Daqo New Energy Corp ADR

Hello and welcome to the Dalcoat New Energy second quarter 2024 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 2. Please note this event is being recorded. I would now like to turn the conference over to Anita Xu, Investor Relations Director. Please go ahead.

Hello, everyone. I'm Anita Xu, the Investor Relations of DocuNew Energy. Thank you for joining our conference call today. DocuNew Energy just issued its financial results for the second quarter of 2024, which can be found on our website at www.docunewenergy.com. So today, attending the conference call, we have our chairman and CEO, Mr. Xiang Xu, our CFO, Mr. Ming Yang, and myself. The call today will begin with an update from Mr. Xu on market conditions and company operations. And then Mr. Yang will discuss the company's financial performance for the quarter and the year. After that, we'll open the floor to Q&A from the audience. 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'll occasionally reference monetary amounts in U.S. dollar terms. Please keep in mind that our functional currency is a Chinese RMB. We offer these translations into U.S. dollars solely for the convenience of the audience. Mr. Xu will make his remarks regarding current market conditions and company performance in Chinese. Let's all translate into English after he finishes. So now I'll turn the call to our CEO. So now I'll turn the call to our CEO.

So now I'll turn the call to our CEO. So now I'll turn the call to our CEO. So now I'll turn the call to our CEO. We maintain a strong financial support table. There is no short-term or long-term debt. Our cash flow is 9.97 billion U.S. dollars. Our cash flow is 11 billion U.S. dollars. Our cash flow is 11 billion U.S. dollars. Our cash flow is 11 billion U.S. dollars. Our cash flow is 9.97 billion U.S. dollars. Our cash flow is 9.97 billion U.S. dollars. Our cash flow is 9.97 billion U.S. dollars. Our cash flow is 9.97 billion U.S. dollars. Our cash flow is 9.97 billion U.S. dollars. In the second quarter, the total production volume reached 64.961 tons. In the last quarter, the project increased by 2.268 tons. It will continue to invest in development and focus on increasing the product range. In this quarter, our N-type products reached 73%. This is a project that is in the process of climbing up. The N-type products also reached 74%. This means that we have a lot of confidence that it can be realized. In the past, it was 100% N-type. In addition, our production cost has dropped significantly in the second quarter, and it has dropped by 3% in the first quarter of 2020. The average production cost is 6.19 billion U.S. dollars per kilogram. Due to the current market situation and the price of the product, we have adjusted the production rate and utilization rate of the next few goals and the production time of the next few years. In the first quarter of 2020, the total production rate of the next few goals was 4,300 tons, 4,300,000 tons, and 4,000,000 tons. In the third quarter, we have already begun to reduce the production capacity and reduce the production capacity, and reduce the production capacity, and reduce the production capacity, and reduce the production capacity, and reduce the production capacity, and reduce the production capacity, and reduce the production capacity, and reduce the production capacity, to break through the cash flow cost line. The cash flow cost has fallen from 60 yuan per kilogram at the beginning of April to 40 to 55 yuan per kilogram at the end of April. At the beginning of May, it broke through 40 yuan per kilogram. Because the cash flow market activity has significantly decreased, the stock market has shrunk and led to a sharp decline in cash flow. At the beginning of April, the stock market capitalization rate increased from 18 to 20 days, up to six months. In terms of price and cost reduction, we started to see that a number of oil and gas companies began to stop and reduce the supply and demand of oil and gas. According to industry statistics, in China, oil and gas companies produced 19.2 million tons of oil in April, plus 16.2 million tons in June. Then, the supply and demand of oil and gas is still higher than the demand for oil and gas. Because the supply and demand of oil and gas is lower than the demand for oil and gas, the supply and demand for oil and gas is lower than the demand for oil and gas. The demand for oil in June will be around 50 tons. In July, we hope that the oil production will not decline in June, but the demand for oil in summer will also decrease significantly. As a result, the price of oil in summer will be stable. We need to see the increase in the opening price of oil in summer. The demand for oil in summer will increase, which will increase the reduction in the rate of oil storage in oil storage. As for the current industry, although we were in but there is no sign of a reversal. We rely on the company's own funding procedures and leading technology to deal with many aspects of the company, but the government is also actively leading the state-owned enterprises to reduce production, single-use, and expand production of light and dark manufacturing projects. With the elimination of road production, under the guidance of the Ministry of Industry and Industry, the Chinese light and dark industry has set up a high-end development forum. In July, the Ministry of Industry and Industry addressed the requirements of the light and dark manufacturing industry, This is the opinion of the Communist Party of China. The opinion is that the capital of the new light house project is lower than that of the new light house. There is a clear demand for good indicators for the management of the new light house, etc. The entire industry has been under the influence for a year. We have also been through a few years. At that time, the price of the first place and the pessimistic mood will eventually build a more rational market environment. Handong is finally over. The light house industry after the process Hello, everyone.

