Q1 2022 JinkoSolar Holding Co Ltd Earnings Call
Hello, ladies and gentlemen, and thank you for standing by for Genco Solar Holdings first quarter 2022.
Conference call at this time, all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session.
As a reminder, today's conference call is being recorded I would like now to turn the meeting over to your host for today's call Ms. Stella Wang Genco Solaris Investor Relations. Please proceed.
Thank you operator, thank you everyone for joining us.
Today for <unk> first quarter 'twenty to 'twenty two earnings conference call. The company's results were released earlier today and available on the Companys IR website at Www Dot simple solar dot com as well as to why our services. We have also provided supplemental presentation for today's earnings.
Call, which can also be found on the IR website.
On our call today.
I mean, <unk> chairman of the board of directors and the Chief Executive Officer of Genco, similar holding company limited Mr. Dennis meal kits marketing officer of Genco Solar Company limited, Mr. Peng Chief Financial Officer of Genco Solar holding company limited and it makes them.
Charlie <unk>, Chief financial Officer of <unk>.
<unk> Solar company limited Mr. Eddie will discuss it didn't close all our business operations and company highlights followed by Mr. Miao, who will talk about the sales and marketing and then Mr. Peng who will go through the financials.
Oh, so 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 a 1995.
Forward looking statements involve inherent risks and uncertainties as such a field trial results maybe materially different from the views expressed today further information regarding this and other risks and included in <unk> public filings with the Securities and Exchange Commission.
Because all that does not assume any obligation to update any forward looking statements, except as required under applicable law.
Yeah.
It's now my pleasure to introduce MS Studies, and the chairman and CEO of <unk> Solar holdings, Mr. Li will speak in Mandarin and I will translate his comments into English. Please go ahead Mr. <unk>.
I'm going to end up which should be good.
Each new buildings, how theyre going again.
Did you do the junior piece hotels, though.
Gotcha.
Can you just sort of a change of heart Fuji Gwinnett County, sometimes can be thoughtful do things on the Sogou Hao to go there.
Did you do so.
<unk> <unk>.
<unk>, yes.
So on pro rata Bob Yes.
Yes.
Well <unk> vehicles for <unk>, <unk> and Hulu.
Leveraging our competitive advantages to fly churn management and a global and that's what we delivered solid results in the first quarter of 2022 with total revenues of RMB 14, 8 billion, an increase of 86% year over year and the correlation.
And then upside at 57% year over year to 814 gigawatt, despite a very challenging environment due to microeconomic uncertainties and a supply chain disruption from the resurgence of COVID-19 in many parts of the world will continue to improve our in house cost structure.
And our gross profit in the first quarter increased by more than 60% year over year.
You do look we know exactly how you can see that always been the signage.
<unk> ballpark.
How are you going to adopt to the audio tour site Zika.
In parallel.
The gel fluids vintage yet attended that illegality.
Are you seeing folks yet.
There is some kind of opportunity or May June sort of showing this.
<unk> got a cell phone.
We pay the modules themselves.
Polysilicon prices and shipping costs to remain high and volatile.
In the quarter since much of our surge in low call. It COVID-19 cases in China triggered a epidemic prevention and containment policies. This have a lab to logistics congestion and a sharp reduction in transport capacity further affecting the timeliness of the materials and the finished.
Product deliveries and increasing cost pressures for many enterprises.
To mitigate the risks and production uncertainties caused by the pandemic. We took early action to ensure ample supply of new materials as well as close cooperation and coordination of production supply chain and our sales department in order to meet production and delivery time.
Your line.
Yeah.
Uh-huh Alot com.
The tiny come shoot.
<unk>, Sweden.
Some of the <unk>.
So Todd on the future.
<unk>.
<unk> got some challenges with highlight folks at the end of June to July onwards, the EOG silicones on your account for the future.
The agenda yet.
Just a quick Sean.
<unk>.
Designer coordinated the young 40 project contracts, all beltway toggle with the dealer.
Sure Joe challenging overtime build for the future of the ballpark.
So no secret that GM John Cooper.
T cell select Farmville <unk> tissue to the Jim Jordan, she did well against them.
For the quarter the improvements were going for the future of gallon sample content media group have gone into more future look one combo.
You're absolutely right.
In China deliver rich for some projects was to some extent delayed due to the supply chain imbalance and logistics disruptions as a result of the COVID-19 resurgence in certain parts of the country.
Over domestic demand has remained solid.
Beginning of 2020 too many Chinese provinces have issue at the time of your tariff policies, which have further stimulated demand for distributed generation, especially for systems designed for the industrial and commercial sectors.
Utility projects consistently high prices, along the supply chain convinced that some of our some of the customers to not to wait any longer to start new projects.
During the quarter the number of bidding for large scale projects grow gradually and by the end of March the bidding phases for more than 50 gigawatts of such projects had been completed.
In Europe , the Russia, Ukraine law has largely boosted demand for solar energy and incremental demand and respected.
It's expected to be released within the year and will steadily increase over time.
In addition, with the low carbon nature nature and economies of scale of the PV. The demand for distributed generation will rapidly increase in countries with a high proportion of the gas fired power and thermal power in their energy mix, we remain confident and optimistic about.
Yes, I'll sort of with a total global installations expected to reach about 250 gigawatt.
So on Amazon with EQT.
And hunting boots, Ken bunch of Truecar com going behind Union before long.
Yes.
So it has a mood without boost crude up to the platform.
So walk us inbounds on the faithful.
People have been done.
Wade can chime in too.
<unk>.
In short, we believe that the impact of the predominate on production and operations is temporary and under control.
Neither industrious resilience in the face of a volatility and fluctuation has been increasing.
A gradual recovery of the logistics and the gradual release of polysilicon.
Confidence about a gradual recovery of the industry and the growth in shipments and installations.
Our guidance on total shipments, which remains unchanged for the full year of 2022.
Imaging gamba sand yet.
Four months assuming behind it.
Okay.
Let me review some tonnage Pablo suddenly Dan So Dan Togo.
For Danville.
E Mail again, putting vehicles <unk> T cells.
Q2 saw jumbo.
That culture in chimpanzees.
Dun <unk> Charlie Hustle.
To achieve this.
Zero.
And in the <unk> tools to build adult anthos entities from corporate that you alluded.
But before that date.
Hi, it's usually about and Jim.
Let's move onto our N type of R&D and the commercial lives the mass production sectors of our business will continue to lead the industry in both areas the technique technical developments and our mass production volumes currently 16 Gigawatts of N type cell capacity.
In coffee and the hedging as Randy off a snowflake was mass produced a cell conversion efficiency exceeding 24 points to six percentage. We are consistently investing in technology for new cell structure upgrades and new medicalization methods to increase efficiency.
And reduce costs.
Is that a new record for our end types of tough comp sale was the maximum conversion efficiency, reaching 35, 7% percentage.
Same time, we are we are also performing iterations on the N type cell technology platform to optimize and apply the latest technology for mass production and achieved technical leadership among our peers.
Funded anything Jim to showing that push you come about changing the engine.
Sure.
And what are you assuming future peg aneel month.
Montana myself to all of them.
Joseph <unk>.
From time to time.
Sorry.
<unk> when it comes out.
Good chunks, you bought just the horror genre.
Attempting.
To put it.
Doug.
I can't say that.
<unk>.
One Bob from self critical.
Tom.
You can see.
Yes.
As a prominent and benefits of the N type module growth, what <unk> been seeing wider wider.
Acceptance and increasing demand from global customers for our <unk> products.
Confident about ramping up to fill to for capacity and increase in sales for the type of new modules, giving us the advantage of a growing our market share and increasing profits.
We of course.
We are optimistic on Chinese demand and expanding our resources and local deployments to grow in the domestic market.
Did your business in China at present, all our efforts on building different channels are already seeing results.
<unk> well for.
Further our coordinates our market strategy pricing systems and brand development. We believe this will give us technical advantages in a distributed generation sector and bring low carbon reliable and highly economical products and our solutions to our customers.
