Q3 2023 JinkoSolar Holding Co Ltd Earnings Call
Thank you for standing by and welcome to the third quarter.
2000, and twenty-three Genco solar holding company limited earnings conference call.
All participants are in listen only mode.
There will be a presentation, followed by a question and answer session.
If you wish to ask a question you will need to press star one.
All of it by the number one on your telephone keypad.
Please note this conference is being recorded.
I would now like to hand, the conference over to Stella Wang of Investor Relations. Please go ahead.
Thank you operator, thank you everyone for joining us today are forging called solar first quarter 'twenty earnings conference call. The Communist results that were released earlier today and available on accomplished IR website at Www Dot single solar telco as well as wireless services. We have also provide.
Added a supplemental presentation for today's earnings call, which can also be found on the IR website.
On our call today, if I'm single solar Ami study sandal chairman of the board of directors and the C O all between coastal or holding company limited Mr. A J, let me I'll just like any officer of Genco solar accommodate electric needs to Pepe Chief financial officer of being called on our holding company Limited, let me search Holly Paul.
She had financial officer of single Solar Company limited and he said he will discuss the clinical solar pimco solar, especially its operations and the company highlights followed by Mr. Miao, well talk about ourselves and the marketing and then Mr. Patty will go through the financials. They will all be available to answer all questions.
During the Q&A session that follows.
Please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995 forward looking statements involve inherent risks and uncertainties as such our future results may be materially different.
From the views expressed today.
Further information regarding this and other race as included in gene called Solar public filings with the Securities and Exchange Commission.
Single solar does not assume any obligation to update any forward looking statements, except as required under the applicable law.
Now my pleasure to introduce them is really center around that and if so you all have seen cultural they're holding.
Mr. Li will speak in Mandarin and I will translate his comments into English. Please go ahead in Italy.
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We are pleased that well they weren't able to overcome the challenges with it due to market volatility and to deliver a strong third quarter. We did so by leveraging our advantages anti popcorn technology extensive global operation not at work and at the Boston integrated capacity capacity structure and other.
Module shipments gross margin and that's income all increased significantly year over year.
Total module shipments were up approximately 20, 114, gigawatts and English of the hangar and a 7.9% year over year polysilicon costs, a decrease sequentially high efficiency N type products that command a premium account for over 60% of hotel.
Of total module shipments and a module shipments to the U S market recorded sequential growth in the third quarter, all contributing to improve the profitability year over year. Our net income increased by the hundreds of 48, 47% to U S dollars 180 114 million.
And adjusted net income increased by 215.1 per cent to U S dollars 184 up one 6 million.
Diluted earnings per share increased by 188, 7% to U S dollars, Oh, 0.6 taste straight dollar and gross margin increased from 15, 27% to 19.3% San.
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Since the third quarter price declines in the supply chain have still knowledge and market demand for the first nine months you only athletes installations of PV in the domestic market reached 128.9 gigawatt, yeah. They are 50% more than the four year installations in 2020 two.
S as well as a new threat products, such as opposed to China's exports. So there has to be common use driving force for China's economy, and also contributes to global energy transition. Meanwhile, intensified competition brought by changes in supply and the demand accelerates at a technical iterations.
High interest rates in some regions and geopolitical tensions caused some volatility in the global PV market.
Which tested all industrial players, we believe that way as the industry leader will become even stronger as competition intensifies.
The end of the third quarter, we became the first module manufacturer in the world to have delivered a total of 100 and nights eight gigawatts of solar modules covering covering over 190 countries and their agents our capabilities and globalize the sales operations and a management added.
By a continuous and the accumulation and innovation help us to build out all around competition barrier.
<unk> in our ability to.
To navigate through the volatility cycle, it shape healthy and if its tenable profitability and increase our shareholder value.
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By the end of the third quarter, the mass produce high efficiency N type cell reached at 25, 26% and the N type of module power output was 25 to 30 watts higher than similar P type modules demand for these products to continue to increase girls globally.
Operator: Thank you for standing by, and welcome to the 3rd quarter, 2023, JinkoSolar Holding Company Ltd. Erning's conference call. All participants are in listen-only mode.
As to the L. C O E I S lawyer and type of modulus and still return a premium over similar P type modules and at a premium continued to exceed the market average.
Operator: There will be a presentation followed by a question and answer session. If you wish to ask the question, you will need to press star, followed by the number one on your telephone keypad. Please note, this conference is being recorded.
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Stella Wang: I would now like to hand the conference over to Stella Wang of investor relations. Please go ahead. Thank you, operator.
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Stella Wang: Thank you everyone for joining us today for JinkoSolar's 3rd quarter, 2023, Erning's conference call. The company's IO website at www.jinkoSolar.com, as well as on used wireless services. We have also provided a supplemental presentation for today's Erning's call, which can also be found on the IO website.
For the year with a pay you to answer part one G I.
That's the end of the third quarter, we already had over 55 gigawatts of N type cell production capacity and by the end of this year N type cell production capacity is expected to reach about southern take English.
Competitive capacity structure, leading in the industry recently, our integrated projects and you shouldn't see China started construction. This one the phase two for a total of about 28, Gigawatts wafer cell and module integrated of capacity are expected to start production in the first half of the 20th 20th.
Xiande Li: On a call today from JinkoSolar, Mr. Lee Jendol, chairman of the Board of Directors and CEO of JinkoSolar Holding Company Ltd.
Gener Miao: Mr. General Miao, chief marketing officer of JinkoSolar Company Ltd.
Charlie Cao: Mr. Panty, chief financial officer of JinkoSolar Holding Company Ltd.
In addition, we are optimistic about the growth potential of watch it by solar storage parity in a lot wrong and all of our capacity built up and the development of our energy storage business are progressing steadily.
Xiande Li: Mr. Charlie Tau, chief financial officer of JinkoSolar Company Ltd. Mr. Lee will discuss the JinkoSolar Space in Operations and Company Highlights, followed by Mr. Miao, who will talk about the sales and marketing, and then Mr. Panty, who will go through the financials. They will all be available to answer your questions during the Q&A session that's followed.
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Unknown Executive: This note that today's discussion will continue on forward-looking statements, mid-anders of the Steve Hopper provisions of the U.S, private security education reform act of 1995. Forward-looking statements involve inherent rigs and uncertainties. As such, our future results may be material-related from the views expressed today. Further information regarding this and other rigs as included in JinkoSolar's public fouling with the Securities and If Change Commission. JinkoSolar does not assume any application to update any forward-looking statements, except as required under the abletful law.
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Stella Wang: As now my pleasure to introduce Mr. Lee, Chairman and CEO of JinkoSolar Holding. Mr. Lee will speak in Mandarin and I will translate his comments into English.
So, creating a important milestone in the innovation of our products and our solutions.
Xiande Li: Please go ahead Mr. Lee. [inaudible] We have pleased that we were able to overcome the challenges with this due to market volatility and deliver a stronger quarter. We did so by leveraging our advantages in untyped top-con technology, extensive global operation network, and advanced integrated capacity structures.
As to our leadership in driving and tops.
Type top contact chronology anti popcorn products is expected to capture market share of greater than 70% in the whole industry, achieving an absolute dominance with higher conversion efficiency lawyer industrial validation costs and other advantages we firmly believe popcorn technology.
