Q3 2024 Daqo New Energy Corp Earnings Call
Speaker Change: Good day and welcome to the DACU new energy third quarter 2024 results conference call. How participants will be on the Sonole mode.
Speaker Change: Du, Anita, distance, please send you a conference specialist for pressing the star key followed by zero.
Speaker Change: after today's presentation there will be an opportunity to ask questions. To ask a question you may press star then one on your telephone keypad.
Speaker Change: and Zhu, you're going to be a good one. To withdraw your question, please press star then too.
Speaker Change: please note, this event is being recorded. Oh, now I turn the conference over to Anita Xu, please go ahead.
Anita Xu: Thank you. Thank you. Thank you.
Anita Xu: Hello everyone, I'm Anita Zhu, the Deputy Chief Executive Officer of Dakunyu Energy.
Anita Xu: Thank you for joining our conference call today.
Anita Xu: Dakou New Energy just issued its financial results for the third quarter of 2024, which can be found on our website at www.dqsolar.com.
Speaker Change: Today, attending the conference call, we have our CFO, Mr. Ming Yang, and myself. Given the time conflict, Mr. Zhu will not be able to attend today's meeting in person. I'll first begin the call by reading Mr. Zhu's comment on market conditions and company operations.
Speaker Change: and then Mr. Yang will discuss the company's financial performance for the quarter and the year. After that, we'll open the floor to Q&A from the audience.
Speaker Change: Before we begin the formal remarks, I would like to remind you that certain statements on today's call, including expected future operational and financial performance and industry growth, are forward-looking statements that are made under the safe harbor provisions of the U.S. Department of State.
Speaker Change: Private Security Litigation Reform Act of 1995 These statements involve inherent risks and uncertainties
Speaker Change: A number of factors could cause actual results to differ materially from those contained in any forward-looking statement.
Speaker Change: Further information regarding these and other risks is included in the reports or documents we have filed with or furnished to the Securities and Exchange Commission.
Speaker Change: These statements only reflect our current and preliminary view as of today and may be subject to change. Our ability to achieve these projections is subject to risks and uncertainties.
Speaker Change: Also during the call, we'll occasionally reference monetary amounts in U.S. dollar terms. Please keep in mind that our functional currency is the Chinese RMB. We offer these translations into U.S. dollars solely for the convenience of the audience.
Speaker Change: So without further ado, let me begin with our management remarks.
Speaker Change: So entering the third quarter, China's solar industry's market conditions remain challenging, exacerbated by the overall oversupply in the industry.
Speaker Change: market selling prices continue to be below production costs for the majority of industry players throughout the entire value chain.
Speaker Change: At the end of the third quarter, we had a cash balance of US$53 million and short-term investments of US$245 million.
Speaker Change: bank no receivables of 83 million and a fixed-term bank deposit balance of 1.2 billion US dollars.
Speaker Change: to capitalize on higher interest rates compared to those of bank savings.
Speaker Change: We purchased short-term investments and fixed-term bank deposits during the past two quarters.
Speaker Change: Overall, the company maintains strong liquidity with a balance of quick assets of 2.4 billion U.S. dollars. These mainly consist of bank deposits or bank financial products that can be quickly converted to cash when necessary.
Speaker Change: On the operational front, during the third quarter, we started maintenance of our facilities and adjusted our production utilization rate to 50% in light of weak market demand and to reduce our cash burn.
Speaker Change: The total production volume at our two polysilicon facilities for the quarter was 53,592 metric tons.
Speaker Change: Through continued investments in R&D and dedication to purity improvements at both facilities, our overall anti-product mix reached 75% during the quarter.
Speaker Change: Our Phase 5B, which started initial production in May and is still ramping up, reached 70% n-type in its product mix, strengthening our confidence in achieving 100% n-type by the end of next year.
Speaker Change: Despite lower utilization levels, we further reduced our task costs to $5.34 USD per kg compared to $5.39 per kg in the second quarter.
Speaker Change: However, unit production costs trended up 7% sequentially to an average of $6.61 per kilogram as a result of reduced production level, which led to facility idle costs of approximately $0.55 per kilogram.