Kevin can you open the <unk>.
If I could.
Yes.
Jim.
And as you can tell me, but im guessing.
You will follow at that time and vehicle to do what's in the mix issue shot John amongst Tony Schuh tenure of the tunnel.
Hum.
That sounds great.
Canada permit you to download it was little bit Sheila could.
You are.
We have successfully ramped up 16 gigawatts of N type cells production capacity.
Into account other advantages the N type sales and strong market demand, we plan to invest in the second phase of N type cells with a total production capacity of approximately 16 gigawatt. The increase E N type cell production capacity, we will further optimize our production.
Infrastructure and to reduce the integration costs as a result, we are increasing our full year guidance. At this time, we are expecting annual and we are expecting the annual production capacity of our mono wafer solar cells and modules to reach 55 gigawatt 55.
55, Gigawatts and 60 Gigawatts, respectively by the end of 2022.
Hi, Doug cannot do what I've just said.
Yes.
Bob.
Julian would you walk through the year.
Before turning over to center I would like to go over our guidance for the second quarter of 2022, we expect the total shipments to be in the range of eight five to nine five gigawatts for the second quarter of 2022.
Thank you initially.
Module shipments in the first quarter were approximately eight gigawatt.
Lesser 400 megawatt a lay person himself a slowing China. Additionally.
By the first quarter, our accumulated a global module shipment has surpassed 100 gigawatts.
Thus, becoming the first company in the industry to achieve this historic milestone.
Regarding regional landscape.
Europe Asia Pacific and the emerging market region with the most of the shipment.
In terms of absolute numbers, our shipments to Europe increased by more than 30% quarter over quarter.
And our shipments in China, nearly tripled year over year.
In Europe , the restaurant UK or Bruce Davis already now.
It is expected to grow in the future.
The highest amount of distributed generation combined with a successor for him.
Our scale project.
<unk> to demonstrate strong growth momentum in the Chinese market.
Although deliveries before some domestic projects.
In.
Due to logistic restrictions caused by the resurgence of COVID-19, and the supply chain disruption.
We are still bullish on China market demand and are moving forward with our first two in house deployment in China.
Yeah.
As a responsible global enterprise.
Advocates of freedom of trade.
Believe our competitive products are the professional services are key to envision some wide adoption of clean Green energy on a global scale.
In the U S.
Policy has temporarily disrupted the market.
And the short term supply becomes difficult.
But we remain bullish about the market potential in the long term.
Therefore, we have been.
Proactively deployed and are working with all parties to come up with a feasible solution.
The wafer cell and module capacity of our <unk>.
Integrated production facilities overseas have been ramping up very smoothly.
With a sound and a comprehensive overseas supply chain, we are confident in our ability to flex for responding to the changes in the U S market.
In terms of contracts we have.
For the full year's order book.
Global customers are increasingly interested in our packet new quota.
We are confident about the ramping up production.
Asti and sell out.
Can you hear me.
We hope <unk> products will contribute more than 20% of our total shifting.
In the face of market and the price fluctuations.
Demand for distributed generation remain strong.
We have proactively extended our global market share in <unk> for.
For example in Europe .
On the emerging market.
The proportion of distributed generation young shifting.
It's going to be in the range of 35% to 40% this year.
We expect that the proportion will definitely grow quarter over quarter.
In terms of product mix, the proportion of our hydro pro.
$82 million or larger size product.
Already.
80% in the fourth quarter.
You're expecting to exceed.
With 90% in the whole year.
Recently, we launched a new theory of it.
Three products covering three major application scenarios.
Clothing.
Industrial and commercial rooftop.
The residential rooftop.
With high efficiency.
Adopted.
New and innovative products will provide customers with high quality at the Green building solutions.
To conclude.
We remain optimistic about the global PV demand in 2022.
Positive cases future Paul.
Mobile marketing network.
As well as vertical integrated and oversee supply chain advantage.
Kaufman about delivering for most of the competitive products and services to customers and in.
Our market share.
With that I will turn it over to Pat.
Thank you again.
For the first quarter of 2022 total revenues increased significantly year over year as a result of strong shipment growth and competitive module prices.
To mitigate the impact of higher raw material prices.
We strengthened our supply chain management.
Nevertheless.
Gross margin decreased both sequentially and year on year.
As we ramp up capacity of more cost effective N type modules and increase sales of premium type product.
Expected, a strong recovery and improvement in profitability for the coming quarters.
Let me go into more details.
Total revenue was two point so the 3 billion a significant increase of about 86 percentage year over year gross margin was $15, one compared with $16 one in the fourth quarter last year.
$17 one in the first quarter.
Last year.
Total operating expenses.
$344 8 million basically flat sequentially.
Significant increase year over year.
Logistic constraints in many parts of the world drove up shipping costs.
Increasing sales expenses.
To mitigate this.
Flexibly adjusted shipping arrangement domestically and overseas.
Market conditions.
And we're able to benefit.
From several strategic agreements with major shipping company.
Well, so flexibility adjusted to other means of transport in order to reduce the impact of shipping cost and profitability.
Total operating expenses accounted for 48% of total revenues in the first quarter. This year after almost 13 percentage in the fourth quarter and down from <unk>.
<unk> percentage in the first quarter of last year.
We will continue to control operating expenses.
As revenues continue to grow as we scale up.
Back to that operating expense ratio will gradually decrease.
EBITDA was 126 million compared with $183 million.
In the.
Fourth quarter last year.
Net income attributable to Genco solar holdings ordinary shareholders.
$4 6 million, resulting diluted earnings per ads of one time.
Change in fair value of convertible senior notes due to an increase in the company's stock price in the first quarter. This year led to a loss.
Of $66 million.
Our foreign exchange hedging the county them.
That's proven to be effective.
In the first quarter.
102, we realized a net foreign exchange again.
Including changing fair value of flooring exchange derivatives.
Of approximately $12 million.
Paired with a net loss of $1 60.
$5 million in the fourth quarter last year.
We'll continue our strict stretches two H again.
Change risk.
Moving to the balance sheet.
At the end of the first quarter the company had cash on cash equivalents.
To $6 6 million, killing us.
<unk>, one 4 billion at the end of fourth quarter, and 1 billion at the end of first quarter.
Last year.
Our cash position has significantly improved and we will continue to strengthen our liquidity.
Hey at some number of days where statistics.
In the first quarter.
Compared with.
52 days in the fourth quarter last year.
Inventory turnover days were 117 days in the first quarter this year compared with 88 days in the fourth quarter last year.
Total debt was.
<unk> 33.
Billing at the end of the first quarter of Sunday can lead to.
Compared with about 4 billion at the end of fourth quarter.
Yes.
Great.
One six.
Billings compared with two point.
<unk> 56 billion at the end of fourth quarter last year.
After the lifting of the Genesee Genco earlier this year.
Refinance structure is expected to improve with access to competitive financing.
This concludes our prepared remarks, well now happy to take your questions.
Operator. Please proceed.
Thank you, ladies and gentlemen, if you wish to ask a question. Please dial zero one on your telephone keypad.
We have a first question from Philip Shen from Roth Capital. Please go ahead.
Yeah.
Mr. Philip Shen. Please your line is open you may ask your questions.
The person from Roth capital. Please your line is open you may ask your questions.
Apologies, ladies and gentlemen for this.
Once again, ladies and gentlemen, if you wish to ask a question. Please dial zero one on your telephone keypad.
I have a question from Alan Hello from Jefferies. Please go ahead.
Thank you operator.
Purcell management for taking my questions.
Here's a couple of questions.
So yes.
We note that for the <unk>.
Asia subsidiary of the company.
Yes.
Issued days.
Preliminary.
First quarter results, which indicate a net profit of around.
400.
In RMB.
This number has.
<unk> are quite different from.
That profit of any U S level. So we're also note that the company has not has no longer issued non-GAAP income which have excluded.
Changes in fair value of the compact robots, so we'd like to know.
How is the competitive overlap with what's the difference between the profit levels. In these two entities and what is the more a fair estimate of like core products for the U S level.
