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spk00: Good day, and welcome to the DOCU New Energy Fourth Quarter and Fiscal Year 2021 Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you need to press star, then one on your touch-tone button. To withdraw from the question queue, 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. Please go ahead.
spk04: Hello, everyone. I'm Kevin He, the Investor Relations of DarkU New Energy. Thank you for joining our conference call today. DarkU New Energy just issued its financial results for the fourth quarter and fiscal year of 2021. which can be found on our website at www.dqsolar.com. To facilitate today's conference call, we also have prepared a PPT presentation for your reference. Today attending the conference call, we have Mr. Longgen Zhang, our Chief Executive Officer, and Mr. Ming Yang, our Chief Financial Officer. The call today will feature an update from Mr. Zhang on market and operations, and then Mr. Yang, We'll discuss the company's financial performance for the quarter and the year. 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 Security and Exchange Commission. These statements only reflect our current and preliminary views 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 conference call is as of today and we undertake no duty to update such information except as required in the applicable law. Also, during the call, we will occasionally reference monetary amounts in U.S. dollar terms Please keep in mind that our functional currency is the Chinese RMB. We offer these translations into U.S. dollars solely for the convenience of the audience. Without further ado, I now turn the call over to our CEO, Mr. Zhao.
spk03: Thank you, Kevin. Hello, everyone. Thank you for joining our conference call today. We had an excellent year with great operational and financial performance. We produced 86,587 metric tons of polysilicon in 2021, exceeding our guidance of 83,000 to 85,000 metric tons and 12% higher than 77,288 metric tons produced in 2020. In 2021, approximately 99% of our production was monogrid polysilicon. which had the highest pricing in the market and was the product most sought after by waiver customers. The year 2021 saw strong global policies supporting carbon neutrality and the decarbonization of the energy sector that led to strong demand for solar energy products and resulted in high political prices. We delivered a strong financial performance for the full year, with a gross margin of 65 percent net income attributable to our shareholders of $756 million, representing a 485.3 percent increase compared to 2020. DaKu New Energy also achieved two additional major milestones in 2021. We successfully listed our subsidiary Xinjiang DaKu on the Shanghai Stock Exchange in China in July 2021, which will significantly amplify our future growth with access to a robust capital market in China. We also successfully completed the construction of our Phase 4B project and started the pilot production in December 2021 with better than anticipated results. As such, we believe that we will continue to be one of the world's best operators in the polysilicon industry and a market leader in many aspects, including production throughput, production quality, profit margin, cost structure, capital structure and burns heat. In the fourth quarter of 2021, we produced 23,616 metric tons of polysilicon, including 1,111 metric tons from our newly built Phase 4b facility, and we sold 11,642 metric tons. End of the year, seasonality impact Combined with downstream inventory adjustments led to a temporary reduction in demand when our customers in the waiver sector reduced their own raw material and product inventory levels and temporarily lowered their utilization rate. After extensive analysis of long-term supply and demand dynamics, we believe that the lower utilization level in the waiver sector was due to seasonality impact and temporary in nature. Therefore, we expect conditions to resume to normal once the solar value chain achieves a new balance when the market demand bounces back. In January 2022, the solar market did see a strong pickup in the end market orders, and the waiver factor utilization and demand quickly resumed normal levels. As a result, polysilicon ASP started to recover meaningfully. Our inventory also quickly returned to a normal level by the end of January. In the fourth quarter, our production cost was $14.11 per kg. The increase in production cost as compared to the third quarter was primarily due to the increase in the cost of raw material of silicon powder. The average procurement cost of silicon powder increased from $2.50 per kilogram in the third quarter to $8.68 per kg in the fourth quarter. Startup costs related to our new Phase 4b facility also had a temporary impact on our costs in the fourth quarter. Despite the strong increase in raw material cost during the fourth quarter, most of this cost increase was passed to our downstream customers, as ASPs for the fourth quarter increased to $33.91 per kg compared to $27.55 per kg in the third quarter. Moreover, the