Q2 2022 JinkoSolar Holding Co Ltd Earnings Call
Yeah.
Hello, Ladies and gentlemen, thank you for standing by for Genco Solar holding company limited second quarter 2022 earnings Conference call. At this time all participants are in 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 to know about the meeting over to your host for today's call to Mr. Levine.
You can call Investor Relations. Please proceed pillar over to you.
Thank you operator, thank you everyone for joining us today voting cultural or second quarter, probably a penny to 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 on the wireless services we have.
We've also provided a supplemental presentation for today's earnings call, which can also be found on the IR website.
On the call today from Pimco solar I makes that agenda chairman of the board of it they're actually Alex if it was that Gonna save officer of Genco Solar Holdings Company limited and he said, they're not Miao Chief marketing officer of Genco Solar Company limited most apparently cheaper.
Officer, Ingersoll, our holding company limited and then Mr. Tallied Tal <unk> Chief Financial Officer of singles, All our company limited.
Well, it's disgusting called solar business operations and company highlights followed by Mr. Miao, who will talk about the sales and marketing and have them leased up happening we all go through the financial.
They will all be available to answer your questions.
The Q&A session that follows.
Please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995 forward looking statements involve inherent risks and uncertainties as such our future results maybe materially different.
The views expressed today.
Other information regarding this and other risks as included in <unk> public filings with the Securities and Exchange Commission.
I think also does not assume any obligation to update any forward looking statement, except as required under the applicable law.
It's now my pleasure to introduce me said he sent up China and if they all are being closer to that holiday. They study will speak in Mandarin and I will translate his comments into English. Please go ahead Mr. Li.
Oddly boots on for that yes.
So just go hold out yet, but they are going to do well.
It turns out yet.
And by doing so you a copy.
Hum matching arlington's are yeah.
She Danville.
And then for Doug Thompson, the pitches that momentum what's useful gymboree colleague I think John the nipple took longer to come back.
For context from a failure of the golf course to consider either in shop model anyway.
It would be at this stage.
Pacifico deep cultural Cook on debt, but she had failed in Asia being tells us to lead the way with channel that while making quantity eases himself will catch up.
We had a good quarter in a difficult market condition pulled out solar module taught us all our shipments in the second quarter were $10 five gigawatt module shipments in the second quarter were 10, one two gigawatt.
Roughly 27% sequentially and the total revenues well to a point, where it's a 1 billion U S dollars at 27, 6% sequentially. There's upstream costs continue to rise they actively work to control internal cost so with technical advancement and the process improvement.
Which partially offsets the impact of higher option costs.
Our profitability.
Gross margin was 14.7% relatively flat compared to the first quarter, excluding the impact of the convertible senior notes and the share based compensation expenses.
Adjusted net income in the second quarter was 55 million U S dollars improving sequentially.
Your daughter courtyard. She had got from them, yes, I see you saw that over time, we'll talk about them yet we did see the quantum of future closures and the continuing falling closer to your phone. So you don't call Hy Bon throughput for breast cancer.
Somebody in so called forget about all that she's about it she got Chihuahua, Toby Thunder here, but I wonder what you're backing up although we are adding on you know somebody is being cultural can't say, whether that's about somebody watching.
Watching collapses odd yet so there's a lot of unfulfilled, yet colombians are yet, but I'm sure. If I started to coordinate with our official young challenging somebody information comes on through.
Don't forget yoga Tony comes on it yet.
You bet.
So we know the time to listen.
Italian CTO of Cognex.
She had yet to Kansas unusual congestion, but we got the company ensure we've got the euro was higher.
It seem to you about some but you see them make whole thing about call. It.
So we did a job they get used to a person.
That would be truly that you're I'll show you a type curve for the gunshots, we'll do that job. She has a little yield for a shot here.
So pharma, what's wrong with some people that we've got a jackup with Chicago being thought about things yet.
We had other times. So that's what you don't lose his remarks, we've got jobs.
For a buffer you want you don't tell you its usual go both ways.
Driven by accelerating attitude condition in several countries and the destination.
As well as the Amadeus fly crisis caused by the Russia, Ukraine conflict.
Non small cell lung products has exploded the money market. According to the statistics and analysis of China's costumes export data by equally China China's exports of modules in the first half of the year reached their server 8.7 gigawatt a year over year increase of a one 2%.
Export to Iraq reached a total of 42 upon four gigawatts of PV module and year over year increase of 100 and 117 seven behind it in seven.
