Q2 2026 JinkoSolar Holding Co Ltd Earnings Call

Operator 3: Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co., Ltd. Second Quarter 2026 Earnings Conference Call. At this time, all participants are in listen only mode. After management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to your host for today's call, Ms. Stella Wang, JinkoSolar's Investor Relations Manager. Please proceed, Stella.

Speaker #1: After management's prepared remarks, there will be a question-and-answer session. As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to your host for today's call, Ms. Stella Wang, JinkoSolar's investor relations manager.

Speaker #1: Please proceed, Stella.

Speaker #2: Thank you, operator. Hello, everyone, and thank you for joining us today for JinkoSolar’s second quarter 2026 earnings conference call. The company’s results were released earlier today and are available on the company’s IR website at ir.jinkosolar.com, as well as on newswire services.

Stella Wang: Thank you, operator. Hello, everyone, and thank you for joining us today for JinkoSolar's Second Quarter 2026 Earnings Conference Call. The company's results were released earlier today and available on the company's IR website at ir@jinkosolar.com, as well as on Newswire Services. We have also provided a supplemental presentation for today's earnings call, which can also be found on the IR website. On the call today from JinkoSolar are Mr. Dimmy Du, CEO of JinkoSolar Holding Co., Ltd., Mr. Gener Miao, CMO of JinkoSolar Company Limited, Mr. Pan Li, CFO of JinkoSolar Holding Co., Ltd., and Mr. Haiyun Cao, CEO of JinkoSolar Company Limited. Mr. Du will discuss JinkoSolar's business operations and the company highlights, followed by Mr. Miao, who will provide an update on sales and marketing, and then Mr. Pan Li, who will go through the financials. Management will be available to answer questions during the Q&A session.

Speaker #2: We have also provided a supplemental presentation for today's earnings call, which can be found on the IR website. On the call today from JinkoSolar are Mr. Jimmy Zhou, CEO of JinkoSolar Holding Co., Ltd.; Ms. Janet Miao, CMO of JinkoSolar Co., Ltd.; Mr. Pan Li, CFO of JinkoSolar Holding Co., Ltd.; and Mr. Charlie Cao, CEO of JinkoSolar Co., Ltd. Mr. Zhou will discuss JinkoSolar's business operations and company highlights, followed by Ms. Miao, who will provide an update on sales and marketing.

Speaker #2: And then Mr. Pan Li will go through the financials. Management will be available to answer questions during the Q&A session. Please note that today's discussion will contain forward-looking statements made under the Safe Harbor Provision of the U.S.

Stella Wang: 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 risks is included in JinkoSolar's public filings with the Securities and Exchange Commission. JinkoSolar does not assume any obligation to update any forward-looking statements except as required under the applicable law. It's now my pleasure to turn the call over to Mr. Dimmy Du, CEO of JinkoSolar. Please go ahead, Dimmy.

Speaker #2: The Private Securities Litigation Reform Act of 1995 states that forward-looking statements involve inherent risk and uncertainty. As such, future results may be materially different from the views expressed today.

Speaker #2: Further information regarding this and other risks is included in JinkoSolar's public filings with the Securities and Exchange Commission. JinkoSolar does not assume any obligation to update any forward-looking statements, except as required under applicable law.

Speaker #2: Let's now turn the call over to Mr. Jimmy Zhou, CEO of JinkoSolar. Please go ahead, Jimmy.

Speaker #3: Hello, everyone. This is Jimmy Zhou, and thank you for joining JinkoSolar's second quarter 2026 earnings call. It is an honor to take on the role of CEO, and I appreciate the trust the board of directors and the management team have placed in me.

Dimmy Du: Hello, everyone. This is Dimmy Du, and thank you for joining JinkoSolar Second Quarter 2026 Earnings Call. It is an honor to take the role of CEO. I appreciate the trust the board of directors and management team have placed in me. Joining me at this milestone of our 20th anniversary, as we embark on the next stage of development, I look forward to working closely together to further enhance our operating performance and strategic execution to drive sustainable, high-quality growth. I will begin by reviewing our operational performance in the second quarter and then outline our key priorities going forward. In the second quarter, module shipments increased sequentially to approximately 16 gigawatts. Supply and demand imbalances across the PV industry remain dynamic. These pressures were further compounded by shifts in domestic and overseas policies, with prices across the supply chain and industry profitability remaining under pressure.

Speaker #3: Daniel, as we celebrate this milestone of our 20th anniversary and embark on the next stage of development, I look forward to working closely together to further enhance our operating performance and strategic execution to drive sustainable, high-quality growth.

Speaker #3: I will begin by reviewing our operational performance in the second quarter and then outline our key priorities going forward. In the second quarter, module shipments increased sequentially to approximately 16 gigawatts.

Speaker #3: Supply and demand imbalances across the PV industry remain dynamic. These pressures were further compounded by shifts in domestic and overseas policies, with prices across the supply chain and industry profitability remaining under pressure.

Speaker #3: As the cost of ramping up our high-efficiency products remained elevated during the quarter, together with the impact on delivering certain low-value orders, gross margin decreased sequentially during the quarter while our net loss expanded. Facing this operating pressure, we optimized our order book and geographic mix, rationally managed utilization rates, and continued to expand the proportion of high-efficiency products within shipments while introducing technologies that lower cost.

Dimmy Du: At the cost of ramping up, our high efficiency products remained evaluated during the quarter. Together with impact of delivering certain low-value orders, gross margin decreased sequentially during the quarter while our net loss expanded. Facing this operating pressure, we optimized our order books and geographic mix to rationally manage utilization rates and continue to expand the proportion of high efficiency products within shipments while introducing technologies that lower costs. These measures are driving a gradual recovery in profitability. The underlying pattern of PV industry competition is gradually shifting from capacity and shipment scale to effective supply, product value and earnings quality. The mandatory new national standard on energy efficiency for modules and inverters released in July will take effect in January 2027. The new standards set level 3 energy efficiency as a minimum threshold for market access.

Speaker #3: These measures are driving a gradual recovery in profitability. The underlying pattern of PV industry competition is gradually shifting from capacity and shipment scale to effective supply, product value, and earnings quality.

Speaker #3: The mandatory new national standard on energy efficiency for modules and inverters, released in July, will take effect in January 2027. The new standard sets level three energy efficiency as a minimum threshold for market access.

Speaker #3: Products that fail to meet this minimum threshold will not be permitted for production or sale, placing high-efficiency products in a stronger position for large-scale renewable energy project tenders.

Dimmy Du: Products that fail to meet these minimum thresholds will not be permitted for production or sale, placing high efficiency products in a stronger position for large-scale renewable energy project tenders. Meanwhile, the implementation of market-based pricing for renewable power is pushing customer to increasingly focusing on energy yield, reliability, and the lifetime value of modules. These changes are beneficiary to industry leaders with advanced manufacturing capacity, technological expertise, global delivery, and long-term service capabilities, which will accelerate the phase-out of inefficient production capacity. By the end of 2026, we expect to have more than 40 gigawatts of TOPCon 3.0 production capacity. Based on the new standard thresholds, these products are expected to meet level 1 energy efficiency requirements and strengthen our annualized production capacity for high efficiency products to lead the industry.

Speaker #3: Meanwhile, the implementation of market-based pricing for renewable power is pushing customers to increasingly focus on energy yield, reliability, and lifetime value of modules. These changes are beneficial to industry leaders with advanced manufacturing capacity, technological expertise, global delivery, and long-term service capabilities.

Speaker #3: This will accelerate the phase-out of inefficient production capacity. By the end of 2026, we expect to have more than 40 gigawatts of TOPCon 3.0 production capacity.

Speaker #3: Based on the new standard thresholds, these products are expected to meet Level 1 energy efficiency requirements and strengthen our annualized production capacity for high-efficiency products to lead the industry.

Speaker #3: We continue to advance our product portfolio and build a solid base for next-generation technologies based on our TOPCon technology roadmap. In June, we unveiled our newest next-generation TOPCon Titan Neo 5.0 modules.

Dimmy Du: We continue to advance our product portfolio and build a solid base for next generation technologies based on our TOPCon technology roadmap. In June, we unveiled our newest next generation TOPCon Tiger Neo 5.0 modules. By optimizing multiple core technologies, the Tiger Neo 5.0 achieved mass-produced efficiency of 25.91% and power output of over 700 watts, setting a new benchmark for TOPCon product performance once again. ESS shipments in the H1 of the year were 3.1 gigawatt hour, increased significantly year-over-year. Benefiting from our presence in high-value market, gross margin improved year-over-year in the H1 of 2026. Due to uncertainties in timing of project delivery and other factors, recognized revenue remains in ramp-up stage. Approximately 1.5 gigawatt hour were recognized as revenue in H1, including more than one gigawatt hour in the Q2.