price of silicon powder started to decline quickly in January 2022, and the current market price of silicon powder is approximately $3.50 to $3.60 per kg. We expect our production cost to decrease meaningfully in the first quarter of 2022 as a result of lower silicon powder prices and a better operational efficiency in our Phase IVb facilities. In terms of our new Phase IV-B facility, we completed the project ahead of schedule despite significant difficulties and challenges resulting from the resurgence of COVID-19. We commenced the construction of Phase IV-B in 2021 and harvested in the first batch of polysilicon from the brand-new CBD furnaces in early December 2021. Within the same year, this has been a new milestone in our company's history in terms of building new capacity and has also set a new benchmark for the industry. We produced approximately 1,111 metric tons and 2,825 metric tons of polysilicon from our Phase IVb facility in December 2021 and January 2022, respectively. We expect to reach more optimized output in February and March 2022 and to produce approximately 9,500 metric tons from our Phase IVb facility in the first quarter of 2022. Polysilicon production from this new facility has already been delivered to our Mona Weaver customers and met their quality standards. Our Inner Mongolia Polysilicon project consisting of 100,000 metric tons polysilicon for the solar industry and 1,000 metric tons polysilicon for the semiconductor industry. are expected to commence in March 2022 and to be completed by the end of the second quarter of next year. We have already obtained the energy consumption approval and plan to partially use renewable energy to power these projects in the future. We also plan to expand the silicon powder production in Inner Mongolia in the future. which will allow us to further enhance our core structure and improve our supply chain stability. Global solar PV installations were approximately 160 gigawatts in 2021, representing a 23% increase compared to approximately 130 gigawatts in 2020. The 2021 global PV market size was limited by the availability of polysilicon. In addition, solar module pricing increased by more than 20 percent during 2021. The increases both in volume and the price in 2021 demonstrated a very strong market demand as solar broadly achieved great parity in major power markets around the world. And the development and the use of new energy, renewable energy, has become a global consensus to meet the urgency of global climate challenges. We believe the strong momentum in the solar PV industry will continue to provide a huge market with a significant growth potential in the future. In the solar PV industry, polysilicon production has the highest entry barrier, requiring substantial capital, complex and difficult to manage process. and equipment, stringent product quality requirements, and non-lead times. We are confident that our advantages and competitive positioning with first-class quality and competitive cost structure will enable us to continue to increase our market share and enhance our global leadership in the polysilicon industry. For the outlook and the guidance for this quarter, Q1 2020, the company expects to produce approximately 31,000 metric tons to 32,000 metric tons of polysilicon during the first quarter of 2022. The year expects to produce approximately 120,000 metric tons to 125,000 metric tons of polysilicon for the four-year of this year, inclusive of the impact of the companies and the facility maintenance. Now, I would like to turn to the call to our CFO, Mr. Min, please.
spk05: Mr. Thank you, Longan, and good day, everyone. Thank you for joining our earnings conference call today. Now, I will discuss our financial performance for the fourth quarter and fiscal year of 2021. We will begin with a review of our fourth quarter of 2021 results. Revenues were $395.5 million compared to $585.8 million in the third quarter of 2021 and $247.7 million in the fourth quarter of 2020. As Longan discussed earlier, the decrease in revenue as compared to the third quarter of 2021 was primarily due to lower policy and sales volume as a result of market seasonality impacts combined with downstream inventory adjustments. With strong downstream demand and customer orders since the beginning of this year, our inventory level has returned to normal by the end of January. Gross profit was $239.8 million compared to $435.2 million in the third quarter of 2021 and $109.5 million in the fourth quarter of 2020. Gross margin was 60.6 percent compared to 74.3 percent in the third quarter of 2021 and 44.2 percent in the fourth quarter of 2020. The decrease in gross profit as compared to the third quarter of 2021 was primarily due to lower sales volume. The decrease in gross margin compared to the third quarter of 2021 was partly due to the impact of higher cost of raw materials. As Langa indicated earlier, Silicon powder costs have declined in Q1 2022 as compared to Q4 2021, and we expect our polycycline production costs to decline as a result. Selling, general, and administrative expenses were $10.2 