Q1 2022 CBAK Energy Technology Inc Earnings Call
Good day, ladies and gentlemen, thank you for standing by and welcome to the H E. B, a K energy technologies first quarter 2022 earnings conference call.
Currently all participants are in listen only mode. Later, we will conduct a question answer session and instructions will follow at that time as a reminder, we are recording today's call.
Any questions objection you may disconnect at this time now ill turn the call over to Al Carey meet events like innovation director of PVH at energy This elite list pockets.
Thank you operator, and Hello, everyone welcome to <unk> Energy's first quarter 2022 earnings conference call. Joining us today are Mr. <unk> <unk>, our chief Executive Officer, and Mrs. <unk> <unk>, our Chief Financial Officer will release results earlier today. The press release is available on the company's IR.
Website at IR Doc feedback of conduct yet as well as from Newswire services rely on this call will also be available in a few hours on our IR website.
On the call with me today are Mr. Bailey Mrs Unit pay Mr. George <unk>, who is our general engineer Mr. Huang Wang who is our vice president and our interpreter Jennifer.
Before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995 forward looking statements in bulk in humans.
As such the company's actual results may be materially different from the expectations expressed to date.
Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC.
The company doesn't assume any obligations to update any forward looking statements, except as required under applicable laws.
Also please note that unless otherwise stated all figures mentioned during the conference call are in U S stores.
With that let me now turn the call for two hours you owe Mr. <unk> Ms.
MS Cindy will speak in Chinese and now which has made his comments into English go ahead Jamie.
On tissue.
Stricter gun alcohol.
Yeah.
Uh huh.
Thank you and Hello, everyone. Thank you for joining our earnings conference call today envision tissue.
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Sundar I thought.
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Okay.
Tension.
I'm part of yellow.
So we're going to shoot yourself twice within the crop, which I'm not.
So huge production poodle.
Carl Gordon.
Sudan, selling so well since I'm sorry on the sold at our Shandong.
Hum.
Uh huh.
Perfect.
Well that sounds good.
Yeah, So I'm sure I'll come to that Tim says Huntington's, because sometimes people don't know Keith on the hot uncertain.
Mhm, who you are who are tongue cutoffs shoebox in Washington.
Well one of them.
So in that time, the cultural thing.
So without getting some some sometimes hard enough without cingal.
Yeah. It comes Dot com.
Dr Cheung Kong products in here.
We are very excited to kick off 2022, with a strong first quarter, our net revenue surged more than eight fold year over year to $82 million of debt roughly 60 million donuts with from the Batesville business and about $65 million was the right.
The business of materials, we're making medium between yourselves.
Which was brought by the heightened as much.
<unk> will be strong sales of high power <unk> led by the rapid growth voice usage in light electric vehicles and to continue to increase.
The interruptible supplies also contributed to the growth in revenues.
Tony will our performance and results will make even while we were still ramping up production at our 19 basically manufacturing plant and thus reflect the immense potential of our basically product equal system.
Our Nanjing facility has a maximum capacity of agent equaled the hour, which is about multiple times as our current capacity, if our enhancing processes fully grounded and operate it.
Along with gradually increasing basically production, we're even more optimistic about the growth and future of our business envision tissue.
So we're gonna toss Huntsville type offer sometimes eagle.
Well I'm going to shoot Charco Python soon.
So that's one answer to that.
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I'm sure the Cogs.
Who consume.
Next let's move on to our recent product developments and production. We continue to develop the largest electrical batesville used to target <unk> and passenger right EV market.
Sure.
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Our young high bar more term Montana.
Young posture Dupont.
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In addition to efforts to continue optimizing the performance of our current synergy called beta with products. We are working to produce a prototype for module for two one for all of US do share by choice at this moment, we have already designed a research and development plans for the model for two one for <unk> and we expect steady.
Progress as planned.
Sure.
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Wholesome Mucci Joseph Bank.
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Yeah.
Joe Bob.
Well not too long so I thought most of them to you, but I'm trying to quantify.
Sure.
So I'm glad you caught on 19 compound that somehow.
Since out somehow.
Oh, I'm not going to throw out a couple of numbers, so funnel clouds, and some telling me I'm asking about.
