Daqo New Energy Corp ADR

Hello and welcome to the DocuEnergy third quarter 2020 results conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. 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. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Kevin He, Investor Relations for DaQ Energy. Please go ahead.

Hello, everyone. I'm Kevin He, the Investor Relations of DaQ New Energy. Thank you for joining our conference call today. DaQ New Energy just issued its financial results for the third quarter of 2020. which can be found on our website at www.dqsolar.com. To facilitate today's conference call, we have also prepared a PPT presentation for your reference. Today attending the conference call, we have Mr. Longgeng Zhang, our Chief Executive Officer, and Mr. Mingyao, our Chief Financial Officer. The call today will feature an update from Mr. Zhang on market and operations, and then Mr. Yang will discuss the company's financial performance for the third quarter of 2020. After that, we will open the floor to Q&A from the audience. 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. Private Securities Litigation Reform Act, of 1995. These statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those containing any forward-looking statement. 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. 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. All information provided in today's call is as of today and we undertake no duty to update such information except as required under applicable law. Also during the call, we will occasionally reference monetary amounts in US 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. Without further ado, I now turn the call over to our CEO, Mr. Zhang. Please, Yongle.

Thank you, Kevin. Hello, everyone. Thank you for joining our constant call today. During the third quarter of 2020, We successfully completed the annual maintenance and several technology improvement projects at our polysilicon manufacturing facilities. We resumed full production in August with excellent operational results. For the third quarter, we produced 18,406 metric tons of polysilicon, among which approximately 97.7% was was more than great. We continued our relentless drive to lower production cost and reached to a record lower cost in 11B terms. During the third quarter, we completed our digital transformation project with a fully digitized manufacturing system that allowed us to continuously improve our process control and analyze our manufacturing data so as to achieve better results in system stability, manufacturing efficiencies, production cost, and the product quality in the future. As our facilities are now running with increased efficiency, we expected to achieve a higher production volume of approximately $19,500 to $20,500 in the fourth quarter, with a potential cost reduction by approximately 3% as compared to the third quarter. During the quarter, polysilicon ASPs increased rapidly due to the quick recovery in solar PV demand from both domestic and foreign markets. Our ASP was $9.13 per kg, a significant improvement from approximately $7.04 per kg in the second quarter. With robust market demand for monograde polysilicon, we expect our ASP to improve meaningfully in the fourth quarter as compared to the third quarter. In recent weeks, because of strong solid module and installation demand, we began to see solid glass capacity shortage becoming a bottlenecker for the solid industry and limiting module production. We expect the shortage of solid glass to ease over the coming months as additional solid glass capacity comes online. The temporary constraint on the industry's utilization rate will be removed which eventually will increase demand for polysilicon. Solar is now becoming one of the most competitive sources of energy, even compared to traditional power generation methods. Globally, we are seeing strong momentum around the world in adopting and implementing renewable energy policies that would strongly benefit the solar and market. Last month, Mr. Xi Jinping, the president of China, announced China's initiative to scale up the national contributions to peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060. We believe favorable policies benefiting solar will be implemented during the upcoming fourth five-year plan driving a substantial increase in solar installations in China. In addition, a growing number of countries and regions, including the most important economies in the world, have announced goals and plans to reduce carbon emissions and widely adopt renewable energies, in particular we are starting to see the trend of utility-scale solar generation combined with power storage providing base load energy and replacing and displacing coal power plants. We believe this is the beginning of a lot of solar displacing traditional fossil fuel-based generation driven by both economics and renewable energy mandates. We are strongly committed to contributing our efforts as a raw material provider for mainstream solar TV modules and are fully confident we will benefit from this fast-growing market. Now I will discuss outlook and guidance for our company. The company expects to produce approximately 19,500 to 20,500 metric tons of polysilicon and is selling approximately 20,500 metric tons to 21,500 metric tons of polysilicon to external clients during the fourth quarter of 2020. For the fall year of 2020, the company expects to produce approximately 75,800 metric tons to 76,800 metric tons of polysilicon, inclusive of the impact of the company's annual facility maintenance. Now, I will turn the call over to our CFO, Mr. Yang, who will discuss the company's financial performance for the third quarter of 2020.

