questions. One is the gross income on those margins.
Gross margin in second quarter, we did have a relatively good compared to our expectations. The major parties, the wafer sort of condo sales contribution and.
Towards third quarter.
We expect the gross income will continue to increase well the gross margin is under pressure because we we shift.
We are targeting to have more solar module shipments.
<unk> you know the upstream the material costs.
Oh the upwards.
But you know we're trying to continue.
Continue to increase our module price.
Uh huh.
It's still facing you know the high partners Southern pen.
Hey classes and clients upwards.
So in general with respect to the gross income increase whereas the cost money.
In a downward trend.
I understand I understand.
But.
The important thing is that gross income.
The second question is that you know you maintained your guidance of about 25 to 30 Gigawatts.
What are your shipments.
Yes.
You are expecting shipments up about nine gigawatts in the fourth quarter.
Can you elaborate can you give us some insights into Oh, what do.
We expect that as a big ramp from our third quarter shipments and then I have one more question.
Uh huh.
Yeah. So I think we are.
Our strong Q4 is.
He said we think the plan is I think it's a part of the nature of the solar industry of course, so if you're looking a look back in the last two or three years' time Q4 is always the peak season.
The whole year.
Of course, there are expecting people are expecting a very strong demand from China.
Thank you.
Each company or the whole industry as a whole.
Everyone will expect a stronger Q4, that's the one part of the nature of the industry team out in another part of it is we are Stephanie our revenue off of our in house capacity as well so naturally in all of our capacity will grow by.
By time flying.
And also as well as preparing for a for the 'twenty 'twenty two as well.
Okay.
So obviously you are expecting a very substantial increase in module shipments as well in the fourth quarter. So the way you will get to the nine gigawatts will be a substantial increase in module.
Matt.
Well.
In general, yes, because that's the direction, but we still have the flexibility to to expose our you know south breakout ourself into a wafer ourselves all modules as we did in Q2 for you in Q3, so we have the flexibility but in general the total shipment will grow.
For sure.
Okay.
And my final question is on the on your capacity.
Hugh you have substantially increased our capacity.
Module, then Youre now talking about 45 Gigawatts for next year.
That's a very.
It's an increase.
And Uh huh.
And this is despite the fact that the module shipment.
You are not.
Not growing as rapidly as they have grown in past years. So.
Can you give us some insights into why do you think that 45 gigawatts.
<unk> been bring to 'twenty two is the right number.
Given that you would have shipped about 'twenty, one or 'twenty two gigawatt this year.
Yeah.
Uh huh.
So physical preparations for next year.
This year the market is constrained by the polysilicon.
After the bottleneck.
Part of it.
You know if I'm honest independence, and we're expecting the legacy or the market will be you know.
Accelerates.
The demands.
And on top of that we are planning to spend time yourself capacities.
No.
Our next generations and the capacities.
And module.
The capacity is relatively small and we wound up build up.
You know module as quickly as possible and before the preparation on next year.
If you look at our shipments, let's say nine gigawatts and based on your calculations in the fourth quarter.
And the module is still you know we face some.
Supply.
This shortage, particularly worry about building to the large size large sensor module capacities for the nexgen.
The next generations.
Okay. Thank you very much.
Thank you.
Yes.
Thank you. Our next question is from Goldman Sachs. Mr. Brian Lee. Please go ahead Sir.
Hey, guys. Thanks for squeezing me in for some questions I had a couple of housekeeping ones first one.
You guys gave us the breakout for modules and wafers can you do anything similar for what is embedded in the <unk> guidance as well as.
Since you're maintaining the full year you know there's an implicit.
Mixture assuming input.
Give us a sense of you know module versus non module shipments in <unk>.
Third quarter, you know, we gave the guidance total shipments five to five five including module of four five to five so the GAAP the difference.
Is the majority of our partners the river surpass yourselves.
Taking to the fourth quarter.
Yes.
I still am flexible, but a majority of part of we are at this stage we were extracting it.
From the module shipments.
Okay Fair enough and then just on the earlier question about gross margins.
It sounds like you're seeing some margin pressure on both.
Product types can you give us a rough sense of where gross margins are for modules versus non module shipments in Europe and your guidance.
Oh, sorry.
Third quarter, we gave the guidance, 12% to 15% and the majority of parties more so the gross margins.
As you know and.
It's very same same.
The module gross margin.
And.
For the fourth quarter.
We.
It's a it's still some opportunities there.
Sure of course is an awkward we're quickly and at the same time, we are shifting our module shipments.
China the majority of part.
And you know and we are trying to get relatively high the module price.
And hopefully you know we were able to offset that.
Cost.
Upward pressures.
Okay fair enough.
And then maybe two more from me.
I know you can't quantify are you you don't want to quantify.
You know the the shipments that had been health.
I'll note that the border here with the there'll be Aro and in the U S can you.
Give us a sense I guess, what what sort of <unk>.
Mix impact or mix.
Are you assuming in terms of shipments for the U S. In Q3, and Q4 are you actually are embedding U S shipments module shipments into the forecast here for either quarter and then maybe related to that you know you have the.
400 megawatt facility in Florida are you able to get cells.
I guess non ginkgo origin go cells into the country to to run that module facility.
Well I think the mix.
It's something difficult to disclose that at the current stage because.
We are even we are cautiously optimistic about Oh documentations.
Which has been well prepared and buses still even though it's not a 100% <unk> car to decide what to do next so that's why we are cautious and monitoring the situation and are doing our best and right now I don't know.
Like Charlie Charlie just said just now I think we are very confident about that amount is not right. Now is not the problem of the demand and it's a problem of supply or shipment wise, we have multiple alternatives.
Even we have a full commitment to all U S customers on to our U S market.