So are you kind of a woman's Huntington, that's you don't close on them, sometimes it all sugar cocoa doesn't cool.
We're also happy to see that market feedback for basically with products has been strong and positive as of May deny we have outstanding basically orders with approximately 400 million yen.
I'll stick to $9 million with these orders our main factory in Derby and is in full production and we are increasing production of our 19, perhaps we also announced two received orders from one of our major clients was about 13 million doors, which should further suggested that the quality and performance of our products.
White the recognized by Chief Global players.
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Thoughts.
And I'm sure he'll findlaw.
In the second quarter, our main focus will be on maintaining stable revenues from basically skews on the interruptible supplies and the raw material business. In addition to that we will also continue expanding the revenue share of large strategical basically by sticking new contracts with LTV and EV manufacturers.
And based on what you said.
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Oh Cogs.
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Call Center, its usual Korean a chunky Yorkshire.
Ponds in C&I.
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So I'm not calling out some time ago.
Hi, Tony.
So until you build up to long run.
I know I saw.
So that's well known.
Now, let's turn to our material business, resulting from the acquisition of Hudson as expected. The business is a major stream of our current revenues and you spend 15 from material price inflation by leveraging advanced technology and reliable <unk>.
<unk> has accumulated a number of strategic customers and is now in full production in 2022, we will maintain high teens as material business operations, while strengthening whole value and professionally.
Hydrants will make further investments into research and development and product innovation to make high nickel cathode materials that can improve safety and range for electric vehicles as we seek to make heightens become a worst first cost manufacturer of cathode materials for new energy power lithium basically.
Vantage.
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So essentially you know that'd be interesting to know.
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Sure Jeff.
You have two local news Santana Chang Qi Dong Kun kin.
We hear about that sometime.
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And then some women don't want something cool at all.
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Hung from someone else. So that's helpful.
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It sounds like fun dogs, Josh as yet.
It sounds as though some of them.
With that I'd like to hear.
Awesome.
Gunnar Romer Deutsche Bank.
People don't do that.
Sometimes on Google.
I know it sounds like we're going to shut down.
What are you sort of go into them.
We've done pretty nicely without Samsung.
Meanwhile, the material price hikes decreased profit of our Gulfstream Patriot business in order to counter the impact we have actually taken meters in three main aspects first we signed long term supply agreements with some major suppliers to secure.
Materials into funds to ensure production.
Second we have expanded into the upstream with our emerging of hydrous. So that we are capable of managing some raw materials or do you use the material price inflation to offset the decrease in our gross profits of the phase III tests.
We started to renegotiate prices with our downstream customers and have successfully raised our prices for a few of our key customers. The rising material prices added sort of impression to cash flow as it takes time to try to beat the price increase to downstream customers. However, these are short term structure.
In Asia as the raw material manufacturers expand production.
The materials will decrease and gradually return to a reasonable level was that we expect gross profit to increase in the future.
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If I'm in the sone.
We aim to lead our lithium iron production.
<unk> energy solutions, while maximizing value for our shareholders with our expansion into the raw material business and suites to response to the market.
Going forward, we will also actively search for quality assets and highly valuable targets, along the upstream and downstream of the new energy industry to invest in an attempt to stabilize our supply chain and enhance our investment returns based on this issue.
Realized CIO of Nerf.
Paul.
Oh, great coconut silicon cycles without Titan will be out there.
Now, let me turn the call over to our CFO do not painful will provide details on our financial performance.
Okay. Thank.
Thank you Tony.
Totally understand you ever lifestyle join our call today I will now go over our key financial results.
Alter of Kensington need to answer.
The full details of our financial results. Please refer to our earnings press release.
Our Medicare revenue expansion why didn't the effectiveness of our girls strategy, the raw material pass hacks men.
And as short term headwinds to the pathway business. That's been taken quick action in order to mitigate its impact.
Additionally, we expanded our investments into our traction.
Texture with.
Primary focus on sales and marketing as well as research and development for our next bill.
Moving onto other results in the first two quarters and not revenue.
730.
Oh, 2%.
True.
A T plus $2 million.
Let them hear read up 10% at one point.