million compared to $11.4 million in the third quarter of 2021 and $11.2 million in the fourth quarter of 2020. SG&A expenses during the quarter included $2 million in non-cashier-based compensation costs related to the company's sharing incentive plan. R&D expenses were $1.3 million compared to $1.9 million in the third quarter of 2021 and $1.5 million in the fourth quarter of 2020. R&D expenses can vary from period to period and reflect R&D activities that take place during the quarter. R&D projects for the quarter includes technology developments related to impurity removal and manufacturing efficiency gains. As a result of the foregoing, income from operations was $228 million compared to $421.7 million in the third quarter of 2021 and $98 million in the fourth quarter of 2020. Operating margin was 57.7 percent compared to 72 percent in the third quarter of 2021 and 39.6 percent in the fourth quarter of 2020. Net interest expense was $2 million compared to $4.5 million in the third quarter of 2021 and $8.1 million in the fourth quarter of 2020. The decrease was primarily due to lower balance of bank loans. EBITDA was $251.1 million compared to $441.8 million in the third quarter of 2021 and $115.1 million in the fourth quarter of 2020. EBITDA margin was 63.5 percent compared to 75.4 percent in the third quarter of 2021 and 46.5 percent in the fourth quarter of 2020. Net income attributable to DACA New Energy shareholders was $148.6 million compared to $292.3 million in the third quarter of 2021 and $72.8 million in the fourth quarter of 2020. Earnings per basic ADS was $2 compared to $3.95 in the third quarter of 2021, and $1.01 in the fourth quarter of 2020. Now on to our full-year 2021 results. Revenue for the year was $1.68 billion, compared to $675.6 million in 2020. The increase was primarily due to higher policy-like and average selling prices and higher sales volumes. Gross profit was $1.1 billion compared to $2.34 million in 2020. Gross margin was 65% compared to 34.6% in 2020. The increase was probably due to higher policy and sales price. SG&A expenses were $39.9 million compared to $39.5 million in 2020. NRDA expenses was $6.5 million compared to $6.9 million in 2020. Income from operations for the year was $1.05 billion compared to $188 million in 2020. Operating margin was 62.6 percent compared to 27.8 percent in 2020. Net interest expense was $20.5 million compared to $25.7 million in 2020. The decrease was primarily due to lower bank loan balance. Income tax expense was $162.8 million compared to $28.2 million in 2020. Net income attributable to DACA New Energy shareholders for the year was $756 million compared to $129 million in 2020. Earnings per basic ADS was $10.24 compared to $1.82 in 2020. Adjusted net income attributable to DACA New Energy shareholders was $766.3 million compared to $147.1 million in 2020. Adjusted earnings per basic ADS was $10.37, compared to $2.07 in 2020. Now on the company's financial condition. As of December 31, 2021, the company had $724 million in cash and cash equivalents, and compared to $661 million as of September 31, 2021 and $118.4 million as of December 31st, 2020. And as of December 31st, 2021, the bank notes receivable balance was $366 million compared to $353 million as of September 30th, 2021 and $0.2 million as of December 31st, 2020. Our inventory balance at the end of the year was $327.7 million This compares to inventory balance of 46.2 million at the end of the third quarter. The increase in inventory balance was due to higher polysilicon finished goods inventory as a result of lower sales volume in Q4, as well as higher raw material prices related to silicon powder price increase and raw material and work in process inventory related to the startup of our new Phase IVb facilities. As of December 31st, 2021, we have no bank borrowings, and all of our bank borrowings have been repaid during the year of 2021. This compares to total bank borrowings of $193.7 million as of December 31st, 2020. And now onto the company's cash flows. For the 12 months ended December 31st, 2021, net cash provided by operating activities was $639.1 million, compared to $209.7 million in the same period of 2020. The increase was primarily due to higher revenues and higher gross margin. The 12 months ended December 31, 2021. Net cash used in investing activities was $782 million compared to $118.5 million in the same period of 2020. The net cash used in investing activities in 2021 and 2020 was primarily related to the capital expenditures on the company's Phase 4B and Phase 4A projects. Total capital expenditures for the year 2021 was approximately $508 million. For the 12 months ended December 31, 2021, net cash provided by financing activities was $736.2 million. compared to net cash used in finance activities of 95.5 million in the same period of 2020. The net cash provided by finance activities in 2021 was primarily to the net proceeds of $935 million contributed by Xinjiang.co's IPO in China. And that concludes our prepared remarks. Operator, we will now open the call for questions from the audience.