Speaker #3: By optimizing multiple core technologies, the Titan Neo 5.0 achieved a mass-produced efficiency of 25.91% and power outputs of over 700 watts, setting a new benchmark for TOPCon product performance once again.

Speaker #3: ESS shipments in the first half of the year were 3.1 gigawatt-hours, increasing significantly year over year. Benefiting from our presence in high-value markets, gross margin improved year over year in the first half of 2026.

Speaker #3: Due to uncertainties in the timing of project delivery and other factors, recognized revenue remains in the ramp-up stage. Approximately 1.5 gigawatt-hours were recognized as revenue in the first half, including more than 1 gigawatt-hour in the second quarter.

Speaker #3: As project deliveries increase, alongside ongoing enhancement of our in-house PCS, EMS, and other capabilities, we will continue to boost the efficiency of both revenue recognition and profit realization.

Dimmy Du: As project deliveries increase, alongside ongoing enhancement of our in-house PCS, EMS and other capabilities, we will continue to boost efficiency of both revenue recognition and profit realization, driving high quality growth for our ESS business. Now, I will move on to our guidance for the Q3 and the full year of 2026. We expect our annual integrated production capacity to reach approximately 100 gigawatts by year-end 2026, including approximately 14 gigawatts from overseas facilities. Considering demand dynamics in certain markets, we will place greater emphasizes on balancing shipment volume, profitability, cash flow, and order quality going forward. And adjusting guidance for full year 2026 module shipments to between 60 gigawatts and 70 gigawatts, and high efficiency products accounting for over 60%. We expect module shipments to between 15 gigawatts and 17 gigawatts in Q3 of 2026.

Speaker #3: Driving high-quality growth for the ESS business. Now, I will move on to the full year of 2026. We expect our annual integrated production capacity to reach approximately 100 gigawatts by year-end 2026, including approximately 14 gigawatts from overseas facilities.

Speaker #3: Considering demand dynamics in certain markets, we will place greater emphasis on balancing shipment volume, profitability, cash flow, and order quality going forward, and adjust our guidance for full year 2026.

Speaker #3: Module shipments to between 60 gigawatts and 70 gigawatts, with high-efficiency products accounting for over 60%. We expect module shipments to be between 15 gigawatts and 17 gigawatts in the third quarter of 2026.

Speaker #3: For the full year 2026, we expect our energy storage system shipments to more than double year-over-year. As we continue to strengthen the competitiveness of our core solar and energy storage businesses, we are also building an investment platform through disciplined capital allocation and professional investment management that will act as a complementary driver for long-term value creation.

Dimmy Du: For full year 2026, we expect our energy storage system shipments to more than double year-over-year. As we continue to strengthen the competitiveness of our core solar and energy storage businesses, we are also building an investment platform through disciplined capital allocation and professional investment management that will act as a complementary driver for long-term value creation. Over the past several years, leveraging our deep industry expertise and long-term perspective on technological trends, we have made disciplined and selective investments directly or through fund platforms focusing on strategic synergies, technological innovation, and long-term value creation. Our earlier investment primary focus on the solar and energy storage value chain. In recent years, as AI drives demand for computing power and electricity demand, we have selectively expanded our investment scope to the AI ecosystem and other frontier technologies. To date, we have invested in more than 40 companies in total.

Speaker #3: Over the past several years, leveraging our deep industry expertise and long-term perspective on technological trends, we have made disciplined and selective investments directly or through fund platforms, focusing on strategic synergies, technological innovation, and long-term value creation.

Speaker #3: Our earlier investment primarily focused on the solar and energy storage value chain. In recent years, as AI drives demand for computing power and electricity, we have selectively expanded our investment scope to the AI ecosystem and other frontier technologies.

Speaker #3: To date, we have invested in more than 40 companies in total. As of June 30, 2026, we have invested an aggregate of approximately RMB 1.86 billion in cash.

Dimmy Du: As of 30 June 2026, we have invested an aggregate of approximately RMB 1.86 billion cash. The original cash cost of the investments remaining in our portfolio is approximately RMB 1.5 billion, with a fair value of approximately RMB 1.99 billion as of the same date. Our investment portfolio has generated cumulative value appreciation of approximately RMB 880 million comprising of approximately RMB 410 million in realized gain from exit and approximately RMB 470 million in unrealized fair value from remaining investments in the portfolio. During the H1 2026, our portfolio generated gains of approximately RMB 490 million, comprising approximately RMB 110 million in realized gains and approximately RMB 380 million in unrealized fair value gains. In the H1 2026, we divested a substantial portion of our equity interest in LAPLACE Renewable Energy Technology Co., Ltd., receiving over RMB 300 million in cash proceeds.

Speaker #3: The original cash cost of the investment remaining in our portfolio is approximately RMB 1.5 billion, with a fair value of approximately RMB 1.99 billion as of the same date.

Speaker #3: Our investment portfolio has generated cumulative value appreciation of approximately RMB 880 million, comprising approximately RMB 410 million in realized gain from exits and approximately RMB 470 million in unrealized fair value from remaining investments in the portfolio.

Speaker #3: During the first half of 2026, our portfolio generated gains of approximately RMB 490 million, comprising about RMB 110 million in realized gains and around RMB 380 million in unrealized fair value gains.

Speaker #3: In the first half of 2026, we divested a substantial portion of our equity interest in Laplace Renewable Energy Technology Company Limited, receiving over RMB 300 million in cash proceeds.

Speaker #3: Since our initial investment in Laplace, the cumulative realized gain on this disposal exceeded RMB 250 million. This gain was recognized over multiple periods through fair value adjustments following its IPO in late 2024, with over RMB 100 million recorded in changing fair value of long-term investment upon settlement in the first half of 2026.

Dimmy Du: Since our initial investment in LAPLACE, the cumulative realized gain on this disposal exceeded RMB 250 million. This gain was recognized over multiple periods through fair value adjustments following its IPO in late 2024, with over RMB 100 million recorded in changing fair value of long-term investments upon settlement in the H1 2026. In addition, Hangzhou Gold Electronic Equipment Co., Ltd. successfully completed its listing on ChiNext market of Shenzhen Stock Exchange during the Q2, creating an additional pathway for future value realization. Looking ahead, we will continue to maintain a disciplined approach to capital allocation. Supporting the long-term development of our core solar and energy storage business will remain our top priority.

Speaker #3: In addition, Hangzhou Gold Electronic Equipment Company Limited successfully completed its listing on the ChiNext market of the Shenzhen Stock Exchange during the second quarter, creating an additional pathway for future value realization.

Speaker #3: Looking ahead, we will continue to maintain a disciplined approach to capital allocation. Supporting the long-term development of our core solar and energy storage business will remain our top priority.

Speaker #3: At the same time, we will continue to evaluate our existing strategic investments based on the operating performance, strategic synergies, and the long-term value creation potential of each portfolio company, while remaining disciplined and selective in pursuing new opportunities.

Dimmy Du: At the same time, we will continue to evaluate our existing strategic investments based on operating performance, strategic synergies, and the long-term value creation potential of each portfolio company, while remaining disciplined and selective in pursuing new opportunities. Through strengthening our core businesses, realizing portfolio value, and improving capital utilization efficiency, we remain committed to creating sustainable long-term value for our shareholders. This concludes my remarks. I will now turn the call over to Jenna.

Speaker #3: Through strengthening our core businesses, realizing portfolio value, and improving capital utilization efficiency, we remain committed to creating sustainable, long-term value for our shareholders. This concludes my remarks.

Speaker #3: I will now turn the call over to Jenna.

Speaker #2: Thanks, Jimmy. Total shipments were 32.9 gigawatts in the first half, with solar module shipments accounting for over 90%. We are leveraging a sales network covering nearly 200 countries and regions.

Gener Miao: Thanks, Dimi. Total shipments were 32.9 gigawatt in H1, with solar module shipments accounting for over 90%, leveraging sales network covering nearly 200 countries and regions and 35 service centers globally. We continue to optimize our geographic mix and the customer structure overseas. In H1, shipments to the overseas markets accounted for over 70%, mainly across Asia Pacific, Europe, and emerging markets. In Q2, the proportion of high-efficiency product shipments improved sequentially. Our Tiger Neo 3.0 series continued to command a premium of approximately $0.01 per watt over conventional products. We also began to ship a small number of scenario-based product in Q2 and gradually plan to increase deliveries in H2. Those products already command a premium of approximately $0.50 to $1.00 per watt over conventional products.