I'm really due to additional revenues from lithium battery materials brought by the acquisition of Hudson and the strong sales of powder they can batch base.
Cost of revenues was 74.9 million U S dollars in the first quarter.
Terry.
888% from the previous year.
Gross profit was $503 million.
A list of 189% from the prior year.
Gross margin was six six person in the first quarter compared with 19.
19 quantify prison in that's been pure read up to 2020 as raw material costs.
Noted earlier was down.
The long term contacts with certain suppliers expanded into raw material business and have begun negotiation with our clients to tackle the past tax.
And we expect our expected the prices of raw materials to be great. While new capacity is being added to by the industry.
In the first half hour.
Operating expenses.
250.
6% to $6.7 million, primarily due to corrosion had pounds and did the acquisition of Apache.
Within that.
Research and development expenses increased the SAB 118, 5% to re plan, mainly U S dollars sales.
Sales and marketing expenses increased to 200 at 19% to their appliance HBV I saw it.
General and administration expenses increased.
Page nine.
9% to two points to $99.
This increases our operating expenses were held on May eight clients great presence.
Relative to other revenue compared with 19.8 person team, there's been periods of time because of what.
Our challenge is our rider of flooring was one 6 million.
In the first quarter compared to 28.4, mainly U S dollars.
In the prior year does not income attributed to shareholders feedback allergy was several points lower maybe like dollars per bed.
Panic to attend.
Plenty of my points, maybe I'll start off in the same period.
People that have tended to do well.
As of March.
<unk>, one <unk> timber to our cash and cash equivalents.
516, maybe.
Compared to two seven times for maybe as dollars.
End of 2021.
Looking ahead, we will remain committed to our long term goals.
<unk> well all the development in the industry.
That concludes our prepared remarks, let's now open the call for question.
Operator, Please go ahead.
Sure.
10-Q.
We will now begin the question answer session.
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And that's what <unk> look like <unk>.
She's the army.
The law judges outstanding Alright.
First question, we have not enough on the stone group. Please go ahead.
No how fusion guys here.
Oh sure.
Suits, Virginia, Fujian and Guangdong.
Your solution hugging should've happened shuttle them.
This share count should be up when she is going to abandon the issue. How did you go against you from UN Treaty.
Okay.
Jim.
Mhm.
Before the company has once released you'll progress about protection up therefore, Mato four six below theories and nowadays the market are all very interested in the development progress of 468 O battery could you.
Give us more update on the development of 4680. Thank you.
So geological once you don't women Newco Kendall.
Okay.
No.
Like what is that.
So the element to that.
And then to the tone of a sudden a calendar thing should the jump off so much ended on a high level.
Capped by the high incremental.
In Montana, the Teva adventure he don't you.
And the other one.
And as you're walking dead tissue.
But we didn't give you the perfect deal.
Michelle.
Hum.
Okay. So yes, we did a re leased our oh acknowledgement on the divestment of 46800.
And as far as the investments of <unk>. One is battery model 4680 and at present, we have already finished the investment of the prototypes and we can fight that this development. This prototype can well satisfied the original.
Di requirements, and we are going to continue which is Tracy.
Secondly, in our I think Bolton in Australia Department.
Although if they don't get it yet.
Oh yeah.
For sure Guangxi, Alicia <unk> doses on jingle Tracfone, yes, sometimes.
A couple of Cheetah, probably chassis Asia. It was a little light and also the people genetic or physical Lisa in Nanjing Wuhan Changsha.
Chunky.
So Hawkeye school dongle, she doing shifting trends.
Mhm.
Okay. So my second question concerning the company's development plan and customer development progress in the 19th time plans I'd like to know more about the protection situation in the 19 plants and in the coming three to four.
Full quarters, what will be the major products to be produced in 19 plant and also could you share with some updates in the development of the customers.
Marketing at the product that will be produced in Nanjing.
Joe What's your own once only halfway done.
Hello, Oh man.
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Argued them off.
The agenda, especially as it turned out.
What do you owe them and basically that's what we all have share.
Uh huh.
<unk> got a shut off our CIO hazard pay.
Sure Yeah, so leila.
Oh, and then took a.
Michelle.
That's a hard question to ask what do you want me at all.
