JinkoSolar Holding Co Ltd DR

and welcome to today's first quarter 2020 Jinko Solar earnings conference call. Please note that all participants will be in listen-only mode for the first part of this call, and afterwards there will be a question-and-answer session. Now I'm pleased to present Ms. Ripple Zhang. Ms. Zhang, please begin.

Thank you, Operator. Thank everyone for joining us today for Jinko Solar's first quarter. 2020 earnings conference call. The company's results were released earlier today and available on the company's IR website at www.jinkosolar.com, as well as on Newswire services. We have also provided a supplemental presentation for today's earnings call, which can also be found on the IR website. On the call today from Jinko Solar, I meet the Chen Kamping, Chief Executive Officer, Mr. Charlie Cao, Chief Financial Officer, and Mr. Jenner Miao, Chief Marketing Officer. Mr. Chen will discuss Junko Solar's business operations and company highlights, followed by Mr. Miao, who will talk about the sales and marketing, and then Mr. Cao, who will go through the financials. They will all be available to answer your questions during the Q&A session that follows. Please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding this and other risks is included in Jinko Soya's public filings. with the Securities and Exchange Commission. Jinko Solar does not assume any obligation to update any forward-looking statements except as required under the applicable law. It's now my pleasure to introduce Mr. Chen Kangping, CEO of Jinko Solar. Mr. Chen will speak in Mandarin, and I will translate his comments into English. Please go ahead, Mr. Chen.

Thank you very much. Good morning, everyone. Thank you for attending today's telephone meeting.

Thank you, Ripple.

Good morning and good evening to everyone, and thank you for joining us today. Thank you. Total shipment of solar modules during the first quarter was 3,411 MW, excluding the impact of the disposal of overseas solar power plants.

This quarter generated total revenues of $1.03 billion and a growth margin of 19.7%, always in our guidance range for the quarter. The COVID-19 pandemic impacted the solar industry, creating numerous challenges from difficulties obtaining supplies of raw materials to logistic and transportation disruptions. Despite all these challenges, we are still successfully achieving the highest Historical shipments in the first quarter which we believe demonstrate our strong ability to execute and cooperate flexibility to carefully navigate and adapt to a difficult global economic environment.

Thanks to containment efforts across the country, all our factories in China have reached full production in March. Our Malaysian factories quickly take measures to ensure the safety and health of employees, and to monitor the local government's prevention and management. Effective response makes our production return to normal at the end of April. At the same time, we repeat the health and safety management measures to the American factories, effectively protecting the production of normal corn. Faced with the obvious decline in demand and the recent price of raw materials, we continuously reduce production, logistics, and sales. The major challenge so far during the first second quarter has been overseas demand.

The pandemic has impacted logistics to varying degrees and caused project delays in most overseas markets. In Malaysia, we immediately implemented measures to ensure the health and safety of our employees while at the same time complying with government containment measures. This rapid response has brought our production back to normal safely by the end of April. We replicated these health and safety measures for our employees in the U.S. and were able to keep production running smoothly throughout the pandemic. With the global demand falling significantly and the price of raw materials declining as a result of the pandemic, we focused our attention on coordinating production logistics and sales to ensure we could fulfill new orders while carefully controlling inventory levels. Treatments of epidemic prevention materials continue to be made from China to all Malaysia and the U.S. facilities. We have been doing all we can to care for our employees, clients, suppliers, and other business partners during this challenging time.

Recently, the Chinese Ministry of Industry and Industry has publicly sought advice on the requirements of the Guangfu manufacturing industry, planning to build a new factory gate in Guangfu, to deal with the application of new technologies, and to request for strengthening of the existing factory gates. to promote industrial integration and accelerate the development of renewable energy. The policy is to accelerate the implementation of new industrialized applications, and to strengthen the integration of agricultural enterprises. In addition, the government has long developed the policy of high-pressure construction and the expansion of storage space. We believe that after the epidemic, the surrounding countries will pay more attention to the localization and energy security issues, as the competitiveness of the government continues to grow in the new year. The increase in the price of industrial chain during the COVID-19 pandemic has led to a rapid increase in the global supply chain. It is expected that many countries will launch a brand-new project to boost the new generation's long-term competitiveness in the post-COVID era. This year, the relative process of supply and demand is a fast-growing market that can reduce the application and speed up the promotion of middle and high-end capital costs. Non-competitive enterprises are gradually withdrawing from the market. Recently, China's Ministry of Industry and Information Technology began