Lastly, 7% demand in the China market was also strong during the first half solar PV installations in China reached the study Twilight gigawatt, a year over year increase of a handle on that 36%.
Given this better that in fact is the growth in demand released our polysilicon production came up short and it was further gravitates biannual maintenance programs and the pavo rationally and anti epidemic restrictions in certain regions of China.
As a result, polysilicon prices rose to continuously and at rates that are reaching the high of RMB 300 in attendance.
Hello, Graham Sydney module prices higher.
Gotcha discussions with other clients indicated that some of them found a higher module prices negatively affect projected yields and other without some demand looked out.
We believe we believe polysilicon prices they'll continue to increase and the reach that peak.
Is that peak in the third quarter, then as polysilicon production ramps up in the fourth quarter polysilicon price increases are expected to moderate driving discovery a recovery of the doctrines Mark Jenks, who sometimes a thoughtful actually I'm dead Center woman who's on the phone call for SUNS.
1000 <unk>.
You should probably shouldn't do have some so that's for sure so yeah.
A woman the Sufentanil Quiverful, Montana, you seem to suggest that your paper trading cheap.
They've gone through the auditing audience the chimney, yes, it sounds like you're doing it yourself.
Did you touch your total told through like jumping ship and going through some challenging but usually follows Hitachi thoughtfully Iconium falls off you don't get done at Fujitsu goes onto Tulsa, while monitoring for tell them to agenda since all her what she wants to see the other multi monitor carefully the telephone.
Recently, the local government of Sichuan Province has imposed a provincewide via the pub irrationally matter ended up production capacity of our manufacturing facilities in Sichuan province has been temporarily affected.
Currently unable to evaluate the extent to which our business operation and financial performance for four yet 2022 and will be affected by the pavo rationally matters in Sichuan province, as everyone else and sort of how long the pavo Russian rationing measures will persist in a one hour to try and manufacturing.
<unk> facilitates can resume floor protection.
Actively monitoring the situation and it has implemented various measures to minimize the adverse impact from it up have a rationally are our business operations and financial performance.
Including but not limited to having our other manufacturing facilities are zero memorial production and actively communicating with the local government about the power of flight related method.
We all go flexibly adjusted our module production volumes and assume that's planned in order to meet the delivery to our clients.
To do that for some time and something you wanted to do something you watch it go tissue your box and who told US they do but you all will come together at the time that you ought to do more months.
Now I'll touch on telco.
The others should be about 90 Hudson bunching for her woman.
Gee I hope the odds you Boswell and she'd against the atomic and Xtreme quota share somebody a woman show you a hunting ought to use so you do all that and she's been through time them Toyota Gosh I'll comment.
So believe that Ts in those households through the season.
In the second quarter, the propulsion of Lifesize, a capacity increase distinguish Ali further improving our integrated infrastructure. The 16 gigawatt of popcorn cell capacity that has started the production at the beginning of the year reached a four production after the end of the second quarter.
The mass production, if they can save of over 24, 8% and E rate and the integrated the costs in light of the Spectation.
We recently started production at our additional eight gigawatt of N type cell capacity in class a and the comments just construction of another production projects with 11 Gigawatts of N type cell capacity E hanging the increase in our in house high efficiency capacity ratio will continuously improve.
With all the competitiveness.
Well my job up would you like to become useful because she's going to jinx it four months.
That's unchanged.
But she solution and once in a bunch of them that she should have gone well.
People are going to shoot in Shanghai and beat it.
So I think we're more downtime is also down about how it's being gender shocking reality September fitting well my son with I'll call them more tests of the whole public but that searchers found yet.
Our downtown jobs is a golf.
Horseshoe Thyssen question, Joe that when the judge so she can go to school did that fall putting channel.
And that's really a pioneer embracing that top comm technology, we have recently achieved the cave technology breakthroughs in the currently selected top comm technology.
That's what we believe we have created and chip area related to call process and technology that the industry, leading mass production efficiency yell at rates and cost levels.
We believe the top call. It is currently the high efficiency cell waste, our greatest value will come out of commercialization.
Mass production in the post that park era, and it has relatively important development opportunities.
We will continue to maintain our leading position through technical iterations.
At the same time being pushing toward the I knew I could for the Guangzhou from attempting that could handle go full out and being shunned all you're piecing youll come you'll either tons or a lot of the audience and Chengdu Zhengzhou.
Young adult T C. You didn't need just changing.
Changing once again towards the end she kenyans through for mobile.