We are preparing for it but I tell you it's difficult to disclose detailed number.
Even for Q3 on Q4 U S shipment yet.
Yeah.
I guess, maybe to ask it another way if you don't have clarity that you can move product into the U S ship product into the U S are you still planning to.
Bring product to the border at risk of having it being seized for months until it gets released and you can maybe ship it to another alternative location as you mentioned I guess, what's the strategy around you.
Taking that risk of having shipments, which get delayed and then ultimately you do have to reroute them elsewhere versus waiting out the process to see what you know what you should do with future shipments over the next couple of quarters.
I think Ah.
I think we're still you know continue to stick to our plan, our Florida shipments even without some challenges.
Of course, those are car with harvest control in the local southeast Asia countries.
We're still doing our best to find solutions with our customers right now so if a detailed number wise.
Again, we cannot quantify yet that'd be courses.
We don't have any number which we can't close but is close but still we are doing our best and we have the constant to two to continue to have our business are ongoing not only U S. But in the other markets as well. So we are working different alternatives in parallel or we have no.
Concerns on that.
Okay.
Last housekeeping one for me what was the the Capex here for the first half of the year and then is there updated view on Capex guidance for are for 2021. Thank you guys.
Oh, okay.
Okay for the first half of 'twenty.
One teacher can do long land Capex numbers.
Approximately 500.
18.
And then Europe.
Anything is possible.
No.
We increased the plan to build a more you know module capacities.
<unk> reached 245, Gigawatts, so we increase our capex targets this year.
As for the full year two are roughly around 1.1 thing in U S dollars.
Yes.
Okay. Thanks, guys.
Yes.
Thank you. Thank you.
The Q&A session is still open if you would like to ask a question. Please press star one on your telephone keypad now.
If you would like to ask a question. Please press star one on your telephone keypad now.
Our next question is from UBS, Mr. William Clifton. Please go ahead Sir.
Great. Thank you very much for fitting me in here just another one on the shipments obviously the guidance implies a pretty substantial ramp in the fourth quarter for shipments to reach the total guidance.
I'm curious you know going into the quarter are you are you expecting to hold more module inventory or do you have the ability to ramp production that quickly depending on what the final mix of module and component.
Cell and wafer sales end up being.
Yeah.
So firstly.
Let me comment in General I think my colleagues, who will give you a breakdown detail later so in general I think our the market demand is quite strong and we have we are holding some of the inventory really because of the accounting issues that we have the contract to fulfill but right now the globe.
Though international logistics are shipping lines are facing a big headaches right now I think it's not only for solar industry, but for all the industries. So it's difficult to get the ship on time and I'll schedule. So that's why you know we have a loss we have some sometimes so we have to face accounting.
The point that we have some inventories on hand, but actually we have all the contract cover photo saw inventories.
Yeah.
Okay and then.
Just one more for me the guidance obviously implies.
Cost pressures are accelerating here in the third quarter.
Right.
Poly silicon prices being pretty stable over the time period glass, obviously coming down just wondering if you could provide a little more color on.
Why are we seeing more expected to see margin compression in the third quarter relative to the second quarter.
And what what level of confidence do you have here that you may actually meet or exceed the high end of the range again.
The misery power as a single Hollywood.
Actually there's a cost in second quarter third quarter.
Based on the weighted average on the polysilicon.
Rich to the high price starting from May this year, so second quarter based on where the average the polysilicon price is also high it's not you know.
That's it.
To Oh 200.
B you know tunnel, it's not based off of that cost in your calculation in the second quarter.
It's a fairly low.
But what is the time collapse no.
And to the third quarter and the polysilicon average causes rates to notice them at high level that is a major part of you know on health.
Hopefully you understand that this is really average and the polysilicon price and it's accelerating.
The you know the.
The pace you know starting from.
And so from a technology perspective.
Average.
More impact there.
Be reflected in the <unk>.
Third quarter.
It's a I think it won't you know is a key.
No impact.
On the cost side.
Got it thanks very much.
Thank you.
Yeah.
Thank you. Our next question is a follow up from Mr. Rajiv from some Sarah capital. Please go ahead Sir.
Yes.
I would like you to give us a little bit more clarification on the revenue number that you have guidance for the third quarter.
Because I'm using.
The combinations of.
We've heard that the module shipments in the third quarter and assuming that there is some price increases.
From Q2 to Q3.
The revenue number that I'm coming up with a higher than one 4 billion, because obviously higher than your guidance. So.
Can you help us understand why your revenue guidance.
The high end of one <unk>.
Using your low end of your of your shipment guidance combined with the assuming that prices are stable or up.
For both module and wafer the revenue number that we came up with is higher than $5.0 billion.
It's a mix issue and.
You know I mean, the shipment to the U S versus our regions the U S.
The ASP is relatively stable.
But you know we have more shipments.
Third quarter versus second second quarter, and the trend yeah in the third quarter in the U S shipments is relatively lower than the second quarter and the percentage wise suggest shipments taking less percentage of the total shipment.
In the U S. You know because of the.
Trade issues and the ASP is.
Dramatically higher than the other regions. So it's a mixed nations.
Yeah.
So what you're saying is that you can increase our gross income.
Second quarter to third quarter even.
At the aggregate level the way for the module price that you wouldn't realize from that.
Though down from second quarter to third quarter, because you have less shipments with the U S where the the module prices in places.
Yes, you're right.
The cost you know production cost is higher and the new address we need to pay additional you know 201 tariff costs. So the gross margin gross margin gross income from U S shipments actually it's a Nash cirrhosis you can never time difference was our original.
And we have more shipments.
You know.
Our original Thunder, which has no no no.
No impact on the gross income contributions.
Great. Thank you very much.