seeking public opinion for its draft standard conditions of the PV manufacturing industry. The draft consultation will be used to raise the standards for new built production facilities in order to promote the application of new clean technologies. Under these new standards, all existing production facilities will be required to implement industrial integration and accelerate the replacement of outdated equipment and infrastructure. This will help accelerate the industrial application of new technologies and will benefit and strengthen leading manufacturers as they expand to scale. In addition, policies governing the construction of ultra-high-voltage projects and grid absorption capacities expansion will support the long-term development of the industry. We believe governments around the world will increasingly run their focus to energy security and localization. especially after the COVID-19 pandemic, due to the continued enhancement of the competitiveness of solar energy over traditional energy and the acceleration of global parity caused by the fall in the price of the industrial chain during the epidemic, which will result in more countries implementing policies to support solar energy and will drive its deeper penetration in the post-pandemic era. In 2020, Excess supply in the market will rapidly drive outstated production capacity out of the market and accelerate application of technologies that will better reduce levelized cost of energy. Smaller manufacturers will find it harder to compete and will exit the market, which will create an opportunity for larger global players to expand the market share. We expect global escalation to fall by around 25% compared to estimation at the beginning of the year due to impact the coronavirus pandemic is having. Our order book for the year remains strong and shipments rolling out, allowing us to reaffirm our guidance on total solar module shipments for the full year 2020.

The company has spent more energy on internal production management adjustments and communication coordination with the outside world. From the comprehensive micro-to-hardware management of the government, to the increased efficiency of information sharing, to the rapid release of raw material and high-efficiency products, and the rapid promotion of high-efficiency products, the industrial component products have sold more than 5 million times faster than expected. Higher power and larger-sized mid-range products have set higher thresholds not only for the quality of the regulatory environment but also for the engineering of the battery environment. It also raises higher requirements for enterprises' capacity to integrate from R&D to mass production. R&D is the most important part of our competitiveness. We will continue to use professional and high-quality R&D teams, industry-leading research platforms, and high-performance product development systems to continuously update the products that can bring the best results for customers, and fully implement the advantages of fast mass production in R&D products, which will lead the development of the industry.

Faced with the COVID-19 pandemic, we made adjustments to our internal production and management process and facilitated the greater flow of information across our external network, which further improved the efficiency of our crisis management response and information sharing. As outdated capacity is removed from the market, and with accelerated adoption of high-efficiency premium products by downstream partners. Standards for PV modules and components were entered the 500-watt ultra-high-efficiency era earlier than expected. These ultra-high-efficiency products also set higher standards for wafer quality and steel technology that are being replicated across supply chains, all the way from R&D to the mass production of modules. Technology remains central to strengthening our competitive edge in the market. We will continue to lead the industry in offering innovative products that will generate solid returns on investment for our clients by leveraging our high-skilled R&D team, industry-leading research platforms, and ability to rapidly mass-produce newly developed cutting-edge products.

In recent years, we have released a new product with a maximum power output of 580W, Tiger Pro. The government's new high-efficiency and high-power product, with the new generation of industry standards, helps the global evaluation of the Internet for more comprehensive applications. The epidemic has accelerated the technological development of the industry, and the competitiveness of leading enterprises has been deeply reflected. At the same time, as the world's largest supply chain supplier, our product development and replacement will be fully considered by project developers. We are still looking forward to the continued development of the company after the epidemic and the further improvement of the market power.