Thank you, Longan, and hello, everyone. Thank you for joining our call today. Now I will discuss our company's financial performance for the third quarter of 2020. Revenues were $125.5 million compared to $133.5 million in the second quarter of 2020 and $83.9 million in the third quarter of 2019. The sequential decrease in revenue was primarily due to lower policy and sales volume despite higher average selling prices. Gross profit was $45.3 million compared to $22.7 million in the second quarter of 2020 and $18.1 million in the third quarter of 2019. Gross margin was 36% compared to 17% in the second quarter of 2020 and 21.5% in the third quarter of 2019. The increase in gross margin was primarily due to improvements in production costs in higher ASP. Selling general and administrative expenses were $9.2 million compared to $10.1 million in the second quarter of 2020 and $8.2 million in the third quarter of 2019. SG&A expenses during the quarter included $4 million in non-cash share-based compensation costs related to the company's share incentive plans. Research and development expenses were $1.7 million compared to $2 million in the second quarter of 2020 and $1.2 million in the third quarter of 2019. R&D expenses can vary from period to period and reflect the R&D activities that took place during the quarter. As a result of the foregoing, income from operations was $33.3 million compared to $10.8 million in the second quarter of 2020 and $8.8 million in the third quarter of 2019. Operating margin was 26.6% compared to 8.1% in the second quarter of 2020 and 10.5% in the third quarter of 2019. Interest expense was $5.4 million compared to $6.7 million in the second quarter of 2020 and $2.6 million in the third quarter of 2019. Dividend off for the quarter was $51.6 million compared to $26.8 million in the second quarter of 2020 and $19.7 million in the third quarter of 2019. Dividend margin was 41.1% compared to 20% in the second quarter of 2020 and 23.5% in the third quarter of 2019. Net income attributable to DACA New Energy shareholders was $20.8 million in the third quarter of 2020, compared to $2.4 million in the second quarter of 2020 and $5 million in the third quarter of 2019. Earnings per basic ADS was $0.29 in the third quarter of 2020, compared to $0.03 in the second quarter of 2020 and $0.07 in the third quarter of 2019. Now for the company's financial condition. As of September 30, 2020, the company had $109.8 million in cash and cash equivalents and restricted cash compared to $115.8 million as of June 30, 2020. As of September 30, 2020, no receivable balance was $1.9 million compared to $8.2 million as of June 30, 2020. And as of September 30, 2020, total borrowings were $271 million of which $140 million were long-term borrowings compared to total borrowings of $264.8 million including $116.9 million of long-term borrowings as of June 30, 2020. For the nine months ended September 30, 2020, net cash provided by operating activities was $71.1 million, compared to $101.6 million in the same period of 2019. And for the nine months ended September 30, 2020, net cash used in investing activities was $80.3 million, compared to $202.3 million in the same period of 2019. Net cash used in investing activities in 2020 and 2019 was primarily related to capital expenditures on our Phase 3B and Phase 4A polysilicon projects. And for the nine months ended September 30, 2020, net cash provided by financing activities was $1.1 million, compared to 76.6 million in the same period of 2019. And that concludes our prepared remarks. We will now open the call to questions from the audience. Operator, please begin.

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. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Gary Zhou of Credit Suisse.

Please go ahead. Hello, management. Congratulations on the strong results. So this is Gary from CS. So basically I have three questions. So firstly, your cost reduction guidance for the fourth quarter, down around 3% here on Q. May I ask, is it production cost or cash cost? And is it based on R&D terms or U.S. dollar terms? And secondly, I noticed that in the sub-quarter this year, so basically there was, it's my calculation, around $4,750 inventory tie up if I simply calculate the difference between your production cost and the sales volume. And if we look at the fourth quarter guidance, your sales volume is around only 1,000 ton higher than your production volume. So may I ask if it is company strategy, you think it is reasonable to pile up some inventory given the potentially very strong polysilicon demand in next year? And then lastly, a quick question on the, do you expect to sign more kind of long-term polysilicon contracts in the future? Because recently we saw kind of some news from your peers, so basically people starting to secure their polysilicon supply for next year. So thank you.

