Q3 2021 Canadian Solar Inc Earnings Call
Yeah.
Ladies and gentlemen, thank you for standing by welcome to Canadian Solar third quarter 2021 earnings conference call. My name is Michelle and I will be your operator for today.
This time all participants are in a listen only mode. Later, we will conduct a question and answer session. As a reminder, this conference is being recorded for replay purposes, I would now like to turn the call over to Isabella Zhao IR director of Canadian Solar. Please go ahead.
Thank you operator, and welcome everyone to Canadian Solar third quarter 2021 Conference call. Please note that we have provided slides to accompany today's call.
Available on Canadian solar its Investor relations website within the events and presentations section.
Joining us today are Dr. Shawn Qu, Chairman and CEO, Ian drunk President of Canadian Solar is majority owned subsidiary CSI solar Dr.
Doctor Weifang Chang senior VP and CFO.
And it's not I don't know right.
Corporate VP and president of Canadian Solar is wholly owned.
Subsidiary Global energy.
Oh company executives will participate in the Q&A session after management's formal remarks.
On this call Shawn will go over some key messages for the quarter, Yeah, and he's made with respect to the review the highlights of the CSI, So alert and global energy businesses, followed by Paul who will go through the financial results.
John will conclude the prepared remarks with the business outlook after which we will have time for questions.
Before we begin may I remind listeners that management's prepared remarks today as well as their answers to questions will contain forward looking statements that are subject to risks and uncertainties. The company claims the protection of the Safe Harbor for forward looking statements that is contained in the private Securities Litigation Reform Act of 1995.
Actual results may differ from management's current expectations and projections of the company's future performance represents managements estimates as of today.
Gideon solar assumes no obligation to update these projections in the future unless otherwise required by applicable law.
A more detailed discussion of the risks and uncertainties can be found in the company's annual report on form 20-F filed with the Securities and Exchange Commission.
Management's prepared remarks will be presented within the requirements of SEC regulation G. Regarding generally accepted accounting principles or GAAP. Some financial information presented during the call will be provided on both a GAAP and a non-GAAP basis.
Disclosing certain non-GAAP information management intends to provide investors with additional information to permit further analysis of the company's performance and underlying trends management uses non-GAAP measures to better assess operating performance and to establish operational goals non.
Non-GAAP information should not be viewed by investors as a substitute for data prepared in accordance with GAAP.
And now I would like to turn the call over to Canadian Solar is chairman and CEO, Dr. Shawn Qu.
Please go ahead.
Thank you isabell.
Morning.
During the third quarter of trying to trend near one.
The Lindbergh for reporting on gigawatt.
Module shipments.
So our largest battery storage project.
The 1.4 gigawatt hour Crimson project Okay.
Riverside commentary.
Yeah, one of the largest battery storage project in the world.
We have accomplished.
Two 4% year over year revenue growth.
Gross margin well ahead of guidance.
Our.
Strongest profit performance.
Dark horse Colby.
Overall, we're pleased.
Cool navigate.
Extremely challenging market.
Continuing to focus on long term their best friend.
R&D innovation.
You're here Yeah, you smell.
I'll walk through a more detailed review of our performance.
New mandates.
But first I would like to highlight three key messages on the global energy market.
Our strategic priorities.
And yes, sorry of solar our wallets IPO.
Yeah.
Please turn to slide three.
First after many years we have.
Starting to see real action.
Around the world too.
Our operating Tonight price the cost of carbon.
Cartel investment fossil sale for us.
Downhole, the European Union's emissions trading system, one of our most mature market in the world fall carbon prices.
The <unk> per ton for the first time.
The Street now.
Now it remains at nearly six times of its.
Trying to pin for trying to 18 average.
<unk> falls, well witnessing more actions.
<unk> coal for where each are clean energy.
<unk>.
Okay.
It is no coincidence that we have.
Experiencing a number of energy prices across the world.
Most notably Europe, China.
Part of.
This event were flat a broader trend.
Decline in your investment and traditional in nature.
Insufficient investment world.
And kind of 10 years of growth in it.
Economic at their bottom lines.
I see three moving parts in this equation.
Ever.
Don't want to increase that.
Fossil fuel based strategy.
So don't want to lower our standards therefore.