Zhonya gene panel.
To Tom's team, sometimes some 40 teaser.
And she cohorts on beach on to new products and Josh.
Anti product the type of new modules continue to be well received by global customers and so far we have high visibility in our auto book.
<unk> type products and <unk> products to come out a competitive a premium as a result of our improved the technical power meters and additional power Gen. Irish again, we are confident that we will complete all before year end type shipments GUL. In addition, considering the release of new capacity in 'twenty two 'twenty three.
And an increasing market penetration.
So that's the propulsion of N type shipments to further increase.
Cause I find me a colleague junior and Galena punching Quant woman telephone, our Guizhou denser agenda core countries or the empty hunting <unk> ginza, so agenda time, though.
Just from your thought about doing something wrong or somewhat neutral to us.
In there of the car and unexpected fly churn and market conditions, we have adjusted our capacity expansion and tasteful wafer cell and module for the rest of this year and as a result, we are consummate with vaccines and your production capacity for mono wafer cells and modules to reach 60.
55, and 65 Gigawatts, respectively by the end of 'twenty 'twenty four.
Hearty juggernaut Butcher when I, just always thought you typically Ali on NIM Defense you do go through that cohort.
The children's shoe adults like what's the longer you wait two trillion cynosure without proof of G about the cohorts three and four bit.
Before turning it over to Dana I would like to go over our guidance for the third quarter of a 'twenty 'twenty. Two we expect is that the total shipments to be in a range of nine to 10 gigawatts for the third quarter. They see it and it really and we are reiterating our total shipments of 35 to 40 gigawatts for the four year, but 2022.
Thank you Melanie.
Sure.
Pardon me.
Over 97% of our module shipment.
We hear that kind of 7% quarter over quarter.
And a double year over year since the Russia, Ukraine conflict global energy transformation.
And it's showing strong growth momentum, especially in Europe .
Second corner.
Hey, Mark.
And the proportion of shipments to Europe remained high reaching 25% to 30% range.
China also distributed generation business demonstrated strong momentum you only added installation in China in the first half.
136% year over year.
In the second quarter.
For the Chinese vaccines Fortunately.
Good morning.
Sequentially.
Our shipments to emerging market also stable.
The stable sequential growth.
Well the amount of a stroke, we also noticed some potatoes.
For example, the amount of in some European countries.
We expect it to slow down sequentially.
The problem with vaccines and logistics.
And some of our domestic clients are waiting to employ in excess.
<unk> continues to rise with the pricing.
Yeah.
So the execution of some large scale antipsychotic mine, reaching 92093.
Any future easier them with great connection on the power transmission.
Thank you.
Parents into consideration, we have been adjusting all the time.
Well, it's almost all kinds of contracts signed as well.
Well keeping in close communication with our clients.
So far both of our contract timing and execution are maintained at a satisfactory level.
U S market tightens supply chain tracking shouldn't exemptions.
Short term.
Along with the President.
Scott Executive order for clean energy and manufacturing and the recently passed the inflation rate production tax authentic true which conclude.
369 million English starch requirements and anything related to funding.
This amount and remain positive.
To improve our risk to risk.
Continue to closely monitor market.
Carlos if you.
Adjusted productions on the marketing strategies Accordingly.
And the further strengthening of our overseas supply chain and a global sales and marketing effort.
The proportion of large size product to ship a ship gradually increase to 90% in the second quarter.
Further optimizing our product structure.
One is through distribution channels, where where growth and demand strong accounted for nearly 50%.
With shipment.
Through distribution channels in European and APAC markets accounting for more than half.
Tiger newer modules continues to be a crime to pipelines all over the world with high order book visibility.
Premiums and fees in line with our expectations.
We estimate that hydro new shipments for the full year I'm trying to kind of the two will reach approximately 10 gigawatts.
The China formation.
Energy is now in the region.
Recoupable trend.
Meaningful energy security.
Okay.
Back to you to achieve rapid growth this year.
Some markets are experiencing.
Experiencing temporary this year due to the individual's short term volatility that comes with rapid growth.
As the market continues to adjust we remain optimistic about global team.
We will provide a various of your material.
Pardon me.
Tiger two.
To cater to diversify the clients' needs.
In our country.
We expect to achieve shipment growth.
Our key growth further increasing our competitiveness in global market.
With that I will turn the call over to Pat.
Thank you Ginger.
For second quarter of 'twenty to 'twenty two.
Solar module shipments total revenue increase.
Secondly year over year.