Well were amended mass driven technical path for now and in the future three to five years their confidence to be ahead of the industry dynamically dynamically by about half a year in terms of a power outage could cost and the products of competitiveness through continuous technology iterations.
Leveraging our integrated capacity.
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As a responsible global company they continue to make progress in sustainable development, that's excellent for farmers in corporate social responsibility, where we saved the hyatt routine from Apple that is outperforming the messenger and payer they accomplish their dedicated to providing clean high efficient and.
Xiande Li: Another model statement grossed margin and net income or increased significantly over years. Total model shimans were approximately 21.4 gigahertz, and increased of the 107.90% year over years. Police silicon costs decreased sequentially, high-inflation and tight products that command a premium account for over 60% of total. Of total model shimans and model shimans to the US market recorded sequential growth in the third quarter or contributing to improve the profitability. Over years, our net income increased by 140.7% to US dollars, 181.4 million, and adjusted net income increased by 215.1% to US dollars, 184.6 million. Related earnings per outage share increased by 188.7% to US dollars, 0.6 to $3. And the gross margin increased from 15.27% to 19.3%.
Reliable solar products and energy storage solutions to more and more countries in the region, making other contribution to global energy transition.
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Before turning it over to Jennifer I would like to go over our guidance for the fourth quarter and a four year about 2023 by the end of 2020 three they expect to mass produce the N type cell efficiency to reach 25, 8%.
Confidence to say that the full year module shipment guidance of 70 to 75 Gigawatts.
N type module accounting for approximately six pay for sense of total module shipments.
Our annual production capacity for mono wafers solar cell and solar module to reach I'd say 590, and 110 gigawatts respectively by the end of this year.
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N type capacity accounting for over 75% of the total capacity.
They expect the module shipments to be about 23, gigawatts for the fourth quarter of 2020 three.
I have confidence we will continue to lead the industry with.
Advanced technology, and a premium high efficiency products.
Thank you Matt.
Total solar some funds were 22.6 gigawatt in the third quarter with module shipments accounting for 95%.
As we continue to improve product quality and the FERC has developed for our client service networks, our brand influence continues to grow.
By end of the third quarter, our all time accumulation of global solar module shipments exceeded 119 gigawatt covering over 190 countries in the region.
In response to market volatility, we are flexible and Jeff sensor geographic mix of our shipments during the quarter the domestic markets in terms of dominant area for our shipments.
For 40% shipments to emerging market remained stable sequentially, while Asia Pacific and in North America increased compared to the last quarter.
We're particularly pleased that the shipments of high efficiency towards the newer modules exceeded 60% of total module shipments as tight.
A new set of Richard its market penetration, especially in China, Middle East and the North America North Africa.
And Asia Pacific.
Thanks to higher efficiency under high added value to customers, how your newer products will still carry a sustainable.
<unk> premium compared to similar P type products and continue to outperform.
Average.
In terms of prices lower upper stream costs have been reflected in market prices, which decreased compared to the second quarter.
Prices declined some clients that have slowed the pace of new orders and some of our existing orders with you later.
However, lower module prices, leading to a greater economic benefits also drove country off the mound, which filled that gap be course caused by delayed orders.
We adjusted prices in the market our strategy to cope with market shifts.
So, let's say solid side, it's real time feedback from clients.
Our order signing moves on Saturday.
As planned with our global like yourself network and the localized customer service infrastructure, we are committed to maximizing the value of the services we provided okay.
Right.
Recently, we signed a 3.6 gigawatt of module supply agreements with entirely new always our core power.
With industry, leading efficiency and reduce the degradation and the temperature coefficient.
He has the bifacial factor outstanding low light performance and unparalleled yield per watt to reduce system lifestyle lifestyle energy costs tied to our new delivers at least a 3% of power generation again to clients.
But she currently.
Climatic conditions in.
In middle East, so accident temperature coefficient and beneficial factor will significantly reduce power generation on the project IRR.
As industry churn price decline and it started to stabilize large scale utility project accelerate as our connections with our great and we expect a new installation record in China. This year.
Relatively high inventory in Europe.
Gradually digested.
And demand remains strong in the U S market of Endesa inflation reduction.
We are also optimistic about the growing solar demand in Saudi Arabia, and the other middle eastern countries to support the energy transition.
With high demand uncertainty and the help of our high efficiency product and services. We are confident that we will expand our market share with that I will turn the call over to Pat.
Thank you Jarrod.
The significant growth in our module shipments.
Decrease in raw material cost as well as our continuous cost control helped our key financial metrics.
<unk> total revenue gross margin operating margin and net margin improved year over year.
At the end of September we declared a cash dividend of <unk>.
One five.
Or for eight days, which is expect to be paid on or around December six this year.
Year.
With the continuous expansion of our global industrial chain market footprint.
And the power of our Florida.
We are confident to maintain a healthy and sustainable profitability.
Our commitment to shareholders.
Let me go into more details now.
Total revenue.
What's full 0.3 6 billion.
Flat sequentially.
Hum.
63% year over year.
Of course margin.
It was $19 three percentage compared with 15, 6%.
In the second quarter.
Xiande Li: [inaudible] Thanks to our leadership in driving and type top-count technology, and type top-count products is expected to capture market share greater than 70% in the whole industry. Achieving absolute dominance, with a higher conversion efficiency, lower industrial liabilities cost, and other advantages, we firmly believe top-count technology will demand a mainstream technical path for now and in the future three to five years. We are confident to be ahead of the industry dynamically, dynamically, by about half-round year in terms of power, output, cost, and product competitiveness. Through continuous technology iteration and leveraging our integrated capacity.
This year and 15.7 percentage in the third quarter last year.
The sequential and year over year increase.
Well, mainly due to the decrease in the cost of raw materials.
Total operating expenses are accounted for nine nine percentage of total revenues.
Compared with 10 six percentage in the second quarter.
This year and 15.4 percentage in the third quarter last year improving year over year.
Income from operations.
It was about 410 million.
Compared with income from operations.
212 million.
In the second quarter.
This year and $8 8 million in the support of last year.
Improving both sequentially and year over year.
Operating margin was nine four percentage compared with five percentage in the second quarter.
This year end.
One three percentage in the third quarter last year.
Improving sequentially and year over year.
Net income.
<unk> attribute to Genco solar holdings ordinary shareholders.
Xiande Li: As a responsible global company, we continue to make progress in sustainable development. With excellent performance in corporate social responsibility, we receive the high-ritting drum apparatus, up-performing the mainstream PV companies. We are dedicated to providing clean, high-efficient and reliable solar products and energy storage solutions to more and more countries and regions, making our contribution to global energy transition.
181, 4 million flat sequentially and compared to $77 3 million in the third quarter last year.
Improving year over year.
Excluding the impact of the change in fair value of the notes.
And long term investments.
And share based compensation expenses. The adjusted net income was $184 6 million flat sequentially and up two times year over year.
Let's move into bad pattern.
Balance sheet.
At the end of the third quarter, our cash and cash equivalents.
Well 1.93 billion compared with 2.35 billion in the second quarter.
Yeah.
Gener Miao: [inaudible] Thank you, Ms. Li. Total solar shipments were 22.6 gigawatts in the third quarter, with module shipments accounting for 95%. As we continue to improve product quality and the further develop our client service network, our brand influence continued growth.
