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spk06: Good morning and welcome to DAKU Energy. Third quarter 2023 results conference call. All participants will be in listen-only mode. If you need assistance, please signal conference specialists followed by the STAR team. After today's presentation, there are opportunities to ask questions. Please note that this event is being recorded. I'd like to turn the call over to Ms. Anita Zhu, Investor Relations Director. Please go ahead.
spk08: Hello, everyone. I'm Anita Zhu, the investor relations of Dakou New Energy. Thank you for joining our conference call today. So Dakou New Energy just issued its financial results for the third quarter of 2023, which can be found on our website at www.dqsolar.com. Today, attending the conference call, we have our chairman and CEO, Mr. Xiang Xu, CFO, Mr. Ming Yang, and myself. The call today will begin with an update from Mr. Hsu on market conditions and company operations. And then Mr. Young will discuss the company's financial performance for the quarter and the year. After that, we'll open the floor to Q&A from the audience. 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 contained in any forward-looking statement. Further information regarding these and other risks included in the reports or documents we have filed with were 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 the 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. So now we would like to welcome our CEO, Mr. Xiang Xu, for the opening remarks.
spk09: Thank you everyone for joining the conference call today.
spk08: Anita will serve as my translator during the call. And if you have any questions addressed to the company or to me, please address the questions at the end of the call. So now, on behalf of Mr. Hsu, I'll now read off his remarks regarding current market conditions and the company performance. So during the third quarter, continued optimization of operations at our two Polar Silicon facilities, resulting in a total production volume of 57,664 metric tons, an increase of 12,358 metric tons, or 27% compared to the previous quarter. Our Inner Mongolia 5A facility, which is now in for production, contributed approximately 40% of our total production volume. So meanwhile, our production costs further decreased by 5.8% from second quarter to $6.52 per kilo, primarily due to improvements in manufacturing efficiency, as well as a reduction in the cost of raw materials, particularly metallurgical-grade silicon. So compared to our first quarter average production cost of $7.55 per kilo, costs have declined by more than $1 per kilogram. Based on the company's most recent production data, we expect our fourth quarter cost to continue to trend downwards from the third quarter levels. We shipped a total of 62,967 metric tons of polysilicon in third quarter, an increase of 9,465 metric tons over our second quarter shipment, and significantly higher than our quarterly production volume. This has resulted in a significant decrease in policy of product inventory across our two facilities, now at a level of less than one week of production volume. For the third quarter, the company generated $70 million in EBITDA. Net cash provided by operating activities for the first nine months of the year totaled $1.5 billion, with more than $711 million in the third quarter. The company continues to maintain a very strong balance sheet with no financial debt. At the end of the third quarter, the company had a cash balance of 3.3 billion U.S. dollars and a combined cash and bank receivable balance of 3.6 billion U.S. dollars. So our total annual policy call nameplate capacity has reached 2,005,000 metric tons across our two facilities. For fourth quarter, we expect total poly production volume to be approximately 59,000 metric tons to 62,000 metric tons, a continued increase over the third quarter levels. Full year production is expected to be approximately 196,000 metric tons to 199,000 metric tons, representing an increase of 46% to 49% compared to 2022 levels. With more than a decade of experience in poly production, as well as a fully digitalized and integrated production system that optimizes operational efficiency, we are confident that we can strengthen our position as one of the dominant political manufacturers in the industry. At the end of the second quarter, after poly prices reached bottom, customers began reordering and taking delivery of products, significantly reducing industry inventory levels. Polycycline pricing recovered gradually over the third quarter. And in July, as module makers intensified competition, module prices fell from RMB 1.5 per watt in June to 1.3 RMB per watt in July. Meanwhile, the high demand in the module sector coupled with lower utilization rate for poly due to power rationing and system maintenance drove a marginal recovery in polycycline prices. According to industry statistics, model-grade policy income prices rebounded from the lowest level of less than 60 RMB per kilo in June to 63 to 68 RMB per kilogram by end July, and an average of 87 RMB per kilogram by the end of September. Furthermore, as the current price range is unlikely to be profitable for new entrants given