Nevertheless, gross margin relatively flat with first quarter.
Decrease the year over year.
Due primarily to an increase in the material cost of solar modules.
Due to a significant increase in the company's stock price in the second quarter.
We recognize the loss from a tenancy in fair value of the convertible senior notes.
Of eight 8 million U S dollars.
In the second quarter.
Excluding the impact of the convertible senior notes and the share based compensation.
Expenses.
Adjusted net income attributed to the Genco sold holding company limited.
Ordinary shareholders.
In the second quarter.
Well, it's $55 million.
Sequentially.
Let me go into more details.
Total revenue.
Two point H billing.
How about 'twenty.
Seven percentage sequentially.
If it.
Kind of increase of 137 percentage year on year.
Yeah.
Gross margin was 14.7 percentage compared with.
15.1 percentage in the first quarter.
<unk>.
17.1 percentage in the second quarter last year.
Total operating expenses were.
457.
Milling at 40 percentage sequentially.
The increase is mainly attributed to an increase in.
Shipping cost for solar modules.
An increase in disposal and impairment loss on property plant and equipment.
And the increase in the share based compensation expenses.
Total operating expenses accounted for.
For about 16 percentage of total revenues in the second quarter.
Perhaps from about 15 percentage in the first quarter.
13 percentage in the second quarter last year.
You beat the 186 million.
Compared with 226 million in the first quarter.
This year.
Excluding the impact from.
From a change in fair value of the notes and the share based compensation expenses.
The adjusted net income attribute to the Genco Soder holding company limited ordinary shareholders.
Well, it's 55 million improving sequentially.
Due to the continued appreciation of the U S dollar against the RMB.
We realized a net foreign exchange gain.
Including changing fair value of foreign exchange derivative.
Up approximately.
34 million in the second quarter this year compared with a net gain of $12 million in the first quarter.
Moving on to the balance sheet.
At the end of the second quarter, the company had cash and cash equivalents.
Oh, two point 15 mis billing.
Likely them from 266 billing at the end of the first quarter and up from 1 billion at the end of the second quarter last year.
Hey at the number of days were 69 days in the second quarter compared with 66 days in the first quarter.
Inventory turnover days were Henry four days in the second quarter compared with <unk> hundred seven.
17 days in the first quarter.
Total depth.
Well, it's three 8 billion at the end of the second quarter.
Down sequentially from $4 3 billion.
Net debt was 1.7 billion compared with $1 6 billion at the end of the first quarter this year.
Okay.
This concludes our prepared remarks.
We're now happy to take your questions.
Operator. Please proceed.
Thank you so much management.
I think Chris participants to best needle and then wanted to ask a question.
Yeah.
I'm happy to ask a question you need to put needle and then.
Well, it's a question of the day, we have from Lauren <unk> from Roth Capital Partners. Your line is on mute Laurence. Please go ahead.
Hi, This is lawrence on on behalf of <unk>.
Thanks for taking the question.
Was wondering if we could.
Color on the power.
Our shuttle.
Specifically you know.
It comes out.
Oh geez.
Half of our total production.
So given that you've shut down for about 10 days would that be an estimated 5% of Q3.
Hey, good capacity offering so far.
Yeah.
Yeah.
Uh huh.
You are talking about.
The impact from the <unk>.
China, some harvest power costs.
The impact for the.
For the production.
Yeah from our factories.
Wafers and.
It's a you know it took.
It's a progressive impact for the quarter.
Since I'm provinces, we were just because of the.
I think that's all I can do.
Paul Kratz.
It did have ICD 10 days to 15 days in part two for our wafer capacities.
Which is roughly two five gigawatts and so when you have four annual capacity is.
So converting to mass production.
Two gigawatts amongst so we estimate the rough it's around Savannah.
Several hundred megawatts, you know impacts.
And for the wafer but.
You know we have global we have global let's say.
We have four factories, you know for the wafers and different readings, including trees and SaaS.
Transfers in China, So we.
We try to maximize the production from our <unk>.
Wafer capacities.
That region so.
Our management teams and nowhere, we tried to minimize the impacts are.
And it did have some some impact from.
So from a production side on our cost side of that in your third quarter.
Yeah.
Okay.
Thanks for the detail.
So I believe.
To cost side would there be any impact from purchase of external wafers in order to meet your shipment guidance.
If so no no no.
Yeah I know.
Because you know.
If you look at our guidance. It was just you know nine gigawatts to 10 Gigawatts we have.
<unk> taken into that.