Hey at the number of days.
Were 87 days compared with.
79 days in the second quarter of 2023 inventory turnover days decreased to 67 days in the third quarter from 70 days in the second quarter. This year.
At the end of the third quarter total debt was full point too.
Two 3 billion compared to 4.73 billion in the second quarter this year.
Net debt was 2.29 billion compared to two point.
Three 8 billion in the second quarter this year.
Alright that structure is improving.
This concludes our prepared remarks, we are now happy to take your questions.
Please proceed.
Thank you.
If you wish to ask a question. Please press Star then one on your telephone and wait for your name to be announced.
If you wish to cancel your request. Please press Star then two.
If you are on a speaker phone please pick up the handset to ask your question.
Our first question today will come from Philip Shen of Roth M. K M. Please go ahead.
Hi, everyone. Thanks for taking my question. So you guys had a pretty nice margin in Q3, despite the collapse in module prices. It seems like you've been able to match your cost structure.
With your module pricing. So I was wondering if you could give us a.
Your sense of how you expect module pricing to trend in Q4, and then also Q1 and then also in terms of margins. What do you expect a similar margins in Q4, and Q1 versus Q3 or do you think there could be potential.
Gener Miao: By end of the third quarter, our all-time accumulative global solar module shipments exceeded 190 gigawatts, covering over 190 countries and the regions. In response to marketable utility, we flexible adjusted the geographic mix of our shipments during the quarter. The domestic market became the dominant area for our shipments according to around 40%. Shipments to emerging market remains stable sequentially while Asia-Pacific and the North America increased compared to the last quarter. We are particularly pleased that there are shipments of high efficiency tiger new modules exceeded 60% of total module shipments as tiger new accelerated market penetration, especially in China, Middle East and North Africa and Asia-Pacific.
Margin expansion in Q4 and Q1 thanks.
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Thanks, Howard from order.
But it is.
We're almost finished.
This Congress.
275 Gigawatts.
Regarding the module price.
I mean that some of our trains.
It's a weird.
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Voice in a downward trend.
Gener Miao: Thanks to higher efficiency and the high added value to customers, tiger new products still carry a sustainable, sustainable premium compared to similar P-type products and continue to all perform the industry average. In terms of prices, lower upper stream costs have been reflected in module prices which decreased compared to the second quarter. As prices declined, some clients have slowed the pace of new orders and some of the existing orders were delayed. However, lower module prices leading to greater economic benefits also drove plenty of demand which fueled the gap because caused by delayed orders.
Versus the third quarter.
And because we have more exposures to China Chinese market in the fourth quarter, we expect our gross margin.
Is possibly slightly down quarter over quarter and.
We next year, we believe you know.
The module price, whether it be nice if they stay.
Stabilized.
And.
Regarding the you know it's a it's.
It's very important to wash through the next two years.
Uh huh.
The little coffee, you know as good as possible with some orders in.
Well you know good position I've seen the way we have the largest.
Top kind of capacities and we have the most largest integrated capacities, although China for.
Gener Miao: We adjusted prices and market strategy timely to cope with market shifts and the solid slide is real-time feedback from clients. Our order signing moves on steady as planned with our globalized self-network and the localized customer service infrastructure. We are committed to maximizing the value of products and services we provided to clients. Recently, we signed 3.6kW module supply agreement with entire tiger new with upper power which industry leading efficiency reduced the degradation and the temperature coefficient enhanced the bifacial factor of standing low-light performance and unparalleled yield per watt to reduce system lifetime energy cost.
For the U S market.
We expect to have over 30% shipments to them.
European market.
Has the market together.
And.
What do you think we are aiming to over 85% shipments.
Topco next year.
So the.
Our confidence.
A lever relatively better performance compared to our peers, Yeah next year.
Yeah.
Got it okay. So.
Our Q4 margin could be down slightly because of the China mix and in Q1.
Perhaps you could have some.
Expansion beyond so grocer or expansion of the margin that you wanted to.
Gener Miao: Tiger new delivers at least a 3% of power generation gain to clients. Particularly ended the climate conditions of data every IE Middle East. The excellent temperature coefficient and bifacial factor will significantly raise power generation and the project IR. As industry chants, prices declined and started to stabilize.
It's too early to say, but you know this year our performance in the U S market is not so good because you know the module was delayed no. It depends and we expect next year everything is getting younger.
This schedule and the margin contribution from the U S market as well.
You know the clients.
Gener Miao: Large-scale ITZY project accelerated connection to the grid, and we expect a new installation record in China this year. Relatively high inventory in Europe is being gradually digesting and demand remains strong in US market and under the inflation reduction act. We are also optimistic about growing solar demand in Saudi Arabia and other middle east countries to support energy transition. With high demand certainty and the help of our high-efficient products and services, we are constant that we will expand our market share.
Significant you know starting from next year.
Okay.
Are you mentioned, Charlie just now the U S shipments and so I was wondering in Q3.
Was there a large benefits in margin.
From.
A healthy amount of U S shipments because you've been able to be released from detention very quickly.
So.
Our next year, you know I think in the past you were talking about 10 gigawatts of shipments.
For the U S market and 24.
Charlie Cao: With that, I would turn the call over to Pat. Thank you, General. The significant growth in our model shipments increased in raw material cost, as well as our continuous cost control, helped our key financial metrics, including total revenue, gross margin, operating margin, and net margin, improved year-to-year.
And in your Powerpoint today, you highlighted 12 plus.
By year end 'twenty.
'twenty three integrated capacity. So do you think 24 could actually be closer to 12 gigawatts.
And.
Oh, well, we can leave it there thank you.
Yeah next year, Yes, Charlie is.
Over a 10 day box shipments in the U S market.
Charlie Cao: At the end of September, we declared a cash dividend of $1.5 per ADA, which is expected to be paid on all around December 6 this year. With a continuous expansion of our global industrial chain, market footprint, and the power of our products, we are confident to maintain a healthy and sustainable profitability, meeting our commitment to shareholders. Let me go into more details now. Total revenue was 4.36 billion. Flex sequentially and up 63% each year.
And that's our target.
The contribution you know, earning contribution from U S market in the third quarter.
<unk>.
Good because we shift around 1314, gigawatts, but most of the modules.
<unk> produced six to nine months is a telco.
And.
So, let's say with a high cost and including the storage cost.
Back to your question on the.
It's improving quarter by quarter I believe you from the beginning of next year.
Hum.
The earnings power from the U S will be significant 14 cool.
Yeah.
Got it so you were able to generate 19% margin in Q3, despite the higher storage costs in Ohio, right now right.
Charlie Cao: Gross margin was 19.3% compared with 15.6% in the second quarter this year and 15.7% in the third quarter last year. The sequential and year-to-year increasing were made due to the decrease in the cost of raw materials. Total operating expenses of a county pool 9.9% of total revenues, compared with 10.6% in the second quarter this year and 15.4% in the third quarter last year, improving year over year. Income from operations was about 410 million compared with income from operations of 212 million in the second quarter this year and 8.8 million in the third quarter last year, improving both sequential and year over year.
Yes, yes, that's very interesting one last question and I'll pass it on.
Can you compare the pre impairment margins in Q3 versus Q4.
Actually.
In other words, what is the like for like margin trajectory.
Yeah.
It means the income and margin.
Yeah.