Thank you.
Thank you. This concludes today's conference call. Thank you for your participation you may now disconnect.
Yeah.
Yeah.
Okay.
[music].
[music].
[music].
Ladies and gentlemen, thank you for standing by for Chico's saw a holding company limited second quarter 2021 earnings conference call. At this time all participants are in listen only mode. After the management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded.
I would now like to turn the meeting over to your host for today's call Ms. Ripple Town <unk> Investor Relations manager. Please proceed to people.
Thank you operator, thank you everyone for joining us today for Genco solar second quarter 'twenty to 'twenty One earnings conference call. The company's results were released earlier today and available on the company's IR website at Www <unk> com as well as our newswire services. We have also provided us.
The mental presentation for today's earnings call, which can also be found on the IR website.
On the call today from Kimco sold out in these studies younger chairman of the board of Directors and Chief Executive Officer of Genco Solar holding company limited Mr Agenda, Miao, Chief marketing Officer of Genco Silvio Company Limited, Mr. Polly Chief Financial Officer of Genco Solar holding company limited and then Mr.
Alrighty Chow Chief Financial Officer of Genco Silvio Company limited.
Mr. Lee will discuss jingle soda ash business operations and the company highlights followed by Mr. Miao, who will talk about your sales and marketing and then Mr. Penny who will go through the financials. They will all be available to answer your questions. During the Q&A session that follows.
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, but wasn't looking statements, we will be having two weeks and all certainties as such our future results may be materially different from the.
Views expressed today, whereas that information regarding this and other risks is included in <unk> public filings with the Securities and Exchange Commission jingle. So that that's not assume any obligation to update any forward looking statements, except as required under the applicable law.
It's now my pleasure to introduce new studying Shanda, chairman and CEO of Genco solar holding Mr. Li will speak in Mandarin and I will translate his comments into English. Please go ahead Mr. Li.
Hum.
Mm Gotcha, that's one month down the odds you go Oh my goodness.
The adviser.
So I remember some cheetah in Utah Marty.
I'm just gently tease them apart.
Big budgets and so it Jamie.
Are you building Guido.
Oh good.
So as you're about to do something.
Jonathan It sounds on its own it yet.
So I was just talking about.
Uh huh.
He'd been Dallas I think we'd have to see why she also holds true so Don how would you like to go onto the Tiger.
Oh, that's owned portfolio, but it's also so who you choose to Derby city.
She's always muni bonds and you've got some seasonal jump button, you're going to ask Doug did that call. We wouldn't be a couple of big jobs. They just won't do that don't do cheetah.
So again, but shoot you.
Yes.
Well, that's so again once you're in that category.
To do so.
Yeah, that's yeah. So she thought.
We are very pleased that you have to leave that to revenue of $24.0 billion U S dollars and gross margin of 17 point or 1% as well as the significant increase in non-GAAP net profit quarter over quarter, despite challenging market conditions.
English backed real chefs polysilicon price increases in May and June and there is a certain time GAAP in the technician or price increases flow upstream to downstream in the supply chain. We quickly increased external sales of silicon wafers and proactively lowered as a protection volume module total shipments and.
Revenue in the second quarter were approximately flat compared with the SEC first quarter, while profit improved sequentially as practice, along the supply chain with manheim.
Apparently stable, let's say overall acceptance of module price increases continuing well into the second half of the ear do you mind, if a module is gradually resuming and our module production volume increased Luckily most of them are in the third quarter.
Yeah.
And Colin Yes. So of course, you, while you sort of see saw their block, which is so high.
Yes the book.
Oh, you're punching a junior.
Well my yoga each other income function.
Oh, My Gosh, you Europe, one solid change where they're going down.
For example, you point coupons go home towards women, who don't want then the English album song with Us income.
Chances are going for minimum pushing to ammonia.
You all could chance one of which you will end up where you are going to walk through a jungle. She didn't make all of our goodwill Kantar Johnson Colombian Congress towards anyway.
I'm sure you're woman, bringing a bunch a whole lot about yield comes up so why women kill to highlight.
Luckily didn't botox teaches young heightened against the pillows.
Hello, Tao Chancellor C Wonder woman seismic while my youngest.
Yeah.
It's been painful.
After a while it was the first PV enterprises to go global we have accumulated experience and insights into the development and management of overseas supply chain.
This has given us the know how and capability to many gay two week since the beginning of the ear, we have continued to optimize and improve our global supply chain management. So far we have announced a few strategic co operation such as a joint investment with Homeaway Company Limited a high purity quick for Mike.
Silicon project with annual capacity of 45000 metric tons and investment in inner Mongolia, I seem to see.
Silicon material company limited a wholly owned subsidiary of <unk> Energy Company Limited and we have signed a strategic five ear polysilicon supply agreement with worker can be a G. Let COVID-19 will supply polysilicon can go solar for all of its production sites in Germany, and the United States.
Which contributes to a long term stability of our supply chain and the business growth. Meanwhile, the overseas wafer manufacturing facility, we'll start construction soon and we'll circle all protection facilities in Malaysia, and the United States when production ramps up.
Yeah.
Okay.
But she got you on that.
Dogs and so it seems in terms of coupon and I'm totally sometimes eat foods, having quite well Samsung that dogs, and sometimes even vasu sure. She's a youthful gene panel Dupont Your dog Chews without you you go vehicles on the yoga.
Can you say E quad that Todd mentioned or you want to jump on homes, you would go to shop on.
He bought teams yeah.
Awesome.
She is a central UPC shop N shop in the cordless, who says well let them take care of that so you'll see a whole yeah. Yeah. The mountaintop thing you have to think and she danced with top end October Dupont.