Yes.
You got considerations so.
Uh huh.
We did.
We did.
We don't have plan to purchase a paper from third parties.
Okay, great. Thanks.
So you know would it be safe to say, the leading indicator for recovery in Switzerland as the recovery water levels. You guys are mostly driven by hydro part right.
Yeah. So it is only in June cover recovery space.
Understand.
It's getting better, particularly in nutrition through this center.
Capacity is expected to close to full capacity in the next best thing in your next couple of days.
Okay.
Great to hear.
I had another set of questions on.
You previously said earlier in the call you touched on it a tight and supports interesting does that have to do with it.
And if it is related to the U S. Could you. Please help us quantify the number of gigawatt that you've.
Maybe you shifted from.
Shipping into the U S to towards you or other countries.
Yeah, I think a way we're prepaying this traceability topic not only for U S market, but also for other market as well we have.
<unk> months of course, we have intensively get inquiry from different countries with different customer about traceability topic right. So that's why we believe in the future we have to prepare the kipp.
Capability.
Tracing traceability of the product to including the polysilicon on some other key material.
A necessary step for the future right.
I think that includes the U S market.
Yeah.
I don't know for U S market yourself for U S market itself, we're still.
Working hard.
Together with our CVP.
Now consolidates too to make shoes right. So it was a currently the customer could ever it's not that smooth as usual.
Specially in the U F. L. P. A so we have two what kind of a lot of details to make it happen and we are working hard on it.
Okay. Thanks for that.
There.
I, just got a little bit more on the you know you said, it's not smooth right. So for what type of modules is not smooth.
And poly South East Asian module, China up Hollywood stars.
Okay.
Or we're all.
Well thank you.
Let's say based on what our knowledge based on our knowledge and awareness.
See if there's a difference between China, polysilicon or European polysilicon or American citizen right. So we have to provide the right documents to to meet the requirement from CBP officials.
Okay. One last question before I hand, it off.
What's the utilization rate of your southeast Asian facilities can you keep it at around the same level by shifting module shipments to other countries and what's what's the rough mix. Please thank.
Thank you.
Okay.
Obviously, we'd.
Well, we'd have to look into the different part across a whole lot of it yet, but I thought the upper stream wise like as a way for them to sell I think that you see in short of supply.
Our full of demand not only for U S market, but also for the other market right and therefore, the module side since he started here in the U S market. It would have been would have to be very careful.
About just visibility, we won't ship or we won't manufacture the products that we cannot guarantee that visibility in the right place.
Okay. Thank you.
Thank you.
Just sticking next question Duffy.
If you wish to ask a question you need to patch Vito and then one.
Makes me have Alan from Jefferies. Your line is on mute you David. Please go ahead.
Thank you operator, and thanks management for taking my question. So my first question is about.
What is the expectation or the current situation.
Corn products and what is that.
Is it one central 1.5 U S sites.
Compared to book.
Uh huh.
Firstly about the product itself.
I think it's a tough.
<unk> com product that we call it either new.
It is highly competitive compared with the standard product right.
Think of it is based on the 72 pieces paired up to Tiger and you is almost a 20 watt peak higher standard product, which.
Also together with the other features like the degradation.
Degradation.
So definitely it's generating extra benefit for the customer and and bring additional value to the project site or to the installations. So solar system. That's why we can't you know getting a premium from the market currently the premium we're expecting a wheel.
Looking at around the one to one five range, sometimes is up to two but let's say the well.
It's a broader range it will be want to up 25%.
Thank you. Thank you. Thank you.
So it's actually pretty decent.
But when it comes to you production cost perspective so.
Alrighty achieve cost parity with us as well.
In terms of the production cost of popcorn.
What is the current view right now.
Uh huh.
Second quarter the top comparison.
That helps the agenda, our R&D and the operational team is working very hard to improve the output.
<unk> phase.
So we asked the cost.
Right now as you know the integrated across all of the.
Top com you know the.
Modulus.
Compared to the traditional and the P. P type module states.
Within the range or lower.
Lower than.
Be five.
Our plan is to know what is in India to improve their cost structures and the way we target by the end of this year and is a top calling integrated cask could rich too.
You know the same level.
Oh, the PERC by the end of this year.
So that effectively means that you will have a big cost and then you'll make an extra.
One O one foot box.
That topic on <unk> that's right.
Okay.
Yeah Youre right.
We didn't see all of the top cut module said, we did have the premium.
And in.
General mentioned.