Margin, including.
Right.
We're totally proud.
And parents.
I know I know and we did have some common inventory in coming years second Florida by the end of the June.
So we don't expect any.
Oh.
Most significantly the impoundments for both third quarter and.
In the fourth quarter, we don't expect.
Everything is ordered and good positioning in the well.
If you do classes pretty nice comp.
Yeah.
Our ASP was.
Charlie Cao: Operating margin was 9.4% compared with 5% in the second quarter this year and 0.3% in the third quarter last year, improving sequential and year over year. The income attribute to JinkoSolar Holdings, ordinary shareholders, was $181.4 million flat sequentially and compared to $17.3 million in the 12 quarter last year, improving year-to-year, excluding the impact of a change in fair value of the notes and long-term investments and share the best compensation expenses. The adjusted income was $184.6 million flat sequentially and had two times year-to-year.
Is this more of a market price.
We expect the inventory.
Impairment.
Great. Okay. Thank you for all the detail that's right. Thank.
Thank you.
Again, if you have a question. Please press star and then one our next question today is from Brian Lee of Goldman Sachs. Please go ahead.
Hi, Thanks for taking the questions. This is grace on for Brian.
My first question is just a follow up to the ask your questions earlier I'm. Just wondering if you can talk about the ASB trends by maybe end market and by a different geography.
Just asking because we have heard that some of the markets like especially the DG market.
<unk> really high channel inventories so can.
Can you provide a bit more color on the ASP trends.
And I have a follow up.
Charlie Cao: Let's move into balance sheet. At the end of the third quarter, our cash and cash equivalent were $1.93 billion compared with $2.35 billion in the second quarter. AR to over days were 87 days compared with 79 days in the second quarter of 2023. Even 3 to over days decreased to 67 days in the third quarter from 70 days in the second quarter this year. At the end of the third quarter total debt was 4.23 billion compared to 4.73 billion in the second quarter this year. Net debt was 2.29 billion compared to 2.38 billion in the second quarter this year. Our debt structure is improving.
Yeah sure normally we normally we see DG market is really to say, yes. He hires on utilities, that's what people are saying, but at the current stage, we see a special situation your U S market, especially right. So the U S market.
Course of many visa says a DG market.
More pressure Sanjay your kids market assess what we have observed.
I think personally we believe a very important reason is because of the let's say, it's a supply side right. So if the supply side that you saw using a fully traceable a nice favorable material or if they are just no play so opportunity game on the spot market or.
I guess, that's one of the reason why do we see you know I just saw oversupply in the U S. D C market in such a short term for the rest of the world and we believe we believe DG market is.
Operator: This needs to take your question. Operator, please proceed. Thank you. If you wish to ask a question, please press star then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you are on a speaker phone, please pick up the handset to ask your question.
Relative to the house, so we still see a strong DG market.
For example in Europe right now there are some pressures from the human side, but in the long term, we are still a big fan of European market No matter. It's D. J E. T. So are we we believe as the pre remarks to speech, we have toward is starting digesting or it will take some time, but it will be.
Philip Shen: Our first question today will come from Philip Shen of Roth MKM. Please go ahead. Hi everyone. Thanks for taking my questions. You guys had a pretty nice margin in Q3 despite the collapse in module prices seems like you've been able to match your cost structure with your module pricing. So I was wondering if you could give us your sense of how you expect module pricing to trend in Q4 and then also Q1 and then also in terms of margins. What do you expect? Similar margins in Q4 and Q1 versus Q3 or do you think there could be potential or even margin expansion in Q4 and Q1? Thanks.
Be there that's what we believe.
Great. Thank you and then my second question on your shipment Guy Your <unk> shipment guide of 23, Gigawatts kind of implying a flattish quarter over quarter growth, but I think historically your forecast more is much higher than through Qs is it is it driven by the orders delayed out you referenced on the prepared.
Remarks are or is there something else and also can you quantify how much of what the how much of the delay was that and do it when do you expect those orders to come back.
Yeah. Thank you Oh, sorry, we are really to provide a relatively conservative numbers. The wishes are I think it's a it's a high end of our annual guidance too.
Which will be around 75 gigawatt still on the order book side that we have you know more than what we need them, but we still have some supply bottleneck. That's that's one of the reason why we continue to expand our capacity try to fulfill orders commitment to where I'm, making so overall.
Charlie Cao: Hey Philip, this is Charlie. The market is very good. You know, in the first five months it's including the third quarter and thanks our strong order for the better days. We almost finished this year's target in the two or three or five big ones. Regarding the module price, the trend is, I mean, it's on the word trend, and we are expecting, you know, the SP, you know, in true voice, in the downward trend, which is the third quarter.
We'd be where we are.
I'm fully confident that the way we are we can be to our let's say guidance if needed a it depends on the supply side and our market trends and.
Your follow up question is about the if you are talking about next Q1 next year. So all of that book again.
Again for this.
Charlie Cao: And because we have more spoilers to China's marketing for the fourth quarter, we expect the growth margin. It's possible, it's slightly time, quarter or quarter. And next year, we believe, you know, the module pipes will be relatively stable lines. And regarding the, you know, it's very important for us to next year, you know, we look up, you know, as quickly as possible, the sales orders. And we are, we're in a good position, I think we have the largest end time in top-con capacities.
Our next year's total demand side, and we are fully confident that the market will go up by another 20, <unk> 25 per cent compared with.
'twenty two 'twenty three.
Sure.
The key market, we still believe the high quality and the high efficiency.
N type top comm paradox still in some of the I said somehow shortage.
That's why we still have the confidence that we will continue to build up our order book and extend our market share next year.
Okay. Thank you I'll pass it on.
Thank you.
Again, it is star and then one to ask a question.
Charlie Cao: And we have the most largest integrated capacities out of China, you know, for US markets. And we expect to have over 30% sharements to European markets and the US markets together. And we are aiming to over 85% sharements of top-con next year. So we are confident we can deliver relatively better performance compared to our peers next year. Got it. Okay. So Q4 margin could be down slightly because of the China mix.
Our next question will come from Roger Chowdhry of intrinsic edge capital management. Please go ahead.
Good morning, and congratulations on a very strong quarter in what was a very difficult environment for the industry.
I have a few questions.
I want to stop asking if there were any yeah charges inventory related charges.
And the gross margin number in the second and the third quarter.
[noise].
Hello Roger.
The answer is no.
Okay and was there any charges in the selling and marketing our general and administrative expenses that were one time expenses.
Charlie Cao: And then Q1, perhaps you could have some expansion beyond growth or expansion of the margin Q1 and Q2. It's already to say, but, you know, this year, our performance in the US market is not so good. Because, you know, the module was delayed, you know, it depends. And the expect next year, everything is getting on the schedule. And the margin contributing from the US market will, you know, be quite significant, you know, starting from next year.
Yes.
Okay.
Yeah, what are there any one time charges in the SG&A.
The line items.
Oh, we do have some you know.
Roxanne I think maybe 10 to 25 minutes.
One of our pool for some.
No favours litigation.
Turning to our long hauls.
Module contracts.
A long time ago, so it's a long time.