their cost structure, we have seen delays in the production plans. Going into the fourth quarter, production volumes in polysector are likely to increase marginally as some new capacities come online. During the third quarter, we saw an acceleration in the transition from P-type to N-type cell technology with strong growth in N-type product demand volume and the N-type product average selling price premium expanded to 10 to 12 RMB per kilo in the third quarter. Going forward, we expect this transition to further accelerate as entire products expand market share, leading to continued demand growth. To give an update on the company's $700 million share buyback program announced in November 2022. By the end of this September, the company had already purchased 8.1 million ADS for approximately $328.8 million, with an average cost of approximately $40.58 per ADS. Combined with the program completed in 2022, in aggregate, the company has already purchased approximately 10 million ADS for approximately $448.8 million. While basic weighted average ADS outstanding for the third quarter was 74 million shares, total outstanding shares at the end of the third quarter were approximately 71.8 million shares, after fully reflecting our recently completed share repurchases. With the urgent need to address climate change, we're still at the very early stage of the energy transition from fossil fuel to renewable energy for human energy needs on Earth. As one of the most competitive forms of power generation, the continuous cost reduction in solar PV products and the associated reduction in solar energy generation costs are expected to create substantial additional green energy demand, which we believe is likely to exceed most analysts' expectations. Solar PV is generally expected to eventually become one of the most important energies to power the world. In addition, as solar PV technology keeps evolving, we believe that the increasing needs for very high-purity poly, such as our in-type polysilicon, will help differentiate us from most of our competitors. While many of our competitors will likely struggle in the current market environment, Dr. New Energy has one of the best balance sheets in the industry with no financial debt, and we, as a whole, are confident that we will navigate the near-term market volatility successfully. We're optimistic that as the solar end market continues to grow and as our customers continue to transition to higher efficiency and type technology, we will benefit from this trend. DACO will continue to strive to maintain solid growth and capture the long-term benefit of the growing global solar PV market. So regarding future outlook and guidance, we expect to produce approximately 59,000 metric tons of poly during the fourth quarter of 2023. And for full year 2023, we expect to produce approximately 196,000 metric tons to 199,000 metric tons of polysilicon. So now I turn the call to our CFO, Mr. Ming Yang, to delve deeper on the financial performance. Ming, please go ahead.
spk02: Thank you, Anita, and hello, everyone. Thank you for joining our third quarter earnings conference call today. Now I will discuss the company's third quarter financial performance. Revenues were $484.8 million compared to $636.7 million in the second quarter of 2023 and $1.2 billion in the third quarter of 2022. The decreasing revenue compared to the second quarter of 2023 was primarily due to the decrease in average selling prices mitigated by an increase in sales volume. Gross profit was $67.8 million compared to $258.9 million in the second quarter of 2023 and $978.6 million in the third quarter of 2022. Gross margin was 14% for the quarter compared to 40% in the second quarter of 2023 and 80% in the third quarter of 2022. The decrease in gross margin compared to the second quarter of 2023 was primarily due to lower average selling prices, which was partially mitigated by lower production costs. Selling general and measure expenses were $89.7 million compared to $43.3 million in the second quarter of 2023 and $280 million in the third quarter of 2022. I will give a little bit more details about the increase in SG&A expenses for the quarter. as compared to the previous quarter, and this is primarily related to the resignation expenses and the recognition of the remaining share-based compensation expenses related to the company's recent management change. The recognition of the remaining non-cash share-based compensation expenses consists of approximately 330,000 shares, which will be vested based on the vesting schedule over the next two years. And based on the current share price, this is approximately $8 million in terms of expense. However, U.S. GAAP rules requires that the company recognize the related expenses based on the share price at the time of grant, and this would be approximately $23 million. In addition, our H&N expenses during the third quarter includes a total of $46.3 million in non-cash share-based compensation costs which includes the above expense related to recent management changes, as I had mentioned. And this compares to a total of $27.5 million of share-based incentive expenses in the second quarter of 2023. For the fourth quarter, we would