Recently, we launched a new Tiger Pro series module with maximum power output of 580 watts. This breakthrough will set new industry standards for power generation and efficiency and will support a wider array of installation scenarios as the globe accelerates towards grid parity. The pandemic is in effect raising technical standards for the industry. The competitiveness of leading players products will drive further innovation in clean energy technology. As one of the world's largest solar module manufacturers, we are developing and adapting our products for project developers, engineering contractors, and design institutes, as well as downstream suppliers. Their feedback has been keen to assisting and mitigating technical risks when building our market-oriented products, which Since our competitive positioning, in short, the pandemic has adversely impacted the industry, but we are still on track to continue generating growth and expand our market share.

产能方面,我们的张金贵电产能, 以于今年4月份查到18GW, 电子产能截至1GW多目10.6GW, 其中包括目前市场上总化效率最高的800MW, 超高效N型电子产能。 On capacity side, our in-house monowafer production capacity reached 18 gigawatts in April.

Sale capacity reached 10.6 gigawatts by the end of the first quarter, including... including 800 megawatts of ultra-high efficiency and type cells that have the highest conversion efficiency currently on the market. On the module side, module capacity was 16 gigawatts by the end of the first quarter, with an additional 9 gigawatts of the new high efficiency capacity expected to eventually be put into production in the second quarter. We will continue to make further refinements to managing cost and efficiency in 2020.

Before turning over to Jenner, I will introduce our guidance.

Based on our current estimate for the second quarter 2020, Total solar module shipments will be in the range of 4.2 to 4.5 gigawatts. Total revenues will be in the range of 1.1 billion to 1.18 billion U.S. dollars. And growth margin will be in the range of 16 to 18 percent. We maintain our guidance on the total solar module shipments for the full year 2020 to be between 8 to 20 gigawatts.