This is Anita. I'll now translate our CEO, Mr. Xu's remarks. The solar industry experienced significant challenges during the second quarter, as market prices fell across the solar value chain to below production costs for nearly the entire industry. As end-of-quarter polysilicon ASP fell below our production costs, We were required, in accordance with accounting rules, to record a non-cash inventory impairment expense of $108 million because our inventory market value fell below book value. This had a significant negative impact on our cost of revenue, growth loss, operating loss, and net loss. Nevertheless, we continued to maintain a strong balance sheet free of financial debt. By the end of the quarter, we had a cash balance of $997 million and a combined cash and bank bill receivable balance of $1.1 billion. To take advantage of higher interest rates compared to bank savings, we purchased $1.4 billion of short-term investments and fixed-term deposits during the quarter. Inclusive of short-term investment and fixed-term deposits, we had adequate liquidity with a balance of quick assets in the amount of $2.5 billion U.S. dollars. On the operational front, during the second quarter, we started initial production of our 100,000 metric tons phase 5B polysilicon project in Inner Mongolia's plant, which contributed approximately 12% of our total production volume. Overall, the total production volume of our two polysilicon facilities for the quarter was 64,961 metric tons, exceeding our expectations and representing an increase of 2,683 metric tons, compared to production volume for the previous quarter. Through continued investment in R&D and dedication to purity improvements at both facilities, our overall end-type product mix reached 73% during the quarter. Remarkably, even our Phase VB, which was still in the ramping up stage, had 70% end-type in the product mix, strengthening our confidence in achieving 100% end-type by the end of next year. In addition, our production costs trended down further in the second quarter, decreasing by 3% from Q1 2024 to an average of 6.19 per kilogram. In light of the current market conditions and pricing, we have adjusted our target production utilization rate for the third quarter and our production plan for the full year. We expect our Q3 2024 total polysilicon production volume to be approximately 43,000 metric tons to 46,000 metric tons. As we start up maintenance and lowered our production utilization rate to support pricing and reduce our cash burn. As a result, we anticipate our full year 2024 production volume to be in the range of 210,000 metric tons to 220,000 metric tons. During the second quarter, solar market sentiment was depressed, and customers showed little interest in purchasing for products. As a result, policy income prices kept setting new lows, below production costs and even below cash costs. Policy income prices plummeted from slightly above RMB 60 per kilogram on average in early April to RMB 40 to 55 per kilogram in late April. and further dropped below RMB 40 per kilogram near the end of May through the end of June. Overall sales pressure intensified as industry Y plus silicon inventory increased from approximately 18 to 20 days of production in early April to more than a month of production by the end of June. With prices declining for weeks to below the industry's cash cost and inventory accumulating, we began to see maintenance and production costs across the industry. Based on industry statistics, the total policy income production volume in China dropped about 15% from approximately 192,000 metric tons per month in April to approximately 162,000 metric tons in June. However, the supply policy income still exceeded the wafer customer demand, which has dropped around 50 gigawatt in June due to lower utilization rate. In July, although they're having further industry policy income production cuts, An uptick in demand from downstream manufacturers will be needed to drive inventory reduction and price recovery. The solar industry has gone through multiple cycles in the past, and based on our previous experience, we believe the current low-price market downturn will eventually result in a healthier market, as poor profitability, losses, and cash burn will lead to many industry players exiting the business with some possible bankruptcies. This will bring the inevitable capacity rationalization, eventually solve the current overcapacity, and ultimately bring the solar PV industry back to normal profitability and better margins. This year will be challenging for China's solar PV industry as solar manufacturers along the value chain experience weak margins driven by oversupply, excessive inventory, and lower prices. At this point, we may have reached a cyclical bottom but do not yet see clear signs of potential improvements. We believe that the current situation of selling below cash cost is unsustainable and that many solar firms are facing significant cash flow challenges leading to delays in loan repayment and order deliveries. Therefore, we're likely to see market consolidation with higher cost manufacturers gradually phasing out capacity at exiting the business. So recently, the China Photovoltaic Industry Association has urged central and local governments, financial institutions, and companies to coordinate to accelerate industry consolidation. Chinese policymakers are also calling for the healthy expansion of the solar industry. China's Ministry of Industry and Information Technology issued a draft in early July that sets rules for solar projects, such as meeting specific electricity consumption requirements and minimum capital ratio for new and extension projects to ensure the high-quality development of the solar PV industry and eliminate outdated capacity. On the demand side, we continue to see strong growth in new solar PV installations in China during the first half of 2024, which reached 102.48 gigawatts, representing a 13.7% year-over-year growth rate. Overall, in the long run, solar PV is expected to be one of the most competitive forms of power generation in China, and the continuous cost reductions of solar PV products and the associated reductions in solar energy generation costs are expected to create substantial additional demand for solar PV. We believe that we're well positioned to weather the current market downturn and emerge as one of the leaders in the industry to capture future growth. So now I'll turn the call to our CFO, Mr. Ming Yang, who will discuss the company's financial performance for the quarter. Ming, please go ahead.