spk00: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw from the question queue, please press star then 2. Our first question today comes from Philip Shane with Roth Capital Partners. Please go ahead.
spk08: Hi, everyone. Thanks for taking my questions. Just a quick one on the guidance for Q1. Given your expectation that inventory has returned to normal at the end of January, I think you guide to 31,000 metric tons in Q1. Does that suggest sales of maybe more than 40,000 metric tons in Q1 22?
spk03: Philip, I think basically, you know, today, I think our production volume is high. You see, each quarter, first quarter, guidance is 31,000 metric tons. If you look at our end of December, I think our inventory is around 13,500 metric tons. So, add together, you see, I think goods for sale, I think almost 43,000 metric tons, 44. So, basically, you know, we should have like five days, you know, merchandise in the shipments. So, yes, I think, you know, should it be around 40,000 tons, you know.
spk08: Thanks, Longan. That's great color. Thanks. As it relates to the Inner Mongolia facility, I was wondering if you could provide a little bit more details on the total CapEx expected, but also a breakdown the capex for the polysilicon for solar and then the silicon for semiconductors and then silicon metal capacity. Is it possible to break that down? And then also can you talk about for the polysilicon production for solar, how does that cost structure – how do you think that cost structure will compare with your existing Xinjiang cost structure?
spk03: Okay, I think, you know, first of all, I think we already announced, I think, a total investment, I think, of $32.5 billion. I think for Xinjiang, the whole year, next, you know, three to five years, strategic investments. Basically, I think, you know, we were in Mongolia to total projects. For the solar silicon is 200,000 tons. For the semiconductor is 21,000 tons. For the silicon metal, I think it's 300,000 tons. And then I think the silicon, right, is around 200,000 tons. But we definitely, I think, put a priority. At this moment, because we are in the, you know, in offering, I think, follow-on offering in Asia, as you see there, I think the total is 11 billion, let me be. That is used to, I think, purely, I think, first projects, we will do is 100,000 tons polysilicon project plus 1,000 tons semiconductor polysilicon. I think for the 1,000 tons solar polysilicon project, total investments around the capex around I think 8 billion. Then we raised I think 11 billion, 3 billion is for the working capital. in terms of semiconductor polysilicon projects, we already raised the money through our IPO. That's, I think, 500 million, let me be. So for that, I think, you know, we have enough cash to cover those two projects. So the next step we will do is, I think, in the processing is 200,000 tons, you know, of silicon metal. I think that's the next, I think, priority. Then for the furthermore, I think when we're going to do the next, you know, 100,000 tons polysilicon for the solar and also 220,000 natural tons for the semiconductor, it depends on the market and also the capital condition. But anyway, I think today, if you look at our balance sheets, and we, I think, by the end of December, we're sitting there almost around 9 point, I think 9 billion, let me be, is sitting in the balance sheets. without any banking loans and also without any accounts receivables. So basically I think this year definitely is a good year. We see the price right now is very strong and for the Q1 and the cash flow is can, you know, can I think projectable. So if can our follow on offering can be successful or without follow on, you know, offering the money proceeds, we still can, I think, implemented, I think, or execute the Mongolia that the 100 metric tons polysilicon for the solar projects. Ming, do you have any comments?
spk08: Philip. Yes. Thank you. Can you also talk about the cost structure expected for the Inner Mongolia 100,000 metric ton polysilicon facility for solar? How it compares to Xinjiang? How does your expected cost structure? Production cost structure. Thanks.