Just in time.
Then your credentials by doing that do you sell it I'll just say, yes sure.
It would be done with Joe Joe you can issue if at all.
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There may be the shuttle such that all of the Joseph a.
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Wendell door.
Alcohol J O us with all of that Oh cool.
So I should know.
Oh sure.
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If I blended oil.
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Great.
Ashley.
Oh, well they side with it too hard you'll ship right.
Well either diesel true <unk>.
<unk> had a touch but what else are they far well.
Yeah Jamie.
Yeah.
No no signs of thought or something that.
I'm, just a little way women, they always hold times and the total <unk>.
You should ask would you deal with total and the whole just your thoughts on mythology.
Well my Archie.
Uh huh.
Xibalba July should change about cash I don't think so maybe I shouldn't Florida.
So I think.
Sure.
Okay.
I think it's useful.
It's a long tenure and finish.
Finish your survey, we let it sounds like you're doing it.
Well my social budgets at all.
Yeah.
Mobile.
Okay.
Okay. So if we talk about down production capacity took 19, we're happy to see that the production capacity have been increasing since the beginning I E.
And I'll add.
We have been exploring and developing the market and we can see according to the market demand and we are happy to see that we publish.
Oh days have been coming to us and we believe that from the end of the second quarter and all of the beginning of the third quarter.
It will be more and more and more that will be expected to arrive.
Rice.
We have the projects. We are we always think that I'll try it according to the market demand.
And at present, we mainly focus on because I think that support two wheelers and three wheelers.
And our main business will be focused on the swapping of batteries and leasing and in this sector of business. We have already when we almost reached a deal with a big client and we expect the plant to place the order.
At the end of June and the total sales amount brought by this order is expected to be about 1 million to one $5 million.
A bit older.
And win.
When it comes to energy star reach market have been paying close attention to our business English recall, it and said, though customers have already started their shake down attached with edge and even a small bunch up there and have already started.
The small loss.
Production already and it is expected that in the third quarter, we're going to receive Odessa bigger orders and the quantity of the sales quantity.
Keep increasing.
After that.
And if we have a look at the future we plan to develop a pro that's focusing on low speed vehicles.
Oh great.
Patching to be coax folks because folks are.
Vehicle.
So that's it.
As some be coast logistics, we as didn't make that we're going to have two to three projects introduced. So these are weird business and they will fulfill our two new protection lies in the fourth quarter.
And then secondly, we also tried to develop more customers so that after the 18 gigawatt.
Actual capacity is where it is we're ready. Each then we can have enough customers or enough orders from big customers, We believe that our.
Earthquake and vision.
That we have been making will lay a solid foundation for securing more oh, there's some bigger customers.
Dan social in for the rest.
But for the rest of this year or let's say in the coming three quarters.
Our sales target is to reach 300 million.
That's it thank you.
Sure.
No other whole Eagle and Tina Joshua Guangxi.
It was a bunch in the Golan engine, saying assurance shameful issue dial a thoughtful assure a phone call on.
Clearly, that's a thing Nicole Suzy Archie E train young CEO not changing challenges.
Mhm. Okay. My last question is concerned and I don't see.
See the serious situations dropped by the Covid pandemic Oh on the one hand, we can see good has been tight in the supply chain and secondly, we also noticed that in China.
Due to the huge of pandemic.
Cities are undergoing locked down at the moment. So we would like to see to know what kind of impact will it bring to the performance of the company in the second quarter as well as the rest of the year.
When do you assume the peso on canine shop.
Hmm mm.
Jason Wuhsien Joan.
The core knee, though gunpowder in Fisher CEO .
Could you.
Sure.
Awesome.
Is that a non Muslim Rd Rd, yet and introductions.
A woman the Saturday in 19 crore, south central Grantor merchant email show Dol, each and phone number of women perpetual Oh shoot.
Are you going to buy the U.
A phone call with that I thought I should mention that kind of shouldn't meal.
No not at all.
Uh huh.
Yes sure.
<unk> got since that that sounds like.
Now my ruble and dancers yet.
Youll photon counting them.
How did you even did swisher.
Yes.
Mhm.
So are we.
We admit that depend on like how has brought some uncertainty.