Okay.
This is Charlie speaking.
Uh huh.
There is no.
In terms of net income and the cancellations.
<unk>.
Genco solar holding it.
Holding companies and as reported under U S GAAP.
And the subsidiaries the Acs.
Reported on the PRC gap.
And one of the most significant difference is the holding companies.
He has only have only have.
It's a 58% right.
Sure.
The company.
All of that.
Holding company.
It had a convertible bonds, which had a single loss.
Because the fair value.
Triggering from the ABS tiers.
It's up during this first quarter.
And on top of that there is.
There is some GAAP differences.
Sure.
Uh huh.
Except for that.
Also some let's say the holding companies have some international projects. So I think if in fact two questions. So the big differences.
So the holding.
Coding the difference or the 58% of the underlying each year.
On top of that convertible bonds, it's a big change.
The increase of this year share price.
There are some small differences because the because of the GAAP reporting differences as well as some.
International Plaza assets.
Understood.
My second question is about the.
Investment.
Polysilicon.
Yes.
And also skin, so would like to know.
With that the material contribution and profit supers reps and all of that in other companies. So when they got through will materialize later in later quarters of this year.
What is the magnitude of that amount.
Okay. So.
So.
And the answer is no.
Don't expect any.
Fee income or investment income in the future because for that.
But we did have arrangements with <unk>.
DBA.
Investors.
9% of equity.
For the.
For the solar.
Silicon plant and.
Which has the capacity I think that 10000 tonnes on the way home, 9%, though equity and the investors.
Around 300.
300 million RMB.
The accounting perspective, because we don't we only have 9% it's a.
We're a small minority.
We recorded under the cost method.
If we host method over 20% that we can pick up in net income from the accounting perspective.
On top of that.
Also have arrangement with Homeaway polysilicon and the way we have.
Pattern too.
15%. So it's the same situation it's underway.
From an accounting perspective, we have not recorded any let's say an investment income unless the underwriting.
Let's say the subsidiaries declared dividend.
Understood.
Thanks.
Basically because of cost method okay.
So just my last question.
So my last question is about.
Increased capacity guidance.
So we'd like to know how.
How much of a shipment.
It has been materialized in the first quarter for the entire popcorn.
No.
Or how much of orders has been secured for the.
Second quarter for the anti products because I suppose the amount is huge that the company is confident that Spanish capacity for another 16 gigawatt.
Isn't it.
Hmm.
Sure sure.
For the entire.
The new capacity of 16, Gigawatts the large size.
<unk> talked <unk> capacities.
On the ramping up stage.
Projects worth more on a window or a small first quarter.
I expect it to rich to full capacity by the end of second quarter. So the first quarter we.
We didn't have it.
The shipments from the new capacity.
From the order perspective right.
So attractive from the customer perspective, we are confident we are able to.
Ship over 10 Gigawatts.
Shipments and.
For the full year.
And.
I think the first second quarter and May take.
10%, 15%.
And the second half of the year is picking up.
Thanks.
Hey.
90%.
Thanks, a lot.
Best of luck for Charlie and I will leave the floor to others. Okay. Once.
Once again, thank you.
Thank you.
Thank you, ladies and gentlemen, as a reminder, if you wish to ask a question. Please dial zero one on your telephone keypad.
We have a following question from William gripping from UBS. Please go ahead.
Thanks, and good morning, just curious if you could.
Help us understand any initial impact youre seeing from the ongoing antidumping and countervailing tariff investigation in the U S and how that's impacted.
You are planned and potential future shipments as of now.
So Jennifer would you like to take the question.
Okay sure.
Let me take that one.
For them to start investigation.
Impacting the whole industry.
A lot of price or because you.
The potential risk off.
Retroactive tariff even to potential you know.
Higher end of the range of possible tariff might put a lot of uncertainty for the manufacture side. That's why you know many factories that appears to us to take our stock and to wait to see the the.
Consequence, or the announcements from the U S government side.
For Genco I think we have.
<unk> vertical integrated.
Supply.
<unk>.
Wafer cell and module together with a long term contract we have secured a width.
Many quite several key that's a key non China polysilicon suppliers. So combine all those factors together I think we are.
We can we are capable to offer one of the I'd say.
One of the most comfortable and.
Reliable solutions.
Prompt solar panel manufacturing side, that's why we have seen many positive feedback about the customers from U S about their strong interest to secure.
To supply from Genco side.
Meanwhile, we are still cautious they manage to.
So our manufacturing process to make sure that you know.
The Companys risks is always in.
We think the toller risks we have four.
Thanks, and just a follow up on that I mean could you speak to kind of how the how your contracts with your customers are structured in terms of.
Should there be a retroactive tariff who is actually <unk>.
Sponsel for that does it vary based on your contracts and just help us understand kind of how that works.
I don't think we are capable to disclose the details of the contract but from the Companys perspective definitely we can.
We cannot Florida, you know what the future potential risk.
That's why we are reaching.
Different solutions with different customers.
Some of the customer shoes to ship the modules themselves some of the customers choose to.
Take the risk of some of your customers may choose to delay the project some customers and I'll take a stab before while onto the announcement happens.
Different customer has different appetite in the different solution.
Got it very helpful. Thanks, I appreciate the help.
Thank you very much.
Thank you, ladies and gentlemen, as a reminder, please dial zero one on your telephone keypad, if you wish to ask a question.
We have a next question from Philip Shen from Roth Capital. Please go ahead.
Hey, guys. Thanks for taking my questions.
Sorry about the mix up earlier I was navigating two earnings calls.
In terms of.
The anti circumvention case.
I think you guys had before the Andy Serkis came up.
A clear.
<unk> solution to address the U S market.
That would avoid.
Avoid W Rowe situations and so.
Can you talk to us about how much.
You were expecting to ship into the U S.
Before anti circumvention here in 2022.
And then now how much do you expect.
Shipments into the U S could be.
Maybe before you are in the three to four Gigawatts.
Now, you're maybe sub 500 or something.
Directionally accurate just trying to get a sense for the magnitude.
The change in then if given the difference in the churn or that Delta.
Because you didn't change your annual guidance, what do you expect those modules to be going.
If it's not the U S.
Europe take it up to.
Perfect. Thanks.
Thank you for.
For that I think is one of the.
So early victim of the top arrow, we got disrupted.
I think by.
Second half of last year. So that's why we have prepared.
Several solutions to make sure we can find our ultimate.
And our supply solutions to the U S market that's why.
Currently our wafer capacity in Vietnam.
Wrapping up smoothly.
We believe.
We could be.
We could offer a very unique solution to the U S market.
To quantify that foot quantify for the volume is still difficult to tell because.
Logistics.
Not very predictable as our current status, especially considering the customer clearance timing.
It's totally out of our control as well or.
Hard to say, but we don't have a very detailed number to disclose.
Before the anti surge.
Case applications started.
But in general our current capacity ramping up is steel and Oscar.
I'll schedule as smooth and we're expecting to supply U S. A.
Market.
Our unique solution.
Very soon.
And the second question for the guidance, we still are bullish about the global amount this year, especially for <unk>.
U S.
After the U S got hit by this anti searching.
We have seen this.
European demand is booming rapidly and strongly.
Weather was China, China demand picking up we believe like that.
Quite a lot in terms of the MAU, So I think that will be.
Good enough to cover the loss, we had in U S market earlier this year.
Okay. Thank you for the color.
Sure.
Yes. Thank you.
Shifting gears to Q2 you gave.
Some guidance there I was wondering if you could talk through the margin outlook do you expect with.
With the pricing power of.
Module pricing going higher and then just pricing through the whole supply chain going higher is there any chance that you could expand margins in Q2 or is there a risk that it.
Okay contract or do you expect it to be flat Q2. Thanks.
So Patrick would you like to.
So to the question.
This is Pat.
For Q2 please.
We expect the gross profit margin would be stable.
Okay stable versus Q1.
Yeah versus Q1 this year.
Great. Okay. Thanks, and then.