Speaker #2: And 35 service centers globally. We continue to optimize our geographic mix and customer structure overseas. In the first half, shipments to overseas markets accounted for over 70%, mainly across Asia Pacific, Europe, and emerging markets.

Speaker #2: In the second quarter, the proportion of high-efficiency product shipments improved sequentially. Our Tiger Neo 3.0 series continued to command a premium of approximately one U.S. dollar cent per watt over conventional products.

Speaker #2: We also began to ship a small number of scenario-based products in the second quarter, and we gradually plan to increase deliveries in the second half.

Speaker #2: Those products already command a premium of approximately $0.005 to $0.01 per watt over conventional products. Following the launch of AIDC and other scenario-based module products in the first quarter, we recently released the Sunny 365 smart solar storage system.

Gener Miao: Following the launch of AIDC and other scenario-based module products in Q1, we recently released the Sunny 365 Smart Solar Storage System. This comprehensive series of integrated PV storage solutions covers several scenarios such as retail, supermarkets, AIDC, and the manufacturing sectors. Especially the AIDC solution is built around our Tiger Neo 3.0 module platform technology and the SunTera energy storage system, capable of meeting the demand from data center for power supply reliability, energy economics, and the sustainable low carbon development through the coordinated control of energy storage system, PCS, EMS, and smart operations and maintenance. We recently received the highest Triple A bankability rating in the Q2 2026 bankability rating report for module manufacturers released by PV Tech. Since first participating in the evaluation in 2014, we have maintained an A grade rating for 12 consecutive years.

Speaker #2: This comprehensive series of integrated PV storage solutions covers several scenarios, such as retail, supermarkets, AIDC, and the manufacturing sector. Especially, the AIDC solution is built around our Tiger Neo 3.0 module platform technology and the SunTera energy storage system.

Speaker #2: Capable of meeting the demand from data centers for power supply reliability, energy economics, and sustainable low-carbon development through the coordinated control of the energy storage system.

Speaker #2: PCS, EMS, and smart operations and maintenance. We recently received the highest AAA bankability rating in the Q2 2026 Bankability Rating Report for module manufacturers released by PV Tech.

Speaker #2: Since first participating in the evaluation in 2014, we have maintained a great rating for 12 consecutive years. Also, we were recognized as a Tier-One energy storage provider by BNEF for the 10th consecutive quarter.

Gener Miao: Also, we were recognized as a tier 1 energy storage provider by BloombergNEF for the 10th consecutive quarter. These ratings reinforce our bankability, project implementation capabilities, and long-term delivery capabilities for the international market. Impacted by the market-based pricing mechanism for renewable energy and the pace of project investment, domestic installation demand has slowed. Yet, we observed the positive signs of shifting structural demand with national-level large-scale renewable energy-based projects led by the central and state-owned enterprises maintaining a steady pace of progress. The share of tenders for high-efficiency modules has increased significantly in the centralized procurement, and the criteria has shifted from simply pursuing lowest bidding price to greater emphasis on module efficiency, life cycle power generation performance, reliability, and the long-term delivery capability. High-efficiency modules have already commanded a reasonable premium in tenders.

Speaker #2: This rating reinforced our bankability, project implementation capabilities, and long-term delivery capabilities for the international market. Impacted by the market-based pricing mechanism for renewable energy and the pace of project investment, domestic installation demand has slowed.

Speaker #2: Yes, we observed positive signs of shifting structural demand, with national-level, large-scale renewable energy-based projects led by the central and state-owned enterprises maintaining a steady pace of progress.

Speaker #2: The share of tenders for high-efficiency modules has increased significantly in centralized procurement, and the criteria have shifted from simply pursuing the lowest bidding price to placing greater emphasis on module efficiency, lifecycle power generation performance, reliability, and long-term delivery capability.

Speaker #2: High-efficiency modules have already commanded a reasonable premium in tenders. At the same time, the distributed generation market is transitioning from scale-driven growth toward a focus on scenarios and operational value.

Gener Miao: At the same time, the distributed generation market is transitioning from scale-driven growth towards a focus on scenarios and operational value. Brand reputation, channel, local services, and the scenario adaptabilities are becoming increasingly critical. This trend benefits enterprises with global channel established brands and differentiated products, which enable conversion of technology and product power into more stable price relationship and product value. Looking forward to 2027, as electricity pricing marketization policies are gradually absorbed and mechanism-based pricing and project ROI models become clearer, several projects that were delayed due to insufficient returns are expected to gradually resume. Large-scale renewable energy-based products, direct green power connection, and distributed scenario-based application will continue to drive domestic demand. The overseas market is expected to maintain some growth resilience, benefiting from energy security, growing power demand, and improved solar-plus-storage economics.

Speaker #2: Brand reputation, channel, local services, and scenario adaptabilities are becoming increasingly critical. This trend benefits enterprises with global channels, established brands, and differentiated products, which enable the conversion of technology and product power into more stable price relationships and product value.

Speaker #2: Looking forward to 2027, as electricity pricing marketization policies are gradually absorbed and mechanism-based pricing and project ROI models become clearer, several projects that were delayed due to insufficient returns are expected to gradually resume.

Speaker #2: Large-scale, renewable energy-based product direct green power connection and the distributed, scenario-based application will continue to drive domestic demand. The overseas market is expected to maintain some growth resilience, benefiting from energy security, growing power demand, and improved solar-plus-storage economics.

Speaker #2: Leveraging our global sales network, leading high-efficiency products, and the continuously expanding solar plus storage solutions, we will capitalize on the opportunities arising from changes in demand structure and expanding application scenarios.

Gener Miao: Leveraging our global sales network, leading high-efficiency products, and continuously expanding solar-plus-storage solutions, we will capitalize on the opportunities arising from changes in demand structure and expanding application scenarios. We will continue to optimize our market and product mix and leverage our technological advantages to strengthen our presence in high-value markets, enhance product value, and improve the quality of our operations. With that, I will turn the call over to Fan.

Speaker #2: We will continue to optimize our market and product mix and leverage our technological advantages to strengthen our presence in high-value markets, enhance product value, and improve the quality of our operations.

Speaker #2: With that, I will turn the call over to Pam.

Speaker #3: Thank you, Jino. Leveraging our leading position and high-efficiency products, we optimized our sales mix during the quarter, resulting in gross margin reaching 4.2%, up 1.3 percentage points year over year.

Pan Li: Thank you, Gener. Leveraging our leading position and high-efficiency products, we optimized our sales mix during the quarter, resulting in gross margin reaching 4.2%, up 1.3 percentage points year-over-year. We also continued to optimize our capital structure and cash flow management and generated positive operating cash flow during the period, a significant improvement compared to last quarter. Our asset to liability ratio declined by approximately 1.5 percentage points from the beginning of the year. For the remainder of the year, our focus will be on balancing scale and earnings quality while carefully controlling cash flow. We expect full-year operating cash flow to improve compared to 2025. Looking at our Q2 financials in more detail. Total revenue was $1.82 billion, up 0.9% sequentially and down 31% year-over-year. The sequential and year-over-year changes were mainly due to the fluctuation in the shipment volume of modules.

Speaker #3: We also continue to optimize our capital structure and cash flow management, and generated positive operating cash flow during the period—a significant improvement compared to last quarter.

Speaker #3: Our asset-to-liability ratio declined by approximately 1.5 percentage points from the beginning of the year. For the remainder of the year, our focus will be on balancing scale and earnings quality, while carefully controlling cash flow.

Speaker #3: We expect full-year operating cash flow to improve compared to '25. Looking at our second quarter financials in more detail, total revenue was $1.82 billion, up 0.9% sequentially and down 31% year over year.

Speaker #3: The sequential and year-over-year changes were mainly due to the fluctuation in the shipment volume of modules. Gross margin was 4.2%, compared with 8.3% in the first quarter.

Pan Li: Gross margin was 4.2%, compared with 8.3% in the Q1 and 2.9% in the Q2 last year. The sequential decrease was mainly due to lower average selling price of solar modules, while the year-over-year increase was primarily due to the higher ASP. Total operating expenses were $287 million, up 21% sequentially and 2% year-on-year. The sequential and year-on-year increases were mainly due to higher expected credit losses in the Q2 this year. Operating expenses accounted for 15.8% of total revenues, compared to 13.1% in the Q1 this year and 10.6% in the Q2 last year. Operating loss margin was 11.6%, compared with 4.8% in the Q1 this year and 7.7% in the Q2 last year. Moving to the balance sheet.

Speaker #3: And 2.9% in the second quarter last year. The sequential decrease was mainly due to lower average selling price of solar modules, but the year-over-year increase was primarily due to the higher ASP.