So with the <unk>.
Running of the factory, how Albert as we know since the outbreak of COVID-19 at the beginning of 2023.
Great lunch locating entirely in 19, and shaoxing, respectively hasn't been affected by the COVID-19.
Locked down although in the future we cannot exclude the possibility of that.
Lock down due to the pandemic. However, we have to say so far so good.
We all have we also feel lucky that our three plants.
Located at the plants are located in three excellent places so if in the future if one day.
The lockdown is happening in one of the city. Each then we can have the confidence to take active measures to mitigate the impact.
Yes.
Hello Medical Northern Sheila she said.
That's it for my questions.
Okay.
Thank you Mr. Christian is Howard Leung Please cola hate.
Alright.
Well when you go whimsical fun so call them those are the hard home so home.
Hydro meals, Utah torture on sugar.
Sounds like you were trying to get to.
I'm sure the guys, who are truly unique or somebody on the phone.
Orders from the underground or useful.
Oh, sorry, Sam.
Mhm.
Okay. After the acquisition of high change that's the company has other plans to acquire a marriage of the better rate plunged upstream or downstream and if yes could you also share with us which the motive behind at all it just out of what kind of.
Strategic sectors that you're considering doing this kind of conviction.
So the awards it seems just wanted I forgot.
Oh, she didn't nudge you in no module shoes.
<unk> is not just the high temperature the Socal Hudson John Jones from Goldman Sachs Socal.
All of them the whole she really is just because you want your noncore goodness.
Tom just on the Chinese songs downloaded.
That number goes up we change out with us it sounded like on your concerns.
Nonetheless, we all should move home.
I would hope the adult women.
Here with outside China.
I don't want to call me that number.
Pone tie withhold glitch out do not to set.
They just don't use that change you are talking about.
<unk> did have shown.
No none at all.
Women don't <expletive> out that you'll go.
Leila and Tony has actually been that you'll bulk or women don't want they made a change of course.
Being down.
No not yet.
Without the health food.
Yeah.
Oh, yes, I'm sorry.
But you don't you shouldn't get Shanghai hold up.
Oh, Yes, I got you.
Ill pass it on but it shouldn't be crews and all non Muslims homes posted adult do.
Oh dunk all of us are not closed yet.
No.
Some challenging questions and don't need they felt like Hana women's Huawei Douglas syndrome.
Yeah honestly, Glenn the Golden Goose Island.
Should you know Shaun.
Women to the sink.
Sounds like Yeah, No T shirt.
Hello, there good news on that.
Question on kind of it didn't.
I wont mention top golf into doing some deals as well.
Coming out of the soil.
Yes, I thought it was kind of towards that goal.
Well one thing too.
Oh God none of it.
Two women.
Question.
We also had that.
Oh.
Thank you.
Mhm.
Hi, there.
Okay. So yes.
Yes, I think there's no question.
We have to say that our recognition of hikes range is a successful outcome.
Injection and.
Hope that we can have more cooperation with companies like high teens in terms of equity or in terms of strategic cooperation.
We have interest in this kind of cooperation because the two.
Respecting the fish one is financial investment the second one is the development of the core business of our company easily have a look at the financial perspectives financial investment.
We know nowadays.
Uh huh.
Most countries in the world, including China.
But taking the development of green and clean energy as well as low carbon development. So we believe that new renewable energy and clean energy will be a pillar industry and us.
Publishing industry in the future. So it is very important for us strategically.
Strategically to integrate the resources upstream and downstream.
New renewable energy, especially in times of lithium battery, we believe that it will boost great potential in the future. So from the perspective of financial investments would believe that this will be we will get.
A bright future and then you have a look at the second perspective that is a big basement all of those sharpening our competitive edge as we know them.
C that is right.
Hi, Ann.
Shader.
Lithium battery and based on our 20 years experience, we are fully aware that the quality of raw material of the lithium battery as well as do the <unk>.
Production capacity is crucial quota.
Minutes of the company that is why we attach great importance in.
The region, the resources upstream and downstream so as to ensure the quality of our products.
In particular, the raw material.
As well as the stability of the supply chain so as to ensure a long term development of our company's core capacity and core competitiveness in the market.