spk03: The cost structure should be, I think, compared our, you know, I think Xinjiang definitely will be, you know, by 3% to 4%, I think, down. The reason is scalability. I think 100,000 tons by the two production lines. And because Xinjiang right now, our output, I think, we've already given you this year, is around 120,000 tons to 125,000 tons. But they are composed, I think, of six production lines. So I think definitely, you know, for the efficiency, I think for the conversion rate, I think from silicon powder to silicon, all were improved. Definitely, I think, for example, for per kg solid silicon produced will consume electricity, I think, should reduce to total around, I think, 52 kWh. Compared right now, in January, I think we're around 60 kWh. So all this, I think, definitely will be, I think, a significant input. But most important, I think, you know, the quality of The products will produce the quality for the Inner Mongolia projects will be better than Xinjiang projects. For example, Mongolia projects, we can produce more than 80% to 90% N-type polysilicon. But for the, I think, Xinjiang projects right now, if we didn't do any, I think, technology improvements, we maybe can do around 70% to 80%. So the quality is most that we focus for the future, especially, I think, next revolution for the sale from P to M. So that demand and challenge we have to meet.
spk08: Okay. Thank you, Longin. In terms of the outlook for pricing, there's a lot of announcements of capacity expansion and with that capacity expansion and extra supply, one would think that pricing would be coming down later this year, but was wondering if you could talk through your latest outlook for how polysilicon pricing evolves as we get through the year and how much production you expect from these new facilities.
spk03: I think the polysilicon price is determined by both supply and demand, the quality and the quantity. I think from the quantity, I think today Polysilicon, you need to compare the ending market. For example, you know, how much we're going to implement, install the PV, I think, you know, the module. And for the, you know, also you have to compare, you know, the waiver capacity right now, expansion in China is very so quickly. So the demand also is hot. But anyway, if you look last year, China produced, I think, 420,000 tons polysilicon, solid polysilicon plus the import around more than, I think, around like 120,000 tons. So, add together, it's around 540,000 tons. So, if you look and compare, you see that can support, I think, the end market around 160 to 165 GW. But finally, I think, because you have to look in all those weaver, the furnaces, you see, have to running. So, that's why exactly happened in December. a lot of waver producer reduce the capacity, okay. They almost selling their silicon in the furnaces, you see. So, for example, the some bigger one reduce their waver capacity utility rate even to 12% or 15%, 20%. So, that's why I think we have inventory December, you know, delay because we don't want to, you know, selling cheaper, you know. We sell, I think January, we sold, I think contract, I think around 160,000, 16,000 tons. In the January, February, we sold, I think, 13,300 tons. So, I think the inventory back to normal. So, this year, I think, you know, if you look, you know, how much, you know, we call, how much supply is available. We say, you see, the usable supply. We think maybe we increase around 250,000 tons, of which I think DACU will provide, I think, around 45,000 tons. And Tongwei will provide maybe 80,000 tons. Then Asian polysilicon, I think, maybe will provide, I think, 20,000 to 30,000 tons. Then the rest of them come from, you know, improvement, technology improvements from, I think, also the New Horizons. So we estimated this year total adding supply, you know, the supply side, the quantity, maybe around 250,000 tons plus, you know, last year. So total is around 750,000 or to 800,000 tons. That will support any market, maybe around 200,000, 20 to 230. So we don't see, we're not see the price will dramatically go down because, you know, we see right now the selling price, I think our ASP is around 32 to 33 dollars per kg right now. And we think, you know, second half of the year will continue, will evolve I think around like 28 to 30. So the tricky is maybe next year. The next year, because, you know, a lot of new coming, but I don't think that the new coming will immediately, you know, come out, you know, the good quality product supplier. Especially, I think, you know, a lot of the Russian guys, just like a certain example, like, you know, New Horizons, taking four years, you know, to produce the polysilicon. But the quality, for example, the electric grade poly, still we call P grade, still below, I think, 75%. So, basically, all is quality. Then, considering right now the cell technology from P to M, that demand high quality of polysilicon. So, that means, you know, even today, some supply, the quality maybe is not demand. They're not, you know, a useful supplier. So, basically, I think it all depends next year whether, you know, the P to M It dramatically will transfer. Secondly, those newcomers will produce the high quality products. So we are ready. But I think DACU, we focus is, first of all, we will, I think, continue to import money to the silicon metal. Because silicon metal, if we can produce, can stable our supply, reduce our cost, and guarantee our quality. That's the one. Second is we were focused to make efforts, you know, working on the semiconductor segments, polysilicon. We think, you know, some revenue will come from semiconductor silicon, at least to replace input, you know, in the year 2024. So that's our, I think, next two to three years' strategy, you know. We are upstreamly integrated, then horizonally to expanding our products from solar, polysilicon to semiconductor to silicon.