Hello, Gary. Thank you for your question. So this is Ming. I'm the CFO. So regarding your question about the 3%, cost reduction quarter over quarter so that would be our US dollar cost reduction and I think if you look at for this particular quarter for Q4 relative to Q3 so there are actually two headwinds so one is the US dollar exchange rate so that moves significantly during the quarter and also there's some increase in silicon technological grade silicon cost But even with these two increases, I think because of our increased manufacturing efficiency and especially reduction in our energy usage, so we still expect about 3% reduction in cost on U.S. dollar terms. Okay. And then for the third quarter in terms of inventory, I think your numbers are fairly close. to our actual numbers. Now, every quarter we use about 500 to 600 metric tons of our own polysilicon for manufacturing of silicon seed rots, which then we reuse in our production of polysilicon. So that's how we also keep our costs low. So I think that needs to be factored in. So I think if we include that impact, I think for Q4 overall, we expect to draw down approximately 1,500 to maybe north of 2,000 tons of inventory. I think that's what we're seeing. Now, I think the overall demand for monograde poly is strong from our customers. I think there is some... impact from the glass shortage, which is impacting the overall industry utilization and then the module volume shipment. So I think if there's no glass shortage, then I think there's going to be even better demand for polysilicon. But I think the overall transaction volume is very healthy for the industry currently. And I think for a long-term contract, Longan will take this question.

Gary, I think for your second question about inventory, I think, you know, basically we think right now, I think downstream we've, you know, capacity expansion so quickly, and we see the sign, you know, continue to demand in Q4. We've given guidance a little conservative because we believe we can, by the, you know, end of Q3, our inventory actually, yeah, close to your figure, maybe about, you know, more than 5,565 tenths, you know, metric tenths. So basically what I want to say is we will sell, I think, more than our production. And it's possible move some capacity to next year. And, you know, for high SP and also for star market value, you see valuations. Second is for long-term contracts. So far, we have long-term contracts with three clients, and one is Longji, one is Sanji, and one is Jinkou. And all three, we collect the deposits from 3.5% to 6%. So I think we will continue to sign one or two long-term contracts and cover three years I think, supply. We know that a lot of clients right now want to sign long-term contracts with us, especially because from now on to end of next year, no more additional adding capacity is on. But the demand is continuing to increase. So basically, we have two conditions. One is if you want to sign a long-term contract at least three years, and the You know, the quantity may be starting lower in next year than higher, you know, maybe 2023 or 2022. Second is we have to collect at least right now, I think, 4% deposits from long-term contracts. Otherwise, we will not sign those contracts because, you know, we want to lock the quantity. So we have to collect, you know, the deposits. So, yeah, I'm answering your question, Gary. Okay.

Thank you very much, Benjamin. So maybe if I may, I'll just very quickly follow up on the first question. So if I articulate the exchange rate, I think that in the fourth quarter, the R&D may appreciate versus U.S. dollar by roughly around 3 to 4%. So is it fair to say that in R&D terms, we are expecting around almost 7% QR and Q cost reduction in the fourth quarter? And so what is our kind of expectation for our further cost reduction into next year? Keith, thank you.

I think, Gary, you know, if you look at our Q3, basically right now, because let me continue to appreciation. So our, you know, the I think cash cost is $4.88 compared to Q2, I think is $4.87, one cent adding. So for dollar, yes, it goes up. But for the lemon B, actually our cash cost is 33.75 lemon B per kg. Compare Q2 is 34.53 per kg. The production cost, cost of goods sold, I think lemon B is 40.3 per kg. Compare Q2 is 41.04 per kg. So basically, yes, what I want to say is 3% continue to go down. Maybe combined with our Lemming B, I think cost continue to go down. Then with, you know, maybe possible foreign exchange, I think Lemming B appreciation. Ming, do you have any?

Yeah, Gary, you're right. So I think for Q4, if you look at our expectation is that In R&B terms, we expect roughly a 7% reduction in cost. That's correct.

Thank you very much. That's all my questions. Thank you for those. Great.

Thank you.

The next question comes from Alan Han of J.P. Morgan.

Please go ahead. Hi, this is Alan from J.P. Morgan. I have two minor questions on the ASP side of things. Because on the third quarter of this year, your average ASP selling price was around $9.13 per kilogram, but that's slightly lower than what we have been seeing on the spot market, so I'd like to understand why. And a small follow-up question on this one is, what is the price outlook for price to be realized for Daiku in the fourth quarter. And I guess, like, also along the prices, like, what is the pricing outlook for 2021? And that's my questions.