Speaker #3: Total operating expenses were $287 million, up 21% sequentially and 2% year over year. The sequential and year-over-year increases were mainly due to higher expected credit losses in the second quarter this year.

Speaker #3: Operating expenses accounted for 15.8% of total revenues, compared to 13.1% in the first quarter this year and 10.6% in the second quarter last year.

Speaker #3: Operating loss margin was 11.6%, compared with 4.8% in the first quarter this year and 7.7% in the second quarter last year. Moving to the balance sheet, at the end of the second quarter, our cash and cash equivalents were about $2.5 billion, compared with about $3.3 billion at the end of the first quarter.

Pan Li: At the end of the Q2, our cash and cash equivalents were about $2.5 billion, compared with about $3.3 billion at the end of the Q1 this year. AR turnover days was 113 days, compared with 128 days in the Q1 of 2026. Inventory turnover was 125 days compared to 142 days in the Q1 this year. At the end of the Q2, total debt was about $6.6 billion, compared to about $6.8 billion at the end of the Q1 of 2026. Net debt was $4.1 billion, compared to $3.5 billion at the end of the Q1 of 2026. This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed.

Speaker #3: This year, AR turnover days were 113 days compared with 128 days in the first quarter of '26. Inventory turnover was 125 days compared to 142 days in the first quarter.

Speaker #3: This year, at the end of the second quarter, total debt was about $6.6 billion, compared to about $6.8 billion at the end of the first quarter of '26.

Speaker #3: Net debt was $4.1 billion compared to $3.5 billion at the end of the first quarter of '26. This concludes our prepared remarks. We are now happy to take your questions.

Speaker #3: Operator, please proceed.

Speaker #1: Thank you. If you wish to ask a question, please press star on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star, then 2.

Operator 3: Thank you. If you wish to ask a question, please press star on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star, then 2. If you are on a speakerphone, please pick up your handset to ask your question. Your first question comes from Brian Lee with Goldman Sachs & Co. Please go ahead.

Speaker #1: If you are on a speakerphone, please pick up your handset to ask your question. Your first question comes from Brian Lee with Goldman Sachs & Company.

Speaker #1: Please go ahead.

Speaker #4: Hey, guys. This is Tyler Bisset on for Brian. Thanks for taking our questions. ASPs declined pretty meaningfully sequentially, so I'm curious how you're viewing ASPs so far in Q3 and how much of an impact you could see from greater shipments of Tiger Neo 3.0 modules.

Tyler Bisset: Hey, guys. This is Tyler Bisset for Brian. Thanks for taking our questions. ASPs declined pretty meaningfully sequentially. Curious how you are viewing ASPs so far in Q3, and how much of an impact you could see from greater shipments of Tiger Neo 3.0 modules?

Gener Miao: For the ASP side, firstly, apple to apple, we are expecting the price to go up a little bit in Q3. If we look into the average prices, it will go up as well. The first reason is because from the current market situations, the price is going up because of different reasons. Spot markets goes up. Most of the DG prices are following the spot market. We are expecting the price of Q2 goes up. The second reason is because the mix of different products. Our 3.0 product, which is a premium product, the ratio in Q3 will be definitely higher than Q2, which will be helpful to lift up the ASP in Q3 as well.

Speaker #2: Yeah. For the ASP side, we expect, firstly, apples to apples, we are expecting the price to go up a little bit in Q3. And if we look into the average prices, they will go up as well, because firstly, the first reason is because from the current market situation, the price is going up for different reasons, but small markets are going up.

Speaker #2: So most of the DG prices are following the small market, so we are expecting the price in Q2 to go up. The second reason is because of the mix of different products.

Speaker #2: Our 3.0 product, which is a premium product, ratio in Q3 will definitely be higher than in Q2, which will help lift up the ASP in Q3 as well.

Tyler Bisset: Super helpful. We have seen pricing for wafers and cells increase pretty meaningfully over the past month. We have also seen futures prices for poly also increasing following some industry self-regulation. Wanted to see how you are thinking about your input costs over the near term and whether you are expecting any impacts from some of these recent moves in input costs.

Speaker #4: Super helpful. And we've seen pricing for wafers and cells increase pretty meaningfully over the past month. We've also seen futures prices for poly also increasing following some industry self-regulation.

Speaker #4: So, I wanted to see how you're thinking about your input costs over the near term, and whether you're expecting any impacts from some of these recent moves in input costs.

Gener Miao: So you are talking about the increase of cost, right?

Speaker #2: So, you are talking about the increase in costs, right? So what is the impact?

Tyler Bisset: Yes.

Gener Miao: What is the impact? We believe it is a kind of healthy rebound, including polysilicon, glasses, and a couple of materials. That is why I think the industrial pair and the increased module price, we do not believe this is going to have negative impact on the customer side. If you look at landscape, solar is the cheapest energy sources. Now there is a huge demand for storage, and solar-plus-storage will be the dominator of the energy diversifications for most of the regions.

Speaker #4: Yeah.

Speaker #2: We believe it's a kind of healthy rebound, including poly, silicon, glass, and a couple of other materials. And that is why I think, with the industry peaking and the increased module price, we don't believe this is going to have a negative impact on the customer side.

Speaker #2: And if you look at the landscape, solar is the cheapest energy source, and now there's a huge demand for storage. Solar plus storage will be the dominator of energy diversification for most of the regions.

Speaker #4: Okay, and just one more from us. Can you provide any more details on how you're balancing shipment volumes and profitability, and how that weighed on your shipment volume guidance for the year?

Tyler Bisset: Okay, and just one more from us. Can you provide any more details on how you are balancing shipment volumes and profitability, and how that weighed on your shipment volume guidance for the year? Are there certain markets that you are prioritizing or de-emphasizing?

Speaker #4: Are there certain markets that you are prioritizing or de-emphasizing?

Gener Miao: We guided down the shipments, right? To 60 to 70. That is very clear message. We do not believe it is the right time to focus on the scale and the profitabilities and the operating cash flow is the key. So we do a lot of optimization of the structures, not only the markets as well as the products and the efficiencies, even our employee resources. Particularly, if you look at 2026 and the demand in China is 30% to 40% lower than last year. So definitely, we have less and less exposure in China. China is still relatively competitive and the price is one of the lowest of the markets. But what we are doing is not only the country by country, as well as the customer by customer.

Speaker #2: We guided down the shipments, right, to 60 to 70. That's a clear message, and we don't believe it's the right time to focus on scale.

Speaker #2: And the profitability and operating cash flow are key. So, we do a lot of optimization of the structures—not only the markets, but also the products—and we are increasing efficiency, even in our employee resources.

Speaker #2: And particularly, if you look at 2026 and the demand in China is 30% to 40% lower than last year. So definitely we have less and less exposure in China, and China is still relatively competitive and the price is low.

Speaker #2: It's one of the lowest markets, but what we are doing is not only the country by country, as well as the customer by customer.

Speaker #2: And on top of that, because we are zoning out the Tiger Neo 3, that is one of the key markets and targeting the digital markets and particularly for the premium markets including the United States and Europe.

Gener Miao: And on top of that, because we are rolling out the Tiger Neo 3.0, that is one of the key markets and targeting the potential markets, and particularly for the premium markets, including United, including Europe. So that is one of the area we like to penetrate more markets here and to get relatively good profitabilities.

Speaker #2: So that is one of the areas we’d like to penetrate for more market share, and to get relatively good profitability.

Speaker #4: All right. Thank you very much.

Tyler Bisset: All right. Thank you very much.

Speaker #2: Yes. So I just like to take it up to the I think the investor in the call and one this quarter meeting, early release of a relatively different and if you look at the GKS, and the US companies, we like to requisition the companies along strategies and firstly, GKS is kind of the controlling shareholder.

Gener Miao: Yeah. So I'd just like to take the opportunity to, I think the investor in on a call. And one, this quarter meeting, earnings data are relatively different. If you look at the JKS and the US companies, we like to reposition the company's long strategies. Firstly, JKS is kind of the controlling shareholder of Jinko China, with the company which is the focus on integration of the solar-plus-storage. But now JKS has more capabilities. In the last five years, we built up a very, very strong strategic investment teams and dozens of investment. A lot of investment are very, very successful. In the last five years, we focus on solar storage-related upstream, downstream. Kind of the very high growth potential companies to make the financial investment and to get the investment returns, and as well as get some synergies for Jinko China.

Speaker #2: So Jinko China, the company which is focused on integration of solar plus storage, but now GKS has more capabilities in the last five years.