In terms of integrated operations over seven Gigawatts of a newly added capacity of larger size sales textbook into production during the second quarter to support the rapid growth in demand for large size products.
The release of new capacity aided by the application of new technologies and the continuous optimization of our process well conflict into that optimizing our integrated capacity structure will gradually be reflected in cost reductions drove in the second half of the ear at the same time, so technology is actually transact.
No stage bumpy tap to N type and we are expanding the investment plan for N type cell capacity based on technical advantages and two years' mass production experience.
Okay.
She is the lead ship yeah, all the time, because we're going to be a pause on pizza Cassandra, but Jimmy Choo woman she's done in Guizhou.
So I don't see it did.
And so all of the top five months maybe all.
Adult shingles on why Saudi is off by a month.
That's as logging cheetah.
Junior both angry about that bunch here towards the end of dogs and sometimes it can just show you all the above.
So I think that's what she does shop on yet quite expensive.
Convenient thousands of tons.
Some 40, Virginia for Pizza.
So we can't judge that because you're always worried that it sometimes it goes up there.
So you should see a good deal for that Youll see.
John could be the beans on doing for the acquired to the father, formerly Italian she's a little of both.
Is it possible for you George Holmes and you end up I have a job.
He then about junior junior end up happening.
Yeah.
Okay.
So Neil Hunt is a central.
Leading technology high quality product.
Products and reliable services form the foundation of our success and the growth of our market share worldwide with the laser Mexican law.
Have a great conversion efficiency of our large area N type mono crystalline silicon solar cell, which is 25 points to 25% and the maximum the Boa Tobey conversion efficiency of our high efficiency module reached 23, 53%, both making history with new World Records.
This ear the shortage of polysilicon highlighted is that economics of large size products.
We expect as a proportion of our lifestyle product shipment to increase rapidly in the second half of 2021 and the market penetration rate of large size products to further increase next year high module prices have also brought about the changes in the market structure the uptake of the distributed generation business.
Achieved I didn't give that much with more flexible business model at a lower sensitivity to practice in response to this trend. We have also raised the proportion of distributed business for the full year to around 40% of total shipments compared with 20 to 25 last year. So all digitally.
And so customers facing different distributed application scenarios.
Well behind Youtube and wants and that's only because I think the beauty of books without them for a song using food. So that's all.
Just to a challenging since you've done that does temper inside the hush puppies.
We should get people into higher than that.
Yes up on Yeah, I mean, yeah, Bill Johnson bump was launched about you shouldn't she had about sort of the topic of can call the health.
Both of which we've done quite a bit.
It doesn't feel good probably Hungary, Susana dumping product, we love balls on junior and sometimes those change or even feel warmer Zambia.
Boston Heathrow chance roller Derby at Hercules.
Look Judy Zhang for comfort food.
Absolutely yeah with a puzzled bogo.
I don't think Jim when he talks about culture and go get them.
Yeah, that'd be a good chance we'll.
She doesn't have a whole bunch on pony.
She was here.
Bob.
Yeah, probably goes to the Europe with an opinion Guam jobs.
Bob.
The PV industry has largely completed its transition from relying on policy subsidies to policies strategic support and their continuous cost reduction and product upgrades brought about by picking a technology innovation have continued to what's already mined we expect.
The second half of 2021 through 'twenty 'twenty two to be a big moment for solar installations top tier enterprises.
I expect it to grow even faster than the industry average and further increase market share with higher proportion of large size products and a faster penetration of distributed generation markets in order to secure the annual growth rate of our global shipment, we signed a strategic cooperation agreements with.
Both Costco shipping.
And matched at the same time in order to facilitate the rapid penetration of China distributed generation business and the accelerated development of energy storage business. We recently signed a strategic cooperation agreement with contemporary <unk>.
X technology coaching had tech and other industry leaders to patronize the worst setup project teams to do Joan to research and the divestment share resources and never went to their respective advantages to jointly promote further business development for solar plus energy solutions.
Yeah.
Part of the job that you're not going to know how well that's just always thought yet.
Aloha Union he's on Judo goes so goes on for a quarter and so we thought it would get you up with you. If you don't do them, that's where water that's available without good geological yet he is totally against that target I mean, you're making.
Hmm.
Yeah, Marty me five I'm thrilled with our 11th.
Sorry about that yeah.
Hardly a union you woman that funding equation.
The agenda.
Hum about health.
Got you understood.
All in all unions opinions on the water or hungry champions.
We also talked about the view on that yeah.
Before turning over to Jennifer I would like to go over our guidance for the third quarter 'twenty 'twenty. One we expect total shipments to be in the range of five to five five gigawatt, including module shipment to be in the range of four to 525 Gigawatts for the third quarter of 2021 total revenue for the third quarter is it.
Back to you to be in the range of one point to 24 billion to 170.
37 billion U S dollars gross margin for the third quarter is expected to be in the range of 12% to 15% the annual mono wafer sort of sale and solar module production capacity is expected to be two which started to appoint a flash 24, and 45 gigawatts respectively.
By the end of 2021 and the full year 2020, while shipments guidance, including wafer cell and module is still expected to be in the range of 25 to 30 gigawatt.
Thank you immensely.
In the second quarter total shipments reached a five two gigawatt.
Inclusive of over one gigawatts wafer and cell shipped to China market.
In terms of module shipment by region Europe contributed the largest proportion of the module shipments this quarter.
Module shipments increased by more than 40% of year over year.
Shipments to China, and the United States remain stable sequentially. So rapid developing Chinese market has been given a boost by government policy.
Back to two countries contribute a large proportion of shipments in the second half of this year and 2022.
Through continuously monitoring China market, the mountain and our customers' needs we have allocated for utility projects in the distribution market is different personnel products and the resources to support the upcoming strong growth.