Okay, I think, basically, if maybe Ming can continue adding on. If you look at our Q3 ASP, actually, it's $9.13 per kg, of which I think, you know, because the monograde I think we're selling is 13,278 pence. So it's a cut 97%. It's $9.23. Then, you know, rest of them is, I think, 3% is the, around 360 measured pence, I think, is the selling price is around like $5.60. So basically... If you compare, the reason is because this is ASP, okay? If you look at the, let me because the selling price is 71.42. The reason is why, because in Q3, if you look at July and August, your selling price is not immediately come back match, you know, the, you know, the industry, you know, guidance. The reason is because most July and August, you already signed the contract, you know, before. You deliver on those months. So actually Q3, you enjoy the high price maybe only in September, and the partial is August. So that's why in Q4, OST would dramatically increase higher than Q3. Meantime, the cost continued down 3%. So the close margin in Q4, you can imagine, I think at least around a 10% improve.

Yeah. Alan, thanks for your question. So because of our order contracting, so the time from when we sign the orders and to when the products are then shipped and then delivered to the customer recognized as revenue. So there could be two to three weeks lag. So, for example, most of our revenue that was recognized, For the month of July, actually, these contracts or pricing were determined around the end of June when pricing was still fairly low. So really, the price normalization really happened for the month of August and then for the month of September. But when you average out the prices, then it is a little bit lower than what the industry spot market pricing is. So there is that lag. But I think by Q4, this will have normalized.

I got you. And the last follow-up is on the pricing outlook in 2021.

Okay. Basically, right now, just like you mentioned, you know, we're only in monograde silicon right now. We just, you know, I think the highest price is a small partial of... reimport the price, the highest. Basically, right now, I think the industrial guidance right now is around 85 to 86. We believe because of the shortage of glass, the module right now production is limited. We believe by the end of this month, this quarter, maybe the selling price monograde is around like 84 to 86, the range, even 82 to 86. RMB, perfect. Always RMB. So for the next year, we believe, okay, in Q1, maybe even China is maybe, you know, Chinese New Year, but we think, you know, out of China, the market is coming back. So we still believe, I think Q1, the selling price around, you know, 82 to 85 and even higher. But in the second quarter, because the, I think, glass, you know, increased, I think, maybe 40% the capacity. So it's no way to limit, you know, the market for the demand for the module. And we believe the price, silicon, because silicon's supply is limited. It is there, stable. I think the demand is continuing to increase as the waiver capacity continues to increase. And we believe in the second quarter, third quarter, the silicon price was above 90, even above 100. So basically for 2021, we believe the ASP were between 90 to 100 per kg, let me be.

Got it. I guess like on the technology front, I guess just get one last follow-up question on the technology front. Like some of your competitors talking about like FBR technology, just want to get your sense on the threats of FBR technology.

I think FEI, I think only one of the companies in China right now, I think, still stick on that. It's using the MEMC technology. Basically, I think FEI, you know, due to the quality, still contains the high percentage of hydrogen and carbon. So determining, you know, the product still is lower quality is classified as, you know, the multi-silicon product. So the selling price is also lower. And we don't believe, I think, you know, maybe it's a supplementary to high-quality polysilicon, you know, made with modified Siemens process. I don't think they were maybe only, you know, maybe supplementary 5% in the future. But right now, because the cash cost is still higher, around $47.50, and, you know, but the selling price is lower. Second is We believe, I think, one of the company right now is use, I think, take advantage of the local subsidized, continue to expansion their capacity. But there's no way from cost-effective, FBI will replace, I think, Siemens Master, the Poly Silicon.

Got it. And I guess I'll pass from here, and thank you very much for your answer.

Thank you, Alan.

The next question comes from Philip Shen of Roth Capital Partners. Please go ahead.

Hey, guys. Thank you for taking my questions. The first one is on the outlook for 2021 volume. I know you're not providing official guidance, but, you know, the run rate you're looking at or we're looking at for Q4 is about 20,000 metric tons per quarter. factoring out maybe two weeks of maintenance, do you think you can get to $80,000 as a baseline for next year, or do you think there's possibly some upside to that?