Therefore, the only solution is too.
To accelerate.
Adoption of reliable low cost and clean.
Clean renewable energy, including solar and battery storage.
Please turn to.
Slide four.
So the long term growth outlook for solar and batteries forward stronger ever.
Solar Pvs cumulative installations will crawl one terawatt.
<unk> and is set to reach 3.2 terawatt by <unk> 30.
Mark or Andy just storage cumulative installations will cross 100 gigawatt hours next year.
Set to reach one.
Terawatt hours by 2030.
Same time selling energy Ppas are also going up reversing a long term trend.
Aggressive CPA bidding.
The market is certainly adjusting and in a good way.
Meanwhile, we're encouraged by the upbeat mero, two and government policies in supporting the energy transition.
China.
On a serious of decarbonization policies for the 14th for 14th.
Our five year plan.
Demonstrating the country's commitment with five climate change.
We expect more policies to come.
Also hope for that prior to the fire them.
Back banner brand, while Pos Congress.
South America.
The right path towards decarbonization.
This responsible government policy that will support long term sustainable development.
Turning to slide five.
All of these.
Macro trend auctions third tailwind.
Tailwind for our business for years to come.
Our preparations for capture all these opportunities started many years ago.
They are global pipeline of solar.
Battery storage assets increase the visibility of our future world.
We're also expanding and deepening our sales channels focusing.
Providing total iron nature.
Total clean energy system solution.
Same time, we're making tactical manufacturing capacity expansion decisions, eliminating investment silicone stage of supply chain for navigating through the short term supply chain volatility.
Investing significantly in technology, and R&D to maintain our leadership position in clean energy.
And finally, I would like to update you on the CSI of solar power vault IPO in China.
Please turn to slide six.
Well on the third round of Q&A feedback with strong higher stock for stock exchange.
And continue to make progress.
We continue to communicate.
We're actively transparently.
Officials.
The Shanghai stock exchange this.
At this point, we think it is more realistic for target completion early next year, rather than this year subject to customer match or <unk>.
Mark.
Regulatory risks.
With that let me turn over the call to east smell for an overview of our global energy business.
Neil Please go ahead.
Thanks, Sean.
Please turn to slide seven.
I'm proud to report that in Q3 global already closed 300 megawatts or one four gigawatt hours.
Got it.
<unk>.
We delivered a total of $140 million.
Revenue of nearly <unk>.
44% gross margin.
Most of the profit this quarter was driven by our landmark getting some standalone battery storage project in California.
<unk> strengthened the value creation potential of battery storage projects.
Note that we completed the sale.
Reconstruction I'm.
Therefore, our gross profit is a better metric.
I worked for four months Dunford resin.
As we continue to hold 20% ownership in this project it will allow us to capture its long term value creation.
Yeah, I'm just glad that he started steam you social providing fully integrated battery system EPC on long term maintenance service.
Construction started several weeks ago.
And we expect the project to reach commercial operation by the summer of 2022.
With a significantly shorter lead time than most solar projects.
We are very proud of our teams or have been developed one of the largest standalone battery storage projects in the world.
And four continued into California Street reliably lithium safety when supporting to pick up on this issue goes.
We tried to Crimson, we now have a couple of two nine gigawatt hours.
Bob Please go ahead.
Footage projects under construction.
500 megawatts are working backlog.
We are also expanding our storage project pipeline in Latin America, and other parts of the world.
For example.
We won't Columbia study first utility scale battery storage project 45 megawatts and 45 megawatts hour.
Colombia has the third largest population in Latin America.
Mexico.
With very strong renewable energy growth fundamentals.
Following our first thought us pretty well.
We recently won another project in Colombia at.
52 megawatt solar plant in the nearby location.
Elsewhere.
We are also developing new battery storage projects in Chile.
Recently, we have been winning in public auctions, while also exploring opportunities to create value by developing merchant, but the mix of products.
These projects represent our entry.
New Latin America markets.
Related to diversity, probably get work pipeline globally.
See shrink global energy for long term growth.
Slide eight please.
Medium term.
We are doing all we can to reduce the impact of the recruitment cost inflation.
For instance, in some markets, we have signed PPA interest indexed to inflation.
Difficulty hedging position.