Overall, the amount of from overseas market remained strong in the second quarter benefiting from both increasing power consumption brought about by the gradual recovery of energy consumption level.
Thanks to effective pandemic control measures and that's an effective implementation of carbon emission reduction goals in major economies like Europe, and the United States.
In addition to the expected reduction in subsidies in some market has brought forward some demand.
We believe that Europe, and the United States, and India will become even bigger driving forces for the newly overseas installation.
So United States is one of our most important market.
Although the supplies have become more difficult.
Late due to challenges with shipping and the policies in short term.
We have made strategic and a long term commitment to adapt our resources and the infrastructure to better serve the U S market.
Our teams have already been proactively deploy researching and promoting suitable long term solutions that will allow us to continuously grow and meet the needs of U S market.
We expect the annual global installation in 2021 to be in the range between 150 to 160 gigawatt.
Some projects scheduled for this year have been delayed into the following year due to higher cost in the supply chain.
Along with our new project in 2022 installations in 2022 are expected to increase by over 30%.
We reiterate our total shipment guidance of 25 to sort of think about it for the full year 2021.
Looking forward as well.
We have a high degree of certainty on the future demand, we are striving to deliver faster shipment of gross compared with industry average.
To increase our global market share as well as reaffirm our competitive position and leading position in this industry.
In terms of product prices outside of the United States markets have generally maintained a upward trend in terms of product structure. So propulsion of large sized product have been rapidly increasing with 182 millimeter product accounting for.
Approximately 50% of shipments in the second half of this year.
We are bullish about the divestment process.
Distributed generation market.
And they expect to up to 40% of total shipments this year it would be going to distributed generation market.
We will continue to explore the global market demand for the distributed generation based on market trends and customer needs.
And to proactively increase our presence in China, United States, Europe, and explore other potential markets.
With that I will turn it over to Pat.
Thank you Jennifer.
In the second quarter, we remain flexible in adjusting shipments for wafers sales our solar module according to the prevailing market conditions.
As a result, we achieved a relatively balanced performance in terms of shipments and profitability.
Sales revenue was basically flat with the first quarter of 2021.
While gross margin exceeded our expectations.
The changes we are drifting.
On the management and control operating expenses and they can change.
Right.
Any pain have proven to be effective.
Income from operations and net profit excluding nonrecurring.
Parents items increased significantly.
Compared with the first quarter of 2000, when they walk.
For second half will convey something wrong.
We expect raw material prices to further stabilize and production volumes to gradually increase.
Which combined with cost reductions, resulting from new production capacity should have a positive impact on profitability.
Let me go into more details about this quarter now.
Total revenue was $24.0 billion.
Sequentially flat.
Gross margin.
Or 17, one percentage sequentially flat.
Disposal and impairment loss on property plant and equipment in the second quarter decreased significantly.
Compared with the first quarter of 2021.
Total operating expenses.
In the second quarter.
Hi, Henry.
The $8.0 million, which accounted for 12 six percentage of total revenues.
In terms of absolute amount and propulsion.
Both improved significantly compared with the first quarter up from the 21.
Excluding shipping costs.
We.
Expect operating expenses as a percentage of total revenue to remain stable.
The effective management and control of operating expenses increased income from operations to $7.0 million App to Hungary.
39 percentage sequentially.
Operating margin increased to four five percentage from one nine percentage in the first quarter I'll turn it on the wall.
EBITDA was.
$143 million compared with $123 million in the first quarter.
Fundamentally wrong net.
Net income was $13.0 million and non-GAAP net income.
It was $47.0 million up significantly sequentially.
Non-GAAP diluted earnings per ads increased two point 89.
We continue to optimize our hedging against the foreign exchange risk.
A record at a net exchange loss.
Seven minutes, a significant reduction from a loss of <unk>.
$5.0 million in the first quarter of 2021.
Moving to the balance sheet.
At the end of second quarter, our balance sheet of cash and cash equivalents.
That's one point or one penny.
Approximately flat with the first quarter alternating the Wow.
Accounts receivables due from third parties improved significantly sequentially and.
And we will continue to work on improving liquidity.
Payoffs in number of days were 62 days.
Compared with six to eight days in the first quarter of 221 inventory turnover days were hendry.
Eight days compared with 126 days in the first quarter of 2021.
Total debt was $15.0 billion at the end of second quarter.
<unk> two point.
$13.0 billion.
At the end of first quarter.
Although total depth.
67, 6 million was related to international solar projects.
90 day one.
$13.0 billion compared with one point 59 billion at the end of the first quarter of 221.
This concludes our prepared remarks, we are happy to take your questions. Operator. Please proceed.
We will now begin the question and answer session audio participants whose question to pose please press star one on your telephone keypad and you will be placed in the queue to cancel the queue. Please press two to once again zero one on your telephone keypad now.
Our first question.
It's from Mr. Philip Shen.
From Roth Capital Partners. Please go ahead Sir.
Hi, everybody. Thank you for taking my questions.
I'd like to ask about your view of the anti circumvention.
South East Asia E D C V tariffs.
That could come around so if the department of Commerce.
So on the case in the coming weeks.
What would you expect to do would you continue to ship into the U S.
And if so.
How would you mitigate that risk of retroactive tariffs or is there a possibility that you may.
<unk> stopped shipping into the U S.
Okay.
Philip This is Tony was speaking.
To mitigate the risk.
No not one at the risk of you are talking about.
Let's say.
China right this solar industries.
We have accelerated the process too.
The more strong.
Brian Chin.
Integrated production in line, although China and.
I think you know we signed to the.
The silicon arrangement at least won't Walker and we have began to build.
The <unk> seven gigawatts wafer capacities.