In terms of the dividend that you guys talked about.
The dividend.
The shareholders for the year.
They are.
Since you guys received it from the subsidiary.
Do you expect to pay out to do a buyback or do you is there a chance that.
You just keep it or what's the can you talk through the plans a little bit more.
Sorry, if somebody addressed this earlier.
Navigating two calls.
Okay.
For the dividend.
Not big numbers.
It's a small number.
We're expecting two to receive the dividend after.
Thanks.
Alright, Thanks Nene in later May.
And.
Okay.
We haven't taken that position.
We use a dividend.
<unk>.
No.
<unk> discussed with the board and.
And then make the decision.
Decision later.
Okay.
Thanks, Charlie can you talk through the options.
Would you consider a buyback or.
Or is the.
What's what's on the table. Thanks.
Yes, it could be you know.
The holding company.
We don't have any.
And the operating assets.
Further the exited.
Ishares and so.
We may consider to take some investment, but it is particularly for the.
You know the solar.
Good.
For the company.
Yes.
Rich the pie our.
Equipments or the materials and the rates, we can do the let's say through the minority.
Our investments to build some equal ecosystem for the solar business one of the options.
And obviously, so we may be paid dividend as well for the U S. The rest of this.
I think as you know just sort of thought about it.
It's a small number.
So we.
So again, we didn't have.
Yeah.
How is that decision yet.
Got it okay. Thanks, Charlie and then in terms of module pricing.
Can you talk about.
Or how do you expect that to trend in Q2, three and four is the idea that we should we be forecasting or thinking about module pricing increasing as we get through the year and do you think that continues into 'twenty three or do you think it comes back down in 'twenty three.
Thank you for the question Phil.
Our opinions module price stabilizing.
Mobilizing in that range.
At around the current market price.
Maybe up and down half cents was.
More or less.
Our stabilized our range and wishes.
Broadly accepted.
And the more customers and customers' day.
Day by day.
Yes.
Have a very.
Robust polysilicon prices.
From last year to this year and also we Meanwhile, we are picking up we have seen that demand is picking up.
Significantly.
There are some turbulence in the U S market about considering other markets for example, China Europe et cetera. The market demand is still there are nice.
Alright, well, considering both both and the many projects that our customers started to.
It's just that their plan and they don't wish to wait for the <unk>.
All they don't wish for the price.
Sharply going down overnight they started to build up their business plan based on our current.
I think module pricing or the solar system costs.
<unk> will be will make the whole ecosystem.
Solar industry more sustainable in my opinion. Meanwhile, gene close end type product itself will.
Provide added value to the customers, who has a very limited budget or have a very.
Hi.
Our target.
I think it does.
Give us perfect window to promote.
Tiger and new products and.
Partial part partially the reason why we are continuing to expand our N type capacity.
Okay, great. Thanks.
Thanks for the color one last one I appreciate all taking all the questions and that's on just.
Just a quick housekeeping housekeeping question can you share what the Q1 cash flow from operations was thanks.
Uh huh.
Yeah.
Charlie.
Sure.
Back to you after the call.
I think it's a positive I can't remember the exact numbers.
Hmm.
Okay, great. Thank you very much Charlie Pan agenda I'll pass it on.
Thank you.
Okay.
Thank you we have a last question from Brian Lee If you would please on mute your line and go ahead with your questions.
Hey, guys.
Good evening, thanks for taking the questions.
Sorry, I jumped on late so I apologize if some of this has already been covered but.
I guess one question on the ADC Vd circumvention investigation as it relates to your.
Sure.
Your operations or your shipments into the U S.
Have you.
I guess considered or are your customers asking you about.
Taking product panel products from your mainland China operations as opposed to buying from.
Your sites in South East Asia I guess.
Is that an option that either you're exploring or your customers are asking you about.
So they can avoid some of the uncertainty that exists around the <unk>.
East Asian countries right now.
Thank you for the question I think we covered that a little bit in the previous answers, but let me briefly repeat again, so far the customer end.
We have we are in.
Experiencing many different customers appetite about the risk of apologists solutions.
Or I think.
<unk>.
<unk> perspective.
Moving out of any solution as a firm across man, but to our bottom lines are clear.
We are only capable to accept it.
Yes, a very limited risk from companys position rice or anything beyond our tolerance risk tolerance. So we have to find a solution if otherwise we preferred to stay you know.
To stay quiet for a while like others two way tend to have more clarity on the tariff side. So that's the direction, we're going and we are experiencing in many different assumptions again.
Some of them taking introduce themselves some of them you put into your warehouse somewhere some of them, saying they wanted to delay some of that I'm, saying it all.
Just taking the product to the other markets many different solutions. So every customer is different from one to another.
Yes.
I appreciate that.
And.
I understand the situation is quite fluid insensitive, maybe just technically speaking.
Yeah.
If a customer were to.
Purchase.
Panels from you that were shipped in from mainland China could you remind us.
Because I know these rates have changed over the years what is your.
Company specific anti dumping and countervailing duty tariff assessed on the Chinese made products right now.
Okay.
Yes.
Right.
Yes.
It's just like what is.
Different companies have different silver rates and.
Some of it already.
I'm going for.
For example, the.
We're expecting.
Thanks.
PR bar H H.
The final rule is going to come out.
Based on the preliminary rate forging coal did you say it is roughly I think.
50% on top of that and when you do pay you know two one.
The 14%, 15% and Australia, along I think 25%. So it's a totally I think the 90 day.
That is a 100%.
Okay, that's that's quite significant.
Helpful. Thank you Charlie.
And then last question for me I'm sure you covered it so I apologies again, but the capacity increases here.
I would assume it means there is a capex increase as well, what's the new capex budget, you're outlining for 2022.
Yeah, So Paul would you like to take.
The capex.
Hello, Okay. This is Pat.
You mean, the capex or are they this quarter.
You just.
The capex.
<unk> for the full year.
Okay.
Full year this year.
The expected that capex would be $3 billion.
$3 billion 3 billion U S dollars.
Yeah, exactly yes, it's wrong.
Brian This is ray.
<unk>.
One five.
No the China.
Apio and we're.
We are expecting generate positive cash flow so as we as we well.
Yeah.
We have also increased some unit project loans from financial institutions.
Okay.
Or is it.
Built up capacities.
For the next generation technology and time telecom capacities.
Okay.
Okay, but just to.
So I am clear I think in March you had said U S. One eight to $1 9 billion. So now that's going to 3 billion correct.
Yes, yes, because we will increase the <unk>.
Has the outlook by the end of this year.
And off to I think up to 50 556 two gigawatts.
So for wafer cell and module.
Okay. I guess this doesn't seem like this is the last question I promise and I'll, let you guys. It doesn't seem like your.
This capacity increase isn't impacting your shipment guidance, which you reiterated.
So this is all mainly going to be ended the year and then flow into 'twenty three any kind of early sense of what the.
The growth you could anticipate in shipments for next year would be because it's a lot of capex and you're not getting any better.
In your P&L. This year it will be next year or so what sort of the general sense of growth we should expect.
Yeah Youre right. The parents for you now.
Some more capacity as the new capacity at Sarnia construction from second quarter rates for the preparations next year.
So if you look at the capacity you know 50 $555 69.
Is that a range at least right.
So of the five to six to eight gigawatts.
And we are.
Overall I think the.
Optimistic.
For the next year and this year.
So at a high price.
And the volume part.
Pardon me volume is.
Still relatively limited and we believe next year is the bottleneck.
You know.
Without the bottleneck is upon incentive plan, what do we think the market will.
Okay.
Okay Fair enough makes sense. Thank you appreciate it.
Okay. Thank you.
Thank you we have no other questions.
Ladies and gentlemen, thank you very much for your participation in this conference call.
You may now all disconnect.
Yeah.
Okay.
Okay.
[music].
Okay.
Steve.
[music].
Yeah.
[music].
[music].
Hello, ladies and gentlemen, and thank you for standing by for Genco Solar Holdings first quarter 2022.
Conference call at this time, all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session.