Basically, it's not the timing for us to give guidance for, I think, 2021. We were given guidance in next, I think, earnings call. But you... I think a projection is correct because, you know, basically we were not adding more capacity to underline, but we continue to improve. And I think digitized, you know, the manufacturing system will reach that figure you mentioned.

So, yes. Okay. Thank you, Logan. You know, as it relates to capacity expansion, again, I can imagine the China listing is important for that. And just wanted to check in on how you're thinking about capacity expansion with pricing, as you mentioned, possibly in that 90 to 100 renminbi per kilogram. What do you think the timing could be on a decision for capacity expansion? And remind us what that next amount of capacity could be.

Thank you, Philip. I think it's a good question. I think, first of all, I think we are, you know, actually, you know, make efforts, you know, try to speed up, accelerate our processing of, you know, listing in stock market. I think so far, I think we can, you know, we cannot give given the timing table, but we believe we can listing in stock market before the end of the Q1 2020. that I think IPO proceeds will give us the opportunity to continue to expansion 4B in Shizuji. The 4B, I think, is 40,000 tons, measured tons. We believe, because we're already starting our design and the main key equipment, I think, contracts and the bidding system. We are planning I think, you know, maybe starting tri-production before the end of next year. And definitely we were, I think, starting, I think, full capacity running the 4B in Q1 2022. So I think 2022, that we're adding, you know, more, I think, you know, the capacity given as the output to meet the market. Considering right now, I think downstream, especially the waiver capacity expansion, as you see there, by the end of this year, China may be around 160 gigawatts, I think, waiver capacity. By the end of next year, it's around more than 300, I think, gigawatts capacity. That means we need, I think, silicon around 100 metric tons. But so far, we didn't have too much right now players our competitor to declare, I think, capacity expansion. On the silicon side, the only is Tongwei, the two plants, I think 80,000 tenths. Then we are, I think, in the stock market proceeding, we also declare we will use the proceeds to invest in a 4B expansion. That's 40,000 tenths. Then plus Asian silicon also declare is around maybe 30,000 tenths. So basically, you know, next year is no more silicon capacity is adding. So for the year 2022, only around 150,000 tons capacity adding up. But the demand side is very hot. So that's why we're thinking if the market continues to drive, you know, compound, maybe, you know, 30 to 40 growths, By the end of the product module installation, we believe even year 2022, silicon price can continue. Still, it can keep a little higher price level.

Great. Thank you for that detailed answer. I wanted to just ask about a comment you made on metallurgical grade silicon. I think Ming may have made that comment. that it's a little bit higher now. Can you talk about why it's higher, how much higher it is versus maybe a quarter ago, and then what is the trajectory ahead, and do you expect some relief, or do you think that there might be tightness in that raw material as well for some time ahead? Thanks.

Yeah. Okay, so a couple of factors are impacting the metallurgical grade silicon pricing. So one is supply and demand. I think because now we're pretty much in overall economic recovery, particularly for China, and so demand, for example, for silicones is improving. And for other products that use metallurgical grade, silicon is also improving as well. So overall demand is rising. And then in terms of supply, because winter is usually the season where the production is a little bit seasonal, so we're seeing some increasing in the price. Right now, it's roughly 5% to 7% higher than the previous quarter, Q over Q increase, but I think we can absorb that into our cost, and we're still forecasting a cost reduction. for next quarter because of improved manufacturing efficiency.

Right. Thanks, Bing. So do you expect this to be relieved starting in Q2, the pressure there from metallurgical-grade silicon? Or do you think it's – like Q1 is still winter for most of it. So if it's seasonal, I'm guessing it's due to lower water levels as a result of needing hydro for the production. Go ahead, sorry.

Yeah, that's absolutely right. So we think probably Q1 will maintain the current level of cost in Q4, and then price will come down in Q2.

Okay. Okay, good. Okay, I think that's it for me. I'll pass it on. Thanks. Great. Thank you, Phil.

The next question comes from Tony Fei of DIOC Research. Please go ahead.