Speaker #2: We build up a very, very strong strategic investment teams and invest a dozens of investment, a lot of investment are very, very successful. And in the last five years, we focus on solar storage related option downstream kind of the very high growth potential companies to make the financial investment and to get the investment returns and as well as get some synergies for Jinko China on top of that because China is more kind of the more competitive on the new technology like the AI, quantum computing, robotics, and the teams is shifting the focus to more kind of strategic board industries, particularly the next generation.

Gener Miao: On top of that, because China is more competitive on the new technology, like the AI content and computing robotics.

Haiyun Cao: The team is shifting the focus to more strategic and broad industries, particularly the next generation. We think the JKS is kind of shifting to both. One is the transforming of the Jinko China and the focus on new energy. On top of that, the JKS and the US companies were shifting more capabilities to invest on the high-growth opportunities. China is the second most powerful country. There is a lot of massive opportunities, and our teams are able to take the advantage. We would like the investor gradually to have the communication with our IR teams and to understand what is the progress, particularly for the strategic investment we are planning and we have made, which we believe will get a very strong return for the JKS in the next 2 or 3 years. Again, we think it is good for the valuation of JKS.

Speaker #2: So we think the GKS is kind of shifting to both: one is the controlling of the Jinko China, and the focus on renewable energy.

Speaker #2: And on top of that, the GKS and the U.S. companies were shifting more capabilities to invest in the high-growth opportunities. China is the second most powerful country.

Speaker #2: There are a lot of massive opportunities, and our teams are able to take advantage of them. So, we would like our investors to gradually have communication with our IR teams and to understand what the progress is, particularly regarding the strategic investments we are making.

Speaker #2: The planning we have made, which we believe will get a very strong return for the GKS in the next two or three years.

Speaker #2: And again, we think it's good for the valuation of GKS. If you look at purely China versus the U.S., there is a very big valuation gap.

Haiyun Cao: If you look at purely the China versus US, there is a very big valuation gap. The US is just 20% to 30% valuation. Plus, we have a lot of portfolios investment and unique investment, which we are able to monetize. I would like to take the opportunity to bring this key topic and have the investor understand what we are going to do in the future. Thank you.

Speaker #2: The US is just 20 to 30 percent valuations. And plus, we have a lot of portfolio investments and unique investments, which we are able to monetize, and so I'd like to take the opportunity to bring up this key topic and have the investor understand, okay, what we are going to do, and in the future.

Speaker #2: Thank ank you.

Speaker #1: Your next question comes from Phil Shen with Ross Capital Partners. Please go ahead.

Operator 3: Your next question comes from Phil Shen with Roth Capital Partners. Please go ahead.

Speaker #3: Hey guys, thanks for taking my questions. Demi, nice to meet you. Congratulations on the new position. Wanted to check in with you guys on the section 232.

Phil Shen: Hey, guys. Thanks for taking my questions. Dimi, nice to meet you. Congratulations on the new position. I wanted to check in with you guys on the Section 232. Specifically, given your recent transition and sale of your US assets to FH Capital, can you talk about the impacts of the 232 on that JV? How do you expect module pricing to be impacted? Ultimately, how do you expect the landscape of manufacturers to shift as a result of the Section 232? Thanks.

Speaker #3: Specifically, given your recent transition and sale, of your US assets to FH Capital, can you talk about the impacts of the 232 on that JV?

Speaker #3: What kind of impact do you expect on module pricing? And then ultimately, how do you expect the landscape of manufacturers to shift as a result of Section 232?

Speaker #3: Thanks.

Haiyun Cao: In general, we believe it is very good for Jinko's strategy to diversify our manufacturing, shifting to long-term entities in the United States. Specifically, I think JV, because we are the financial minority investors, we are not in a position to discuss the plan for the joint ventures because the majority shareholder takes the leadership, and we are not involved in any operations. For the 232, in general, we believe that is consistent with Trump administration to bring manufacturing back to the United States, not only the module capacity, as well as the wafer, polysilicon, and the solar cell capabilities. We have expectation, anticipation, the 232 will be coming in the early year. It is come a little bit late, but we have some kind of diversified the potential supply chain to minimize the impact.

Speaker #2: In general, we believe it's kind of very good for Jinko's strategy to invest in our manufacturing, shifting to long-favored entities in the United States.

Speaker #2: And specifically, I think JV, because we are the financial minority investors, we are not in a position to discuss the plan for the joint ventures, because the majority shareholder takes the leadership and we are not involved in any operations.

Speaker #2: But for the two, three, two in general we believe that is consistent with Trump administration to bring manufacturing back to the United States not only the module capacity as well as the wafer polysilicon and the solar cell capabilities and we have expectation anticipation the two, three, two will become in the early year at its come a little bit late but we have some kind of diversified the potential supply chain to minimize the impact but anyway we believe that is going to be increase the cost of the solar modules that is going to have the impact to the solar development cost but we believe because of the it's a little bit significant increase for the potential solar module price but it's not have a significant impact for the solar farm investment returns given the US PPA prices is in recent years gradually increase to a relative competitive but a little bit higher level.

Haiyun Cao: Anyway, we believe that is going to increase the cost of the solar modules. That is going to have the impact to the solar development cost. We believe because it is a little bit significant increase for the potential solar module price, but it does not have a significant impact for the solar farm investment returns, given the US PPA prices in recent years gradually increase to a relatively competitive but a little bit higher level. Back to your question. We think it is anticipated, but it is a little bit exceeding expectation because the input price tax rate is a little bit higher, but it is not so high to make the industry demand dramatically go down. We still believe US is a good market in the next few years.

Speaker #2: So back to your question, we think it's anticipated, but it's a little bit exceeding expectations because the input price tax rate is a little bit higher. But it's not high enough to make the industry demand dramatically go down.

Speaker #2: We still believe the U.S. is a good market in the next few years, and Jinko, as a minority interest, and the joint venture will penetrate the U.S. market to take the opportunity in the U.S. market.

Haiyun Cao: Jinko has minority interest, and the joint venture will penetrate the US market to take the opportunity in the US market.

Speaker #3: Okay, thanks, Charlie. So would you expect pricing to kind of go to $0.42, $0.44 in the U.S.? You guys are a JV minority owner now, but I’ve got to imagine you have some views on pricing.

Phil Shen: Okay. Thanks, Charlie. Would you expect pricing to go to $0.42, $0.44 in the US? You guys are a JV minority owner now. I got to imagine you have some views on pricing. What is your sense of where module pricing goes in the US? Thanks.

Speaker #3: So, what's your sense of where module pricing goes in the U.S.? Thanks.

Speaker #2: If you look at the minimum price—38, right? Thirty-eight cents, 15% tariff. I think the market's evaluating the potential impact and customers are evaluating how they are going to proceed with their project plans while managing risk.

Gener Miao: If you look at the minimum price, $0.38, right? $0.38, 15% tariff. I think the market is evaluating the potential impact, and customer is evaluating how they are going to proceed their project plan. I think we don't have definitive answer from customers, but the initial feedback is that most projects will continue evenly under the kind of 232 policy disruptions. That is my initial preliminary information.

Speaker #2: And I think we don't have a definitive answer from customers, but the initial feedback is that most projects will continue even under the kind of two-three-two policy disruptions.

Speaker #2: That is my initial preliminary information.

Speaker #3: Okay, great. That's very helpful. Thanks, Charlie. And then, as it relates to—you just mentioned two elements of the 232: the minimum import price and then the 15% ad valorem tariff.

Phil Shen: Okay, great. That's very helpful. Thanks, Charles. You just mentioned two elements of the 232, the minimum import price and then the 15% ad valorem tariff. There's also a third part, which is the tariff rebate program that is based on US CapEx. Would you expect your JV to qualify for that tariff rebate program?

Speaker #3: There's also a third part, which is the tariff rebate program that is based on U.S. capex. Would you expect your JV to qualify for that tariff rebate program?

Gener Miao: It's still the JV question. I'm not in position, but based on interpretation of policy, my understanding is firstly, it's a kind of new capacity expansion. Secondly, it should include wafer, cell, and maybe polysilicon, right? It's a new capacity addition. The solar module is not included, and it looks like it's targeting for the wafer, cell, and as well as polysilicon.

Speaker #2: It's still the JV question. I'm not in position, but based on my interpretation of the policy, my understanding is, first, it's a kind of new capacity expansion.

Speaker #2: Secondly, it should include wafer sale and maybe polysilicon, right? It's a new capacity addition. It's not included in the solar module is not included and it looks like it's targeting for the wafer cell and as well as polysilicon.

Speaker #3: Right, that's true. It's based on new capacity, but it can support manufacturers to expand capacity. So, okay, I'll pass it on from here. Thank you very much.