As a reminder, today's conference call is being recorded I would like now to turn the meeting over to your host for today's call them instead of one Genco Solaris Investor Relations. Please proceed.
Thank you operator, thank you everyone for joining us today for <unk> first quarter 'twenty to 'twenty two earnings conference call. The company's results were released earlier today and available on the company's IR website at Www Dot simple solar dot com as well as all you have to wire services.
We have also provided a supplemental presentation for today's earnings call, which can also be found on the IR website.
On the call today from <unk>, so that Mr. <unk> <unk> chairman of the board of directors and the Chief Executive Officer of Genco, similar holding company limited Mr. Dennis meal kits marketing officer of Genco Solar Company limited Mr. <unk>, Li Chief Financial Officer of <unk> solar.
<unk> Company limited and it makes their tallied Tal Chief financial Officer of the <unk> Solar Company limited Mr. Eddie will discuss it didn't close all of our business operations and company highlights followed by Mr. Miao, who will talk about the sales and marketing and then Mr. Peng who will go through the financials.
Well also they will all be available to answer your questions during 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 a 1995.
Forward looking statements involve inherent risks and uncertainties as such our field trial results may be materially different from the views expressed today further information regarding this and other risks and included anything closer alerts public filings with the Securities and Exchange Commission.
Because all that does not assume any obligation to update any forward looking statements, except as required under applicable law.
Yeah.
It's now my pleasure to introduce MS Studies, Zenda, Chairman and CEO of <unk> Holdings, Mr. Li will speak in Mandarin and I will translate his comments into English. Please go ahead Mr. <unk>.
I'm going to end up which should give that you'd see bidding going again.
<unk>.
Hotel Zoe.
Gotcha.
Once he gets will fill that changeover Fuji guinan Guarani linzess from Sandler O'neill.
And be thoughtful depends on that sooner.
Did you do so the supervisor.
Hum.
<unk> done that yet.
Turning to water Bob Yes.
Yeah.
Well, let me take audit Pip on vehicles for <unk>.
More recently, Tony and depth and value.
Leveraging our competitive advantages in fly churn management, and a global and that's what we delivered solid results in the first quarter of 2022 with total revenues of $14 8 billion, an increase of 86% year over year and the correlation.
That's up by 57% year over year to 814 gigawatt, despite a very challenging environment due to microeconomic uncertainties and a supply chain disruptions from the resurgence of COVID-19 in many parts of the World where continued until April how the in house cost structure.
And our gross profit in the first quarter increased by more than 60% year over year.
You do look we know exactly how you can see that always been the.
Gourmet <unk> ballpark.
Are you going to adopt to the audio tour Zika.
James I'll, let parallel.
But jeff with vintage year dependent.
Yes.
Yeah.
But you didn't see while making sort of shouting distance hold out.
If we were going to get a telephone call.
Jean.
Joseph.
Yeah.
Polysilicon prices and shipping costs to remain high and volatile.
During the quarter since March surge in low call. It COVID-19 cases in China triggered a epidemic prevention and containment policies. This has led to a logistics congestion and a sharp reduction in transport capacity further affect the timeline of the materials and the finished.
The product deliveries and increasing cost pressures for many enterprises.
To mitigate the risks and production uncertainties caused by the pandemic. We took early action to ensure ample supply of new materials as well as close cooperation and coordination of production to fly chance in our sales department in order to meet production and deliberate.
Lines.
Uh huh.
The timing of the gone <unk>.
Newsweek gourmet prove themselves that judge <unk>.
On the future.
Gotcha.
James Goodman sounds you would highlight folks at the end up into <unk>.
So it goes on your account for the future.
Yes.
Did you guys aren't quite showing massawa that Louis should see though he has decided to coordinate the young <unk> contracts, all beltway toggle with Daiwa Securities.
Sure Joe.
Overtime build towards the future of that ballpark.
So no secret that GM John Cooper.
That rely on booties.
While repeated detoxing adjacency to the churn Jordan <unk> vehicles.
Vehicle product Waddell for imports were going for the future of gallon sample content.
It could have gone to the global <unk>.
Sure Luke one combo.
You're absolutely right.
In China deliver rates for some projects was to some extent delayed due to the supply chain imbalance and the logistic of disruptions as a result of the COVID-19 resurgence in certain parts of the country. However, domestic demand has remained solid.
Any of the 2020 too many Chinese provinces have issue at the time of these terrorists policies, which have further stimulated demand for distributed generation, especially for systems are designed for the industrial and commercial sectors.
The project's consistently high prices along the slide 10 convinced that some of our some of the customers to not to wait any longer to start new projects.
Quarter, the number of a bidding for large scale projects grow gradually and by the end of March the bidding phases for more than 58 gigawatts of such projects had been completed.
Europe , and Russia, Ukraine wall has largely boosted demand for solar energy and incremental demand and respected.
It's expected to be released within the year and will steadily increase over time.
<unk> is a low carbon nature nature and economies of scale of a PV the demand for distributed generation will rapidly increase in countries with a high proportion of the gas fired power and thermal power in their energy mix, we remain confident and optimistic about.
Yes, I'll sort of with a total global installations expected to reach about 250 gigawatt.
Tom.
<unk> based in Huntingdon.
Ken bunch of Truecar com.
Behind it and therefore don't charge them.
She's a hoodie that crude up to the platform.
So what are some bumps along the way.
So people have been thought or myeloid progenitor.
Okay.
In short, we believe that the impact of the pit down days on production and operations is temporary and under control the pizza industry resilience in the face of volatility and fluctuation has been increasing.
The gradual recovery of the logistics and the gradual release of polysilicon, we are confident about the gradual recovery of the industry and the growth in shipments and installations.
Iterate our guidance on total shipments, which remains unchanged for the four year of 2022.
And machine Gamba sand you pump on your performance assuming behind it.
Okay.
Yes.
Pablo suddenly dantrolene, Saudi you toggle.
Bill.
Well my email again switching vehicles since it seems in general what do you see it for sure.
Jumbo due to women that culture in chimpanzees.
Wait until against the Charlie Hustle weapons also will be achieved.
Digital.
Well, Mr. <unk> seen that the emphasis will be impactful to build it out at us entities corporate non U.
That's useful.
It's usually that didn't ship.
Let's move onto our N type of R&D and the commercial lives and mass production sectors of our business will continue to lead the industry in both areas. The technique technical development and the mass production volumes currently 16 Gigawatts of N type cell capacity.
In coffee and the hedging as well.
Only offer snowflake was mass produced a cell conversion efficiency exceeding 24 points to six percentage we have conflicts in the late investing in technology for new cell structure upgrades and you match organization methods to increase the efficiency and reduce costs recently.
Is that a new world record for our end types of telecom cell, whereas the maximum conversion efficiency, reaching 25, 7% percentage at the same time. We are we are also performing iterations on the N type cell technology platform to optimize and apply the latest technology.
For mass production and achieved technical leadership among our peers.
Funding and machine tool show in the push out when they come about.
But yes, we do have a future.
And what you're shooting for.
Montana myself to all of them are empty.
Joseph So again neither pizza.
They don't work from home tissue, Tom the Jamba, Saudi bogie.
John My apologies.
Let me tell you mentioned good chunks here.
So without that enables you to put it.
<unk> said that you towards hunting that's useful.
Take one from Charleston, conquer that you're seeing.
You can see with Hudson.
As a prominent and benefits of the N type module growth would have been seeing wider wider.
Acceptance and increasing demand from global customers for our <unk> products.
Confident about ramping up to fill to for capacity and increase in sales for the type of new modules, giving us the advantage of a growing our market share and increasing profits.
Well boy.
We are optimistic on China demand and expanding our resources and local deployment to grow in the domestic market.
Did your business in China at present, all our efforts on building deeper into channels are already seeing readouts.
So check with welfare welfare that coordinates our market strategy pricing systems and brand development.
This will give us technical advantages in a distributed generation sector and the brain low carbon reliable and highly economical products and our solutions to our customers.
Yeah.
Kind of environment.