expect our HG&A expenses to normalize and would be in the range of approximately $35 to $38 million per quarter. inclusive of non-cashier-based compensation costs. Research and development costs were $2.8 million compared to $2.2 million in the second quarter of 2023 and $2.5 million in the third quarter of 2022. R&D expenses vary from period to period to reflect R&D activities that take place during the quarter. And most of our R&D activities currently is focused on increasing the percentage of N-type polysilicon for the company's bottom mix. For foreign exchange gain was $3.1 million for the quarter compared to a loss of $19.7 million in the 10 quarter of 2023. And this is attributed to the volatility and fluctuation in the U.S. dollar and RMB exchange rate during the quarter. And as a result of the above-mentioned, income from operation was $22.5 billion compared to $213 million in the second quarter of 2023 and $693 million in the third quarter of 2022. Operating margin was 4.6% compared to 33.6% in the second quarter of 2023 and 56.8% in the third quarter of 2022. Net loss attributable to DACA New Energy shareholders was $6.3 million compared to net income of $103.7 million in the second quarter of 2022 and $323 million in the third quarter of 2022. Loss per basic ADS for the quarter was $0.09 per share compared to earnings per basic ADS of $1.35 in the second quarter of 2023 at $4.28 in the third quarter of 2022. And adjusted net income, a non-GAAP attributable to Dark Renewal Energy shareholders, including non-cashier-based compensation costs, was $44 million compared to $134.5 million in the second quarter of 2023, and $590.4 million in the third quarter of 2022. Adjusted earnings per basic ADS was $0.59 compared to $1.75 in the second quarter of 2023, and $7.81 in the third quarter of 2022. EBITDA was $70.2 million compared to $230 million in the second quarter of 2023 and $720 million in the third quarter of 2022. EBITDA margin was 14.5% compared to 36.1% in the second quarter of 2023 and 59% in the third quarter of 2022. Now I would like to provide some additional color related to our operations. So from a pure operation perspective, this would exclude the impact of the one-time resignation cost and the non-cash share-based compensation cost of the U.S. LISCO. For our operating city, Xinjiang Daco, it recorded a pre-tax earnings of 888 million RMB. or approximately 121 million U.S. dollars, a net income of 689 million RMB, or approximately 94 million U.S. dollars. Dakou New Energy currently owns approximately 72.4 percent of Xinjiang Dakou, and Dakou New Energy shareholders' allocation of the operating net income should be approximately 32.4 million, excluding the above-mentioned GAAP accounting-related expenses. And now on the company's financial condition. As of September 30th, 2023, the company has $3.28 billion in cash and cash equivalents in restricted cash compared to $3.17 billion as of June 30th, 2023 and $3.05 billion as of September 30th, 2022. And as of September 30th, 2023, Note receivable balance the company was $276 million compared to $799 million after June 30, 2023 and $1.57 billion after September 30, 2022. Note receivable balance represents bank notes with maturity within six months. And now the company's cash flow. For the nine months ended September 30, 2023, net cash provided by operating activities was of $1.49 billion compared to $1.7 billion in the same period of 2022. And for the nine months ended September 30, 2023, net cash used in investing activities was $954 million compared to net cash used in spending activities of $605 million in the same period of 2022. Net cash used in investing activities in the three quarters of 2023 was primarily related capital expenditures on the company's policy plan project in Basel City, Inner Mongolia, inclusive of both Phase 1 and Phase 2. And for the nine months ended September 30, 2023, net cash used in finance activities was $602 million, compared to net cash provided for niche activities of $1.4 billion in the same period of 2022. Net cash used in finance activities for the first three quarters of 2023 was primarily related to $322 million in share repurchases and $303 million in dividend payments made by the company Xinjiang Daiquo subsidiary to its minority shareholders. The company continued to maintain a very strong balance sheet with significant cash balances and no financial debt, as well as healthy operating cash flow. And with that concludes our prepared remarks. Operator, we will now open the line to questions from the audience.
spk06: Thank you. We'll 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 your question, please press star then 2. This time we'll pause momentarily to assemble the roster. First question will be from Philip Shin, Roth MKM. Please go ahead, sir.
spk00: Hi, everyone. Mr. Xu, Ming. Thanks for taking my questions. I wanted to explore your view on polysilicon pricing for Q4. You came in with about $7.70 for a Q3 for a kilogram, and I wanted to see what your expectations are for a Q4. And then also for the beginning of next year, and then by year end 24, do you see a recovery or do you expect polysilicon pricing to remain at current levels? Thanks.