Charlie Cao: Great. Okay. Thank you. You mentioned Charlie just now the US shipments. And so was wondering in Q3, was there a large benefit in margin from the healthy amount of US shipments because you've been able to be released from the tension very quickly. And then also next year, I think in the past, you were talking about 10 gigawatts of shipments. For the US market in 24. But in your PowerPoint today, you highlighted 12 plus gigawatts by year and 23 of integrated capacity.
I figured you onno trainee expenses not being as G&A expenses, we do have some.
No.
So with Ya man well off shots.
Okay.
And.
Going back to the gross margin.
I'm trying to understand what your Oh, what's your.
Cost of polysilicon was for the quarter and.
The number I'm coming up with is around $16, an average of $16 per kilo.
All right.
And then maybe.
Charlie Cao: So do you think 24 could actually be closer to 12 gigawatts? And we can leave it there. Thank you. Next year, yes, Charlie is over 10 gigawatts of shipments in US market. And that's our very target. And the contributing, you know, earning the ability from US market in third quarter is not good because, you know, we shipped around 1.3, 1.4 gigawatts, but most of the modules was, you know, produced six to nine months ago, and it was a very high cost and including the storage cost.
No Chinese policy.
Understood.
Is that right.
Rajeev well, we don't disclose the number but are you at.
Looking at the index and the China Poly roughly I assume in a range of.
A 60 RMB per kg to 19 RMB per kg.
Charlie Cao: So back to the question, it's including in a quarter-by-quarter, I believe you from the beginning of next year, and the earning power from the US will be lasting never can for Jinko. Got it. So you were able to generate 19% margin in Q3, despite the high storage cost and the high. All right. Yeah. That's very interesting. One last question, and I'll pass it on. Can you compare the pre-imperiment margins in Q3 versus Q4 actuals?
But the honest southern that although China has kind of answer.
Hi, Thanks, two to five five times compared.
Compared to China, it's different.
The price mechanism.
Yeah.
Yes, absolutely.
<unk> energy reported there our ASP for the quarter was actually $7 60.
So that is actually closer.
Closer to 50, a RMB per kg.
Okay.
Yeah, you're right you're right.
Okay.
Well, there's a public and index right for the pilot and.
The textbook business, but the.
Thinking about we have the right inventory tomorrow days is roughly six days or 80 days, we have production lead times. When you think about the time difference.
Do the calculation.
Charlie Cao: In other words, what is the like-to-like margin trajectory? Do you mean the income and margin? Oh, the margin, including in Q3? Right, the margin. We don't have a pre-imperiment. I know, I know. And we did have some income and inventory income in the second quarter by the end of the June. So we don't expect any additional or significant impoundment for both the third quarter and the fourth quarter. We don't expect, and everything is ordered.
You can do the calculation based on the train.
The detail.
The numbers I think we have the supply chain advantage compared to the market, but we have different mix center.
The U S market versus them.
The market out of our U S.
Deposit pricing difference.
So Charlie is.
Is it fair to say that because you'll have 60 to 80 days of inventory that your poly prices are always lagging the spot market by 60 to 80 days.
Yeah, Yeah yeah.
Turning to the U S submission based on that.
Charlie Cao: And we are in good position, and we believe our price is pretty nice if you compare our ASP with the small market parts, and we don't expect the inventory, you know, impoundment. Great. Okay. Thank you for all the details. Oh, that's nice. Thank you. Again, if you have a question, please press star, and then one.
Okay.
My other question is about competition.
Competition.
And at the prices, where our modules are right now what percentage of the industry players between tier two and tier three do you think are losing money right now and and what percentage of these companies are cutting back on their production because they had been out there the pricing is below there.
Grace: Our next question today is from Brian Lee of Goldman Sachs. Please go ahead. Hi, thanks for taking the questions.
Basketball.
Yeah, well you know.
Uh huh.
For the.
We have seen this situation.
Charlie Cao: This is Grace on for Brian. I guess my first question just to follow up to the ASP questions earlier. I just wonder if you can talk about the ASP trends by maybe end-market and by different geography. Just asking because we have heard that some of the markets, like especially the DG market, have seen really high-tenile inventory, so can you provide a bit more color on the ASP trends? Thank you. And I have a follow-up.
Situations recent single ounces.
With different utilization rates for different players in the industries.
Tier one integrated companies.
Jim could we have you know.
Order visibility is.
We're a good mix for the entire versus tea time.
And then we have good man and the management of costs.
So for some orders with relatively low class well able to continue to delever.
Charlie Cao: Yeah, sure. Normally, we see a DG market that is relatively ASP higher than utility. That's what people think. But at the current stage, we see a special situation in the US market, especially. Right, so the US market requires of many reasons. The DG market is more pressured than the utility market. That's what we have observed. I think personally, we believe very important reason is because of the supply side. So if the supply side is using a fully feasible, I say, raw material, or they are just, you know, play the opportunity game on the small markets.
I think the.
Yeah.
Variable margin or gross profit from it as well.
It was a tier two insurer city pairs, even some you know let's.
Let's say that yeah, not integrated not international companies, they are reducing their utilization rates.
So it's a it's going to be different.
We're going to be a difference in the.
Situations and so different companies I think it is generally one of the top top top tier company, where I was taking the advantage to gain more market shares.
Yeah.
Yeah.
Right right do you see that happening already that are tier.
Tier three companies are cutting back their production right now.
Charlie Cao: I guess that's one of the reasons why we see, you know, I just oversupply in the US DG market in such short term. For the rest of the world, we believe that the DG market is relatively healthy, so we still see a strong DG market. Even, for example, in Europe, right now, there are some pressures from the human society, but in the long term, we are still a big fan of European market, no matter it's DG or E2. So we believe that the pre-remarked speech we have is starting digesting, so it will take some time, but it will be there. That's what we believe.
Yeah. There you are doing you know you're kind of leaning towards tier two tier three.
Sure.
No.
Yeah.
Lowers their utilization rates.
So so does these devoted to think that your asps are.
Are going to be much higher than the spot market prices.
You are selling into the utility market, which is more contract driven and a lot of the spot prices that you see companies are sending into really our fire sales.
Yeah.
It's fair to say that but you know different companies have different mix of different countries and different mixes to the D. G Richard utilities.
Charlie Cao: Great, thank you. And then my second question on your Shipman guy, your 4Q Shipman guy of 23 gigawatts, kind of implying a flatish quarter of a quarter growth, but I think historically your 4Q is much, much higher than 3Qs. Is it, is it driven by the orders delayed at your reference on, on the preparing marks or, or is there something else? And also, can you quantify how much about the, how much what, of the delay was that and, and do, when do you expect those orders to come back?
Different product mix so.
I think you know put genco real confidence in Dubai.
Bind together.
Our small.
Module price is relatively higher than the market price.
It's not market basis for quite a few C U E.
So from the.
Public you know what.
Life Science.
Charlie Cao: Thanks. Yeah, thank you. So we are really to provide a really to conservative numbers that, which is, I think, is the high end of our annual guidance to, which will be around 75 gigawatts. Still, on the other side, we have, you know, more than what we need, but we still have some supply bottleneck. That's one of the reason why we continue to expand our capacity, try to fulfill all this commitment we are making.
Charlie can you also talk about what was the level of depreciation in the third quarter and AR and the EBITDA for the third quarter.
I see we have just coastal either.
So, including the detailed breakdown in the UK.
You can look at.
I think.
Pvp.