Speaker Change: Regarding SME Gregg's policy outcome, we started initial production in the second quarter and have since then worked toward qualification by downstream customers.
Speaker Change: Recently, we passed qualification with certain customers and anticipate official commercial delivery early next year.
Speaker Change: In light of the current market conditions, we expect our Q4 2024 total polysilicon production volume to be approximately 31,000 metric tons to 34,000 metric tons.
Speaker Change: As a result, we anticipate our full year 2024 production volume to be in the range of 200,000 metric tons to 210,000 metric tons.
Speaker Change: During the third quarter, challenging market conditions forced more industry players to reduce production utilization rates and began maintenance.
Speaker Change: Based on industry statistics, polysilicon supply in China decreased by 15% and 6% month-over-month in July and August respectively.
Speaker Change: with the total polysaccharide production volume falling below 130,000 metric tons in August, the lowest yield to date.
Speaker Change: This reduction eased inventory pressure with prices bottoming in a range of approximately $35 to $40 RMB per kilogram.
Speaker Change: Poly prices stabilized after reaching their lowest level and stopped declining.
Speaker Change: This price level was below the cash cost of even the Tier 1 players.
Speaker Change: and four consecutive months of cash losses have led all manufacturers to reassess their future strategy.
Speaker Change: In August and September, due to downstream customers' efforts to take advantage of COVID-19,
Speaker Change: of Low Prices Amid Production Costs, Polar Spoken Prices Rebounded to Approximately 38 to 43 RMB per Kilogram.
Speaker Change: However, industry-polished silicon inventories remain significant at the end of the quarter. One month into the fourth quarter, the polished silicon industry is still rebalancing supply and demand and needs further production costs and stronger market demand to sustain a price recovery.
Speaker Change: The fourth quarter has historically seen strong mutual isolations in China and the aggressive stimulus packages unveiled in September and October to support the domestic economy might encourage investment from state-owned enterprises.
Speaker Change: In the medium to long term, we believe the current low prices and market downturn will eventually result in a healthier market, as poor profitability losses and cash burn will lead to many industry players exiting the business.
Speaker Change: Ultimately, eliminating overcapacity and bringing the solar PV industry back to normal profitability and better margins.
Speaker Change: This year is challenging for China's solar PV industry. At this point we may have reached the cyclical bottom but have yet to see a curve.
Speaker Change: As the price wars have undermined the healthy development of the industry, on October 14, the China Photovoltaic Industries Association convened a special conference attended by senior executives from major manufacturers in the industry.
Speaker Change: Calling to strengthen self-discipline and reduce unbridled competition.
Speaker Change: While further details on promoting the sustainability of the industry still need to be discussed, we believe this is a positive signal toward market consolidation with higher cost and inefficient manufacturers gradually phasing out capacity and exiting the business.
Speaker Change: On another positive note, on October 18, CPIA announced a reference price of $0.68 RMB per watt for modules, setting up more of a winging bid.
Speaker Change: On the demand side, new solar PV installations in China in the first nine months of 2024 reached 160.888 gigawatts, growing 24.8% year over year.
Speaker Change: Overall, in the long run, solar PV is expected to be one of the most competitive forms of power generation globally, and the continuous cost reductions in solar PV products
Speaker Change: and the resulting reductions in solar energy generation costs are expected to create substantial additional demand for solar PV.
Speaker Change: We are optimistic that we will capture the long-term benefits of the growing global solar PV market and maintain our competitive advantage by enhancing our higher efficiency N-type technology.
Speaker Change: and optimizing our cost structure through digital transformation and AI adoption.
Speaker Change: As one of the world's lowest-cost producers with the highest-quality end-tech product, a strong balance sheet, and no financial debt, we believe we are well-positioned to weather the current market downturn and emerge as one of the leaders in the industry to capture future growth.
Speaker Change: Now I'll turn the call to our CFO, Mr. Ming Yang, who will discuss the company's financial performance for the quarter. Ming, please go ahead.