Belgian them.
To match our capacity.
Existing capacities in Malaysia, and the U S. So from the let's say the.
Medium term, we are optimistic and we will continue to serve you know our U S.
Boy, you know U S customers and therefore, the conversions are converging talking about risk still in the early stage.
It did have some uncertainties.
We are falling off.
The.
Event on the coast.
Keep in touch with our customers.
Okay. Thanks, Charlie.
I know, it's a tough situation and.
I think you brought up.
The silicon arrangement with Walker.
And there are seven gigawatts of wafer capacity and Vietnam.
I think in the anti circumvention case.
The genco.
Facility is.
Mentioned in vaccines and so if they do take the caisson.
Our wafer facility in Vietnam would you consider continuing to experience that bill.
Build that facility out or is there a chance that.
You might slow things down there.
You know.
We don't have further plan to expand the capacity on the wafer out of China.
The first step and we want to have.
Relative to competitive homeless to buildup integrated including the silicon right, although China to make sure to mitigate the risk to zero and we think we are well positioned to mitigate this risk.
Okay, Great and then how much with the W. R O enforcement, how much product has not made it.
How much of your product from Malaysia has not made it to the U S shores, thus far.
And what is the impact of that.
On our Q3 results because you know I think in your prepared remarks, you talked about.
Opex should be.
Flat ahead.
Four excluding shipping costs.
So.
To what degree you know.
How much product has been not able to get to the U S. Shores and then how much is it cost in Europe to store that product because my understanding is a it can be quite expensive.
Have you been able to find.
Other markets for that product or do you expect to wait for that product to make it to the U S. Thanks.
Yeah.
So yeah, we did have some modules stopped by the U S CBP and to request additional documentation and.
We're still in the process.
Preparations are relevant Documentations and.
At this stage.
You know cautiously optimistic for the results.
It did have because it is it's going to take time. So it did have some impact.
Our shipments to the U S market.
In terms of the storage we did have additional you know where we are expecting to.
<unk> or traditional storage for the human trees and waiting for the preparation of the relevant documentations.
And back.
Back to question now is the solar and more you know.
He managed prettiest shop and no I think it is not it's not a demand issue or its just you know globally. It's just the supply you know supply chain in the <unk>.
Higher supply chain costs and production capacity capacity bottleneck.
Okay.
Sorry to ask the question again, but can you quantify how much product.
It has not been able to make it to the U S and.
What's the cost might be too.
Store that.
Well you can process evaluation.
And of course it did have said you now have negative impact on the shipments of U S.
Gross margin even in a net profit, but it is short term but.
We're not in a position to east coast with digital number.
Okay I really appreciate.
Are you taking the questions I know I know, there's some tough questions with that I'll pass it on.
Sure. Thank you.
Thank you. Our next question is from Credit Suisse. Mr. Jeremy tell please go ahead Sir.
Hello, Thank you for taking my questions. This is Gary.
Two quick questions.
Can management share with us what we feel are module pricing outlook into the fourth quarter of this year, absolutely, especially after the reason to upstream.
And what do we think is a maximum kind of a module camera developers out in China.
Sure. Thank you Gary for your questions. This is Jennifer.
Regarding the market price, we haven't seen the latest changes are from the upper stream.
Apply to inside of life, the polysilicon price change and as the EPA price change.
Sometimes because glass price changes of course as well so we are anticipating.
Module price will not be able to accept the order of course, because there are certain you know.
Bottleneck on the ceilings for the downstream players so far and the customers to adopt to August numbers. So in our observations the latest.
Thank her tenders by some of Chinese OEM number our just released today and yesterday, we have observed a August tier one players.
One point to 80 RMB per watt peak, sorry, if we make it a more specific I think the range is somewhere between $83.0 to 186.
That should be.
Our flagship price for the rash.
Rest of 'twenty one.
Okay.
Yeah. Okay. Thank you. So my second question is.
Can management share with us a little bit more information on our corporation with a C. A T. O. So just wondering if he has any kind of a numerical or talking on the energy storage business on all other operations.
And my last question is.
Company can share with us some updates on the subsidy reallocation listing I. Thank you.
Alright.
Yes. Thank you first question I guess or further cooperation with the August.
Storage battery companies, including <unk> and others I think that that's a very strategic move.
Pre prepared remarks, so we emphasize that that is our long term strategy prepare for the future of course with the.
Grid parity ongoing we are anticipating a massive.
Duration in the renewable sector, especially in PV industry to be happening in the next coming years and because of the nature of the PV solar.
Our generation system.
Storage is a mask for.
For the whole industry saw further growth that's why we have established partnerships with key players in the storage.
Sectors to make sure that we're well well prepare for that and it makes it a more specifically and we are we trying to research and development together with some of the resources sharing and.
Leverage each other's respective either wanted to jointly promote.
Future business development for the solar.
Plus energy solutions.
And the next question I think Charlie will take that.
The IPO process is still in Europe.
On the track.
We submitted the application to some high stock since by the end of June and ASP.
Today, it's still in the review process by the regulators.
Okay. Thank you for taking my questions.
Thank you.
Thank you.
Thank you our next question from Sarah Capital Mr. Rajeev. Please go ahead Paul.
Yes.
Good morning, good evening.
I had a few questions.
The first question is about the gross income you guys did a very good job.
Improving the gross income number from the second quarter from the first quarter.
And balancing that mix of wafers and modules to get there.
Is it reasonable to think that you know obviously, there's a lot of dynamics that gross income will continue to grow in the third quarter.
Even.
You are reaching a sharp V. The amount of the modules that you would ship relative to wafers themselves I'm not talking about the gross margin number but the gross income itself.
Is it reasonable to think that that will continue to increase in the third quarter.