spk02: Okay, Mr. Xu will provide commentary first, and then Nita will provide the translation.
spk09: 目前是第四季度十月份,十一月十二月份。 十月份,现在还是维持现在的建价。 N型的,P型的这个是八万块钱,七万多嘛,七万左右。 N型的大概在八万左右的这个价格,十月份。 因为我们现在订单,我们看到十月份现在也是这个价格,也没有太大的变化。 I estimate that in December, due to supply and demand issues, the price may have some changes, but not too much. But in 2020, of course, this date is the first quarter of 2024. It is definitely a matter of demand. So maybe in the first quarter of 2020, the estimated price should be between $65,000 and $70,000.
spk08: So, Mr. Hsu has commented that for the fourth quarter, the price should stay somewhat similar to now, and for P-type should remain around 70 RMB per kilo, and for N-type, there's a 10 RMB premium, which is around 80 RMB per kilogram. And in December, the price should stay somewhat consistent as of now. And going into the first quarter, because of demand, the price should lower to around 65 to 70 RMB per kilogram, around that range. But going into second quarter and beyond, it should rise above 70 and plus.
spk00: OK, great. The price to 55 to 70 kilograms lower in Q1, what is driving that? And is that price, are you talking about P-type? And so should we expect N-type to be 10, or maybe higher? And what will cause the price to go higher in Q2? And what does he think the year-end 24 price might be? Thanks.
spk09: The main reason is that the price of the first quarter is mainly due to the Spring Festival and the Chinese Spring Festival and the Spring Festival is mainly due to the Spring Festival and the Spring Festival So the price of the first quarter is 65 dollars, but it may be about 500 dollars The first quarter is mainly due to the season, but the second quarter I think the first quarter is also in January and February, so the price will start in March I think it will go up N-type price should be 5 to 10 dollars, 5 to 10 dollars
spk08: The price in the first quarter, around 65 to 70, the price range is primarily driven by seasonality. So Christmas and Chinese New Year, and that causes lower demand. So that's primarily the price in January and February, but price should recover starting in March. And that's the price for P-type. For N-type, we see a price premium of around 5 to 10 RMB per kilogram.
spk00: Okay, got it. Thank you. One more question for me and then I'll pass it on. As it relates to the industry structure and, you know, given these low prices, you know, there are a lot of companies that might be having trouble with driving profit. So just curious if you can talk about what he sees ahead and can he Does he expect certain companies to stop production or even accelerate the stoppage of production shutdown? What does he see for the evolution for the industry in the coming six months? Thanks.
spk09: China's production capacity in October is about 150,000 tons per day. But our cost is the most advantageous. At that time, it was 60,000 yuan, but now it is more than 50,000 yuan. Now in China, China's production capacity is more than 30,000 tons per month. The cost of 70,000 yuan The price of 70,000 units is about $90,000 per unit. The price of 150,000 units is $90,000 per unit. The price of 60,000 units is more than $75,000 to $80,000 per unit. So in the future, our cost will change to $65,000 to $70,000. The cost of 50,000 to 60,000 units will be a loss. The cost of 50,000 to 60,000 units will be a loss. So if this is a loss, there must be a price increase. In terms of the industry structure, first of all we want to highlight that we have a
spk08: very competitive cost advantage in producing polysilicon. And we see that if price goes down to 65 to 70, there's roughly a 50,000 to 60,000 of production volume that's not going to be profitable. And for the new entrants, their costs are obviously a lot higher than us, which is around $75,000 to $80,000. So given that they don't have enough cash, not enough cash, and the financing route is relatively limited now, they will be struggling in the coming quarters.
spk02: So we certainly see industry supply adjustments going forward in the coming months, as well as the industry rebalancing and normalized.
spk00: OK, got it. Thank you for the color. I'll pass it on. Great. Thank you, Phil.
spk09: Thank you.
spk06: Thank you. Next question will be from Alan Lau of Jefferies.
spk09: Please go ahead.