In other markets, we've been negotiating significantly hydro ppas for new projects.
Takers have been willing to accept hydro prices.
We are also proactively Canadian equipment orders for projects, where we can.
Overall, the impact in 2020 one is limited.
There will be some impact in 'twenty to 'twenty two.
Turning to slide nine.
That said, we still anticipate a strong 2022.
We continue to grow our global pipeline of projects, which now stand at 24, Gigawatts for solar for rigs, including 29 million.
21 gigawatt hours of battery stood at Chipotle.
Meanwhile, we continued to execute on our long term strategy to expand the base of recurring cash flows.
One leg of a Brazilian infrastructure from the slightly delayed due to the cost inflation impact.
Making significant progress on that what are your opinions investment vehicle.
The first batch of projects will be 164 megawatts and we'll be keeping their mutual drove with invest first in the next few months.
Our operations and maintenance teams I'd also winning new project contracts with global O&M portfolio now.
What sort of silver.
<unk> is already operational.
860 megawatt hour sofas products projects across nine countries.
Now, let me pass it up again.
Who will talk about the Canadian solar CSI solar business.
Please go ahead.
Thank you. This now please turn to slide 10.
In Q3, we delivered three nine gigawatts of shipments in the 11th and.
One $1 billion revenue.
Gross margin improved sequentially by 200 basis points to 15, 1%.
Given by continued price increases and partially offset by higher costs.
The margin was also helped by antidumping and countervailing duty reversal benefit as the solar tariff for the last revision was reduced to zero in the remand decision.
Please turn to slide 11.
The operational environment remains very challenging driven by three key factors.
First the global logistics bottleneck is continuing to increase our transportation costs.
While delaying shipping schedules.
We have signed several long term contracts, we shipping companies to mitigate the impact.
But.
<unk> average shipping costs.
At five times, the historical average the impact remains significant.
Second material costs are moving up again.
Across the board polysilicon.
Glass EV encapsulant.
Steel aluminum etcetera.
And not just for solar but for battery materials as well.
With lithium carbonate prices at four times, where they were at the beginning of the year.
We're mitigating the cost increase we've continued ASP increases.
With solar module prices up by nearly 25% year over year.
Yeah.
And third.
Power curtailment has not only affected our capacity utilization rates at search in factories.
But also significantly affected the utilization of energy intensive upstream manufacturing capacity, leading to the resumption of input price increases since September.
So the operating environment is not great and the power shortages in China are affecting the execution of our margin improvement plan.
However, we continue to take crack proactive measures to improve the situation.
For example, we have walked away from low priced volume in order to protect margins and have been raising prices more aggressively on new contracts.
Our market positioning and brand.
No.
More important than ever.
We further expand and deepen our sales channel partnerships.
Clean energy brand, providing total system solutions.
We're also optimizing our capacity expansion and each live nation to ensure we are operating in line with market realities.
And strong mentioned, we're limiting investment in certain stages of the supply chain to avoid falling into the overcapacity trap.
For example, we see significant overcapacity in the cell manufacturing and thus we do not have immediate plans to expand south capacity.
Nevertheless.
We do expect to continue to expanding our module capacity to benefit from sell overcapacity.
And we continue to develop our sales channels, particularly in the distributed generation segments.
Importantly, turning to the next slide please.
We're investing in next generation solar technologies, such as <unk> and type pitcher junction or top comp programs.
You know, we already invested in and ex GT pilot lines earlier this year.
We'll be delivering FCT modules in the coming weeks.
The champions sell during mass production not R&D testing has generated close to 25% efficiency.
While average efficiency is reaching 24, 5%.
We're also currently deploying 200 megawatt top comm pie deadline utilizing existing mono PERC capacity.
Please turn to slide 13.
In terms of battery storage.
Well on track to complete 860 megawatt hour of <unk>.
<unk> shipments this year for the Mustang and slate projects.
In fact.
<unk> 300 megawatt hours project commissioning as we speak.
The slate project will be completed before the end of the year.
Our combined contracted and forecast pipe pipeline continues to increase.
Although some of the earlier stage pipeline has dropped somewhat due to the current supply challenges.
That being said.
We're making significant progress on our.
In house, R&D and product development for stationary batteries storage product.