If I look at the PBT and we have detailed numbers, it's roughly <unk>.
600 million in U S Thanos.
Charlie Cao: So overall, we are, we are fully confident that we can beat our, let's say, guidance if needed. It depends on the supply side and the market trend. And your follow-up question is about, if you, you're talking about next QA or next year's order book, again, for this next year's total demand side, we are fully confident that the market will go sub by another 20, even 25 percent, compare with 2023. So in the key market, we still believe the high quality, in a high, if efficiency, and type top-com product is still in some of the somehow shortage. That's why we still have the confidence that we will continue to build up our order book and extend our market share next year.
If I look at the details including your calculation.
I see okay, sorry, I have not had a chance to look at that.
Can you also talk about what.
Yeah.
<unk> of the of the market.
Not a gene called battery market this year will be popcorn.
And what's the percentage will be next year.
In terms of you know how much the quantity produced by the other company.
Okay.
This is a as you.
You know the first year for when times are tough.
You are penetrating the market.
But assuming that the overall of the market size is.
20% to 25% this year by the way did over 60% and.
Next year, it's possible and time will occur.
Achieve 60%, 70%, but we are able to achieve I think over 85%.
Hello.
Unknown Executive: Okay, thank you, I pass it on. Thank you. Again, it is star and then one to ask a question.
So if the market this year and over 400 gigabit.
Gigawatts you think that top Congress there is over 100 gigawatts.
Rajiv Chaudhri: Our next question will come from Rajiv's salary of intrinsic edge capital management. Please go ahead. Good morning, and congratulations on a very strong quarter in what was a very difficult environment for the industry. I have a few questions. I want to start by asking if there were any charges, inventory related charges in the gross margin number in the second, in the third quarter. Hello, Rajiv. The answer is no. Okay, and whether any charges in the selling and marketing or a general and administrative expenses that were one-time expenses. Yeah, were there any one-time charges in the SGNA of my items?
Yeah.
Uh huh.
So there are lots of fall off.
For roughly we estimate the total our industry I'll put up the top comp well.
In this year will be somewhere around the 100 to 110 gigawatt and so across very interesting cold will contribute around 70 gigawatt ish. So next year. It's a number it definitely will be more than double that for the total industry. So we're expecting somewhere around a 400 gig.
But definitely the genco will it take a.
Main part or better but are definitely not as big as this year.
Right, Okay, Okay and finally.
Finally, one last question on the interest bearing debt you made the point that the interest bearing debt came down in the third quarter is that something that we should expect will continue in Q3, Q4, and Q and Q1.
Charlie Cao: Hello, we will just have some, you know, Well, roughly, I think maybe 20 minutes, 25 minutes. One of the poor for some, you know, private litigation regarding the one of the module counter-long time ago. So it's one time. I think it's in the other operating expenses, not in the GNA expenses, but we did have some, you know, this 20 minutes, you know, law of charge.
Yeah, we have a gradually decreases the.
With that because our earnings increase.
Congratulate the operating cash flow for the company, we generated I think kilometers this year.
The first nine months is it's around 11 billion RMB.
Operating cash flows.
Yeah.
Improvements, so that's where the leverage the total that we're expecting to come through.
222.
Rajiv Chaudhri: Okay. And going back to the gross margin, I'm trying to understand what your cost of polysilicon was for the quarter. And the number I'm coming up with is around $16 on average, $15 per kilo on average bend between Chinese polysilicon and U.S, polysilicon. Is that a fair estimate? Well, Rajiv, we don't discuss the number, but you can look at the index and China poly roughly, I think, in the range of $60 on B per kg to 90 on B per kg.
Let's say that.
Decrease.
Nebraska.
Thank you and congratulations again.
Okay.
Please press Star and then one to ask a question.
Again it is star then one to join the question queue.
Our next question today will come from Alan Law of Jefferies. Please go ahead.
Thank you.
So first of all congratulations to the company and the very impressive results in <unk> and despite the.
P S I actually happening.
Rajiv Chaudhri: And by the polysilicon out of China, it's kind of, I think, two to five times, you know, compared to China. It's a different, you know, the price, you know, making them. Yeah, actually, DQ energy just reported their ASP for the quarter was actually $7.60. So that is actually closer to 50 RMB per kg. Yeah, you're right. You're right. You can't, you know, there's a public index, right, for the poly. And the tax relations, but think about, we have the, we inventory tomorrow dates is roughly 60 to 80 days.
Climbing profit quarter over quarter.
So some of the questions on the details as to what Oh, how is the U S shipments situations.
So how.
How much has the company shipped to the U S and what's the view on <unk> shipment to the U S and has to custom inspection improved etcetera. Thanks.
Yeah.
Yeah, we were just talking about the earnings contribution from the U S for Genco in Southern Florida.
And.
You know we have smooth as you know.
The parents with CBP.
Starting from July.
And the Q4 weighted roughly 1.31 comfortable gigawatts.
Rajiv Chaudhri: We have production need times, right. You need to think about the time difference and to do the calculations. But you can, you can do the calculation based on the trend, but the detail, you know, the numbers, I think we have the supply chain at the wallage compared to market price, but we have different mix for the U.S, market, which is the, you know, the market out of U.S., it's the polyprices difference.
Expecting stable shipments.
<unk> Q4 versus Q3.
Because you know not on inventory with.
Yes.
Yeah.
The thing you know.
First half a year. So we shifted our rest of the time Warner I mean sort of Florida and fourth quarter are we know our production returned to normal.
No no moral standards.
Let me shift to reshape the similar numbers.
Rajiv Chaudhri: So, Charlie, is it fair to say that because you have 60 to 80 days of inventory, that your polyprices are always lagging the spot market by 60 to 80 days? Yeah, you can, you can do the, you know, estimation based on that.
Contributions, earning contributions.
More of a quarter improves third quarter their contribution is not so great not so big because of the human food produce six or nine months or so ago.
Cost storage costs production costs.
Charlie Cao: Okay. My other question is about competition at the prices where modules are right now. What percentage of the industry players between tier two and tier three? Do you think are losing money right now? And what percentage of these companies are cutting back on their production because they are below, the pricing is below their cash cost. We have seen this situation in recent months for different utilization rates for different players in industries.
Hi.
Next theory, where express team.
With some earnings from Simmons.
Okay.
And is it so.
What you mean is because you have locked in that that the.
Module price through.
Contract and then as the input prices declining so would you expect U S a market you'll actually.
Ill be improving a lot from genco perspective right.
Yeah. It's no if you look at the market the market.
So it's hard because there's a.
Charlie Cao: For the Tier 1 integrated companies, I like JinkoS, we have in order for the better it is a very good mix for the end time, which is three times, and we have good management and cost. So for some orders with relatively low price, we are able to continue to deliver, I think, the renewable margin of cost per per per per[inaudible] Right, right. Do you see that happening already that the dear three companies are cutting back their production right now?
This was.
To us only as it can be supply from the <unk>.
Although China there is.
It's a L P S issues for the industry.
Mouse monsters, and 14 cost specifically because our inventory.
Whereas produce long time ago, and we go.
Okay.
Yes.
Whereas moose and starting from July.
The older relatively older inventory that causes very up higher so earning gross margin contribution.
This is more for third quarter.
Going forward, we expect to.
No.
The earnings contribution will be you who weren't accretive.