Thank you, Ms. Chen. The total shipment of solar modules reached 3,411 megawatts, a historical high in Q1 despite the challenges COVID-19 created for our sales and production. Over the past few months, we have been carefully monitoring industrial developments, real-time market trends, and first-hand client feedback, which provided us with a detailed understanding of how the pandemic is impacting our clients and allow us to offer better support. At the same time, we launched the emergency response mechanism developed from our experience facing previous challenging and unpredictable market turbulence, which provided us with a flexible and pragmatic tool to navigate during the crisis. The impact of the pandemic is expected to shrink global market demand by approximately 25%, in 2020 to 110 to 120 GW. Nevertheless, our high-quality products remain in strong demand and reaffirm our guidance of annual shipments in the range of 18 to 20 GW. With our order book for the year growing and shipments rolling out, we continue to drive growth. The China market was oversupplied in Q1. Some of the delayed projects from 2019 are now under pressure to complete installation before the June 2030 deadline, which is helping to stabilize module prices lately. New building runs for utility plants in 2020 are expected to start construction in the third quarter, reaching peak installation in Q4. In 2020, grid capacity for solar power connection will reach 48.45 gigawatts. Ultra-high-voltage projects are being extensively promoted by the government as a strategically important source of energy integration and power transmission from China's west to the coastal regions over the long run. According to the latest policy from China's NDRC, Each province is required to set the lowest non-hydro-renewable generation ratio, ranging from 5% to 25%. In addition, reforming policies in electricity treating and distributed power treating plants will also improve solar power utilization efficiency, accelerating the diversification of China's energy mix. The distribution market in the U.S. has slowed during the pandemic shutdown in March, while the construction of large-scale power plants still continued as planned. Given the situation, the U.S. Department of Treasury announced that ITC for renewable investment would receive a one-year extension. Just a few weeks ago, the government of Virginia signed a bill requiring the state to achieve 100% carbon-free power by 2045. A number of large-scale renewable energy projects continue to be adequately funded from global financial institutions despite energy markets facing unpredictable turmoil. Many European countries have begun easing travel restrictions since May. Economies there are bouncing back and businesses are getting active again. Portugal awarded a 1.15 gigawatt solar auction in 2019. In early 2020, Portugal announced another solar auction for 700 to 800 megawatts to be carried out within the year. The Netherlands launched a 10-year net metering program to support residential solar and lower annual electricity costs by 9% from 2023 to 2030. According to the regulator, homeowners who are willing to install PV systems will benefit from a reasonable investment return. Germany also listed the 52 gigawatt cap for subsidies of small-scale solar projects. The market is expected to recover strongly in 2021. The economic stimulus package, which includes renewable energy, will soon be having a a significant positive effect across the whole Europe. Turning to Asia, the lockdown in India since March 24th's travel restrictions have greatly impacted the flow of personnel and materials. The extension of the lockdown prolonged these restrictions, which have further impacted public transportation, project suspension, bidding, and power plant operations. Recently, Customs, Banks and other institutions began gradually returning to work. Several large utility companies, such as SECI and NTPC, have extended the bidding deadline for PV power generation projects. In April 2020, SECI extended the bidding deadline for solar projects and wind-solar hybrid projects, totaling 8.7 gigawatts. In Vietnam, the lockdown has been lifted, which resulted in TV projects getting back on track. The Deputy Prime Minister of Vietnam issued a policy in April to encourage the development of solar power projects. According to the Decision 13, new FITs for all three types of solar energy systems and projects, namely floating, ground mountain, and rooftop, will be lowered. The pandemic in Japan has gradually eased, and Japanese government terminated the statement of emergency on May 25th. PV installations still continue, but at a much slower pace with completion of large-scale projects delayed into 2021. Marketing in Asia, such as Australia, Singapore, Malaysia, Philippines, have slowly kicked off. The Brazilian market continues to be significantly impacted by the pandemic, which has affected approximately 70% of the installations. The market downturn has forced many small installers and distributors to halt operations, and some large-scale projects to delay until 2021. Middle East and Africa regions began opening up in June. Some businesses are reopening. and construction activities are returning with limited labor mobility. In conclusion, we are confident in long-term growth prospects of the PV industry despite all the short-term challenges. Going forward, Jinko Solar will continue to adapt our products and services to the needs of customers who are increasingly demanding high-quality products, stable supply, and a strong brand recognition. The pandemic will accelerate the removal of outdated capacity and leave only the strongest standing. We were recently recognized as a top performer of the sixth consecutive year in the PVEL DNV-CV module reliability scorecard and was one of the only two global manufacturers to have been recognized as a top performer every year since 2014. Being recognized as a top performer once again reflects our dedication and commitment to the research and development of high-quality PV products. Speaking overall, the absolute capacity in the solar industry is invisible, but high-efficiency PV products remain short in supply. Competitive products underpin the marketing added value, and overall sustainable development. As a leading market player, Jinko Solar has always been customer-oriented, focusing on optimizing power plant design and reducing LCOE. Recently, we launched our latest Tiger Pro series, reaching a maximum power output of 580 Wpg. It took place via online live streaming with approximately 200,000 people from all over the world participating in the event. Not only did the Tiger Pro series gain significant exposure from this, it also acted as a milestone for the PV industry. As the industry turns a page, we will strengthen our position as the supplier of choice with the lowest LCOE, strongest system compatibilities, and overall economic value. With that, I will turn it over to Charlie.

Thank you, General. Results in the first quarter were in line with our guidance. Key financial indicators, including total revenue, gross margin, and net income, have increased significantly year over year. This is due to the continued increase in the integrating production level. By the end of March, we closed the sale of the two solar power plants with a combined capacity of 155 megawatts in Mexico, which reduced the total debt by about 121 million US dollars. final vapor capacity reached to 18 gigawatts in April, which will support our expected total measurements of 18 to 20 gigawatts for the full year. Going into the details, excluding the sale of the overseas solar power plants, total revenues were 1.03 billion U.S. dollars, an increase of 25% from the first quarter of 2019. Growth margin improved to 19.7% compared to 16.6% in Q1 last year. EBITDA was 100 million U.S. dollars compared to 49 million U.S. dollars in Q1 last year. Long gap net income was 32 million U.S. dollars, significantly increased year over year. This translates into long gap diluted earnings per eight years of 65 cents. Including the sale of overseas solar power plants, total operating expenses accounted for 12.6% of total revenues, compared to 11.9% in the fourth quarter of 2019 and 12.5% in the first quarter of 2019. The sequential increase was primarily due to an increase in shipping costs, as the percentage of total revenue associated with the higher percentage of shipments to the oversea markets in the first quarter of 2020. Moving to the balance sheets, our balance of cash and cash equivalents were 670 million US dollars compared to 895 million US dollars at the end of last year. Accounts receivable turnover days were 66 days compared to 94 days in Q1 last year. Inventory turnover days were 110 days, compared to 120 days in Q1 last year. Total debt was 1.8 billion U.S. dollars, compared to 1.9 billion U.S. dollars last year, in which 162 million U.S. dollars was related to international solar projects. Net debt was 1.1 billion U.S. dollars, compared to 1 billion US dollars at the end of Q4 2019. Total capex for 2020 is expected to be around 350 million US dollars, which is used for the 5 gigawatt second phase of model wafer capacity and additional new 9 gigawatt model module capacity. This concludes our preview. prepared remarks and we are happy to take your questions. Operator.