Thank you, Mr. Shi and Nita. Hello, everyone. This is Ming Yang, CFO of Dr. New Energy. We appreciate you joining our earnings conference call today. I will now go over the company's second quarter 2024 financial performance. Revenues were $220 million compared to $415.3 million in the first quarter of 2024 and $637 million in the second quarter of 2023. The decreasing revenue compared to the first quarter of 2024 was primarily due to a decrease in the NSP as well as decreased sales volume. Gross loss was $159 million compared to our gross profit of $72 million in the first quarter of 2024 and $259 million in the second quarter of 2023. Growth margin was negative 72% compared to 17.4% in the first quarter of 2024 and 40.7% in the second quarter of 2023. For the second quarter of 2024, the company recorded $108 million in inventory impairment expenses as the company's inventory's market value falls below book value. The decrease in gross margin compared to the first quarter of 2024 was also due to lower ASP, which was partially mitigated by lower production costs. SG&A expenses were $37.5 million compared to $38.4 million in the first quarter of 2024 and $43.3 million in the second quarter of 2023. SG&A expenses during the second quarter included $19.6 million in non-cash share-based compensation costs related to the company sharing incentive plans compared to $19.6 million in the first quarter of 2024. R&D expenses were $1.8 million compared to $1.5 million in the first quarter of 2024 and $2.2 million in the second quarter of 2023. R&D expenses vary from period to period and reflect R&D activities that take place during the quarter. Most of our R&D activities has been around increasing our end-type percentage. As a result of the foregoing, loss from operations was $196 million compared to income from operations of $30.5 million in the first quarter of 2024 and $214 million in the second quarter of 2023. Operating margin was negative 89 percent compared to 7.3 percent in the first quarter of 2024 and 33.6 percent in the second quarter of 2023. Foreign exchange loss was 1.4 million compared to 0.3 million in the first quarter of 2024, which is attributable to the volatility and fluctuation of the U.S. dollar and Chinese New Yuan exchange rate during the quarter. Net loss attributable to New Energy shareholders was 120 million compared to net income of 15.5 million in the first quarter of 2024 and 103.7 million in the second quarter of 2023. Net loss per basic ADS for the quarter was $1.81 compared to earnings per ADS of $0.24 in the first quarter of 2024 and $1.35 in the second quarter of 2023. Non-GAAP adjusted net loss attributable to Dr. New Energy shareholders excluding non-cash share-based compensation costs was $98.8 million compared to adjusted net income of non-GAAP attributable to Darfur New Energy shareholders of $36 million in the first quarter of 2024 and $134.5 million in the second quarter of 2023. Adjusted loss per basic ADS was $1.50 compared to adjusted earnings per basic ADS of $0.55 in the first quarter of 2024 and $1.75 in the second quarter of 2023. EBITDA was negative $145 million compared to $76.9 million in the first quarter of 2024 and $230 million in the second quarter of 2023. EBITDA margin was negative 66% compared to 18.5% in the first quarter of 2024 and 36% in the second quarter of 2023. Now on the company's financial condition. As of June 30, 2024, The company had $1 billion in cash and cash equivalent in restricted cash, compared to $2.7 billion as of March 31, 2024, and $3.17 billion as of June 30, 2023. And as of June 30, 2024, the note's fiscal balance was $80.7 million, compared to $194 million as of March 31, 2024, and $798 million as of June 30, 2023. no receivables or percent banknotes with maturity within six months. And as of June 30, 2024, fixed-term deposits within one-year balance was $1.2 billion, compared to nil in previous periods. For the six months ended June 30, 2024, net cash used in operating activities was $278.6 million, compared to net cash provided by operating activities of $786 million in the same period of 2023. and for six months ended June 30, 2024. Net cash used in investing activities was $1.7 billion, compared to $496 million in the same period of 2023. The net cash used in investing activities in the second quarter was primarily related to purchase of short-term investments and fixed-term deposits, which amounted to $1.4 billion. And regarding the company's purchase of property and plant equipment, and for the first six months of this year, this amounted to $292 million. We currently anticipate full-year capital expenditures in the range of $550 to $600 million, which is a further reduction from our earlier plan. Capital expenditure for the second half of 2024 is therefore expected to be in the range of $260 to $310 million. Capital expenditure for the year is primarily related to our Inner Mongolia policies and projects, Phase I and Phase II. And for the six months ended June 30th, 2024, net cash used in finance activities was $43 million compared to $477 million in the same period of 2023. The net cash used in finance activity in the second quarter of 2024 was primarily related to dividend payments and share purchases by our company's net subsidiary. And that concludes our prepared remarks. We will now open the call to Q&A 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're 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 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Phil Shen with Roth Capital Partners. Please go ahead.