Yeah.
So you have two questions. One is the gross income gross margin and.
Gross margin in second quarter, we did have a relatively good compared to our expectations the major parties.
The wafer sort accounted sales contributions.
And.
Two words, yes third quarter.
We will use the expected gross income will continue to increase while the gross margin is under pressure because we will we are targeting to have more solar module shipments at the same time, you know the upstream material cost.
Yeah.
Upwards, and that's where I'm trying to.
Continue to increase our module price.
It is still facing.
Hi, Paul incentive in the evening classes and appliances upwards.
So in general we expect the gross income will increase whereas the gross margin.
In a downward trend.
I understand I understand but the important thing is that gross income will contribute to growth. The second question is that you know you maintained your guidance of about 25 to 30 Gigawatts.
Florida what are your shipments would suggest that you are expecting shipments up about nine gigawatts in the fourth quarter.
Can you elaborate can you give us some insights into.
What's the reason that you expect a big ramp from third quarter shipments and then I have one more question.
Uh huh.
Yeah. So I think we are.
I think a strong Q4 is.
We think the plan is I think it's a part of the nature of the solar industry. Because if you are looking look back in the last two or three years' time Q4 is always the peak season as of the whole year, mainly because there are expecting people are expecting a very strong demand from China.
I think each.
Each company or the whole industry as a whole.
Everyone will expect a stronger Q4, that's the one part of the nature of the industry demand and another part of it is we are steadily revenue off of our in house capacity as well so naturally you know.
Our capacity will grow.
By time flying.
Also as well as preparing for for the 2022 as well.
Okay.
So obviously you are expecting a very substantial increase in module shipments as well in the fourth quarter. So the way you get to the nine gigawatts will be a substantial increase in module.
Equipment.
Okay.
Well, that's a little part in general, yes, because that's the direction, but we still have the flexibility to to expose our south breakout ourselves into wafer ourselves all modules as we did in Q2 for you in Q3, so we have the flexibility but in general the <unk>.
It'll shipment will grow for sure.
Okay and then my final question is on the on Europe capacity.
Hugh you have substantially increased our capacity.
Module, then you're now talking about 45 Gigawatts for Europe.
That's a very significant increase.
And this is despite the fact that the module shipment this year.
I'm not growing as rapidly as they have grown in past years. So can you.
Give us some insights into why do you think that 45, Gigawatts volt modules and Brent you're trying to do is the right number.
Given that you would have shipped about 'twenty, one or 'twenty two gigawatt this year.
Uh huh.
So tissue preparations for next year.
And this year the market is constrained by the polysilicon.
On the opposite bottleneck.
The positive.
If I'm honest independents.
We're expecting our legacy as a market will be you know.
Accelerating the demands and on top of that we are planning to N type cell capacities and.
No.
Next generations and capacities.
And the module.
Capacity is relatively small and we want to build up.
Our module ASP.
As possible and therefore, the preparation on next year and if you look at our shipments, let's say nine gigawatts and based on your calculations in the fourth quarter.
The module is deal.
We faced some.
Supply.
Shortage, particularly where you are building the.
The large size large science module capacities.
The.
Next generations.
Okay. Thank you very much.
Thank you.
Thank you. Our next question is from Goldman Sachs. Mr. Brian Lee. Please go ahead Sir.
Hey, guys. Thanks for squeezing me in for some questions I had a couple of housekeeping ones first one.
You guys gave us the breakout for modules and wafers can you do anything similar for what is embedded in the <unk> guidance as well as.
Since you're maintaining the full year you know.
There's an implicit.
Mixture assuming in <unk> can you give us a sense of you know module versus non module shipments in <unk>.
Hmm.
Third quarter, you know, we gave the guidance total shipments five to $5 five including module of four 5% to five so the GAAP the difference is.
The majority of the partners the river surpass yourselves.
Taking to the fourth quarter.
Yes.
Flexible of a majority of part of it.
At this stage.
Extracting its from the module shipments.
Okay Fair enough and then just on the earlier question about gross margins.
It sounds like you're seeing some margin pressure on both.
Product types can you give us a rough sense of where gross margins are for modules versus non module shipments in your in your guidance.
Uh huh.
Third quarter, we gave the guidance, 12% to 15% and the majority of products more so the gross margin is as you know.
It's very same assemblies.
<unk> gross margin.
For the fourth quarter.
We are.
It's still some uncertainties.
Material cost.
Afterwards, we are quickly and at the same time, we are shifting our module shipments.
China, the majority of Dupont and you.
And we are trying to get relatively high the module price.
Hopefully we are able.
Well to offset.
The cost.
Upward pressures.
Okay Fair enough and then maybe two more for me.
I know you can't quantify are you you don't want to quantify you know the the shipments that had been.
It held up at the border here with the there'll be Aro and in the U S can you.
Give us a sense I guess, what what sort of.
Mix impact or mix.
Are you assuming in terms of shipments for the U S. In Q3, and Q4 are you actually embedding U S shipments module shipments into the forecast here for either quarter and then maybe related to that you know you have the.
400 megawatt facility in Florida are you able to get cells.
I guess, non ginkgo or genco cells into the country to to run that module facility.
Well I think the mix.
It is something difficult to disclose that at the current stage of course.
We are even we are cautiously optimistic about Oh documentations.
Which has been well prepared and buses still you know its not a 100% <unk> car to decide what to do next so that's why we are cautious and monitoring the situation and are doing our best right now.
Like Charlie was Charlie just said just now I think we are very confident about that amount is not right. Now is not the problem of the demand and it's a problem of supply or shipment wise, we have multiple alternatives.
Even we have a full commitment to all U S customers on to our U S market and we are preparing for it but difficult to disclose any detailed number.