spk08: Great. Thanks for all the color. I'll pass it on.
spk00: The next question comes from Gary Zhu with Credit Suisse. Please go ahead.
spk07: Hello, management. Thank you for taking my questions. Firstly, congratulations on the strong results. So I've got two questions. So firstly, I would like to ask So I understand our A-share subsidiary has a dividend policy to pay no less than 30% of the profits. So just wondering, can measurement provide us kind of a timeline on when the U.S. ADR may receive such dividends in cash, and what is our plan on how to use that cash? And the second quick question on the, so does measurement can provide us any cost estimate for first quarter this year. Thank you.
spk05: Hello, Gary. Hi, this is Ming Yang. I'm the CFO. So regarding your first question on the A-share subsidiary dividend policy, okay, so our subsidiary Jinjiang Darko has provided a commitment letter to its shareholders in China, and it's committed to pay cash dividend on the three-year period from 2021 to 2023 of no less than 30% of the average annual net profit in this three-year period. So you can say that it's committed to pay at the minimum of 10% of every year's net profit. And as the shareholder of Xinjiang.co, so we are considering to propose a plan with higher than that percentage of dividend for this year. However, we also need to consider the CapEx requirements and the related uncertainty of Xinjiang DACO's private offering in China. So we would need to balance between long-term and short-term shareholders' interests. However, I would say that the dividend plan of Xinjiang DACO in 2021 will need to be approved by the Board directors and the shareholders meeting of Xinjiang DACO and so the actual amount will be announced by then and we expect that to be around mid-March of this year. And then on your second question of cost estimates, so let me give you a little bit more color. So I think as you see our cost of goods sold for Q4 was $14.11 in U.S. dollars. This translates to roughly 90 RMB per kilogram in cost, and is really due to the significant higher cost of silicon powder. And so I would say since January of this year, silicon powder costs has declined to roughly $3.50 per kilogram or roughly 25 RMB or so per kilogram in RMB. So I would say overall for Q1 without higher cost inventory impact, so cost would be somewhere in the range of 50 to 55 RMB per kilogram, or I would say roughly $8 to $8.50 per kilogram. But because we do have the higher cost inventory at the end of the year, so I would say cost would be somewhere within that range, so between $8 to $14, so somewhere in the middle, maybe $10 to $11, something like that for Q1, and then reverting to the lower end of roughly $8 to $8.50 in Q2.
spk07: Thank you for answering my questions. If I may, just a very quick follow-up on the first question. So, am I right that basically for the U.S. ATR, the earliest time that we may pay dividends is for the FY22 results? And secondly, before that, is it possible that at the U.S. ATR level we may consider to use the dividends received from Asia to do some actual buybacks at the U.S. level? Thank you.
spk03: I think basically, you know, it's all Asia, you know, it's Asia, you know, regulations. I think we were determining the dividends, I think, by the annual meeting, I think a board meeting, make the change. Usually the dividends would declare, I think, a release, maybe in June, July. So basically, you know, then also considering, you see, the DACU is a major holder, so we need a transfer, you know, exchange, the lending fee profit, you know, to foreign exchange. So it takes some time. But, you know, basically, What we need to do is either we continue to just release the dividend to the U.S. shareholders, or we just buy back. So far, we're not making a decision so far, okay? We're ready now.
spk07: Okay, okay. Yes, this is very helpful. Thanks. Thank you.
spk00: The next question comes from Alan Wu with Jefferies. Please go ahead.
spk06: Thanks a lot for taking my questions and also congratulations to management on the good results. Most of the questions was addressed and I have a couple of minor questions. First of all, I would like to know in terms of cost profit in first quarter, given that the cost is coming down and while the policy is going to stay strong, do you expect the per unit cost profit to stay similar or even better compared to Q4 last year?