Speaker Change: Thank you, Anita, and hello everyone. This is Ming Yang, CFO of Dakuo New Energy.
Speaker Change: We appreciate you joining our earnings conference call today. I will now go over the company's third quarter 2020 financial performance.
Speaker Change: Revenues were $198.5 million, compared to $219.9 million in the second quarter of 2024 and $484.8 million in the third quarter of 2023. The decrease in revenue compared to the previous quarter is primarily due to a decrease in ASP as well as a decrease in sales volume.
Speaker Change: Gross loss was $60.6 million, compared to $159.2 million in the second quarter of 2024, and gross profit of $67.8 million in the third quarter of 2023.
Speaker Change: Gross margin was negative 30.5% compared to negative 72% in the second quarter of 2024 and 14% in the third quarter of 2023.
Speaker Change: For the third quarter, the company recorded $80.9 million in inventory impairment expenses compared to $108 million in the second quarter.
Speaker Change: The increase in gross margin was primarily due to the inventory subject to larger amount of inventory write-downs in the second quarter that were subsequently sold in the third quarter of 2024.
Speaker Change: SG&A expenses were $37.7 million compared to $37.5 million in the third quarter of 2024 and $89.7 million in the third quarter of 2023.
Speaker Change: HC&A expenses during the third quarter included $18.9 million in non-cash share-based compensation costs related to the company's share incentive plan, compared to $19.6 million in the second quarter of 2024 and $46.3 million in the third quarter of 2023.
Speaker Change: R&D expenses were $0.8 million compared to $1.8 million in the second quarter of 2024 and $2.8 million in the third quarter of 2023.
Speaker Change: R&D expenses can vary from period to period with flat R&D activities that take place during the quarter.
Speaker Change: Loss from operations was $98 million compared to $195.6 million in the second quarter of 2024. And income from operations of $22.5 million in the third quarter of 2023.
Speaker Change: Operating margin was negative 49% compared to negative 89% in the second quarter of 2024 and 4.6% in the third quarter of 2023.
Speaker Change: Net loss attributable to Dakong New Energy shareholder was $60.7 million
Speaker Change: compared to a loss of $120 million in the second quarter of 2024 and $6.3 million in the third quarter of 2023. Loss per basic ADS was $0.92 compared to loss of $1.81 in the second quarter of 2024 and $0.09 in the third quarter of 2023.
Speaker Change: was $39.4 million compared to $98.8 million in the second quarter of 2024 and just net income of $44 million in the third quarter of 2023.
Speaker Change: Adjusted loss per basic ADS was $0.59 compared to $1.50 in the second quarter of 2024 and adjusted earnings per basic ADS of $0.59 in the third quarter of 2023.
Speaker Change: EBITDA was negative $34 million compared to negative $145 million in the second quarter of 2024 and $70.2 million in the third quarter of 2023.
Speaker Change: gave it a margin of negative 17% compared to negative 66% in the second quarter of 2024 and 14.5% in the third quarter of 2023.
Speaker Change: now on the company's financial condition.
Speaker Change: As of September 30th, 2024, the company has $853.4 million in cash, cash equivalents and restricted cash, compared to $997.5 million as of June 30th, 2024.
Speaker Change: As of September 30, 2024, NODE's receivable balance was $83 million, compared to $80.7 million as of June 30, 2024, and $276 million as of September 30, 2023.
Speaker Change: Those receivable represent bank notes with maturity within six months.
Speaker Change: Now for the company's cash flow.
Speaker Change: The nine months ended September 30th, 2024. Net cash used in operating activities was $376.5 million compared to net cash provided by operating activities of $1.5 billion in the same period of 0.23.
Speaker Change: And for the 9 months ended September 30, 2024, net cash used in investing activity was $1.75 billion.
Speaker Change: compared to net cash used in investing activities of $954.3 million in the same period of 2023.
Speaker Change: Next, cash used in investing activities in the three quarters of 2024 was primarily related to the purchase of short-term investments and fixed-term deposits, which amounted to $1.4 billion.
Speaker Change: And for the first nine months of the year, purchases of property, plan, equipment, and land use rights were approximately $336 million.