Hi, management. This is Tony Fei from DIOC. I have three questions. First one regarding your long-term contract. So we know that your long-term contract typically only lock in the volume, not the price. And in the last September, we do notice that you can't re-own the pricing with one of your waiver customer. So are there any financial consequences of this kind of delayed procurement? And do you think it will happen again in the future? This is the first question. And second is on the product mix. So this year we noticed that some of the cell manufacturers, they announced new plans to ramp up the HJT capacity in 2021. So when that comes true, there will be new demand for the N-type polysilicon products. So I'm just wondering if you can give an update on your certification process for the N-type polysilicon with the wafer manufacturers. And third is a housekeeping question. I see you have paid down some of your debt in the third quarter. So will you continue to do that, given your strong operating cash flow? Thank you.

Okay, first of all, for your first question about long-term contracts, most long-term contracts right now, today in China, the price is not locked. only the quantity. Even our competitors, you know, even after collecting, I think, deposits, lower deposits. But to us, I think you can see we already signed three long-term contracts. We collected deposits from 3.5% to 6%. The reason why we continue to stick on that, because we think, you know, with certain little higher percentage of deposits can guarantee the quantity the contract can be stick on that, can deliverable. So that's, I think, our purpose. Even though I think one of our long-term contracts you see, you know, in the history in this year and some months maybe delay and sign contracts, they still, I think, you know, come back. For example, one of our clients didn't sign in September. So that's why our inventory jump up. And But they still, I think, come back, you know, book additional one month in fourth quarter. So, basically, I think it's a long-term relationship. And, yes, from contract, you know, side, we have the right to, if in our book, you know, take the contract, the quantity of, you know, silicon, we can, you know, I think, forfeit the deposits. But, you know, all these clients is long-term, you know, we not do that. So basically, I think, for us, I think if we collect enough deposits, we think we can still stick on the contracts. And the contracts, I think, basically, the price is determined by, I think, the industry guidance. And then the sign, each month, even right now, two weeks, we sign, maybe sign contracts with clients. Second question about, you know, the HJT. Okay. HGT, I think, is the cell production for N-type cell. Basically, right now, the imported HGT equipment is almost four times cost than the PERC technology. So it's not cost-effective. So basically, right now, China today, everyone right now tries to domestic manufacturing N-type, or you call it HGT cell production. For example, I think one of our clients, I'm not mentioning this in the US, they call it HBT. So the HBT, they also still produce N-type cell, but I think the efficiency maybe only increase a half point or 0.7% is not to compare with HBT increase almost 1.5% to 2%. So HVT right now, I think they cost like 1.5 times the cost of, I think, PERC. So that's why right now it's workable. But they're not specifically buy N-type silicon from us. Because we supply all right now P-type. They just select from all material to some N-type to manufacturing right now, 800, I think, megawatts. I think, you know, the HBT N-type cell. But for the future, yes, definitely. I think if HBT, the equipment can domestic manufacture, the cost continue to go down, the cost effective is short, then N-type silicon will be, demand will be more. Today, actually, our silicon production, I think, of which almost 30% to 40% is N-type. But we cannot sell N-type in a separate way. Only one client is SunPower, I think, you know, definitely one of the Chinese companies right now. I think every month two cotton, I think, N-type. So today N-type, the SP, compared to P-type, only two lemon B per kg difference. So in the future, hopefully, I think, you know, as the HGT equipment continues to I think, installed and adding, so N-type silicon will continue to demand, you know, can increase, then the price, the differentiator between N-type and P-type silicon will, you know, will difference, will become large. For the third question about the debt, I think so far, I think if we look at our EBITDA, I think, you know, for the third quarter, even for the fourth quarter, which will magically, you know, increase. So basically, from now on, our target is to continue to improve our leverage, reduce our leverage ratio. I think to pay off some 4B, I think, expansion payments, and then also to reduce the banking loans. And basically, you know, I think as As I mentioned, the stock market value, I think today in China, valuation is higher than the U.S. market, basically. And we are making efforts to listing in stock market. We believe, I think, you know, we can raise enough money to, you know, to expansion for B, even more money to expansion for another, you know, new 45. 40,000 tons, I think, facilities somewhere. We're looking outside of Xinjiang. So, Tony. Okay, great.

Thank you for the question. Yeah, thank you for the comment. I appreciate it.

Okay, thank you.

This concludes our question and answer session. I would like to turn the conference back over to Kevin He for any closing remarks.

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 bye-bye.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.