Even for Q3 on Q4 U S shipment yet.
I guess, maybe to ask it another way if you don't have clarity that you can move product into the U S ship product into the U S are you still planning to.
Bring product to the border at risk of having it being seized for months until it gets released and you can maybe ship it to another alternative location as you mentioned I guess, what's the strategy around <unk>.
Taking that risk of having shipments, which get delayed and then ultimately you do have to reroute them elsewhere versus waiting out the process to see what what you should do with future shipments over the next couple of quarters.
I think.
I think we're still you know.
Continue to stick to our plan, our Florida shipments, even we have some challenges because corvid corvid control in the local southeast Asia countries.
We're still doing our best to find solutions with our customers right now so for detailed number wise.
Again, we cannot quantify it yet because it is.
We don't have any number which we can close but is close but still we are doing our best and we have the confidence to two to continue to have our business are ongoing not only U S. But in other markets as well. So we are working on different alternatives in parallels or we have.
No concerns on that.
Okay.
Last housekeeping one from me what was the the Capex here for the first half of the year and then is there updated view on Capex guidance for <unk> for 2021. Thank you guys.
Sure.
Oh, okay.
Okay for the first half of.
<unk> a nuance in our Capex numbers.
Approximately 500.
Amy.
Yes.
Awesome.
No.
We increased the.
The plan to build a more you know module capacities.
To reach $47.0, Gigawatts, so we increase our capex.
Target this year.
For the full year, two are roughly around on Poland, one bidding U S dollars.
Okay. Thanks, guys.
Yes.
Thank you. Thank you.
The Q&A session is still open if you would like to ask a question. Please press star one on your telephone keypad now.
If you would like to ask a question. Please press star one on your telephone keypad now.
Our next question is from UBS, Mr. William Linton. Please go ahead Sir.
Great. Thank you very much for fitting me in here just another one on the shipments obviously the guidance implies a pretty substantial ramp in the fourth quarter for shipments to reach the total guidance.
I'm curious you know going into the quarter are you are you expecting to hold more module inventory or do you have the ability to ramp production that quickly depending on what the final mix of module and component.
That one wafer sales end up being.
Okay.
So firstly let.
Let me comment in General I think my colleagues, who will give you a breakdown detail later so in general I think the.
Market demand is quite strong and we have we are holding some of the inventory really because of the accounting issues that we have the contract to fulfill but right now the global International logistics.
Shipping lines.
Placing a big had X right now I think is not only for solar industry, but for all the industries. So it's difficult to get the ship on time and I'll schedule. So that's why we have lost our way.
Sometimes we have to face accounting point that we have some inventories on hand, but actually we have all the contract cover for those inventories.
Yeah.
Okay and then.
Just one more for me you know the guidance obviously implies.
Cost pressures are accelerating here in the third quarter.
Right.
Poly silicon prices being pretty stable over the time period glass, obviously coming down just wondering if you could provide a little more color on you know.
Why are we seeing more expected to see margin compression in the third quarter relative to the second quarter.
And what what level of confidence do you have here that you may actually meet or exceed the high end of the range again.
Oh, the misery power is.
Sydney, how with tax.
<unk> costs in certain corners third quarter is based on the weighted average on the polysilicon.
Rich to the high price starting from May.
<unk> this year.
Second quarter based on a weighted average.
Polysilicon prices got so high it's not.
That's it.
Two.
200 RMB tunnel.
Based on the exact cost in your calculation in the second quarter.
It's a fairly low.
But what is the time collapse now.
To the third quarter and the polysilicon. The average cost is relates to notice them at high level that is a major part.
Health.
Hopefully you understand that this is really average and the polysilicon price.
And it's accelerating.
The you know the.
The pace you know starting from.
And so from a technology perspective.
Average.
More impact.
I'll be reflective.
Third quarter.
I think it won't.
Key.
You know impacts.
On the cost side.
Got it thanks very much.
Thank you.
Thank you our next question is.
As a follow up from Mr. Rajiv from <unk> capital. Please go ahead Sir.
Yes, I would.
I'd like you to give us a little bit more clarification on the revenue.
Numbers that you have guidance for the third quarter.
Because using different combinations of.
We've heard that the module shipments in the third quarter and assuming that there is some guidance in pieces.
From Q2 Q3.
The revenue number.
Coming up with or higher than $5.0 billion because of the obviously higher than your guidance. So.
Can you help us understand why your revenue guidance at the high end is one five but using your low end of your of your shipment guidance combined with the assuming that prices are stable or up.
Oh modules that we close the revenue number that we've come up with is higher than one 4 billion.
It's a mix issue.
You know.
The shipment to the U S versus our regions the U S.
The.
The ASP is relatively stable.
Regina.
But you know we have more shipments.
Third quarter versus second quarter.
The trend yeah in the third quarter and the U S shipments is relatively lower than the second quarter and the percentage wise does your shipments taking less percentage of the total shipment.
In the U S. You know because of the.
Trading issues.
It is.
Dramatically higher than the other.
So it's a mixed issues.
So what you're saying is that you can increase our growth.
From second quarter to third quarter, even though.
The aggregate level the way for the module price that you wouldn't realize from that moved down from second quarter to third quarter, because you have less shipments to the U S where the module prices inflated.
Yes, Youre right.
With the cost production cost is higher and the new address we need to pay additional 201 tariff costs.
The gross margin gross margin gross income from Europe shipments accurate Nasaw significant difference was our original <unk>.
And we have more shipments.
You know.
Our original Thunder, which has no no no no.
No impact on the gross income contributions.
Great. Thank you very much.
Thank you.
Yeah.
Thank you. This concludes today's conference call. Thank you for your participation you may now disconnect.