And hope to give you more updates very soon.
Now, let me turn it over to Lisa who will go through the financial results in greater detail.
Please go ahead.
Thank you yeah.
Please turn to slide 14.
We delivered one $2 billion in revenue.
Gross margin was 18, 6% well ahead of our guidance of 14% to 16%.
He was really benefited significantly from the Crimson popular slowed as you project itself as well as higher module pricing.
As again mentioned, we also had a $12 million benefit from.
The ADC VB reversal true up.
We thought to true up the gross margin would still stand at 17, 6% well ahead of the guidance.
Selling and distribution expenses increased by 21% quarter over quarter, mainly due to higher transportation costs would you call. It a fool.
<unk> quarters of the sequential increase.
To give you a sense of the magnitude.
Two years ago transportation costs.
Approximately 60% of selling and distribution expenses.
Today.
It accounts for 80%.
The total amount is more than three times from two years ago.
General and administrative expenses also increased by 21% male.
Mainly due to the projected loss contingency.
Underlying opex cost increase is very low.
Even after adjusting for transportation costs.
In this tough operating environment, we continue to manage costs very carefully.
Maintaining our investment.
Due to our technology and our cost of savvy operational efficiencies.
Other operating income increased this quarter due to a combination of factors.
<unk> the sale of 75 megawatts of solar power systems in China.
Total operating expenses were up 11% and a communist for 14% of revenues.
This was above our targeted long term opex level.
The net foreign exchange loss in the third quarter was $14 million higher than usual.
Loss was mainly due to the strength of the U S dollar relative to our basket of currencies, including the Brazilian real and Euro.
The losses were partially offset by our hedging programs.
The income tax benefit was $3 million.
Resulting from the utilization of net operating losses.
Net income attributable to Canadian solar shareholders was $75 million.
<unk> 52 cents per diluted share.
Our basic and diluted EPS.
At the same expense and a <unk> 52, respectively.
We increased our issued a share base by one 1 million and $2 6 million shares.
In Q3 and year to date with our ATM.
At the money equity offering program.
In addition, I would.
Diluted EPS.
Before 6.3 million shares to come for the additional shares at our convertible bonds being fully converted into equity.
Slide 15 please.
Now turning to cash flow and the balance sheet.
Our working capital days increased the motto or sorry, two more days.
Affected by longer logistics cycles.
We now expect a full year 2021 capex to be around $500 million below our previous guidance.
Just the capacity expansion and the utilization plans in light of latest market conditions.
Oh without a months, we deployed approximately 420 million year to date.
Leaving $60 million in the third quarter.
We ended the period with a healthy cash balance at $1.4 billion, giving us significant financial flexibility.
Total debt increased modestly to $2 3 billion from $2 2 billion.
Mainly driven by an increase in non recourse borrowings.
While net debt to EBITDA.
Sweden with cash.
The stable at three seven times.
Now, let me pass back to Shaw, who will conclude with our guidance and our business outlook shell.
Thanks for your call.
Let's turn to page.
Thanks, Tim.
For the fourth quarter of trying to generate what we expect total module shipment to be in the range of 3739, gigawatts, including approximately 250, a megawatt hour molecule.
Shipments to our own project.
Total revenue is expected to be in a range of 154 6 billion.
The updated shipment.
Revenue guidance reflects.
Deliberate decision took protect module asps.
Profitability in the fourth quarter.
Q4, gross margin is expected to be between 14% to 16%.
Please note that this does not include any benefit from the potential refund.
Previously incurred section 201 tariffs all molecule shipped to the U S.
Reminder.
Court of International Trade recently road to read in state.
Exclusion of Bifacial solar molecule from section 301 tariff.
CIP also reduced the section 301 tariff rate from 18% to 15%.
We're still evaluating the magnitude of the potential benefit therefore.
It's not included.
Today's guidance.
For the full year of tonnage on a one factor of storage shipment accounted for CSI solar.
It will be in a range of 840, <unk> hundred 60 megawatt hour.
Project sales in global energy are expected to be in the range of $1 five to 4.1 gigawatt, reflecting the timing of certain project sales.
Alright, it and if I.
I understand negotiations.
That may occur.
Remember our Q1 next year.
We are also introducing guidance for the next year for.