Speaker Change: For the full year, we currently anticipate our total capital expenditure cost to be approximately $426 million.
Speaker Change: And for the nine months ended September 30, 2024, Net Cash Houston finance activities was $48.5 million compared to Net Cash Houston finance activities of $602 million in the same period of 2023.
Speaker Change: The net cash used in finance activities in the three quarters of 2024 was primarily related to dividend payments and share repurchase buy.
Speaker Change: And that concludes our prepared remarks.
Speaker Change: We will now open the call to Q&A from the audience. Operator, please begin. Yes, thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.
Speaker Change: If any time your question has been addressed and you would like to withdraw it, please press star then 2.
Speaker Change: At this time, we will pause momentarily to assemble the roster.
Speaker Change: And the first question comes from Philip Shen with Roth Capital Partners.
Philip Shen: Hi everyone, thank you for taking my questions. I wanted to check in with where you think the government might be in terms of cutting off
Philip Shen: capacity based on energy intensity. So when do you think that policy could become effective? You know, is it near term before the end of the year or do you think we need to wait for a much longer time? Thanks.
Speaker Change: Phil, are you referring to the government policy about reduction in production?
Philip Shen: Yes, that's right. And so I think the government is looking to reduce production based on energy intensity and so if you have a 55 kilowatt hour per kilogram cutoff
Philip Shen: Thank you.
Philip Shen: than producers above that energy intensity.
Speaker Change: So just curious, you know, when do you think that could become effective and then also
Speaker Change: how much of the market in terms of percentage or capacity in metric tons could exit if that's the case. Thanks.
Speaker Change: Okay so, hi Phil, thank you for the question. So I think they're having discussions.
Speaker Change: going around in the industry, both from the CPOIA and also from MIT and other government entities.
Speaker Change: And I think there has been consensus among the manufacturers.
Speaker Change: to promote a healthier development of the industry.
Speaker Change: to exercising self-discipline. If we look at the current condition, inventory level is above 350,000 metric tons across all. Around 250,000 metric tons at the poly level and then another 100,000 at the wafer level.
Speaker Change: look at it from that aspect.
Speaker Change: I think in terms of the structural reform that
Speaker Change: we've been hearing or in the market they were contemplating either the energy consumption or it could be a certain percentage times the main capacity of in terms of the production volume.
Speaker Change: So for the energy consumption, we don't have more details around that, but I think if we look at companies that have an energy intensity or a consumption of less than
Speaker Change: 55 kilowatt hours it would only be in the top four
Speaker Change: to five players.
Speaker Change: Okay.
Speaker Change: Please.
Speaker Change: So quickly just to add Anita's comments, our understanding is...
Speaker Change: The NDRC and National Energy Administration is looking at this.
Speaker Change: There could be some kind of enforcement and allocation in terms of how much energy usage is allocated to the various manufacturers to restrict production.
Speaker Change: But if you look at China in history, I know China has done a lot of the supply-side reform, especially for, for example, the aluminum industry, the glass industry, and the steel industry. And historically, the government has had a lot of success in these.
Speaker Change: supply-side reform to stabilize the market and stabilize pricing. So we think the government is looking at this as a practical approach to fix the issues at the solar industry rate.
Speaker Change: Subs by www.zeoranger.co.uk
Speaker Change: Great. Okay. Thank you, Anita and Ming. And so, as a follow-up there, you know, I know I asked this earlier, but I'm just going to get a, I'm going to ask it again, but from a timing standpoint, when do you think, like, do you think this is already in, positively impacting prices?
Speaker Change: And do you continue to expect pricing to be supported near-term or do you think the policy needs to be implemented first and then you see the pricing move more material things?
Speaker Change: I think realistically with regard to timing we really don't know. I think in terms of what we've heard or understand is the government, the various agencies are studying this.
Speaker Change: and you know they're talking with the industry players and talking with the industry association and with the top manufacturers.
Speaker Change: And I think, you know, policies like this probably will take one to two months to formulate. So we're looking at maybe end of November or December or maybe even later. So we really don't have any real insight on timing.