This cost structure, we need to work continuously to improve.
And it's a you know a good you know on the track on the way, we expect and our target is by the end of this year. It could be you know rich the same level.
So thanks a lot.
Another question is about.
What is your view on <unk>.
One of the major policy.
Who is entering into a module space.
So it is one of the hottest topic in the market. So what is your view on this.
And I think there's a very big market, even if with existing marker the mark.
Can you go through that.
And.
If you look at the top five companies module companies, there's market share now it says $60 65 per cent.
All our tier two or three companies, taking serious or defend market share.
And if you look how the growth rates, we expect 30%.
A couple of years.
So.
If it is is there's a lot of potential.
Room.
For the let's say the big players too to penetrate the markets and that's the module you know the business is not purely in production side and we build this business.
For over 10 years, it is more kind of like Nike and our global manufacturing and global marketing sells back ability and no small cells our relationship with customers. So what we what we're doing is we continue to solidify the hour.
You know there is some funding marketing.
The product competitiveness.
Okay. Thanks, a lot.
So.
Also like to note that management has also mentioned.
In patients with action.
<unk>.
One off peak.
Incentives in the active so coffee.
Subsequent yourself installation, but also would be a lot.
A lot of subsidies on building factories would be doing so we'd like to know is shingles.
You're doing food expansion.
In Q U S in terms of.
Yeah.
Yeah, I'd say it's.
You know hot topics.
Yeah, you know the the two.
To be effective in the U S. You know starting from next year and it did.
It provided a lot of subsidies.
From manufacturing in the U S and we have where we already had a very small module capacity is 400 megawatts, which will be ineligible for the <unk>.
And for the expansion topic on the way out in the early stage two for evaluations, but I think it's we expect to you know there will be more local no U S based.
Little more local.
Capacities in the next couple of years.
Given the strong support from the IRS policies by the way we are at the early.
Early stage evaluations.
Yeah.
So.
My last question is what is your outlook.
Outlook on the solar is the laser beam.
This year next year.
Hopefully 2022, who tells you they do five global installation in a brief.
Breakdown.
Hum.
Yeah, well, we estimate roughly 250 megawatts.
A gigawatt installation this year.
And the next year, given you know the bottleneck of the polysilicon will be gone.
We expect a strong close in China.
The European markets.
We estimate a roughly 25, 30%.
The market growth next year.
Yeah.
And so so that more than 300 gigawatt.
But you are talking about like 2300, if we're trying to get off of it.
Yeah.
It's new.
A general I think we are optimistic.
No because the potash showcase at very high level. It did delay you know.
Particularly the utility scale projects in China.
As Ralph on originally so that.
Given the next few years.
Volume.
Input.
We expect.
Infill spacing will be.
Where are you now at a.
Larry Craig speeds.
Thanks, a lot so whats the company will benefit from the strong demand and also the upside you could help quantify that and I'll leave it there.
Thank you management.
Yeah.
Thank you.
Okay.
And Steve if you wish to ask a question you need to place needle and then one on your telephone keypad.
Once again participants if you ask a question. Please press <unk> and then one do you have a question from <unk> Chaudhry from some sort of capital Rajeev. Your line is on mute. Please go ahead.
Good morning, and thank you for taking my question.
Actually I have a few questions. The first one is just on <unk>.
On the model.
Look at the unit shipments that you had in the second quarter and compare them to the unit shipments in the first quarter.
It seems that your average price realized for module went down.
Quarter to quarter to quarter.
Significantly bye.
By almost.
By about a one.
One full penny or maybe more than one cent.
Can you explain why that would be happening in an environment, where prices in general are stable or up.
Sorry are you asking about Q1 of fiscal <unk>.
Yeah.
I think according to our data as a Q1 Q2 are priced pretty close.
For the Q2 average prices.
<unk> has a very tiny job compared with Q1 Asps.
Many sub recourse.
There's some historical order so we have to execute it well.
Wishes to lower that market price. The rest are pretty normal for you know all of you who we believe is a corridor of N T.
Staying in a market condition.
No big changes.
Yeah, I mean, just based on the on the revenues that the unit shipments look like.
The average selling price in the first quarter was around $28 four.
In the second.
Second quarter was around 27 <unk>.
So that looks like a pretty decent drop but you are saying that.
If it was because of legacy shipments at a lower price.
Both legacy shipments behind you.
Alright.
Let me correct you on that.
The revenues in clothing manufacturers right not only module revenues even module revenue.
A majority of our plan, but we still include the other part.