Hi, this is Matt Ingram on for Phil. Thank you for taking our questions. Looking ahead, can you give us a sense of pricing and cost structure beyond this year? Do you think that there could be some recovery in price next year, and how much more room do you have to lower the cost structure?

Hello, this is Ming . Thank you for your question. I think in recent months, particularly in August, we've already seen some pickup and recovery of pricing. Anita said at the bottom, I guess in terms of June and July, pricing was below 40 RMB per kilogram. And as of now, pricing is the range of 41 to 42 RMB per kilogram. So we saw a range somewhere in between 2 to 3 RMB per kilogram in terms of price recovery. And this is primarily a result of the industry's production reduction and a slight uptick in demand from customers. So we do not think the current pricing is sustainable. We do believe that, say, over the rest of the year, we should continue to see likely between two to, let's say, four RMB kind of price recovery. Production continues to remain at a lower level. And while For next year, we do believe that demand continues to improve, especially from new markets like Middle East, Latin America, Africa, and again, I think further market developments in China and Europe, for example. So we do think that pricing should recover to at least production costs or maybe normalize to higher production costs, higher than production costs. So we think maybe mid-next year is when we will see normalized pricing for polycylium. Great.

Thank you.

And quickly follow up on your cost structure. Sorry. We do think there continue to be opportunity to reduce cost. I think we're seeing very successful cost transform right in Mongolia Phase II facility. I think you saw approximately 3% reduction of costs from Q2 to Q1. And we do expect that Q3 costs should be flat to slightly lower than Q2. So we think in the second half we should, overall we should see costs somewhere around $6 or even slightly lower than $6. And we think this cost structure should continue next year.

Really appreciate the color there. And then can you just talk about the channel inventory in the market? Do you expect that to continue to grow in your term? And where do you think that peaks?

Okay, actually, channel inventory has already peaked. So inventory is actually coming down as of August, and we think this should continue to go down, you know, I think primarily as a result of continued reduction in supply. So we think it just should probably reduce to a much more reasonable level by, say, Q4 or by the end of the year. Right? So unless we see some kind of meaningful price recovery, at least above the industry cash cost, we're very unlikely to see improvements in production.

Okay, great. Thank you for the color. I'll pass it on. Great. Thank you.