For the full year of trying to trend is true.
We expect module shipments to be in the range of 20, we're trying to two gigawatt.
Slatkin, approximately 45% growth from China.
'twenty one.
We expect battery storage.
To be in the range of 1415 gigawatt hours.
Slatkin.
Seven 2% year over year growth.
And the total protests our provision in the range of $12 four from two nine gigawatt.
<unk> 10, 58% year over year growth.
Revenue for the full year trend has trended true is expected to be in the range of six.
Five to seven in dollar.
30% year over year.
To sum up we believe the challenges facing the industry.
Temporary and the long term fundamentals remain positive.
Canadian solar.
Asia will benefit from both market and company specific.
<unk> catalyst.
Each of our business segments.
That was.
Was it like to open the call at your questions operator.
Thank you.
Minor if you wish to ask a question. Please press star one on your telephone keypad and wait for your name to be announced if you wish to cancel their request. Please press the pound or husky.
Your first question comes from the line of Philip Shen from Roth Capital Partners. Please ask your question.
Hi, everyone and thank you for taking my questions.
First one is on.
2022 guidance, thank you for sharing that.
That outlook so early.
Specifically I was interested in understanding how you expect.
<unk> to trend by quarter I know you haven't given it officially but given your.
Outlook for how input cost could trend and your ability to increase both pricing.
On the module side with Asps.
As well as Ppas on the.
Project side.
Do you think we could see margins trend.
By quarter as we go through 'twenty two.
Hi, Taylor.
Charles speaking.
We believe now are those are all forecast you'll know that.
The feedstock.
Pricing has been quite volatile this year now for <unk>, we believe that the overall trend for the key material, especially polysilicon.
B.
Rather than up.
That cost.
Uh huh.
Tobias at Seneca.
Yes.
Getting higher.
Quarter should be up a lot.
Over the past off the next four to five.
Waters.
And.
Also considering the recent today announced the U S.
<unk>.
Which will help the customers.
And also help us.
Cost of the.
Extrusion of the.
Of the.
Facial modules from the.
Section 201, but also the reviews.
A reduction of the AR.
Section 201 for other modules considering all of these factors.
What.
Thanks.
The molecule.
The overall margin.
But should get better next year, which means.
If we forecast of 14% to 16% margin for the fourth quarter.
We are forecasting the molecule.
The.
Canadian solar margin.
The stabilized and.
Going up.
Flying today.
For the four quarters next year that will be my.
Expectation.
Great. Thank you Shawn.
You mentioned the section 201.
Bi facial exemption.
Being reinstated.
So you talked about.
How you could see a refund.
No you said youre assessing the magnitude.
Right.
Given.
Does that.
The product all the bifacial product that's coming in as of earlier this week.
Now without the.
I guess, 18% tariff.
You have some benefit there.
And then there could be.
Benefits for recent.
Imports as well so I was wondering if you might be able to give us a sense for what the size of that could be and then also for Q3 I think.
Mark gross margin had.
A positive impact from.
The CVD from a prior period.
Being refunded.
Or at least being reduced I think to zero percent. So can you quantify what the impact was for Q3.
And then also what you expect for Q4.
I guess you might continue to to get that refund.
Right.
Yes.
<unk>.
Uh huh.
That event.
Sure.
Yes $12 million.
No.
Moving forward it feels that way.
18% duty.
Health.
The exceptional 18% year to date.
The beneficial way.
Our U S customer also help us.
Therefore, I think we'll see more disparate next year rather than the Q4.
Cause as.
As you all know.
The shipping and logistic time is pretty long on these days so.
The staff.
Shifting to date.
Probably only be able to create custom.
Customer in Q.
In Q1.
Great. Thank you one last one for me.
How do you guys expect opex to trend in Q4, maybe by line item and then in.
Q3, I think you also had this $23 million operating income benefit.
What was that.
The driver of that thanks.
Sure.
Phil This is wasteful, let me answer this question, yes, the old products was up about 11%.
Quarter over quarter, mainly.
Mainly due to the higher transportation cost as I explained.
On the call earlier and going into Q4, I think all of these cost factors will be pretty much.
Similar.
Similar to Q3, so that.
That is the overall picture but.
A lot of them will be compensated with.