spk10: Thanks a lot. Thanks a lot for taking my question. Thanks, Mr. Hsu and also Ming for the prepared remarks. So I'd like to have more clarity on the share base expense list. This seems to be the item which has a major change quarter over quarter. So we'd like to know what is the breakdown on the $89.7 million of SGMA because in the primary market it was $46.3 million of non-cash share base compensation but in reconciliation it's $50 million. So we'd like to know how much is the original share-based compensation, and how much is related to the resignation of Ms. Zhang Longgen?
spk02: Hi, Alan. This is Ming. I will discuss the increase in CN expenses. So for the quarter, we had a total of $46 million in non-cash share-based compensation expenses. And of that, approximately half or approximately $23 million is related to liabilities of our previous CEO, Mr. Longin Zhang. And this actually is approximately, again, 330,000 shares of his previous equity grant, which would be vested over the next two years. But because of GAAP accounting rules, and we are required to recognize this expense during the third quarter, This also would be recognized in terms of at the time of the grant, which was around $70 per share or so. That's how we quoted the additional $23 million in additional share-based compensation costs. The remaining is also primarily related to his other resignation expenses as well. But we do expect this to normalize for the next quarter. And we expect next quarter's CNA expense to be in the range of $35 to $38 million per quarter.
spk10: Understood. Thanks a lot. Because it seems that other than these expenses, because the increase in expenses quarter over quarter is like $46 million. Probably this $24 million is one of them. It seems there are also other increase in expenses. So are those cash expenses?
spk02: Yeah, yeah. So I mean, some of it is expenses related to, for example, shipping costs, as we ship more volume for the quarter. Yeah. But the remaining is primarily to his resignation costs.
spk10: Understood. So the next question, switching gear to our buyback plan. So we have already buyback a major portion of our $700 million buyback plan, but still we have quite a lot of bullets. So are we planning to declare dividends or what is our plan to execute the remaining of the, make use of the remaining funds? for the buyback or dividends.
spk09: Regarding the $700 million share back, we have a remaining $380 million left. And because our CEO has just
spk08: been in the position for a quarter. And we've been in talks with our board and our management team. And we have decided that we will continue to pursue the share repurchase program. And we're committed to repurchase during the last quarter to whatever the upper limit would be based on what we can do to repurchase on a daily basis. But overall, we will continue to repurchase.
spk09: Yeah, we will buy back as much as we can in the last quarter. Thank you. So effectively, it means $380 million in the remaining two months.
spk02: Effectively, yes. As much as we can repurchase, yes.
spk10: Okay, okay. Thank you. So, yeah.
spk09: Because I think the price is very low right now. But some of our shareholders may want to return some, right? Otherwise, from the company's point of view, personally speaking, this price is a very cheap price. So we all think, a lot of people think, some of our directors think they can all return. This is a good thing.
spk08: Yeah, we see the price as being very low at this point, so we are very committed to repurchase at this point.
spk10: Understood. So, as communicated before, the company may also consider to cancel those shares. So, is this still the plan, or when will the company cancel those shares?
spk02: So it is the company's intention that I think by year end we would cancel the shares that we have repurchased. So the company's intention is to cancel those shares, the repurchased shares. Thank you.
spk10: That would definitely help a lot in increasing the ETS as well. So yeah, thanks a lot. So I think the last question here is, What is your view on next year? What do you think will be your production plan? Is it full capacity based on the current capacity? And lastly, what is the progress on your semiconductor grade polysilicon?
spk11: For the production volume for next year, we forecast around 280,000 metric tons to 300 metric tons. But that will also be a contingent upon the progress of our construction.
spk08: Yeah, and for semiconductor, we'll start pilot production at the end of this year. So for next year, the capacity will just be 1,000 metric tons.
spk02: So I want to write on a high level, right? So we will have full production on our Xinjiang facility, which is around 130,000 metric tons. And then also full production on our Indo-Mongolia phase one, which is also additional 100,000 metric tons. And finally, we... Inamogolia Phase II to start production around mid-year next year. So approximately, based on 100,000 metric ton capacity, around 50,000 metric ton production. So that's why we think next year arrange 280 to 300. Obviously, this is a very preliminary estimate. It's not an official guidance. And we will have a more of formal numbers based on when are in the Mongolia Phase II is more closer to completion and start of production. Thank you.