And just a little but again sometime in <unk>.
Yes.
In Kansas.
As you can get them, telling them that doesn't get you too.
You will follow at that time and vehicle to I don't know if you want something that's issue shot John amongst Tony Schuh, with Kenya and autonomy.
To young.
That sounds great.
Can you just don't forget about what would you all well.
<unk>.
We have successfully ramped off the 16 gigawatts of N type cell production capacity.
Taking into account other advantages the N type cells and strong market demand, we plan to invest in the stack in the face of N type cells with a total production capacity of approximately 16 gigawatt. The increase E N type cell production capacity will further optimize our production.
Infrastructures and to reduce the integration costs as a result, we are increasing our full year guidance. At this time, we are expecting annual and we are expecting the annual production capacity of our mono wafer solar cells and modules to a ratio 55 gigawatt 55.
55, Gigawatts and 60 Gigawatts, respectively by the end of 2022.
Hi, Doug it cannot do channel checks.
Yes.
Bob.
Julian would you walk through again.
Before turning over to Jenny I would like to go over our guidance for the second quarter of 'twenty 'twenty. Two we expect the total shipments to be in the range of eight five to nine five gigawatts for the second quarter of 2022.
Thank you obviously.
Module shipments in the first quarter were approximately eight gigawatt.
The 400 megawatt of layperson itself, a slowing China. Additionally.
By the fourth quarter, our accumulated a global module shipment has sub close to 100 gigawatt.
Thus, becoming the first pump named the industry to achieve this historic milestone.
Regarding regional landscape.
Europe Asia Pacific and the Mercury market works in a region.
With most of the shipment.
In terms of absolute numbers, our shipments to Europe increased by more than 30% quarter over quarter.
And our shipments in China, nearly tripled year over year.
In Europe , the restaurant, Ukraine War boosted solar did now and it is expected to grow in the future.
The highest amount of distributed generation combined with his successor.
Large scale projects continue to demonstrate strong growth momentum in the Chinese market.
Although deliveries before some domestic project has been delayed due to logistic restrictions caused by the resurgence of COVID-19, and the supply chain disruption.
We are still bullish on China market demand and are moving forward with all test to in house deployment in China.
As a responsible global enterprise.
Out of a case of freedom of trade.
We believe our competitive products are the professional services are key to English so wide adoption of clean and green energy on a global scale.
In the U S.
Policy has temporarily disrupted the market.
And the short term supply becomes difficult.
But we remain bullish about the market potential in the long term.
Therefore, we have been.
Proactively deployed and are working with all parties to come up with a feasible solution.
The wafer cell and module capacity of our.
Integrated production facilities overseas have been ramping up very smoothly.
With a sound and a comprehensive overseas supply chain, we are confident in our.
Relative to a flexible response to the changes in the U S market.
In terms of context, we have high.
Visibility for the full year's order book.
Global customers are increasingly interested in our packet new quota.
We are confident about the ramping up production to full capacity and sell out.
Can you hear me.
We hope <unk> will constitute more than 20% of our total shipments.
In the face of market and the price fluctuation.
Demand for distributed generation.
<unk>.
We have proactively extended our global market share in D C for.
For example, in Europe , APAC and emerging markets.
The proportion of distributed generation you are shifting.
<unk> to be in the range of 35% to 40% this year.
We expect the proportion will that may grow quarter over quarter.
In terms of product mix the proportion of our.
Hi, Gopro was $82 million or larger size product.
Already.
3% in the fourth quarter.
Okay.
With 90% in the whole year.
Recently, we launched a new theory.
Products covering three major application scenarios.
<unk>.
Industrial and commercial rooftop.
The residential rooftop.
With high efficiency.
Adopted.
New and innovative products will provide customers with high quality at the Green building solutions.
To conclude.
We remain optimistic about the global PBT mountain in 2022.
Positive, but dedicated future Paul.
Global marketing network.
As well as vertical integrated in overseas supply chain advantage, we are confident about delivering put most of the competitive products and our services to customers and improve our market share.
With that I will turn it over to Pat.
Yeah.
Thank you Kinner.
What was the first quarter of 2022 total revenues increased significantly year over year as a result of strong shipment growth and competitive module prices.
To mitigate the impact of higher raw material prices.
We strengthened our supply chain management.
Nevertheless.
Gross margin decreased both sequentially and year over year.
As we ramp up capacity, a more cost effective N type modules and increase sales of premium type product.
Expected a strong recovery on the improvement in profitability for the coming quarters.
Let me go into more details.
Total revenue was two point. So this rig billing a significant increase of about 86 percentage year over year gross margin was $15, one compared with $16 one in the fourth quarter last year.
$17 one in the first quarter.
Last year.
Total operating expenses were.
$344 8 million basically flat sequentially.
Significant increase year over year.
Logistic constraints in many parts of the world drove up shipping costs.
Increasing sales expenses.
To mitigate this reflects Blake adjusted shipping arrangement domestically and overseas.
Market conditions.
And we're able to benefit.
Several strategic agreements with major shipping company.
Well, so flexibility adjusted to other means of transport in order to reduce the impact of shipping cost and profitability.
Total operating expenses accounted for 14, 8% of total revenues in the first quarter. This year after almost 13 percentage in the fourth quarter and down from <unk>.
15% is in the first quarter of last year.
We will continue to control operating expenses.
As revenues continue to grow as we scale up.
Back to that operating expense ratio will gradually decrease.
EBITDA.
Henry.
26 million compared with Henry $83 million.
In the fourth.
Fourth quarter last year.
Net income attributable to Genco solar holdings ordinary shareholders.
$4 6 million, resulting diluted earnings per ADR of one time.
The change in fair value of convertible senior notes due to an increase in the company's stock price in the first quarter of this year led to a loss.
Of $16 6 million.
Our foreign exchange hedging mchaney them.
That's proven to be effective.
In the first quarter of.
On page 22, we realized a net foreign exchange again.
Including changing fair value of flooring exchange derivatives.
Of approximately $12 million compared with a net loss of $1 65.
$5 million in the fourth quarter last year.
We will continue our strict stretches two H again.
Change risk.
Moving to the balance sheet.
At the end of the first quarter, the company had cash and cash equivalents.
Two $6 6 million, killing.
<unk>, one 4 billion at the end of fourth quarter, and 1 billion at the end of first quarter last year.
Our cash position.
It can be improved and we will continue to strengthen our liquidity.
Hey at the number of days were 66 days.
In the first quarter.
Pathways.
52 days in the fourth quarter last year.
Inventory turnover days or 117 days in the first quarter this year compared with 88 days in the fourth quarter last year.
Total depth.
So these three.
Billing at the end of the first quarter of Sunday can lead to <unk>.
Compared with about <unk> billion at the end of fourth quarter.
Nokia.
Net debt was $1 six.
Billing compared with two point 56 billion at the end of fourth quarter last year.
Uh huh.
After the lifting of the Genesee Genco earlier this year.
Finance structure is expected to improve with access to competitive financing.
This concludes our prepared remarks, well now happy to take your questions.
Operator. Please proceed.
Thank you, ladies and gentlemen, if you wish to ask a question. Please dial zero one on your telephone keypad.
We have a first question from Philip Shen from Roth Capital. Please go ahead.
Yeah.
Mr. Philip Shen. Please your line is open you may ask your questions.
The person from Roth capital. Please your line is open you may ask your questions.
Apologies, ladies and gentlemen for this.
Once again, ladies and gentlemen, if you wish to ask a question. Please dial zero one on your telephone keypad.
I have a question from Alan Hello from Jefferies. Please go ahead.
Thank you operator.
Purcell management for taking my questions.
Here's a couple of questions. So yes.
We note that odd.
Asia subsidiary of the company.
Yes.
Issued days.
Preliminary.
Last quarter, we felt which indicates an appropriate.
Around 400 billion.
Billion RMB.
This number has a S R.
Are quite different from.
That profit of any U S. Local so we're first of all note that the company has not has no longer issued non-GAAP income which have excluded.