With the higher ASP.
Okay. Thank you okay. Thank you Shawn I'll pass it on.
Okay.
Your next question comes from Colin Rusch from Oppenheimer. Please ask your question.
Thanks, so much guys.
We get an update on how your PPA pricing is holding for the projects that you are already fully developed and signed deals with.
Relative to.
Clearing price in the market for sales of projects just trying to get a sense of how those spreads are changing.
Your ability to digest some of the higher cost there.
Turning to supply chain.
Hi, He has now is now a handle this question.
Thank you Sam Hi, Colin Thanks for the question.
Look we don't have this year.
Yeah many projects.
Assigned that are not indexed to inflation like most of the Ppas. We signed this year in Brazil, and they are all our PPA incur.
They are indexed to inflation, so that has not changed in the market there.
In the rest of the countries.
All the Ppas that we have signed.
How does this play before so we don't see a big impact.
With us on on any change in the market conditions this year.
What we have seen in the market.
It truly depends from market to market, but what we are seeing participants in <unk>, Michigan.
Lease from the market PPA from the fourth we have been doing this holiday.
The contracts we have them their negotiations.
Have been basically if we're negotiating we didn't sign from PPA software basically.
Very close to be finalized.
But as soon as we can for negotiated.
Please reply your question or.
Yeah.
Some more nuance to it.
The second question.
Other than there is.
The clearing price for projects or are you seeing things clear at.
5% Unlevered returns.
Is it getting.
Down below 5% or is it closer to 6%, what's the sense of pricing on work buyers aren't right now.
It really depends from market to market on the on the PPA contracts that do upside and as you know, but look in general I would say, 6% makes it a reasonable assumption.
And that's what people lose its basically looking forward obviously the countries.
Okay, Great and then just changing gears on the power dynamics in China.
Sean.
If you look at the activity around that.
Are you seeing signs of.
No real activity that can help boost power power production are you seeing the government got involved can you just give us an update on what's happening on the ground to mitigate that and what you're watching for to just get a bit more hopeful on a capacity coming back online.
Well this is Yan first of all I think.
Given the macro level at the high level of carbon neutral effort I think.
Controlling on the carbon emission from the carbon based energy.
Consumption will continue however in.
In the past few months.
Very harsh restriction on power control.
Kind of a temporary we already are observing.
Relaxation on that so that's why we see some improvement on the supply chain already but.
But I'm not saying that will completely disappear it will continue but it will be in a more rational manner.
Into next year.
Okay. Thanks, a lot guys.
As a reminder, if you wish to ask a question. Please press star one on your telephone keypad.
Your next question comes from Brian Lee from Goldman Sachs. Please ask your question.
Hey, guys.
Thanks for taking the questions.
Maybe just first one is a follow up to that.
<unk> question.
That $23 million.
Operating income benefit you saw on the Opex line away from what is that and does that repeat.
Okay.
Yeah, sorry, Brian can you.
Highlight exactly where the number here.
Hi, Brian.
The benefits.
Thanks, Paul.
No Hi, Brian This is Sean.
After operating benefit from selling of some of the.
Of the solar power plant asset in.
In China.
And.
You are not repeat.
Is that one time item.
Yeah, that's 75 megawatt solar power plant, we sold in Western China.
Okay.
Why does that show up as a contra expense I guess as opposed to just one.
Or is it not booked.
Booked as traditional revenue and margin.
Yes, because that asset.
Work is recorded.
As a project to a halt.
If it's probably got the whole thing if we decided to to offload the project.
It is reported as a <unk>.
And benefits or other income rather than into the revenue line.
Got it okay understood it makes sense.
And then maybe two more quick ones for me.
I don't know if you mentioned this I appreciate the.
Early 'twenty, two guidance and all of the different capacity.
Forecasts here.
What are you thinking about the Capex budget for 2022.
All right.
That's still far away.
We haven't finished that yet.
Do you think it will be in excess of the 500 million for this year given your capacity is growing more on a year on year basis.
At this moment, we believe it.
More or less the same.
And trying to ensure NOI however by SASSA.
Steve.
Quite a few mindset into China.
China trended to sell or.
Finalize it.
This is telecom.
Okay understood makes sense and then.