spk03: You're talking about cost, right? You're talking about cost, right? The unit cost, right?
spk06: At the unit cost profit.
spk05: Profit. Let me answer this question for you. Okay. So, obviously, if you look at where SP is right now, you know, like long indicator, I think somewhere in the $32 to $33 range. While we believe that cost, based on current trends, is probably around $10 to $11. So we're looking at more than $20 per kilogram in terms of contribution per kg. So I think this is probably one of the better periods for the company, and definitely we think it's better than our Q4 level.
spk06: Thanks a lot, and considering the sales volume is high as well. I would like to check on the A-share, share issuance progress, because given the amount is relatively huge, we are talking about $11 billion of RMB. I would like to know, is there any interest to be seen so far, like any cornerstone investor or any major funds showing interest on this one?
spk03: Okay, I think the follow-on offering right now, I think it's just, I think, accepted by Shanghai Stock Exchange. Still in the proceeding of, I think, auditing, we call it checking the materials. I think the follow-on offering procedures will be simpler than the IPO. Basically, just inside, Shanghai Stock Exchange inside, you know, check all the data and the question, I think, just one time or two times, then they have the concluding, then we just go to the China SEC for the restoration. So the timing, I think, you know, maybe we'll finish, I think, by middle of July. And talking about, you know, potential investments, I think we already did some roadshow. I think so far, I think we send our roadshow to 400, I think, quality institution investors right now. So far, almost, I think, around 200 institutions, very interesting, and including some big name and also some, you know, sovereign funds. Yes, we are working on some. I think we're already in there. Some corner investors may be taking, I think, a bigger chunk, maybe around $2 billion, $3 billion. So the rest of them, I think, you know, other investors have. Because the total, I think, of qualified investors Investors should be limited by lower than 35, I think, investors. So we're working on that. We will let you know.
spk06: Thanks a lot. Thanks a lot for managing. I have no more further questions.
spk05: Great. Thank you, Alan.
spk00: The next question comes from Colin Yang with Daiwa Securities. Please go ahead.
spk02: My first question is regarding the demand-supply dynamic. As you may know, the Polysacan demand-supply has been remained largely balanced up to almost 100, and about 35,000 homes in commercial operation in the last quarter, last year. And we do not see any new capacities coming out during the first three quarters this year. My question is, which culture do you think we would see the most imbalanced demand and supply of polysynicin? And my second question is regarding the N-type and the P-type polysynicin. What is the cost difference between the N-type and the P-type polysynicin? And is there any difference between the conversion ratios, you know, for the polysynicin converted to one gigawatt of the monovapor? Thank you.
spk03: I think it's a good question. I think for the first question, I think, when is the, I think, the price, I think, the new supply coming? I'm not crystal ball, okay? I'm not fortune teller. But at least, you see, we can say, because, you know, a policy can produce, it takes a long time from design to equipment, you know, procurement for the oil, you see, the I think for a long time, it takes time. Even, let's say, you know, like Tongwei today, I think they're still climbing, I think, ramping their production, I think, in Baoshan, as you know that. It takes time, at least, I think, 18 months. So I don't believe, I think, the newcomer will supply the good quality products, starting, I think, production running by... I think, first year, next year. I even thinking, you know, second half of next year, maybe some coming. So basically, I don't think, you know, the, were any big change in this year, but definitely next year, you will see some players were coming. But definitely, I will say, in the future, I think Tongwei and Daku will take the market share more than 50%, then the rest of them taking another 50%. Even though, let's say the new coming, you see, the market may be, I think, depressed or go to another circle, then the quality is a big issue. So I think I like your second question. From P to M, that means they demand high-quality products, okay? So even today, let's say, for example, if we use our Xinjiang facility right now, with all production, you know, produce the P-level silicon, we can produce around, I think... 130,000 tons, let's say that, okay? But if we're going to produce 70% N-type, the quantity definitely will go down. Maybe, you know, we'll go down to 120,000 tons. The output maybe will reduce by 10% or 5%. Then the cost also will go up because, you know, the furnaces may be taking a little long time. So, you may be able to consume more electricity. Also, I think for the conversion rate, I don't think it will change too much. But for other processing, you need more, I think, technology and know-how to do that. So to answer your question, from P to N, I think the quality, not only from purity, but also from the Other, I think, technology data, you see, you have to improve. So basically, I think, you know, today in China, there's not too much player can produce M-type. And we are right now all, I think, recognize, and I think, qualification, I think, by the major, I think, we've produced, I think, downstream, we've produced that.