Phil Shen: Right. That's true. It's based on new capacity, but it can support manufacturers to expand capacity. Okay. I'll pass it on from here. Thank you very much.

Speaker #2: Welcome.

Gener Miao: Welcome.

Speaker #1: Your next question comes from Rajiv Chowdhury with Sunsera Capital. Please go ahead.

Operator 3: Your next question comes from Rajiv Chaudhri with Sunsera Capital. Please go ahead.

Speaker #4: Good morning, everybody. I have a few questions, starting with: Can you calibrate for us the size of the market that you expect globally this year and in 2026?

Rajiv Chaudhri: Good morning, everybody. I have a few questions, starting with, can you calibrate for us the size of the market that you expect globally this year in 2026, and then break it down between the total size in China and international?

Speaker #4: And then, could you break it down between the total size in China and internationally?

Gener Miao: You mean the 2026 total demand, right?

Speaker #2: So you mean the 2026 total demand, right?

Speaker #4: Yes.

Rajiv Chaudhri: Yes.

Speaker #2: Yeah, so I think in 2026 we are expecting a low year because of the sharp drop in China's domestic demand. If you are looking at the numbers, we are thinking roughly, on the module side, it will be around 600 gigawatts.

Gener Miao: Yes. I think 2026, we are expecting a low year because of the sharp drop of the China domestic demand. If you are looking number-wise, we are thinking module side, it will be roughly 600 gigawatts or slightly below that. That will be our expectation. If you break them into different categories, you will find out, for example, in China, you will find out is mainly the demand disappear from the utility market. But the distribution market are still strong or robust during the H1. If you look at the non-China market demand, you will find out the European market had some up and downs during the H1.

Speaker #2: Or slightly below that. That will be our expectation. And if you break them into different categories, you will find out, for example, in China, you will find that it's mainly the demand disappearing from the utility market, but the distribution market is still strong or robust during the first half.

Speaker #2: And if you look at the non-China market demand, you will find that the European market had some ups and downs during the first half. But if we look into the total numbers, because of the first quarter rush due to the VAT policy change in China, most of the non-China demand is almost in line with expectations, even slightly higher than last year.

Gener Miao: But if we look into the total numbers because of the Q1 rush of the VAT policy change in China, most of the non-China demand is almost in line with the expectations, even slightly higher than last year. That is what we had for the H1 and our expectation for this year. For next year, we believe there will be some recovery in the utility market in China. So we are expecting a better 2027 demand than 2026. If you want to quantify that, we will look at something between 600 to 650 gigawatts in 2027 versus around 600 gigawatts or slightly below 600 gigawatts in 2026.

Speaker #2: So that's what we had for the first half and our expectations for this year. And for next year, we believe there will be some recovery in the utility market in China.

Speaker #2: So we are expecting a better 2027 demand than 2026. So if you want to quantify that, we will look at roughly 600 something between 600 to 650 gigawatts in 2027 versus around 600 gigawatts or slightly below 600 gigawatts in 2026.

Speaker #4: Okay. So if the 2026 is around 600, that means that you're now looking at your market share globally going down from last year, because your market share would be about 11%, right?

Rajiv Chaudhri: Okay. So if the 2026 is around 600, that means that you are now looking at your market share globally going down from last year? Because your market share would be about 11%, right?

Speaker #2: Yes. There are some reasons behind it, right? First, what we call the accessible market is reducing, right? So, there are certain sizable markets introducing more and more strict barriers—trade barriers or policy barriers—which are not easy to access.

Gener Miao: Yes. There are some reasons behind it. The first one is, we call accessible market is reducing. There are certain sizable market is introducing a more and more strict trade barriers or policy barriers, which is not easy to access. The second reason is because the competitions across the manufacturers where some of the tier 3, tier 2 players, they are to attack the market or even protect their own cash flow, which is not what Jinko can do. So Jinko is still taking care of the long-term reputation and the qualities. That is why we have to give up some of the low price deal and protect our own interests.

Speaker #2: Right? So, the second reason is because of the competition across manufacturers, where some of the tier-three, tier-two players are playing a low-price strategy, sacrificing quality, etc.

Speaker #2: ...to attack the market or even protect their own cash flow, which is not what Jinko can do. So Jinko is still taking care of their long-term reputation and the quality.

Speaker #2: So that's why we have to give up some of the low-price deals and protect our own interests.

Speaker #4: So breaking it down, when you said about some markets becoming less easy to access, I assume you're talking primarily about the United States. Can you give us a sense of what you expect out of that 65 gigawatts that you expect this year—roughly what percentage will be the US? And what do you think, going forward longer term, your US sales will be as a percent of total?

Rajiv Chaudhri: So breaking it down, when you said about some markets becoming less easy to access, I assume you are talking primarily about the United States. Can you give us a sense of what you expect out of that 65 million gigawatts that you expect this year? Roughly what percentage will be the US, and what do you think, going forward, longer term, your US sales will be as a percentage?

Speaker #2: Yeah, sorry to jump in, but it's not only the US. Even, for example, in Europe, they have similar rules asking that all EU-funded or financed projects cannot use China-based or Chinese factories.

Gener Miao: Yeah, sorry to jump in, but not only US. Even, for example, Europe, they have these kind of rules asking for all the EU-funded projects or financed projects cannot use China-based or Chinese factories. For India, it is a kind of technical barrier. But for China-based manufacturing, it is not accessible at all as well, together with some other mid or small size of the market as well, like Turkey, like other markets. I will not name all of them, but definitely US is one of them or one of the big ones. But it is not the only one. There are many more because of different reasons, geopolitical or securities, I think.

Speaker #2: So for India, it's a kind of technical barrier, but for China-based manufacturing, it is not accessible at all as well. Together with some other mid- or small-sized markets as well, like Turkey and other markets.

Speaker #2: So I won't name all of them, but definitely, the US is one of them, or one of the big ones. But it's not the only one.

Speaker #2: Just many more, because of different reasons—geopolitical or securities.

Speaker #4: I see. Okay. Moving on to another question about credit losses. Can you elaborate on what you mean by that and what actually happened in the second quarter?

Rajiv Chaudhri: I see. Okay. Moving on to another question about credit losses. Can you elaborate on what you mean by that and what happened actually in Q2?

Speaker #2: Credit loss? Why are you talking about the credit loss for accounts receivable? Are you talking about that?

Gener Miao: Credit loss?

Haiyun Cao: Credit loss. Rajiv, what are you talking about? The credit loss for accounts receivable? Are you talking about that?

Speaker #4: Yes. Can you just give us more details on that?

Rajiv Chaudhri: Yes.

Gener Miao: Hello?

Rajiv Chaudhri: Can you just give us more details on that?

Speaker #2: So you mean some kind of probation impairment or whatever you are looking at, right?

Haiyun Cao: You mean kind of provisioning impairment or whatever you are looking at, right?

Speaker #4: Yes. No, you mentioned in your comments that one of the reasons for higher operating expenses in the second quarter was that you experienced some credit losses.

Rajiv Chaudhri: Yes. You mentioned in your comments that one of the reasons for higher operating expenses in Q2 was that you experienced some credit losses, and I was just looking for some elaboration. Was it some particular customers who went delinquent?

Speaker #4: And I was just looking for some elaboration. Was it some particular customers who went delinquent?

Speaker #2: So Rajiv, let us check, but based on my understanding, we didn't have any kind of deteriorated credit from customers, and it's kind of an accounting perspective based on the aging.

Haiyun Cao: For Rajiv, let us check. Based on my understanding, we did not have any kind of deteriorated credit from customers, and it is accounting perspective based on the agings. Actually, if you look at the operating cash flow, we delivered positive RMB 600 million in H1. The healthy operating cash flow is one of the key focus from management perspective. We do not see any significant bad debits or whatever from customer perspective.

Speaker #2: And actually, if you look at the operating cash flow, we delivered a positive RMB 600 million in the first half of the year. And healthy operating cash flow is one of the key focuses from a management perspective.

Speaker #2: And we don't see any significant bad debt or whatever from a customer perspective.

Speaker #4: Okay, another question is: you mentioned that the cost of production of the newer product line, the 3.0, remained elevated. Can you explain some of the reasons why?

Rajiv Chaudhri: Okay. Another question is on, you mentioned that the cost of production of the newer product line, the 3.0, remained elevated. Can you explain some of the reasons why? Because we were expecting, actually, the cost to start to come down as you ramped up. What happened?

Speaker #4: Because we were expecting, actually, the cost to start to come down as you ramped up. What happened?

Speaker #2: Oh. In the second quarter, we ramp up the new facility. In the second year, three. And in the ramping up stage, typically the cost is relatively higher.