spk10: Understood. It's very clear. Thanks a lot. I'll pass on. Thank you.
spk06: Thank you. Our next question comes from Andre Corporati from the Andre Corporati Corporation. Please go ahead.
spk01: Hello, sir. Just so I understand, repurchasing in the last, I like that the total shares of Sandy decreased finally. I want to ask one more question. The first question is how much more will shares be issued for management compensation plans in the next one year or two years? Will we see $40 million or something like that as share-based compensation? That's the first question. And the second question, you have $3,350 million or something like that repurchasing left. Last quarter, you were stating that you will finish it by the end of the year. So we'll be expecting Q4 for you to deploy all of this capital or as much as possible and at an accelerated pace compared to the anterior quarters. So till now, you bought in three quarters like $300 million. Are you telling us that you will buy $200 million or even $300 million of what is left in the last quarter, in one quarter?
spk08: Regarding the share repurchase, yes, I think we can repurchase. Based on the rule, we can repurchase around $220 million to $250 million in the last quarter, and we'll definitely accelerate. We'll keep that pace. Okay.
spk01: Okay, and how many in quarter four? I don't know the exact number, but if you have it on the top of your head or something around that, how many shares will be issued for share best compensation? If I'm not wrong, this quarter it was like 45 million, but last quarter, so Q2, you had like 120 million or something like that. You had a larger one time. So my question is for Q4, how many shares will be issued for share best compensation for management?
spk02: Okay. We can aggregate around 350,000 shares. 300,000 shares, something like that.
spk01: So that's 300,000 times $24 today's price. It's okay. Not even $1 million in share price compensation. Okay. Okay, last question is, actually I have two questions left. You stated in last quarter, and I really like that in the transcripts and the earnings call, you stated in August that you will consider issuing shares in 2024 in the Shanghai listed shares, the 75% ownership that New Energy has. and you would consider selling shares there to buy shares on the New York Stock Exchange. So my question is, when will that be available? Is it two years after the IPO or in what month of next year?
spk09: Yeah, we will don't because there's a
spk08: we yeah thank you for the suggestion and we will consider that proposal and in fact i think by july next year we are able to sell the shares in asia and then use that amount to continue maybe employ a deploy another share purchase plan for 2024. do you have any idea not an estimate of what these cherry purses after you finish this cherry purchase of this year the 750 million
spk01: So you have like $300 million left or $350 million left. So my question is, what will the scale of the 2024 repurchase program be or other dividend yields for investors in the New York Stock Exchange shares? I'm talking in DQ on New York Stock Exchange. If you have any idea or if you could comment on that. And thank you very much for all your answers. Very nice for you.
spk02: Hello. Thanks for your question. So it is still early to say or to estimate what the program size might be like. But, you know, starting in July of 2024, you know, after the three-year lockout period for our A-share listing, so the U.S. Dockland New Energy is able to start to sell down some of its shares of the A-share listing. So I'll just start on numbers. So let's assume that we sell down even a minor 10% stake based on the current valuation of the Asia listing, which is roughly 70 billion RMB. So we could potentially raise somewhere in the range of 7 billion RMB or so in capital. And I would expect that majority of this could be used for share purchase in the US NYSE.
spk01: listing that's the current very nice way how you stated it so that called new energy just for all shareholders and for me also to understand we own 75 percent of the Shanghai listings right it's such a rudimentary question but I just want to make it clear the stupidest question ever but yeah that's right 72.4 percent to be exact yeah but that's right yes yeah the discount is insane okay And the last question and final one, what will the free cash flow be for 2024 or how much capex last quarter? I really liked how management talked in the earnings hall and I just want to make a revamp of what happened last quarter. So capex you talked last quarter, actually Ming Yang talked, I think the last CEO or whatever, he talked that how much capex is left in 2024? What will the outflow, what will the capex be for 2024? around how much is left to invest.
spk02: Okay. So as of the end of the third quarter, so total cap is remaining for the company's major projects, including in the Mongolia phase one, in the Mongolia phase two, and our semi-project is approximately 6.5 billion RMB, or approximately $900 million or so. And of that, we expect for the third quarter, total CapEx plan CapEx is around 2.7 billion RMB or roughly 350 million. And the remaining will be spent for the next year. So that's the total CapEx plan right now.