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

Thanks for taking my question. So I would like to know about what is the breakdown on the impairment of 108 million, and also the inventory level at the end of 2Q, because it appears that the production volume is higher than sales volume for 20,000. $20,000 is a fair assumption on the inventory level by N of 2Q, and if that is the case, an impairment of $108 million seems huge, so we'd like to know the basis on that.

Okay, so the reality is the $108 million is a reduction in not just finished goods, but also work and process inventory and raw material. which reduces our cost, you know, from, you know, our production cost, let's say, is around $6.19 per kilogram to really the current or the current market pricing, which is below 40 RMB per kilogram. And about 60% of that is related to finished goods inventory. Okay. And then... Looking at our inventory at the end of the quarter. Give me a minute. Let me just quickly look that up. Okay. It's 20, approximately 28,000 metric ton. Okay. So we built roughly 20,000 metric ton of inventory like you said during the quarter because of the market conditions. and the weak demand. But I think starting in August, we're starting to see a reduction in inventory right now.

Thank you. So if 60% is finished goods, so it's basically around, I guess, $60 to $70 million of the impairment is related to the impairment on 28,000 tons, right? So that's still like around $2 to $3 per kilogram. So does this seem huge? Because the production cost, the spread between the ASP and the production cost appears to be only $1 per kilogram. So I'd like to know, did I miss anything from this front?

Okay, I think realistically if you look at, you know, pricing especially, what it looks, you know, what we have to reduce our inventory to, like somewhere in the range of, say, 37 to 38 RMB per kilogram. So that's what, let me do a quick math.

Okay.

So the AFD is 37 or 38, but your production cost is only at around 40-something. So if the impairment is... 45, right?

45 RMB per kilogram. Yeah, so that's around 12 RMB.

But if it's 28,000, then it's still, at most, it should be like 300 million, maybe. So since the impairment amount... 50 million.

And then there's also raw materials, right? And then working process inventory, that's also being reviewed.

I see. So maybe we will move on to the guidance. I have noted that the production volume guidance on 3Q and second half has reduced significantly. So I would like to know, first of all, the thinking behind this is this to preserve cash, and secondly, what do you see, like the utilization rates of your peers? Do they also cut their production volume as well?

I would say yes. So for most of our peers, I think, with the exception of maybe one of the main ones, I think most have reduced utilization significantly, I think, in light of the current market pricing environment. I think certainly, you know, I think in the current market condition, I think we have to balance, right, I think, in the most economical way in terms of maintaining production while at the same time minimizing cash burn and cash loss so we do believe that the currentization level that we have that we're operating in in light of pricing remains below cash cost is the most prudent I think also the most effective way of minimizing the cash burn on the company

So there's effectively around 70% of utilization, right? So will this impact the production cost or is it fine?

It's actually, I would say, overall very minimal impact on production cost, I think, only 1 to 2 RMB. Because almost 80% of our cost is what's what we call variable cost, which is electricity and energy and other consumables like steam and graphite and the silicon sea rock.

Understood. So regarding to the fixed deposit of an investment of $1.4 billion, so we'd like to know how long is those investments and how liquid are those? So basically the question is related to buybacks because we'd like to know the liquidity of the company on that front.

Okay. Almost all of the fixed investment and term loans were purchased by the Xinjiang DACO subsidiary, right? So in terms of the US LISCO and our cash balance, it's virtually all of it is in liquid savings accounts or money market funds. So, and then that $1.4 billion is primarily in either six-month, I would call it, fixed-term deposits with Chinese domestic banks or higher-interest savings products offered by the banks.

I see.

So... And those are traded within three months.

Oh, within three months, right.

Yeah.

I see. So my last question is basically on the buyback. So the company has launched a $100 million buyback program. So I'd like to know if the company is going to continue on the buyback, and what is the planning of the buyback? Like, which price do you think is appropriate, or do you think the current stock price is the level where you think the company will actually accelerate the buyback?

Yeah, thank you, Alan. So in terms of the share repurchase program, so we are authorized in the amount of $100 million back in July. So we definitely think that our stock is undervalued. But in terms of the pace, I would say that it will be contingent upon the market conditions. And what will be more opportunistic in terms of the repurchase?

So we're going to look to repurchase as many shares as possible for the company to maximize the money that we spend in terms of its effectiveness.