Speaker Change: Okay, but what was it like? Yeah, go ahead. Sorry Ming, I cut you off. I think that that was the, I mean you gave a little bit of color. But it's about pricing, right?
Speaker Change: Thank you for joining.
Speaker Change: Yeah, just give your pricing outlook in general, so with and without the recording. Okay.
Speaker Change: I think overall that the pricing is complicated right so pricing is a function of supply and function of demand and market and market pricing and also in terms of utilization and
Speaker Change: I think for the industry, we do believe that pricing has bottomed.
Speaker Change: For now...
Speaker Change: and it's likely to go up further in the future, but we don't know what the timing looks like or how much it could go up.
Speaker Change: Thanks for watching!
Speaker Change: Okay, great. I think I'll leave it there. Thank you very much and best of luck.
Speaker Change: Okay, great. Thanks, Phil.
Speaker Change: Thank you. And the next question comes from Andrea Corporate, a private investor.
Andrea Corporate: Thank you.
Andrea Corporate: The
Andrea Corporate: So my question is not more on the operations side of the business and more on the potential of the usage of buybacks to correct the difference between Shanghai and New York.
Andrea Corporate: As investors, in January 2015, the lock-up period, the volume 31 we did in July, it should end. So my question is, what are the plans for...
Andrea Corporate: Yeah, it would be a critique for everyone to close some of the difference, it's a 4.3 times difference and my question is what will happen after January 15 as the next report, quarterly report will be likely after January 15.
Andrea Corporate: Thank you.
Speaker Change: Thanks for watching!
Speaker Change: Hi, thank you. Thank you, Andre, for the question.
Speaker Change: used that to purchase the ADRs to close down the gap, but I think back in July...
Speaker Change: It was due to regulatory issues.
Speaker Change: difficulties because there was a new regulations launched in May if the stock price was trading below the IPO issue price then we're not able to sell down which is why we also voluntarily disclosed we wanted to extend the period until January
Speaker Change: As of now, it's difficult for us to say.
Speaker Change: what's the plan next, because it would also be contingent upon
Speaker Change: the stock price by January but I think it's definitely something that we would consider to potentially close down the gap between the A share and the ADRs.
Speaker Change: Okay, so regarding that, could you provide a bit more of...
Speaker Change: More color to investors so
Speaker Change: Even if it would be available, the option, we are, the letter of undertaking of the intent to reduce your halting, which I see on the Security Exchange Commission.
Speaker Change: Could you provide more color? IPO price wasn't at 21.49 RMB from what I see in 2021. And aren't we trading currently above IPO prices in Shanghai?
Speaker Change: Oh back then when we were at the expiration of the lockup period the share price was also very low which is why
Speaker Change: of China.
Speaker Change: Thank you.
Speaker Change: Yes. That's correct.
Speaker Change: Thanks for watching!
Speaker Change: functioning.
Speaker Change: Thank you.
Speaker Change: Okay, so let's say we do have a voluntary lock-up, right, that I think will expire in January. So once that expires, and if the board of DQ does decide to sell its A shareholding, then we would need to file a plan to...
Speaker Change: reduce our A-share ownership in the open market with decision high stock.
Speaker Change: Okay, but there are no other clauses which are preventing that from happening if the conditions continue to be the same as are currently.
Speaker Change: Yes, as long as share price is above 21.49, at least based on the rules, we are allowed to sell down shares.
Speaker Change: I don't think right now the rules is that we could sell roughly 1% 1 to 2% per quarter
Speaker Change: Thank you for your time.
Speaker Change: It's 4.3x or 4.5 times the difference.
Speaker Change: My other question is, I think in the previous quarter we are currently reporting, the share count only decreased by 0.5%.
Speaker Change: from last quarter. It decreased to $66.3 million from $66 million, sorry, the other way around, but it's just a small decrease. So buybacks were not that much used in this quarter. Like, I was expecting more buybacks.
Speaker Change: Okay.