The revenue that's why you cannot use the revenue divided the shipment.
Asps.
That's not accurate enough.
I was thinking well I assume.
There.
So no additional factor.
You know maybe the RMB depreciation sand that you use a U S. Dollar there. So maybe you know reflecting as warehouse you know second quarter, China is taking more parking but again the ASP is stable in the second quarter a slice of it.
A little bit or down a very small.
Yeah.
Yeah, Okay, sorry, I understand.
So along the same line can you give us some feeling for what that used to be.
That will be in the third quarter and the fourth quarter for the year.
Okay.
Yeah for the third quarter, the ASP will be.
Our stabilized first quarter in the second quarter.
For the fourth quarter.
It has not been fully close but we are still closely monitoring the market situation, but we are expecting a market prices.
Sure.
Hopefully you're expecting.
You're not expecting fourth quarter to be flat also.
Yeah, more or less a flat, but it's still far away from the fourth quarter.
Or is there still an unknown factors to affect in sorry, we don't have.
On the fourth quarter Asps.
But my personal expectation will be the first quarter, the first quarter asp's or market price will be more.
More or less stable compared with Q3.
Another question is on the stock based compensation.
Can you quantify exactly how much it is per quarter.
Uh huh.
What it was in the second quarter and how it is expected to trend in the.
Third and fourth quarters.
Yeah.
Okay.
But its compensation as you know we you know the company granted you know the first quarter second quarter. It's a one off item and given you know the future. We expect the amount of royalty very small and for the second quarter. The exact same amount that you can calculate the pizza.
You know because we have disclosed our adjusted net income which.
Which is 55 million and the no.
Including the convertible bonds and the stock based compensation I think it's roughly I think 20, or so and if I may.
You can do the calculation.
So it's 25 billion and you think that in the third and fourth quarter that number is going to go down.
Yeah, well a lot of small wherever there is a small.
That's right yeah.
Okay. So.
<unk> costs on a per watt basis.
Go up quarter to quarter on a per watt basis.
Yes children classes.
At high level I assume it's roughly.
One five to two Sun U S cents per watt.
And about a quarter by quarter, it's relatively stable.
The shipping costs well maintained.
We have a high level.
Given you know more meat to China second half for your blended will be lower second quarter.
Next year, we expect to you know.
Given the global economies were a break and then we expect next to you the Simpsons logistics, where it will be you know the cost of it would be it will be.
In a downward trend.
Okay.
And can you also tell us what the depreciation and Capex numbers for the second quarter and what your expectation is for the full year now.
Yeah.
First first for Capex in the first.
In the first half of this year is reached one 4 billion.
And for the whole year, we forecasted.
It still remains on the strengthening U S stores.
[laughter].
And depreciation.
Yeah.
Sure.
Okay.
Depreciation.
It's a that's a roughly per watt per watt basis.
Roughly.
I think you know.
<unk> per watt basis is five to six on the cents per watt. So there's.
It's roughly a 50 526 billion.
Yeah.
Amit.
For second quarter.
Yeah.
Okay.
Our final question is.
Yes.
On the polysilicon business as you know the polysilicon module.
Margins are right now in excess of 70%.
And.
Even though they will come down as prices come down the expectation is that the polysilicon business and maintained gross margins back up.
Maybe 35 or 40% much higher than the module business.
Canadian Solar has expressed an intention to get into the polysilicon business.
Do you have any thoughts about that.
Getting into the polysilicon business ourselves.
Yeah.
Polysilicon.
It's a bottleneck and you know listen through years by next year.
For sure you know the the surprise or sufficient and it's in a downward trend. So if I'm. The polysilicon side, we don't believe it's a bottleneck for our business in the future.
We are.
Power supplies team supply chain team is doing as well.
The partnership with <unk>.
At least a leader or the polysilicon producers and the size of the long term.
The polysilicon supplier contracts.
On the as we as we invest that's minority.
Investors should we we reinvested two companies as minority interest and a 222 to strengthen our relationship before the top connoisseurs supplier.
So we don't have plan, let's say.
Two.
To do the business the odds of polysilicon.
So far.
Okay and my final question is about storage can you give us an update on what you are doing in the solar space.
What sort of autos in revenue then feedback youre getting from the marketplace.
Well the storage business still in the early stage, we believe it's not the right timing to talk about it.
We will share our strategy and our plan once they test right right. Thank you for your attention.
Thank you. Thank you very much.
Thank you.
Yeah.