Last one from me and I'll pass it on if I look at your slide deck. The guidance Slide Slide 16, again I appreciate all the detail here you got modules.
45% in 'twenty two.
Battery storage, 70% project sales up 50%.
But then revenues up 30 in the guidance. So just trying to understand what sort of ASP assumptions are you, making an environment right now where.
Panel pricing is up 25% like you said Sean.
Are you, assuming ASP degradation into 2022 or.
Are the batteries or project sales coming in at lower prices, just wondering why that volume growth, which is pretty robust across all three product types for you.
Is it kind of translating into.
Similar level of revenue growth.
<unk>.
This is yet.
Actually we're still feeling certain uncertainties from next year first of all.
We still believe there are multiple number of driving forces for next year. So as you see the.
The inflation may not end yet and.
Do you see.
We still observing.
The the output the real output for Silicon next year, it's going to be.
Taking time from first half into the second half so the real capacity is going to be released.
In the second half so that.
We're still seeing.
Rather.
Tight balance between supply and demand I'm talking about silicon module shipment for next year. So although we are also observing.
Adjustments from downstream I'm talking about the PPA off take from prices.
And the expectation of returns.
So becoming more tolerant Inc.
Oh things together.
Seeing next year is very rational balancing that's why we're providing a very rational forecast in terms of asps.
I would say is rather stable. It may go down, but it's not going to be a dramatic drop so in particular in the first half.
We are seeing quite a tight balance.
Okay I appreciate it yeah, Brian does equate from let me also add on the.
<unk> side, even though the gigawatt.
Projected for next year 2022 higher.
The higher than 'twenty, 'twenty, one, but because of the nature of the business a high a gigawatt. It doesn't mean necessarily mean higher revenue. So there is this a factor in the total equation.
That's why you see a much higher volume, but not necessarily much Ohio property.
Okay.
I'll take that offline thanks, guys.
Once again, if you wish to ask a question. Please press star one on your telephone keypad.
Again, it is star one if you wish to ask a question.
Yeah.
We will take our final question from J B Lowe of Citi. Please ask your question.
Hey, Good morning, everyone. My question is on <unk>.
Essentially on polysilicon and whether you guys have well first I wanted to ask about.
What impact do you guys are seeing if any.
From the <unk>.
Instituted by the customers Bureau here in the states.
Over the summer and how that's been affecting your.
Polysilicon buying patterns, if at all and whether or not you guys are looking for.
I guess alternative polysilicon supply outside of China, and how that would kind of work with your cost.
Thanks.
Yeah.
Hi, <unk>. This is Shawn you can weigh out by in polyethylene.
Both the unifying China.
And I'll say, China, where to stay.
Abel and long term.
Appliance, both inside and outside of China and India.
Yeah.
<unk> significant trials.
All China.
Moving forward.
I think where you continue to buy on the Silicon policy inside China and also in China and of course in all of our purchasing activities we have.
Our strict opponents thing.
To prevent any.
Forced labor.
Yeah.
Actually this Ohio.
The.
Commonly accepted.
Lisa practice.
Okay great.
Other question was just on have you did you guys see any COVID-19 related slowdowns in your southeast Asia manufacturing facilities.
And have those.
And if so have those been.
Abated.
We see Covid.
Related.
Yes, we do see some COVID-19 related.
Slow down.
Yeah.
Manufacturing.
Southeast Asia, but we also see.
Some subtle it out.
It seems to be due to other reasons.
Paul.
And it looks like it's affecting especially the.
Production at <unk>.
The funnel.
Other solar companies.
Yes, I think the impact from other factors, our Baker and had the impact of Colby.
Okay.
Okay interesting.
Alright, thanks, guys.
There are no further questions from the line at this time I would now like to hand, the call back to Canadian <unk>, Chairman and CEO, Dr. Shawn Qu for closing comments.
Thank you and thanks, everyone for joining us today.
However lines continuing to support.
And if you have any questions or lack of a setup a call.
You can contact our relationship.
The Investor Relations.
Team.
Hi.
Youll have a wonderful Thanksgiving.
Today's next week with our family and have a nice day.
Yeah.
Thank you. This concludes today's conference call. Thank you for participating you may now all disconnect.
Okay.
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Okay.
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