Changes in fair value of the copper coupons, so we'd like to know.
How is the competitive overlap with what's the difference between the pocket laterals in these two entities and what is the more a fair estimate itself.
Like core profits.
<unk> level.
This is Charlie speaking on the.
There is no.
In terms of net income and the cancellations.
Clearly you know the genco solar holding at the holding.
Holding companies and are reported under U S GAAP.
And the subsidiaries the Acs.
Reported.
Jonathan.
And one of the most significant difference is the holding companies.
It is only have only have.
Let's say, 58% y O so each year.
The company.
All of that.
Holding company and had our convertible bonds, which had I think a loss.
Because a fair value.
Triggering from the Sears.
It's up during this first quarter.
And on top of that there is a.
I assume there's some GAAP differences.
Sure.
Except for that.
There are also some let's say the holding companies have some international projects.
So I think it comes back to your question. So the big difference is because of the holdings holdings is the difference.
80% of the underlying each year on top.
What was that convertible bonds, it's a big change.
Because of the increase are this year share price.
There are some small differences because the because of the GAAP reporting differences.
Some international project assets.
Understood.
My second question is about the <unk>.
<unk> and <unk>.
Polysilicon.
With Oh way and also single so we'd like to know.
Sure.
That would be material contribution and profit Super swaps and all that other companies. So I wonder if that will materialize later in later quarters of this year.
What is the magnitude of that amount.
Okay. So it's up.
So the.
And the answer is no.
We don't expect any.
Income or investment income in the future because we did have arrangements with the GBA.
<unk> invested.
9% of the equity for.
For the solar.
Silicon plant.
And which has the capacity I think that 10000 tonnes on the way home, 9%, though equity and the investors.
Around 300.
300 million RMB.
The accounting perspective, because we don't we only have 9% it's a worry.
A small minority and already recorded under the cost method and if we host method over 20% that we kind of pick up in net income from the accounting perspective.
And.
On top of that we also.
Also have arrangement with Homeaway.
<unk>.
The way we have.
We plan to have 15%.
It's the same situation gets underway.
From an accounting perspective, we have not recorded any.
Net investment income.
The underwriting.
Let's say the subsidiaries declared dividend.
Understood.
So it's basically because of cost method okay.
So just my last question.
So my last question is about.
Uh huh.
<unk> capacity guidance.
So we'd like to know how.
How much of a shipment.
Has been materialized in the first quarter.
For the entire popcorn and.
<unk>.
Or how much of orders has happened as a cure for second.
Second quarter for the anti products because I suppose the amount is huge that the company is confident that Spanish capacity for another 16 gigawatt.
Isn't it.
Hmm.
Sure sure.
For the time.
The new capacity of 16, Gigawatts the large size.
<unk> talk on capacities.
On the ramping up stage.
Projects worth more on the water or a small first quarter.
I expect it to rich to full capacity by the end of the second quarter. So the first quarter we.
We didn't have it you know.
The shipments from the new capacity.
From the order perspective or a.
No attractive from the customer perspective, we are confident that we are able to.
Ship over 10 Gigawatts.
Shipments and.
For the full year.
And.
I think the first second quarter and May take place.
At 10%, 15%.
And does it.
Second half of the year is picking up.
Thanks.
Hey.
90%.
Thanks, a lot.
Thanks, a lot for Charlie and I will leave the floor to others.
Thank you.
Thank you.
Thank you, ladies and gentlemen, as a reminder, if you wish to ask a question. Please dial zero one on your telephone keypad.
We have a following question from William gripping from UBS. Please go ahead.
Thanks, and good morning.
Just curious if you could.
Help us understand any initial impact youre seeing from the ongoing antidumping and countervailing tariff investigation in the U S and how that's impacted.
You are planned and potential future shipments as of now.
So Jennifer would you like to take your questions.
Okay sure.
Let me take that one.
And then to start.
So yes it is.
Impacting the whole industry.
A lot price for the course.
It's a potential risk off.
Retractive Paris event.
Casual you know the higher end of the range of possible tariffs might you know put a lot of uncertainty for the manufacture side. That's why you know many factories that appears to us to take our stock and to wait to see the consequence or the.
The announcements from the U S government side for Genco I think we have established.
<unk> integrated.
Supply from.
Wafer to cell and the module together with a long term contract we have secured a week.
Many quite several key that's a key non China polysilicon suppliers. So combine all those factors together I think we are.
We can we are capable to offer one of the I'd say.
One of the most comfortable and you know.
Reliable solutions.
From a solar panel manufacturing side, that's why we have seen many positive feedback about the customers from U S about their strong interest to secure.
Supply from Genco side.
Meanwhile, we are still cautious they manage to.
So our manufacturing process to make sure that you know.
The company's risk is always in.
Santa Paula risks, we care for.
Thanks, and just a follow up on that I mean could you speak to kind of how the how your contracts with your customers are structured in terms of should there be a retroactive tariff who is actually responsible for that does it vary based on your contracts and just help us understand kind of how that works.
Oh, Hi, I don't think we are capable to disclose the details of the contract but her from the Companys perspective definitely we can.
Well, we cannot Florida, you know what the future potential risk at the Circ. That's why we are reaching a.
Different solutions with different customers.
Some of the customers choose to ship the modules themselves some of the customers choose to take.
Take the risk of some of your customers may choose to delay the project. Some customers you know they may take a stop before while onto the announcement happens.
Different customer has different appetite in the different solutions.
Got it very helpful. Thanks, I appreciate the help.
Thank you very much.
Thank you, ladies and gentlemen, as a reminder, please dial zero one under the telephone keypad, if you wish to ask a question.
We have a next question from Philip Shen from Roth Capital. Please go ahead.
Hey, guys. Thanks for taking my questions.
Sorry about the mix up earlier it was navigating two earnings calls.
In terms of.
The anti circumvention case.
I think you guys had.
Before the anti searches came up.
A clear solution to address the U S market.
That would.
W Rowe situations and so.
Can you talk to us about how much.
You were expecting to ship into the U S before anti circumvention here.
In 2022.
Now how much do you expect the shipments into the U S could be so maybe before you were in the three to four Gigawatts and maybe now you're maybe sub 500 or something.
Is that Directionally accurate just trying to get a sense for the magnitude.
The change in then if given the difference in the change or that Delta.
Because you didn't change your annual guidance, where do you expect those modules to be going.
Right.
It's not the U S.
Europe take it up to.
Perfect. Thanks.
Thank you Phil.
For that I think one of the.
So early victim of the top arrow, we got disrupted.
I think by.
Second half of last year. So that's why we have prepared.
Several solutions to to make sure we can find our ultimate.
And our supply solutions to the U S market and Thats why you know.
Currently our wafer capacity in Vietnam.
Wrapping up smoothly.
We believe you know we could be.
It's very we could offer a very unique solution to the U S market.
To quantify that what quantify for the volume is still difficult to tell because.
So logistically as well.
Not very let's say predictable as our current status.
Specialty considering the cost Mclaren timing is.
Totally out of our control as well sure.
I, it's hard to say, but we don't have a very detailed number to disclose.
Before his anti surge.
This investigation started.
But in general our current capacity ramping up still.
I'll schedule, a smooth and we're expecting to supply U S.
Market with our unique solution.
Very soon.
And the second question for the guidance, we still are bullish about the global amount of this year, especially for our U S. A.
After the U S got hit by this anti searching.
We have seen this.
European demand is booming rapidly and strongly to.
Together with China, China demand picking up we believe like that.
Quite a lot in terms of our female so I think that will be good.
Good enough to cover the loss, we had in U S market earlier this year.
Okay. Thank you for the color.
Sure.
Yep. Thanks, Thank you.
Shifting gears to Q2, you gave us.
Some guidance there I was wondering if you could talk through the margin outlook.
Do you expect with the pricing power of module pricing going higher and then just pricing through the whole supply chain going higher is there any chance that you could expand margins in Q2 or is there a risk that it.
Okay contract or do you expect it to be flat Q2. Thanks.
So Pat would you like to.