Thank you. So, ladies and gentlemen, we'll begin our question and answer session. If you would like to ask a question to the speaker, please press 01 on your telephone keypad. To cancel, please press 02. Our first question is from Philip Shen and Roth Capital Partners. Please go ahead.

Hi, everyone. Thank you for the questions. The first one is on pricing. We calculate an implied module ASP of about 30 cents per watt in Q1 on a blended basis for you. And I think based on your guidance, the pricing might be closer to 26.2 cents for Q2. So this just, you know, maybe a 13% sequential decline. Are we accurate with these numbers? And perhaps you can comment on what we might be missing. Specifically, you know, how much MQ1 did you have for module-only, for example?

Yeah, so it's Jenna. Thanks for the question. Yeah, for the Q1, the ASTs compared with Q1 and Q2, we are seeing, you know, because of market turbulence and also the pandemic impact, the market price dropped by around, let's say, 10%. So if we look into our Q2 pricing, yes, I think we are around that range as well. So compared with the Q1 ASPs, Q2 ASPs were expected to drop by approximately a high single-digit range.

Okay. And then how do you expect that lending pricing to trend in Q3? Do you expect another drop as well, and then do you see the stability more in Q4? What do you see ahead? Thanks.

Yeah, so our strategy is always to follow the market. So we're not against the market. So when we see the market price is dropping, definitely, you know, our pricing will drop. That's our strategy. I think everyone will follow that, not only Jinko. So number-wise, it's hard to define right now what's the exact numbers for Q3. It's still too early to talk about the Q3 final pricing. But from the observation of the market price side, we did feel the expectation from all the customer ends that they expect the market price continue to drop compared with Q2. But actually, when we look into the whole year pricing, I still believe there will be some bounce back at late Q3 or even early Q4 because expected strong demand in China rush by the year end. There will be a kind of a shorter supply by that time.

Okay. Thanks, Trevor. And then... From a housekeeping standpoint, can you share what the CapEx and depreciation was in P1?

Yeah, Philip, the depreciation, the cost roughly per quarter, roughly $40 million, and the CapEx is roughly $100 million for the first quarter.

Great. Okay, thanks, Rob. And then one bigger picture question. In your prepared remarks, you commented that the draft MIIT policy should drive capacity lower. Can you comment a little bit more on how you expect this policy to work and how do you expect this to impact the industry? I can see marginal capacity expansion going away, but was wondering if you could just comment more on what you see as the impact in this policy and when you expect it to be made official.

Thanks. Bill, you're talking about ICCs, right?

No, I'm talking about the Ministry of Industry policy to force the industry to have higher efficiencies in the capacity expansion.

You mean the China manufacturer, like the industry standards thing, right?

That's right, yeah.

Yeah, well, I think, you know, this is, you know, national standard, and which is encouraged, continue to encourage the, you know, latest technology adoption. And there's a lot of, you know, thresholds, which is the minimum, you know, the minimum, you know, threshold, and the if the industry participants want to expand the capacity. And I think all in all, I think it's very positive for the industry's consolidation, and particularly, you know, the tier one companies, given their technology advantage and will lead the capacity expansion to meet the, you know, anticipated sustainable growth and in the future. And for the tier two, tier three companies, and it's under pressure, and it's not only from the customer perspective, right? A lot of, you know, tier one companies is leading the product, and we are promoting over 500 watt, you know, modules. And tier two, tier three companies, and they're under pressure. And from the supplier perspective and the government want to build policies and which is, you know, it's a positive for the leading companies, but negative for the, you know, the tier two, tier three companies.