spk01: So what is left in 2024 is $900 million, right? Or that is minus the 300?
spk02: Six to 700 million, yeah, approximately.
spk01: Okay. And in 2025, do you have any major plans yet? Or is there any capex in 2025 which is eccentric, like about $500 million?
spk02: No plan right now, currently.
spk01: Okay. So Mongolia phase two or phase one, whatever is the last thing. Okay. Thank you very much. You were very kind, very nice to hear you.
spk11: Thank you. Thank you.
spk06: Thank you. Next question will be from Jack Yu, LC Capital. Please go ahead.
spk07: Hello. I want to carry about the cancellation of the shares. Just now, you said that at the end of the year, there might be cancellation of the shares. We would like to know, will you cancel all of it by the end of the year? at the end of the year he will start to cancel it. So what is the schedule of the cancellation of the shares in details? Do you have plans?
spk02: Okay, most likely it will be one time around the end of the year and we would likely cancel almost all, if not all, a majority if not all of the shares that we repurchase. I think most likely all of the shares that we repurchase at that time will be canceled.
spk07: Okay, thank you. And we also want to know, do you consider any dividend option, dividend for the company?
spk08: For this year, our priority this year will still be the share repurchase plan. As we just stated, we'll continue to repurchase our shares as much as we can. And for next year, we will contemplate between another share repurchase program or issuing dividends, but that will be contingent upon board approval and we'll need to to delve deeper into that and consider the plan. But as of now, our primary goal is to complete as much as we can in terms of the share repurchase plan.
spk07: Okay, okay, thank you. That's all my questions.
spk06: Thank you. Our next question will be from Gordon Johnson. GLJ Research, please go ahead. Hey guys, can you hear me?
spk03: Hello?
spk11: Yeah, hi, we're here.
spk03: Hey, thanks for taking the questions. So a lot of my questions have been answered, but there seems to be some concern amongst some of our on-the-ground contacts in China that there could be grid issues with respect to the massive amount of solar that's been installed this year. I mean, I think over the first nine months, we're close to 130 gigawatts in China, suggesting we could get 172 gigawatts for the full year 2023. That's amazing. That's great for you guys. But what we're hearing is that could potentially cause issues with respect to grid connects next year, and thus you could get flat to down installs in China. Two questions. Number one, have you heard this? Number two, if you have, what are your thoughts? And then a follow-up. Thank you.
spk09: The Chinese market, let's say next year, I think it will be about 130 this year. I think it will be about 200 this week. Some people say the data is about 200. 130, right? But the exact data has not been calculated yet. But China's telecommunications network should be able to handle this power supply, from China's point of view. At the same time, China now has about 15% of the output. This is clear from the output. Of course, there are also some tax evasion cases. From the point of view of the Internet, it is a green development. So this Xiao Na Bao, at present, it can be said that the Chinese government is still supporting it, because it is now in the green zone. So I think there should be more than 200 projects next year. At least we should have more than 200 projects by the end of this year.
spk02: Okay, let me translate for Mr. Shi. So even though this year, you know, approximately 130 gigawatts has already been installed, right, Mr. Shi is still very optimistic about the overall installation here within China. So it's the expectation that, you know, and again, he's actually an expert on the grid. So he's been a supplier of equipment to the grid for many, many years. He expects that overall next year could be approximately 200 gigawatts. And what's happening here in China is one is it is the Chairman Xi Jinping's goal and his mandate that China to deploy significant amounts of renewable energy. And also the National Energy Administration is very proactive in terms of allowing and requiring actually local grids to except as much renewable energy as possible. At the same time, China is building significant amount of capacity in energy storage, expected that storage could reach as high as 15% of the overall power generation for China over time. Even in the near term, China is exploring technology, including not just battery storage, but also in terms of hydrogen storage, as well as hydro or a water-based type of energy store. So this is all happening within China. So I think combining all these factors, including the mandate from Chairman Xi Jinping, we do believe that China's renewable energy, particularly solar market, will continue to grow for next year.