Typically Krishna.
Hello, This is Pat.
For Q2.
We expect the gross profit margin would be stable.
Okay stable versus Q1.
Versus Q1 this year.
Great. Okay. Thanks, and then.
In terms of the dividend you guys talked about.
The dividend at the <unk>.
Our holders.
Our.
Since you guys received it from the subsidiary.
Do you expect to pay out.
To do a buyback or do you is.
Is there a chance that.
Can you just keep it or what's the can you talk through the plants a little bit more I'm.
Sorry, if somebody addressed this earlier.
I was navigating two calls.
Okay.
For the dividend that you know, it's not big numbers.
It's a small number.
We're expecting to receive the dividend after paying your thanks alright.
Thank you.
In late May.
And we did.
We didn't we haven't taken that position.
You said a dividend.
And the remaining you know.
<unk> discussed with the board and.
And.
This is a decision later.
Okay.
Charlie can you talk through the options.
Oh.
You consider a buyback or.
Or is the.
What's what's on the table. Thanks.
Yes, it could be you know.
The holding company.
We don't have any.
No significant operating assets, except for the you know the exited.
For the eight eight years and so.
We may consider to take some in restaurant, but it is.
For the.
You know the solar.
Who are the companies.
This rich supply our no.
Equipments or the materials and the race weekend.
Let's say through the minority.
Our investment to build some equal ecosystem for the solar this is one of the options.
And the second obviously, so we may be paid dividends as well for the U S. The rest of this.
I think you know just sort of thought about it.
Small number.
So we were.
Again, we didn't have the you know the.
How is that decision yet.
Got it okay. Thanks, Charlie and then in terms of our module pricing.
Can you talk about.
Generally how do you expect that to trend in Q2, three and four is the idea that we should we be forecasting or thinking about module pricing increasing as we go through the year and do you think that continues into 'twenty three or do you think it comes back down in 'twenty three.
Thank you for the question Phil.
Our opinions the module price.
Stabilizing.
But rising in that range.
At around the current market price.
Maybe up and down half cents was.
More or less.
Our stabilized the range and wishes.
Broadly accepted by more and more customers and end customers.
Day by day is everything.
Have a very robust.
Robust polysilicon prices.
From last year to this year and also we Meanwhile, we are picking up we have seen that demand is picking up.
Significantly.
There are some turbulence in the U S market about considering other markets for example, China Europe et cetera, the market demand is still there and nice.
As Paul whole, considering both Bose and many projects many customers started to.
It's just that their plan and they don't wish to wait for the they don't they don't wish for the price.
Sharply going down overnight they started to build up their business plan based on the current.
I think module pricing or the solar system costs.
<unk> will be will make the whole ecosystem of solar industry more sustainable in my opinion. Meanwhile, Ching close end type product itself will provide.
Provide added value to the customers, who has a very limited budget or have a very high.
Hi, IRR targets or I think it does give us perfect window to promote.
New products and a partial part partially the reason why we are continuing to expand our N type capacity.
Okay, great Okay. Thanks.
Thanks for the color one last one I appreciate all taking all the questions and that's on just.
Just a quick housekeeping housekeeping question can you share what the Q1 cash flow from operations was thanks.
Uh huh.
Yeah.
Charles This is the number.
Number.
Back to you after the call.
I think it's a positive I can't remember the exact numbers.
Uh huh.
Okay, great. Thank you very much Charlie Pan and Jenner I'll pass it on.
Thank you.
Thank you we have a last question from Brian Lee If you would please on mute your line and go ahead with your questions.
Hey, guys.
Good evening, Thanks for taking my questions sorry.
Sorry, I jumped on late so I apologize if some of this has already been covered but.
I guess one question on the ADC Vd circumvention investigation as it relates to your.
Your operations or your shipments into the U S.
Have you.
I guess considered or are your customers asking you about.
Taking product panel products from your mainland China operations as opposed to buying from.
Your sites in South East Asia I guess.
Is that an option that either you're exploring or your customers are asking you about.
So they can avoid some of the uncertainty that exists around the southeast Asian countries right now.
Thank you for the question I think we covered that a little bit in the previous answers, but let me briefly repeat again, so far the customer and I think we have.
Or anything you know many different customers appetite about the risks apologists solutions.
Sure I think.
We signed the Genco perspective, we are now.
Moving on any solutions for pharma cost man, but to our bottom line is very clear we were only capable to accept.
Yes, a very limited risk from companys position rice or anything beyond our tolerance risk tolerance or we have to find a solution. If otherwise we prefer to stay you know.
So stay quiet for a while like others two way tend to have more clarity on the tariff side. So that's the direction, we're going and we are experiencing in many different assumptions I guess or some of them taking the units themselves. Some of them you know put it at your warehouse somewhere some.
Most of them, saying they wanted to delay some or all of a sudden thing at all.
Just taking the product to the other markets. So many different solutions. So every customer is different from one to another.
Yes.
I can appreciate that.
I understand the situation is quite fluid insensitive, maybe just technically speaking.
Yeah.
If a customer were to.
Purchase.
Panels from you that were shipped in from mainland China could you remind us.
Because I know these rates have changed over the years what is your.
Company specific anti dumping and countervailing duty tariff assessed on the the Chinese made products right now.
Sure.
Yes.
Yes.
It's just like why did you say you know different companies have different silver rates.
But some of it already.
There are ongoing and the for example, the.
Expecting that.
Turning to <unk>.
Pier bar H H.
The final rates is going to come out.
Based on the preliminary rate forging cole.
It is roughly I think.
50% on top of that and when you do pay you know two one.
The 14%, 15% and Australia, along I think that 25%.
Totally I think the 90 day.
That is a 100%.
Okay. That's yeah, that's quite significant.
Helpful. Thank you Charlie.
And then last question for me I'm sure you covered it so apologies again, but.
The capacity increases here.
I would assume it means there is a capex increase as well, what's the new capex budget, you're outlining for 2020.
Yeah, So Paul would you like to take.
The capex.
Hello, Okay. This is Pat.
Absolutely.
Capex for this quarter.
Yeah just.
The capex.
<unk> for the full year.
Okay and for the.
Full year this year.
I expected that capex would be $3 billion.
$3 billion 3 billion U S dollars.
Yeah, exactly yes, it's wrong.
Brian because we are seeing a wee bit.
One 5 billion.
No the China.
And we're expecting to generate positive cash flow size raspberry.
Yeah.
We have also increased some pause your loans from financial institutions.
Okay.
Sure.
Built up capacities.
For the next generation technology and time tough com capacities.
Yeah.
Okay.
So I am clear I think in March you had said U S. One eight to $1 9 billion. So now that's going to 3 billion correct.
Yes, yes, because we increased the capacity outlook.
This year.
And up to I think up to 50 556 two gigawatts.
So for wafer cell and module.
Yes.
Okay. I guess this doesn't seem like this is the last question I promise and I'll.
I'll, let you guys it doesn't seem like your.
This capacity increase isn't impacting your shipment guidance, which you reiterated.
So this is all mainly going to be ended the year and then flow into 'twenty three any kind of early sense of what the.
Gross you could anticipate in shipments for next year would be because it's a lot of capex and you're not getting any benefit of it.
In your P&L this year it'll be next year, so what sort of the general sense of growth we should expect.
Yeah.
The parents for you now.
Some more capacity as the new capacity starting up construction from second quarter rates for the preparations for next year.
So if you look at the capacity you know 50, 555 or 60 I assume.
Is that a range at least right.
So of the five to six to eight gigawatts.
And we are you know overall I think the.
Our domestic you know for.
For the next year and this year the polysilicon still at a high price.
And the volume partly partly volume is.
Relatively limited and we believe next year is the bottleneck.
You know what.
The bottleneck is upon us Senator when do we think the market will.
Right Okay.
Okay Fair enough makes sense. Thank you I appreciate it.
Okay. Thank you.
Thank you we have no other questions.
Ladies and gentlemen, thank you very much for your participation in this conference call.
You may now all disconnect.