Gener Miao: The Q2, we ramped up the new facility, the Taicang Phase 3. In the ramping up stage, typically the cost is relatively higher. On top of that, the Q2, because the Q1, the raw material cost, the silver cost is relatively higher. So carry forward to the Q2, the cost is relatively higher. But it is a kind of combination of the two factors together to result in the relatively higher cost. But we expect the cost will be lower in the Q3 with the capacity reaching to full operational status, as well as the input cost is relatively lower compared to the Q2.

Speaker #2: On top of that, in the second quarter, because in the first quarter the raw material cost and the shipper cost are relatively higher, that carries forward to the second quarter, so the cost is relatively higher.

Speaker #2: But it's a combination of the two factors together to resolve the relatively higher cost. But we expect the cost will be lower in the third quarter, with the capacity reaching four operational standards.

Speaker #2: In addition, the input cost is relatively lower compared to the second quarter.

Speaker #4: So, given that you're expecting the ASPs also to be up in the third quarter, are you suggesting that gross margin could bounce up quite nicely in the third quarter?

Rajiv Chaudhri: Given that you are expecting the ASPs also to be up in the Q3, are you suggesting that gross margin could bounce up quite nicely in the Q3?

Speaker #2: Yeah, we did expect a moderate improvement in gross margin in the third quarter.

Gener Miao: Yeah. We did expect gross margin moderate improvement in the Q3.

Speaker #4: Okay. And can you also talk a little bit about Mr. Xiande Li stepping down from the CEO's position? This is obviously a tough time for the company.

Rajiv Chaudhri: Okay. Can you also talk a little bit about Mr. Xiande Li stepping down from the CEO's position? This is obviously a tough time for the company. Can you just elaborate on why he's chosen to do it at this time?

Speaker #4: Can you just elaborate on why he's chosen to do it at this time?

Speaker #2: I think they will leave. Our chairman is founder; he is always focused on the strategic, long-term visions. And I don't believe there's any change because of the change of the Chief Executive Officer.

Haiyun Cao: I think David Li, our Chairman, is the founder. He's always focused on the strategic long-term visions. I do not believe there's any change because of the change of the Chief Executive Officer, because JKS is a controlling shareholder of Jinko China. The key business of JKS is on top of the controlling shareholder of Jinko China. That is the primary entities to operate the business. The Chairman believes this is the right time. JKS, on top of the controlling shareholder business and doing the strategic investment, because our Chairman built up the teams, the strategic investment teams, 5 years ago. There is a strong track record in the last 5 years, and it is the right time to catch up the massive opportunities in China.

Speaker #2: Because JKS is the controlling shareholder of Jinko China, the key business of JKS, on top of being the controlling shareholder of Jinko China, is the primary entity to operate the business.

Speaker #2: And the Chairman believes this is the right time, with JKS on top of the controlling shareholder business and doing the strategic investment, because our Chairman built up the teams as strategic investment teams five years ago. There is a strong track record in the last five years.

Speaker #2: And it is the right time to catch up on the massive opportunities in China. Not only in the last five years, there is a solar and storage investment opportunity, as well as AI, robotics, quantum computing—a lot of investment opportunities.

Haiyun Cao: Not only in the last 5 years, there is a solar and storage investment opportunity, as well as AI, robotics, quantum computing. A lot of investment opportunities. That is why I think I talked about in the beginning of the conference call. We like to investment to take the times to understand, okay, what we have done in the last 5 years for strategic investment, overturn the investment, cash out maybe 60%. There is a very good investment opportunity. The team have invested, including the recent large model, the AI model, K1, K3, maybe you heard from the news. We believe there will be a good opportunity to make investment return through the JKS strategic investment and the team platform.

Speaker #2: So that is why I think—I just, like I think I talked about in the beginning of the conference call—and we'd like the investment to have, take the time to understand, okay, what we have done in the last five years for strategic investment, over ten investments, cash out maybe 60%.

Speaker #2: And there is a very good investment opportunity. The team has invested, including in the recent large AI model—K3. Maybe you heard about it in the news.

Speaker #2: And we believe there will be a good opportunity to make investment returns through the JKS strategic investment team platform.

Speaker #4: Okay. Moving on to capital spending, can you tell us what the capital spending plan is for this year, and how you're thinking about 2027?

Rajiv Chaudhri: Okay. Moving on to capital spending. Can you tell us what the capital spending plan is for this year and how you are thinking about 2027? Obviously you are running well below the 100 gigawatt capacity that you have. Should we expect basically very little capital spending in the next 2 years?

Speaker #4: Obviously, you are running well below the 100-gigawatt capacity that you have. Should we expect basically very little capital spending in the next two years?

Speaker #2: Yeah, correct. There will be very, very small minimum and minor upgrades, and we don't expect any significant investment. Even if we want to do some in the future, the local manufacturing in key countries outside of China for the local market will be done through joint venture structures.

Haiyun Cao: Yeah, correct. There will be very small minimum and minor upgrades, and we don't expect any significant investment. Even if we want to do some in the future. We do the local manufacturing in the key countries out of China for the local market. We will do through the joint venture structures. That will minimize our CapEx as well. That is depending on if the market is getting rebound. Back to your question, I don't believe is significant and should be very small on the maintenance CapEx in the next 2 years.

Speaker #2: That will minimize our expected CAPEX as well, but that depends on whether the market rebounds. So, back to your question, I don't believe it will be significant.

Speaker #2: And we should be very, very small in the maintenance CAPEX in the next two years.

Speaker #4: So is the $5 billion number a maintenance CAPEX? Or even less than that?

Rajiv Chaudhri: Is the 5 billion number a maintenance CapEx or even less than that?

Speaker #2: No, it should be significantly lower—maybe $500 million or maybe $1 billion. And there should be very, very small.

Haiyun Cao: No. It should be significant lower, maybe 500 million or maybe 1 billion, and should be very small.

Speaker #4: I see. Okay. And how much CAPEX is required in the storage business?

Rajiv Chaudhri: I see. Okay. How much CapEx is required in the storage business?

Speaker #2: The storage business—what? Oh, storage. Oh, storage, we don't have a capacity plan. Currently, we have roughly 5 gigawatt-hours battery cell and 20 gigawatt-hours battery pack.

Haiyun Cao: The storage business. What is it? Storage. Oh, storage. Oh, storage, we don't have capacity plan. Currently we have roughly 5 gigawatts battery cell and 20 gigawatts battery pack. We don't have plan to do the capacity expansion, and we would like to take a lighter approach and partner with different suppliers. The key element part, key part is the solution. The solution for AIDC, for solution for different case, different projects and the technical branding and marketing capability and the technical services. That will be the key investment. But the investment is on the, I think the teams. It's not the equipment.

Speaker #2: We don't have plans to do the capacity expansion. And we would like to take the line approach, and the partner is different suppliers. And the key element, the key part, is a solution.

Speaker #2: The solution for AIDC for solution for different case different projects. And technical branding and marketing capability and the technical services that will be the that will be the key investment but the investment is on the I think the teams is not the equipment.

Speaker #4: I see. Okay. So your business model in storage is basically an asset-light model?

Rajiv Chaudhri: I see. Okay. So your business model in storage is basically an asset-light model?

Speaker #2: Yes. Yes. Yeah.

Haiyun Cao: Yes.

Rajiv Chaudhri: Yeah. Now, going back to module market share, do you think that in the Q2 also you are number one in the world?

Speaker #4: Yeah. Now, going back to module market share, do you think that in the second quarter you were also number one in the world?

Speaker #2: Yes. Yeah. In the first half year. And we are I think we are still the number one. And but that is now our target and the key is we need to go get through the cycles and we develop our capabilities and the volume does not show any capabilities.

Haiyun Cao: Yeah, in the H1, I think we are still the number one on the. But that is not our target. The key is we need to go get through the cycles and we develop our capabilities. The volume does not show any capabilities. Capabilities shows we are able to have more good planning, and we have make sure we have more capabilities to select different customers and different markets and branding and marketing activities. It's not, we don't believe the volume say something.

Speaker #2: Capability shows we are able to have better planning, and we have to make sure we have more capabilities to select different customers and different markets, and to carry out branding and marketing activities. It's not that we don't believe the volume says something.

Speaker #4: Okay. So at what level do you think your given that some markets are becoming more difficult as Jenner mentioned, at what level do you think your market share globally bottoms out?

Rajiv Chaudhri: Okay. At what level do you think, given that some markets are becoming more difficult, as Gener mentioned, at what level do you think your market share globally bottoms out? At the peak it was around 15%, roughly a couple of years ago, and now you are heading towards 11% to 12%. Where do you think that number bottoms out?