Yeah.
She has dropped from credit Suisse. Your line is on mute.
Hello Nigel.
Thank you for taking my questions.
I have a few questions. So firstly on the <unk>.
But.
So just wondering if the company has withdrawn.
Our module shipment for this year for the China market and overseas market and if possible can we talk a little bit on the unit profit difference between China domestic sales versus overseas talking about himself.
And the second question is on the telecom, so I notice that even though some of our competitors. They also have some capacity coming out.
Well, it's quite early this year. So just wondering do we believe these are one to one five.
Yes P permit can be maintained going forward and also you know comparing our N type.
Home products versus peers.
So can management talk about what's the advantage of ophthalmic products.
And then lastly, a quick question on the polysilicon side. So so basically the near term.
Chicken prices too high a company that's supported by the us kind of a supply disruption, but just wondering if management has appeal.
So what time, which marks.
Kind of we kind of started to.
To see the polysilicon price to drop thank you.
Yeah.
Thank you.
Lot of questions I will try to cover as much as I can so firstly about the geographic mix of our mix for the full year, we are expecting the China in the Europe market are the two largest contributor to genco genco solar shipments for the full year.
Which accounted for around 25% to 30%.
Just on the phone.
Followed by our emerging market, which will be contributing and we're expecting a country.
Between 20% to 25% and APAC.
APAC market will be around 15% to 20%.
Rest of World, followed up by our other markets, including North America, Middle East Africa, et cetera, right and the second question about us Tiger in U N type product premium.
So the way we are pricing the paradox ace two sharing the dip.
The benefit that together with our customer is not a competitive.
Competition for let's say a gaming.
The negotiation is really a benefit sharing model, which means that approximately a as I say a round by using Tiger Neil N type products that our customers are project can get additional benefit of around two.
Two five to three cents per watt so.
We are establishing a business model to share the benefit.
By approximately half the hopper with a customer that's why we believe such business model is sustainable and a persistent and it doesn't have to go to the price competition, even with more on the more peers are drawing into top Com group. We believe we can try and today you know leading the technology.
Innovation and create.
Create a bigger market for solar industry, we don't have to go to the price competition.
The comparative with our in our funnel.
Followers or our peers a top car technology. We believe you know at some point here in this area of our cost structure and our efficiency including hour per doctor.
<unk> performance will continue to have a competitive.
The vantage Ah ha or at least a leading position in this market and the way I feel confident on that.
Lastly, about the poly silicon prices, we believe.
In the long run like Charlie saying in previous conversations we believe the polysilicon will become will be debottleneck.
The next coming quarters, and which will create a bigger market for solar installation in the downstream, especially for the utility project, which has been significant delays due to the capex.
Problems.
We are having a big help on that.
Hope that answer your question.
Yes, I think you mentioned that this is a helpful and I'll pass them. Thank you.
Thank you very much.
Okay.
Next question is coming from Brian Lee from Goldman Sachs. Your line is on mute.
Hi, Thanks for taking our questions. This is Greg on for Brian .
Just a quick question on the margin expectations, just given the elevated poly pricing and also the power control and not to try them, which may impact your utilization rate how should we think about your gross margin in <unk> and also for the next couple of quarters. Thanks.
Yeah. The gross margin, we expect to you know.
Expanding a little bit expansion.
And your next quarters.
We did face.
Debated at a price that was upon us silica.
And that's why I was the power cuts you know phone system components, but you know our top county in a module.
Capacity is seen.
There is upgrading where it goes.
Status and Oh countries contribute with more parking saw revenue and put on mix and.
Which has.
Right.
With relatively higher gross margin perfect contributions.
We have the confidence and.
The margin will be expanded.
In the second half year compared to two in the first half year.
Okay understood. Thank you and then on your Opex.
That increased pretty significantly three can you I guess, that's partially due to stock comp.
I think you mentioned Stockholm will be very minimal and three Q. Phil can you talk about your opex expectation in the second half.
Thanks.
So I'm.
I'm talking about operating expenses operating expenses.
Uh huh.
Operating expenses are so.
You know that.
Kevin will have more shipments second half a year, you know and therefore the compare.
Compared to first half year, we expect the opportunity.
<unk> expenses against the revenue will be slightly lower.
The second half of year.
Alright, Thank you I'll take the rest offline.
Okay.
Thank you.
Yeah.
At this time there are no further questions. So that does conclude our second quarter.
This conference call you may all disconnect now thank you so much.
Okay.
Uh huh.