spk03: Okay, that's helpful. then one last one for me um and again congratulations on your your prior execution guys really good in the poly market um so we've heard that there was in september there was roughly 60 gigawatts of output um yet the market only absorbed 40 gigawatts and again we're hearing that there could be caps on the market of you know 200 gigawatts in 2024. so just wanted to hear your thoughts on if indeed those numbers are accurate. Is there the potential for some of your competitors to potentially shut down capacity slash idle capacity that's making the market better as we enter the first half of 24? Thanks again.
spk09: In the beginning, because of the problem of the seasonality, we started to have a lot of scams. For example, our next few companies, for example, Shuangliang, our customers, Zhonghuan, Gaojun, some of their production capacity has dropped by 50%. The average production is about 78% of our customers. So this is the whole data. But the demand in this sector is of course the demand in Europe and the United States. Of course, there is also the demand in China. It should be said that especially the price of the main building is declining. So everyone is still looking forward to about 20 GW. Our main building is really in need of some 20 GW. But soon, it should be said that at the end of the year, I think the Chinese market will have some new changes. Next year, although there are now 20 plans, but I think 200 plans, but I think next year the Chinese market will be more than 200 plans. Including what we now call the desert, Guanghu Hotel. China has come up with a lot of new policies. The desert hotel is a big problem. Including Xinjiang, including Gansu, including Limu.
spk08: Yeah, so for this quarter, we've seen that wafer has some inventory due to scenality reasons. So for instance, our downstream players, our customers, like Sean and TCL, from what we've known that their utilization rate has dropped to 50%, but overall for wafer, the utilization rate is still around 78%. And because module price have kept falling down, we've seen that there should be around 20 gigawatt of inventory by year end. And also at the beginning of the year, but there should be some new changes going forward into next year. And we forecast that China should be able to reach and even exceed 200 gigawatts next year because there's some new policies launched in Xinjiang, Gansu, Inner Mongolia, et cetera. And regarding the question on our competitors, those who don't have any competitive advantage would have no edge in this market, given the low price. And yes, they would have some struggles.
spk02: So I think shutdown, including managed shutdown and islanding of some capacity is actually a likely situation for non-competitive players within the industry.
spk09: For players and our industry, cost and quality are the two primary factors.
spk08: the key factors in gaining an edge in this competitive landscape. And as a company, we have the lowest cost and very high quality. So we believe that we can sustain our position in the market.
spk03: Thanks again, guys.
spk02: Great. Thank you. Thank you. We'll take our last question if there's one more.
spk06: Thank you. The next and final question will be from Frank Fong of Norang. Please go ahead.
spk05: Thanks, Mr. Xu and Mr. Yang for taking my question. I think this question has been addressed in the second quarter earnings. I just want to reconfirm that we do not consider any privatization plan in this year and also in the next year, right? And the second question is, are the voting rights of shares hold by management is equal to those voting rights hold by minority common shareholders. Thank you.
spk08: Sorry, Frank, can you repeat the second question?
spk05: Yeah, my second question is about voting rights of shares hold by management or the board members. I wonder if the voting rights is similar as one one to one ratio to those shares hold by minority common shareholders. Thank you.
spk09: Yeah, we don't have any plans in terms of privatization at this point, but we will see how the market evolves.
spk08: But as of now, we don't have any plans in terms of privatization this year and in the coming years. Okay.
spk02: And regarding your second question regarding voting rights, So the majority shareholder does not have super voting rights. So they do have the same one-to-one voting rights as the minority shareholders or the public shareholders. So the voting rights are the same amongst shareholders.
spk05: Understood. Thank you, Mr. Hsieh. And thanks, Mr. Yang.
spk11: OK, great. Thank you, Frank.
spk02: OK, operator, I think that concludes the session.
spk06: Yes, that concludes the question and answer session. And I'll turn back to management side for closing remarks.
spk08: Thank you everyone again for participating in today's conference call. So should you have any further questions, please do not hesitate to contact us. Thank you and have an awesome day. Goodbye.
spk06: Thank you. This concludes the conference call today. Thank you for attending today's presentation. You may now disconnect.
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