Speaker #4: At the peak, it was around 15%, roughly in the last couple of years. Now you're heading towards 11 to 12%. Where do you think that number bottoms out?

Speaker #2: Bottom out. Frankly, I don't have the target number, but a fair estimate—I think 10% is a reasonable number for the current stage.

Haiyun Cao: Bottom out. Frankly, I do not have a target number, but a fair estimate, I think 10% is a reasonable number for current stage. But the markets go pick up and we think we should be ready to get more market share.

Speaker #2: But when the markets pick up, we think we have good position and should be ready to get more market share.

Rajiv Chaudhri: Okay. Thank you very much.

Speaker #4: Okay. Thank you very much.

Speaker #2: Thank you.

Haiyun Cao: Thank you.

Speaker #1: The next question comes from Alan Low with Jefferies. Please go ahead.

Operator 3: The next question comes from Alan Lau with Jefferies. Please go ahead.

Speaker #4: Thanks, Madison. Thanks, Madison, for taking my question. Also, congratulations, Jimmy, on becoming the CEO of the company. So I would like to follow up on a couple of things.

Alan Lau: Thanks very much for taking my question. Also, congratulations to Yi on becoming the CEO of the company. I would like to follow up on a couple of stuff. First of all, the Section 232, heard there are already quite significant inventory in the US. BloombergNEF is quoting close to 100 gigawatt. Not sure if you are aware of it and would like to know how much inventory we have to get prepared for the policy change.

Speaker #4: First of all, on Section 232, we heard that there is already quite significant inventory in the US. BNEF is quoting close to 100 gigawatts. Not sure if you are aware of it.

Speaker #4: And I would like to know how much inventory we have to get prepared for the policy change.

Speaker #2: We did have preparations, but it's based on the short-term sales contracts, right? In the next two or three months, typically we will arrange some kind of purchase agreement.

Haiyun Cao: We did have preparations. It is based on the short-term sales contract, right? In the next 2 or 3 months. Typically, we will arrange some kind of purchase agreement. Because there is still sufficient time, right? 2 or 3 months.

Speaker #2: And but because there's still sufficient time, right—two or three months—and we will purchase on a regular basis, and we believe because the cost structure is a little bit higher, the market is able to absorb the potential cost increase.

Alan Lau: Yeah

Haiyun Cao: We will purchase on regular basis. We believe because the cost structure is a little bit high, and we believe the market are able to absorb the potential cost increase.

Speaker #4: Understood. So, how much inventory do you see in the market?

Alan Lau: Understood. How much inventory in the market do you see?

Speaker #2: We don't have that information. You mean the module, right?

Haiyun Cao: We do not have the information. You mean in the module, right?

Speaker #4: Yes. Yes. Yes.

Alan Lau: Yes.

Haiyun Cao: I think you can check the customer data. Maybe two, three months later, you will see the US customer data. So it will have a better understanding about how many or how much megawatt has been imported.

Speaker #2: I think you can check the customer data. Maybe two or three months later, you will see the U.S. customer data. So it will provide a better understanding about how many, or how much, megawatt has been imported.

Speaker #4: Understood. Understood. Thanks. I also heard some feedback on the Section 337 investigation regarding the TOPCon patent. I wonder, how do you see it, and is it affecting any of the TOPCon sales in the US?

Alan Lau: Understood. Thanks. Also heard some feedbacks on the Section 337 investigation regarding to the TOPCon patent. Wonder how do you see it, and is it affecting any of the TOPCon sales in the US?

Haiyun Cao: Is that the First Solar patented?

Speaker #2: Is that the first solar patent case?

Speaker #4: Yeah. They have a patent case and also there's a Section 337 investigation, and yeah, there's some feedback suggesting that, yeah, this might impact or this might create some problems for selling TOPCon into the US market.

Alan Lau: Yeah. They have a patent case, and also there is a Section 337 investigation. There is some feedback suggesting that this might impact or this might create some problems for selling TOPCon into the US market.

Speaker #2: I didn't hear the information or any update, but again, based on our internal and external teams, we are quite confident in our patent capabilities, and we don't see any disruption for Jinko so far.

Haiyun Cao: I did not hear the information or any update, but again, based on our internal, external teams, we are quite confident in our patent capabilities. We do not see any disruption for JinkoSolar so far.

Speaker #4: Understood. And regarding the strategic cooperation with one of the major US players, I wonder if you might share the progress on that front.

Alan Lau: Understood. Regarding the strategic cooperation with one of the US major players, I wonder if you might share the progress on that front. Is there updates? Because there is a recent announcement of a $10 billion of investment into building solar capacities by that largest player in the ESS. I wonder what the progress of our discussion with that player.

Speaker #4: Is there any update, especially since there was a recent announcement of a $10 billion investment into building solar capacity by the largest player in the ESS?

Speaker #4: So, I wonder what the progress is of our discussion with that player?

Speaker #2: We haven't made any progress so far. If there is any significant improvement or progress, I think we may update the list with the news.

Haiyun Cao: We didn't have any progress so far. If any significant improvement, any progress, I think we may take the list on the news. Globalization is our strategy. It's cooperation with different partners, not only in the United States, in different countries. It's one of the key areas where we like to take and explore the different opportunities. If we reach to significant progress, we definitely will share the news.

Speaker #2: But globalization is our strategy. It is cooperation with different partners, not only in the United States, but also in different countries. This is our key area—we would like to explore different opportunities.

Speaker #2: And if we reach significant progress, we definitely will share the news.

Speaker #4: Understood. So my last question is on the ESS business. I think in the last quarter, in the PowerPoint, it showed around 1.42 gigawatt-hours of ESS shipment POD.

Alan Lau: Understood. My last question is on the ESS business. I think in the last quarter, in the PowerPoint, it showed around 1.42 gigawatt hour of ESS shipment. While in this quarter, since the number is revised, I'm not sure if the way of calculating the shipments is different, but it seems that Q1 has a lower number of shipment, whereas Q2, there's 1 gigawatt hour plus shipment. It seems the company is reiterating its annual target. Does it mean that in H2 there will be close to 8 gigawatt hour of shipment?

Speaker #4: While in this quarter it seems the number is revised, or I'm not sure if the way of calculating the shipments is different, but it seems that Q1 has a lower number of shipments, whereas in Q2 there's one gigawatt hour-plus shipment, and it seems the company is reiterating its annual target.

Speaker #4: So does it mean that in the second half there will be close to 8 gigawatt-hours of shipment?

Haiyun Cao: It's H2 loaded. Because a lot of projects we shift, but we need to go through different stage, including testing, commissioning, and particularly for the large scale ESS project. We have the confidence that we're able to achieve our guidance by the end of the year. If you're looking to next year, Q2, Q3 should be, we are able to recognize maybe 3 to 4 gigawatt hours a quarter, next quarter.

Speaker #2: It's the second half of the year loaded, and because of a lot of projects we shipped, we need to go through different stages, including testing, commissioning, and particularly for the large-scale ESS project.

Speaker #2: And we have the confidence we are able to achieve our guidance by the end of the year. And if you're looking to next year and the second quarter, it could be that we are able to recognize maybe three to four gigawatt hours a quarter next quarter.

Speaker #4: Understood. Understood. So how much was shipped in the first quarter? Because it seems there's a change in the method of calculation, or what?

Alan Lau: Understood. How much was shipped in Q1? Because it seems there's a change in the method of calculation or what?

Speaker #2: In the first half, we shipped, I think, three gigawatt-hours. And again, last year we shipped, I think, over five gigawatt-hours, but last year we recognized just one gigawatt-hour.

Haiyun Cao: H1, we shipped, I think, 3 gigawatt hours. Last year, we shipped, I think, over 5 gigawatt hours. Last year, we looked at just 1 gigawatt hours. So there is a gap, 4 gigawatts, carried forward into this year. H2,

Speaker #2: So there's a gap—four gigawatts—carried forward into this year. Anyway, it's...

Speaker #4: Understood.

Alan Lau: Understood

Haiyun Cao: Yeah.

Speaker #2: Yeah.

Speaker #4: Understood. Thank you. Thanks, Charlie, for taking my question. Thanks. Thanks, Jinko and Ganna. So, yeah, thank you.

Alan Lau: Understood. Thank you. Thanks, Charlie, for taking my question. Thanks. Thanks, Ding and Ghana. Yeah, thank you.

Speaker #2: Thank you. Thank ank you.

Haiyun Cao: Thank you.

[Company Representative] (JinkoSolar): Thank you.

Operator 3: That does conclude our conference for today. Thank you for participating. You may now disconnect.

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