For the quarter by quarter.
Next year Q1 will be.
Yes.
Sure.
And I think that is very positive point that a lot of investors.
<unk> has not fully appreciated this thanks, a lot for the clarity on this and then my next question is.
So everyone has been talking about the inventory in Europe. So how do we see it and of around how many days or months of inventory we have in Europe.
Charlie Cao: Yes, they are doing the utilization for tier 2, tier 3 in their lower their utilization rate. So, it is reasonable to think that your ASP are going to be much higher than the spot market prices because you are selling into the utility market which is more contract driven and a lot of the spot prices that your three companies are selling into really are fire sales. So, it is fair to say that, but you know different companies have different mix to different countries and different mix to the DG with the utilities and different products.
Yeah.
Yeah.
Yeah.
Yeah, so approximately in Europe market is that a man.
D G based on market so in that kind of the Sacramento in my opinion and tests are normally around two months after.
Local inventory plus or the logistic time, maybe one month to one.
Half-mast should be reasonable so total together, if you're taking from the manufacturing point of view all average or you could take us three to three and half months. After walliams. That's the that's a normal or let's say the standards inventories across every one if you look into the centers.
Charlie Cao: So, I think, you know, for Jinco we are confident and we are combined together in our small module price is relatively higher than the market price. [inaudible] This is the first year for end-time talks to penetrate the markets and the overall the market size is 25% this year, but we did over 50%. Next year, it's possible end-time will achieve 60%, 70%, but we are able to achieve I think over 85%. So, if the market this year is over 400 gigawatts, you are saying that top corn this year is over 100 gigawatts?
Point or distributors points, you know that's normally IRA approximate to myself documentary.
Yeah.
So you would think.
Last fall, we are sexually at two months and.
Sure.
Oh, no no right.
No no no no I'm, saying for D. G based distributor generate day that.
Three of the market.
The market standard, let's say right.
Currently it's definitely hit US, especially you mentioned that Europe, I think you know that the because of the prices falling Sars are the end customer is having some hesitation to weigh tend to the market price coming to us at a lower level, so that slowed down the let's say the south wall.
At the end the customer side, that's the reason why from the channels or the human freeze point of view you know, it's a human face higher than let's say a normal situation.
However, in my opinion to end customers or end market and demand is still there, but it's just to create some hesitations.
I I I believe that it takes maybe one two more months time to observe digest all the inventories across our whole channels, but the demand is still robust in Europe.
Yeah.
Understood.
So could.
Could you share your view on the utility side of things in Europe, because because I think people have been focusing a lot on.
Deepak DG market in Europe, and actually inventory is mostly related to D. G, but how about just city market in Europe.
And utility segment not only in Europe other across the whole globe. There's barely any inventories are really inventory right. So most of the inventory and the utility segment as more you'll know bill.
Charlie Cao: Let me take it at the last of all off. So, roughly, we estimate the total industry output of the top corn in this year will be somewhere around 100 to 110 gigawatts. And so, across which Jinko will contribute around the 70 gigawatts. So, next year, the number definitely will be more than double for the total industries we are expecting somewhere around 400 gigawatts. But definitely, Jinko will take a main part of it, but definitely not as big as this year. Right.
They tend to just goose deliver outside but it's not a free inventory you can redirect to sell to others or I saw that.
That's why I, even accounting basis, it just defined as inventory, but just from a sales point of view. It is not available to sell right. It's just a way of telling you that right timing or he's on the way to the destinations right.
That's why not only Europe, but across our whole war, that's more or less the situation utility even if there's some inventory or the accounting basis, but it should not be a risky.
Too much.
Yes, I see your point I think.
Charlie Cao: Okay. And finally, one last question on the interest-bearing debt. You made a point that the interest-bearing debt came down in the third quarter. Is that something that we should expect will continue in Q4 and Q1? Yeah, we are gradually decreasing the debt because our earnings increase gradually here. Now, putting cash flow for each company will generate, I think, a little longer this year, for the first nine months, it's around 11 billion RMB, operating cash flows. That's significant improvements. So, for the leverage, the total debts were expecting to continue to, to, to, to, to, let's say, the decrease several and several.
I'd like to know how is the demand in utility side of things like are you actually in Europe as well because this will be the decline in module prices stimulate more installation in the utility side.
Unknown Executive: Great.
Hi.
Yeah. It was the interest yes.
Yes, so far.
Firstly, the demand side definitely we see there some more attractive.
For the end customer to continue to develop more solar projects are in the utility segment that requires I R is becoming more and more and more attractive.
Attractive yield is higher and higher. So however, you know it's a it's a cycle race or with your bathroom project. It doesn't happen I'd stay why it takes 12 months 18 months, sometimes even 24 months, even more to to have all of this are in the two.
To finish off with the whole development cycle, you will even though early financing to close the financing part of it to be ready to place orders to the module side. So it takes a pretty long cycle.
So my simple answer is yes, we see a very promising future.
Both U S and the Europe, but it takes some time to to have you know all the pipe price released to become a real order for for the manufacture of extreme cold.
And secondly for your question is regarding <unk>.
Sorry, I forgot your second question.
How does that compares AP, increasing interest rate because in some of the earnings call.
Unknown Executive: Thank you. And congratulations again.
U S. Yeah, because banks like Jpmorgan and bank of America, saying that Oh the.
Operator: Please press star and then one to ask a question. Again, and a star and then one to join the question, Q.
Allen Lough: Our next question today will come from Allen Lough of Jeffries. Please go ahead. Thank you.
Charlie Cao: So, first of all, congratulations to the company in their very impressive result in free kill and despite other peers actually having declining profits quarter to quarter. So, some of the questions on the details as to whether how is the U.S, shipment situation? So, how much has the company shipped to the U.S, and what is the view on 4Q shipment to the U.S, and has the custom inspection improved, etc. Thanks. We just talked about the early contribution from the US for Jinko in Sir Porter.
The increase in interest rate and also.
Thank you.
Great.
Hi, randomly track with.
Some customers I won't say, that's 100% but.
Checks some key clients of us and most of them are their feedback is ER positive sort of because.
For the existing projects either.
If there are there financial is closed so normalized they secure a fixed the interest rate across the whole lifecycle of their projects investment cycles. So for them, it's a safe and even with our module price coming down and they have a more that's a return for their investment.
Charlie Cao: And, you know, we have smooth, you know, the currents, let's say, with CBP, starting from July, and Q4, we delivered roughly 1.3, 1.4 kilowatts, and we were expecting stable, you know, Q4, which is Q3. And because, you know, a lot of inventory was, you know, was detained, you know, in the first half of the year. So we shift aggressively high volume in Sir Porter, and Q4, we are producing, you know, return to almost planning, you know, no more standards, and we shift to, we shift around to similar numbers.
Interest rates doesn't hurt the SAP part and for the ongoing projects would be of course, a M and the interest rates are higher and most of the clients I can pass it.
The majority of the interest rate a higher interest rates caused us to the end customers as well as the PPA customers before.
I sign a more attractive PPA price than before.
Definitely there won't be 100%, but that's my I shared that points out from the customer feedback.
Thank you. Thank you.
On the part of the some of the cases may happen.
So I think Oh My final question, there will be a in relation to what is your view on what is the progress of your U S expansion.