Speaker Change: Okay, so in terms of the share repurchase, Dre,
Speaker Change: Our management team was also waiting to see when would be a good timing. I think if we assess it based on the cycle of the policy cycle this round, we were expecting if there's no structural reform or any sort of policies,
Speaker Change: done to accelerate the balance of supply and demand, then it might last two to three years, given that the players in this round are very strong in financials.
Speaker Change: and, for instance, some of them have already raised a lot of capital in the financial market and also some of them have other business lines to support the poverty business.
Speaker Change: So if we let it rebalance, it might take a slightly longer time. So we were waiting for the turning point of the NSG to be more clear before we could buy more aggressively. I think that was the rationale behind it.
Speaker Change: [inaudible]
Speaker Change: Yes, it was as if the world was falling. I understand, OK, I understand, but...
Speaker Change: This is the last question, regulatory changes in China, they should help the most the polysilicon producers which are the lowest average selling cost and the producers which are the most efficient, which Daco is one. My question is, will it focus the regulatory changes, will it help the large players the most and the ones which have the lowest average cost, which in turn means that they have the lowest average cost of energy for producing polysilicon I guess, so that's the question.
Speaker Change: Well, I think it's the other way around. If you have the, with the economy of scales and with more advanced technologies, right, I think the larger players
Speaker Change: have a smaller energy consumption, which is why they have a lower cost. It's the other way around.
Speaker Change: so I think the policy would not necessarily be helping the big guys to survive
Speaker Change: and force the smaller or the new players to exit the market, but rather they would want advanced capacity to remain the market.
Speaker Change: and the less advanced, or I should say the ones that were cost higher in terms of energy consumption, silicon consumption, steam, etc., might gradually phase out.
Speaker Change: OK, congratulations to the promotion to CEO and please consider after January 15, because if the company does not capitalize on this difference, I think there's a possibility that this difference will just be raised by a fund or somebody else.
Speaker Change: Thank you and have a wonderful day.
Speaker Change: Thank you. Thank you.
Speaker Change: Thank you. And the next question concerns Jinghu Wu of CICC.
Speaker Change: Please go ahead CITC, you are live.
Speaker Change: Okay, well the next question comes from Alan Lau with Jefferies.
Speaker Change: Thank you for watching!
Speaker Change: about 80 million dollars of
Speaker Change: inventory write-down. So the net inventory write-down right now is about 80 million and then we had roughly 27 million of reversal, okay, during the quota that not showed up in the cost of goods sold.
Speaker Change: Okay, and...
Speaker Change: Yes, yes, yes.
Speaker Change: Okay, around 66 percent or two-thirds is finished goods and about one-third of that is in raw material.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: So it's him.
Speaker Change: 66% of 80 million are finished goods.
Speaker Change: Around two-thirds, right? 66%, yeah.
Speaker Change: Understood. And my second question is...
Speaker Change: basically on the average production cost. So there appears to be a rebound in the cost. So just to confirm that this is basically due to the lower utilization rates.
Speaker Change: So the unit depreciation went up, right? Is this the correct understanding of the rebounding production cost?
Speaker Change: Yes, that is the correct understanding. So, of the $6.61 production costs,
Speaker Change: roughly 55 cents is related to the facility idle cost. A majority of that is depreciation.
Speaker Change: Okay, so if you subtract that, I think you get to like $6.06.
Speaker Change: I just did this spherically, and... Ignore the facility... Idle facility cost, yeah. Because if you look at our cash cost actually came down.
Speaker Change: for the quarter. Yeah, exactly.
Speaker Change: So, we'd like to know, because the company is guiding for a further lower utilization rate in 4Q in terms of the production volume, so we'd like to know if we can fairly expect that in 4Q the trend would be similar.
Speaker Change: meaning that cash costs will continue to be at similar level, whereas average production costs might increase because of a further decline in utilization rates.
Speaker Change: Yes, that's correct. So we're actually expecting cash costs to go down because we're now using the most efficient.
Speaker Change: part of our facility.
Speaker Change: for production, right, so with the lowest cash cost, while unfortunately, because of depreciation, yes, I think the total production cost will be higher.