I see. And yes, you have explained that the cash is already there in the U.S. level. So probably it's going to still go ahead in this year.

That's our current assumption, yes.

I see, I see.

Thank you. So I'll pass on. Thank you.

Great. Thank you, Alan.

Again, if you have a question, please press star then 1. The next question comes from Rajiv Chaudhry with Sunsara Capital. Please go ahead.

Good morning. My question, the first question relates to the fully loaded costs that you will incur in Q3 and Q4. If you're reducing the utilization rate, shouldn't that actually increase your fully loaded costs relative to the third quarter?

Well, I think, interestingly, that has to do with the cost structure of policy and production. Right, so roughly 35 to 40% is electricity, and then another 35% is silicon metal. And then majority of other costs is actually mostly consumables, like graphite, the silicon seed rod, and the packaging. So if I look at what these we would call, you could call it variable costs where we don't produce, right? We don't buy silicon metal. We don't buy the consumables. So these represent actually more than 80% of the cost. Okay, the remaining 20%, approximately 13% is depreciation, right, which is the non-cash portion. So yes, right, depreciation will, you know, the overall depreciation expense will be aggregated over a smaller volume. You know, but I think the overall impact is not that much, right, because it's not a huge portion of our cost. And while in terms of the rest is labor, labor, let me see, is roughly 6% of our cost and then we're reducing labor cost by between 10 to 20%. You know, we're optimizing our cost our staffing level, for example. So I think the overall impact is actually not that significant. Us, we maintain production, right? Because we're reducing production by, what, maybe 30%, 35%, something like that. Lots of the previous levels, yeah.

A second question is related to the difference between production and sales. So you will produce 210,000 to 220,000 tons, but the sales are likely to be higher than that, right? I mean, if you expect inventories to get back to normal by the end of the year, then sales are likely to be, I don't know, 240,000 to 250,000. Is that the right way to think about it?

I can only say we – well – You're talking about the full year, right? But I think realistically in the first half we did build inventory, so volume was less than production. And we expect the second half we will see more sales than production, right? Right. But again, it's early, right? It's only August, so it really depends on how much more sales we can achieve relative to production, yeah.

I see. But for the year as a whole, you expect sales to be greater than production, right?

It's difficult to tell. It's really up to Q4 performance.

I see. Okay. And can you give us any specific examples of companies that are of competitors who are actually closing shop as distinct from just reducing their output right now?

Well, I think one well-known case that happened recently is a company called Renyang, which I think they have a nameplate of over 100,000 metric ton. And that company was in a financial crisis where they had problems repaying their bank loans. And they have major issues repaying their suppliers and even paying interest. So our understanding is they're being consolidated by Tongwei. So we're always doing due diligence on them right now, yeah. So I think that they have significantly reduced production. And then we know of two other cases where we're not going to say the company's name, but one new entrant actually built a 50,000 metric ton facility, actually never even started that facility. That facility remains idle. It's complete and idle. And then there's another peer competitors, I think they've built, they've claimed they've built approximately 100 to 200,000 metric tons capacity, but our understanding is the volume that they're selling to the market is actually fairly trivial. So those are the cases that we know of right now.

So when you look at, Ming, when you look at the year as a whole, 2024 as a whole, Do you think that with the sales that you will do, which will be, let's say, around your total production levels, that you would have gained or lost market share in 2024?

I think at least based on the latest industry production, so even though we reduced utilization, I think we're still maintaining market share. I think based on our current production level... We're roughly 15% of the market.

But your total output would be about 10% higher than last year, or I should say maybe your total sales will be about 10% higher than last year, right? So do you think that that is roughly the growth rate of the market this year, 10%?

Well, I think it really depends on especially Q4 because if you look at our production and sales volume in the first half, especially for Q1, it's still relatively healthy. It's really Q2, it came down. And then at this point, we're expecting our Q3 sales volume and shipment to be above Q2. And then Q4 is looking, at least for now, is looking at a positive trend. I would say if I look at industry statistics, I think it's still expecting roughly 20% kind of improvement.

Okay. Thank you. Okay, thank you. Okay, thank you.

This concludes our question and answer session. I would like to turn the conference back over to Anita Hsu 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 have an awesome day. Goodbye.

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