Charlie Cao: But contributions, early contribution will, Q4, by Q4, improves. So Q4, the contribution is not so big, not so big, because of the inventory was, you know, produced six or nine months ago. This cost, storage cost, production cost is relatively higher. But next year, we are expecting with some earnings, you know, from US instruments. And so, what you mean is because you have locked in the module price through the contract, and then as the enterprise is not declining.
Capacity and what is your view as if now as to the chance of getting DIR as subsidies because there has been quite a lot of.
A market check this has to be some lobbying happening in Washington et cetera to target.
Okay. He's Chinese place so would like to know do you have an update on dose.
Okay.
Well, we don't have a.
Here, we are waiting for this.
Detailed guidance official detailed guidance released as well so I think that is still not finalized yet so we're waiting for that as well but for.
Charlie Cao: So, you expect US market will actually be improving a lot from general perspective, right? Yeah, it's, you know, if you look at the market, the market, the module price is high, because it was, it was only can be supplied from the capacity out of China. There is a new FLTA issue, you know, for the industry in the last few months, and for China specifically, because our inventory, you know, was produced a long time ago.
For the U S market, where we believe it's a very promising market and we're still holding our bullish position is on that and we are trying to do whatever we can to serve the U S market, but we will we'll take more actions was August details got released.
And so you are planning to complete by the end of this year right.
Well, we will see well, let's say back to the previous past state to what we have and if there are.
If your question is regarding whether we have a new plant that we have to wait 10 to the detail.
Charlie Cao: And we get the process, the worst moves, and starting from July. And the, the old, relatively old inventory, the cost is very higher. So, earning, and it goes smart, and contribution is, is more for third quarter, but going forward, we expect to, you know, the earning contribution will be improved, work quickly, quarter by quarter. And next year, it will one will be, you know, work position. And I think that is very positive point that a lot of investors have not fully appreciated this.
That's really okay.
Okay. So your plant in Jacksonville, one gigawatt plant will be completed on time right.
Got it got it.
Yes.
Okay. Thank you thanks a lot.
At this time, we will conclude our question and answer session.
For any additional questions. Please contact IR at Chico's solar dotcom.
The conference has now concluded we thank you for attending today's presentation and you may now disconnect your lines.
Charlie Cao: Thanks a lot for the clarity on this. And then my next question is, so everyone has been talking about the inventory in Europe. So, how do we see it, and around how many days or months of inventory we have in Europe? Yeah, so approximately in Europe market, that's, I mean, DG based market. So in that kind of the segment, in my opinion, that's normally around two months of the local inventory plus the logistic time maybe one month to one, one and a half months should be reasonable.
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Charlie Cao: So totally together, if you're taking from the manufacturer point of view on average, it should take a three to three and a half months of the volumes, that's a normal, or let's say the standards, inventories across everyone. If you're looking to the seller's point or distributor's point, you know, that's normally approximate two months of the inventory. So you think the current level is actually at two months and it is actually a novel, right?
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Charlie Cao: No, no, I'm saying for a DG based distributor generated a driven market, that's the market standard let's say, right? As the current data, especially you mentioned Europe, I think you know that because of the prices falling, so the end customer is having the hesitation to wait until the market price comes into the lower level, so that slowed down the let's say the sales volume at the end customer side. That's the reason why from the channels or the human trees point of view, you know, the inventory is higher than the normal situation.
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Charlie Cao: However, in my opinion, the end customer, the end market and demand is still there, but it's just to create some expectations. But I believe it takes maybe one, two, more months time to observe, digest all the human trees across the whole channel, but the demand is still robust in Europe.
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Charlie Cao: Understood. So could you share your view on the utility side of things in Europe? Because because I think the people has been focusing a lot on a DG market in Europe and actually inventory is mostly related to DG, but how about the city market in Europe? In utility segment, not only in Europe, but across the whole globe, there's barely any human trees, a real human tree, right? So most of the human trees under the utility segment is more, you know, build a way to ensure the goods deliver outside, but it's not a free inventory, you can redirect to sell to others, right?
Charlie Cao: So that's why even accounting basis, it is defined as inventory, but from a sales point of view, it is not available to sell, right? It's just the way that you're the right timing or it's on the way to the destinations, right? That's why not only Europe, but across the whole world, that's more or less the situation in utility. Even there's some inventory as an accounting basis, but it should not be risky too much.
Charlie Cao: Yeah, I see a point. I think we would like to know how is the demand in utility side things like in US or in Europe as well, because we would decline in module prices, stimulate more installation in the utility side, and how does that compensate with the interest? Yeah, so firstly, the demand side definitely, we see there's more attractors for the end customer to continue to develop more solar projects in utility segment, because IR is becoming more and more attractive, the yield is higher and higher.
Charlie Cao: So however, you know, it's a cycle, right? So when you develop a project, it doesn't happen as day one, it takes 12 months, 18 months, sometimes even 24 months, even more, to have all the, you know, to finish off the whole development cycle, even, you know, early financing to close the financing part to be ready to place orders to the module side. So it takes pretty long cycle. So my simple answer is yes, we see a very promising future, both US and Europe, but it takes some time to have, you know, all those pipelines released to become a real order for the manufacturer at Jinko.
Charlie Cao: And secondly, for your question is regarding, sorry, I forgot your second question. So how does that compensate the increasing interest rate? Because in some of earnings call in US, yeah, because banks like JP Morgan and Bank of America are saying that the increasing interest rate and also, yeah. I randomly check with some customers. I won't say that's 100%, but I check some key kinds of us. And most of them, their feedback is positive.
Charlie Cao: So because for the existing projects, even if their financial is closed, so normally they secure a fixed interest rate across the whole life cycle. So for them is safe. And even with the module price coming down, and they have more as a return for their investment. So the interest rate doesn't hurt that part. And for the ongoing projects, because even the interest rate is higher, and most of the clients can pass the majority of the interest rate, higher interest rate cost to the end customers, to the PPA customers who can sign a more attractive PPA price than before. But that place won't be 100%, but that's my, I share that point from the customer feedback. Thank you. That's definitely part of the, some of the cases may happen. Thank you.
Charlie Cao: So I think, yeah, my final question will be in relation to what is your view on what is the progress of your US expansion capacity? And what is your view as of now as to the chance of getting the IRA subsidies? Because there has been quite a lot of market chapters as to there are some low being happening in Washington, etc, to target against Chinese plays. So we'd like to know, do you have an update on those?
Charlie Cao: We don't have a clear, we are waiting for this detailed guidance, official detailed guidance released as well, so I think it's still not finalized yet, so we are waiting for that as well. But for the US market, we believe that's a very prosely market, we're still holding our bullish positions on that, and we are trying to do whatever we can to serve the US market, but we will take more actions once all the details can be released.
Charlie Cao: So your plan will complete by the end of this year, right? Well, we will see, but for the previous plan, stay to what we have, and if your question is regarding whether we have new plans, we have to wait until the detailed guidance really. So your plan in Jacksonville, your Wengigawatt plan will be completed on time, right? Yes, yes, yes, yes.
Unknown Executive: Okay, thank you, thanks a lot.
Operator: At this time, we will conclude our question and answer session. For any additional questions, please contact IR at JinkoSolar.com. The conference has now concluded, we thank you for attending today's presentation, and you may now disconnect your lines. Thank you very much. [inaudible]