Speaker Change: Thanks for watching!
Speaker Change: Because we're not appreciating the same amount of money over much less production.
Speaker Change: Understood. And in terms of the recent policy changes in China which led to a very strong rally in the past one or two weeks, I would like to know from our perspective have we seen any...
Speaker Change: What do you see of the possibility of the energy control materializing and at the same time do you see high chances of price rebounding into the next couple of quarters?
Speaker Change: what the industry is looking like, what are the utilization rates and what are needed from the corporates. So I think...
Speaker Change: Ideally, or I should say, it would come more in terms of...
Speaker Change: a blend of
Speaker Change: For instance, government enforced structural reform based on either energy consumption like you mentioned or based on...
Speaker Change: ...a nameplate capacity.
Speaker Change: times a certain percentage of utilization rate to cap the production volume.
Speaker Change: So it will be a blend of the structural reform and also based on industry self-discipline of players who have to also assess their own strategies, right? So I think...
Speaker Change: During the most recent meetings, there have been consensus on reducing the utilization rate to around 50%, but because different companies have different conditions, for instance, some players might have a low inventory.
Speaker Change: and a lower cost as well, right? So I think it will take longer time to materialize in terms of a reduction in supply.
Speaker Change: So, what's the second question?
Speaker Change: In terms of the price, I think for the fourth quarter, given how quickly or how much production would get reduced,
Speaker Change: in the coming month.
Speaker Change: There could be a chance of price rebound before the end of the year, but really going to the next year, it's hard to forecast or it's hard to comment because we don't know exactly how it's going to look like from both the supply and demand side.
Speaker Change: Right, like as a quick example, so usually historically in the fourth quarter demand has been strong for new solar installations, but this fourth quarter it's really a slightly or relatively weak demand as we see it right now.
Speaker Change: So per month, the poly demand is only around 100,000 metric tons.
Speaker Change: So I think it will be a more dynamic moving trend.
Speaker Change: Understood. So I think when it comes to the production cut, because a lot of discussion is around the energy consumption, so would like to know if you might share what is the per unit energy consumption for the different plants for now?
Speaker Change: For our point
Speaker Change: Yes.
Speaker Change: Okay, right now for Xinjiang, this is roughly 55.
Speaker Change: I'm just going to fill it out.
Speaker Change: Yeah, per kilogram.
Speaker Change: So, from this perspective, the market rumor of cutting off and power consumption of 50 seems not very likely, right? Otherwise, that would mean only probably one or two companies continue to operate.
Speaker Change: I think, and then that also depends on how it's measured, right? Because right now, how it's being, there's no standardized way of measuring it. So the way we measure ours is actually the power usage by the entire facility, including the front end, the growth of the silica, the back end, even the water and our own generation of hydrogen, you know, we produce our own TCS and things like that.
Speaker Change: So it's the whole facility concept, you know, the total use of energy in the whole facility divided by total production. Okay, I think not all companies do this. Some companies only measure the poly production part, you know, without including the facilities.
Speaker Change: And so yeah, so I think there has to be first a standardized way of measurement.
Speaker Change: Thank you.
Speaker Change: which probably would take time and not easy to align the standards.
Speaker Change: Thanks for watching!
Speaker Change: Well, I think what's being discussed is some independent third-party auditor would actually be hired and standardize this first. This is being discussed right now.
Speaker Change: I see, I see. Very clear. I'll pass on. Thanks a lot for the answer and also the improvement in the result as well.
Speaker Change: Great, great. Thank you. Thank you.
Speaker Change: Thank you and the next question comes from Sarah Lee
Speaker Change: Please go ahead, Ms. Li. Your line is live.
Speaker Change: All right. Well, at this time, this does conclude the question and answer session, so I would like to return the floor to Ms. Xu for any closing comments.
Speaker Change: We're live at the moment. Thank you for joining us. We're live at the moment.
Anita Xu: Thank you everyone again for participating in today's conference call. Should you have any further questions, please don't hesitate to contact us. Thank you and have an awesome day. Goodbye.
Speaker Change: I'll start shooting... in low light