Uh huh.
So we'll come cartoons.
Okay.
Currently undergoing Showtime.
So I'll turn them excuse me, sometimes my forefathers Indra no women seem too endorses Armstrong you often see in Chicago from prior year.
Sundar take a ton of them both central Iowa.
Union Hardy Har again.
Women thrive tenants with higher no.
So if you're in Sudan, sometimes wrong when Mr. Louis.
We are following a similar trend on them.
Mhm.
Okay from the reports that you gave days just now I realize that the production capacity in Dalian.
Is cool.
It is in full capacity and I also noticed that recently quite a few vector manufacture Reg counts that plans to build new production lines. So I'd like to know that force feedback in the year 2022 in claim reserves better reading the tea.
A real opex production, what kind of.
Len do house toward the development of new production lines.
Sure.
Sure when did you want to look reasonably cheaply dogma.
Hello.
Just.
Hi, there.
My job as CEO .
Which element.
I'm kind of just go Chicago.
Sure.
She has hung in there tried every corridor quieter.
Quieter.
Lower than you thought and it is yeah, Oklahoma Bungie don't know since you're taking a ship, which ones what I owe a mesh at Honda fungi, which N Pasha.
Mayo Turbochef oven.
Got it.
How about you know through all of that it's your turn.
This is gonna want yes.
No woman.
And Oh, well then that's how you enjoy all harsher, Missouri tornado.
Did you say Don so the only.
Well listen, let a month ago.
I don't know if there's a woman I shouldn't genotypes Zynga I know that you are today.
Although I'm not totally.
Sure Jorge.
Cohorts each other thing John or me, yes. Thanks.
Youre right Joe proposal agenda.
Hi, Linda.
Total.
No I mentioned I just assume the triage is another huge outside of China.
There's always doing TV.
Yeah.
Yes.
It's just unbelievable.
Right.
No I think all women show another cohort changed collateral.
That's what I'm doing quite.
Well they shouldn't have.
Uh huh.
I think that's what I need.
Spend a couple of them they do sure.
Hello.
And obviously that will get them done.
Well I hope it ended up being about how we conduct well then she was at that time.
And somebody else is corporate I sure hope so.
Sure.
Yeah, Yeah, that's you're targeting you do that you desire.
Crisis Tor.
But you're entitled to follow me here. She back did you say.
Could you show your loss ratio.
No.
EMEA did you that they're also achieved.
So what are the cohort to go digital.
Sure Joe.
Okay.
Well then sales later.
Mhm.
Okay. So yeah.
We also noticed that the market, especially those major major players in the market.
Quick leach expanding DAP production capacity and our plant in Thailand, and managing at the same but I don't see any conflict in that because our market our customers on the overlapping because for those the other major players they are focusing on.
We're supplying more too.
Two the vehicle manufacturers for electric tools that so we'll see that we are focusing on energy star reached and small power vehicles.
So and and our production capacity has been increased sharply in valeant and our new production lines.
Great deal with each entering into full production phase.
And in the future.
Customer think moms tap increasing it is also possible that we are going to allocate and invest more production more new predictions lies but some for our new production lines in Dalian have already doubled what we have in the past.
And in terms of energy Star range.
Up to we are after our new protection like come into operation.
Two out of three customers of yours.
Has already placed Oh days, and AR, which are in and we believe that <unk>.
About the new production line in Valeant, Ken well meet their requirements in the near future and we have to look at the raw material, we will keep a close.
Look at the.
Custom and meet in the downstream and if they have the requirement.
To increase their old days, then we will also actively.
Actively finance.
We extend our.
Capacity, so as to better satisfy their needs.
Yeah.
Okay.
Ore mill two common Sheila.
I have no more questions. Thank you.
Thank you all right.
Seeing no more questions in the queue, let me turn the call back to Mr. Daly for closing remarks.
So there's a range like that.
Oh.
Uh huh.
And then I can offerings.
Sun Dawn I'm, calling in for <unk>.
Thank you operator, and thank you all for participating in today's call and for your support we appreciate your interest and look towards reporting to you again next quarter on our progress.
Yeah.
Thank you our against this concludes the call you may now disconnect.
Thank you.