spk02: Okay, so do we have any quantitative data like what is roughly cost difference from P to N?
spk05: Okay, so actually there is slightly higher cost for N-type poly compared to P-type poly. You're talking about production costs, right, of the different types. Okay, so I would say this would be similar to For example, when multi-type poly initially was the dominant market and when people started to enter into mono-type of poly, because initially when we grew mono-type of poly, we had to grow it slower, using more electricity, and also with a different process, so it had maybe 10 to 15 percent higher cost. time go on and we continue to optimize our production to the extent that now all of our production is really P-type mono, right? So production costs would go down over time. I would say similarly for N-type. So initially, N-type would also require us to grow the silicon slower with the optimized process and using more energy and maybe more other raw materials. as well, and also for impurity removal. So maybe 5% to 10% higher cost, but I would say over time, when we start to ramp up the production mix, then the cost would go down further. I see. Thank you. I think the key is that I think within the industry, very few players can do it in time currently, and I think that would continue going forward, especially for the new entrants.
spk02: Cool. Can I have another question? Do we have any color and show results about any privatization plan for the U.S. ADR?
spk05: Can you repeat your question? I'm sorry. We didn't hear that very well.
spk02: Sure. I mean, do we have any plan, you know, to take the U.S. ADR privately?
spk03: No, at least right now, we're not focused on any privatization. We are working on, you know, I think the Asia company, the company, I think, operation side. You know, we're not considering anyone now so far.
spk02: Got you. Thank you so much. That's all my questions.
spk03: Great. Thank you.
spk00: The next question comes from Cho Ji with Goldman Sachs. Please go ahead.
spk01: Hi, thank you for taking my question. Can I ask about what's your view on how the silicon powder prices are evolving throughout the year? As you mentioned before, you see very strong results this year, and also there are incremental new capacity of the polysilicon. Recently, there has been some meaningful reductions of the silicon powder prices, but how do you see the price involving or trending in the future quarters? Thank you.
spk03: I think last year the silicon powder price go up because I think the first half of the year in the salt in China, I think the, you know, because the government, I think, you know, emphasis on the policy, high consumption, high confusion, you know, elimination. So I think it caused the, silicon metal price go up, especially in September, October, you know, to the peak. But later, I think the government, I think, recognized the problem. I think, you know, especially solid industry is the key industry for China. So I think they opened the door, reopened, I think, the small and the medium, I think, silicon metal plant, you know, starting the production. So we see December, the silicon metal price, you know, dramatic go down. from I think 90,000 lemming bee per ton dropped to I think 40, 50. In February right now, the metal price I think you see there, I think on the line you see there is around like 23,000 lemming bee per ton. I think definitely I think because the mineral price go up, the coal price go up, I think the cost to produce silicon metal also go up from, I think, in history maybe around 8,000, 7,000 per tons to where now around 13,000 to 14,000 per tons. So we think the price will be in the future around, I think, the metal maybe around 20,000 tons. The silicon powder maybe around 20,000 to 23,000 tons. But, yes, if we're going to do that, you know, in the Mongolia, I think we will first do that 200,000 metric tons to match our production. I think it definitely will reduce our cost. I think, you know, back our cash cost to maybe still to 30, you know, if we can produce, you know, our own silicon metal, you see. And definitely I think it's competitive age for us to compete with other players.
spk01: Understood. Thank you so much.
spk05: Great. Thank you.
spk00: This concludes our question and answer session. I would now like to turn the call back over to management for any closing remarks.
spk04: Hi. Thank you, everyone, for participating in today's conference call. Should you have any further questions, please don't hesitate to contact the company. Thank you. Bye-bye.
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