Okay. Thank you very much. I'll pass it on.

Thanks, sir. Our next question is from Tony Faye at the BOCF. Please go ahead.

Hi, thanks, management. This is Tony from BOCI. I have two questions. First is regarding on the order book front. So among the 4.2 to 4.5 gigawatt shipment target for Q2, could you give us some color regarding how much of that will come from domestic orders and how much from overseas, and how about that mixed movement in the second half maybe? All right.

Yeah, so you're talking about Q2 number, right? So I will assume your question is mainly about the China mix during the Q2 and also the rest of your shipment plan, right? From my observation, so Q2, yeah, Q2 number. Q2 number for the shipment makes China will occupy not a significant number. The number we are looking at is around, let's say, 10% to 15%. However, it will rapidly going up, especially when the China market starts to boom. By the second half, we expect the ratio will be higher and higher. Even by the peak time of the Q4, we are expecting the number could be even 30% or even plus. For the total year, our target China market will still be taking a pretty, let's say, a fair ratio compared with all the other regions we are having. So approximately a quarter of our total shipment is expected to ship in China.

Okay, great. And my second question is regarding the financials. So looking at your results in the Q1, actually all the revenue and gross profit are quite in line with your previous guidance, but the net profit was tracked by the change in fair value of some derivative products. So in the second quarter, actually, we are seeing the RMB is still weaker year on year. So should we expect more kind of losses or fair value changes in the quarter? Thank you.

Okay. The change of fair value includes two parts. One part is linked to our international projects and the interest swap. And that is a significant negative impact in the first quarter because of the worries you know, low, even close to zero, the U.S. fiscal rate. And it's, I think it's a long time. And it's, you know, the long-term, the U.S. fiscal rate is, is, is, is evolving to the standard level. And for the currency, you know, the currency forward, forward currency to, to lock our sales orders. And the, because the RMB is not expected to be depreciated in the first quarter, particularly given the recent tensions between the US and China. And now the RMB is stabilized and relatively appreciated. So we don't expect significant impact in the second quarter. And for the financial The instruments, I mentioned the two items, and we don't expect significant impact in the second quarter.

I agree. Thanks for that.

Thank you.

So once again, ladies and gentlemen, as a family reminder, if you'd like to ask a question to the speaker, please press 01 on your telephone keypad. To cancel, please press 02. Our next question is from Brian V. at Goldman Sachs. Please go ahead.

Hey, guys. Thanks for taking the questions. You know, maybe just to follow up a little bit on an earlier question, just on the gross margins, you know, you're getting down about 250 base points at the midpoint for the second quarter versus the first quarter. you know, pricing really started falling in late March and April. So, you know, we've heard from other companies that a lot of that volume could flow through more in 3Q as opposed to, you know, real-time in 2Q. So is it fair to assume gross margin is down again, potentially in 3Q, and then how should we think about the savings from there?

You know, there are The decline of gross margin in the second quarter reflected the slowing, the weight demand, particularly from the international markets in the second quarter. And back to, you know, we discussed that the S&P is in a downward trend. And given the market situation, the S&P is continuing to downward. But however, you know, and you know, from the cost perspective, we are improving at the same time. So given the, you know, the third quarter, I think, you know, the second half year, the growth margin and continue to be under pressure, but we are trying to, you know, to achieve relatively stable growth margin and compared to the second quarter. And because particularly from the, you know, And we rapidly expand our capacity on monografer. And we are expecting to increase our integrated production costs and, you know, throughout the challenge period, and which will offset the next impact of the, you know, the ASP, you know, downwards and, you know, second half of the year.

Okay. That's helpful. Um, and then, uh, Charlie, just a question around the, uh, the inventory. I know, you know, in past years, you typically have a pretty big move up in inventories from 4Q to 1Q. It seems a little bit bigger this year. Um, and if it's not the same time accounts receivable, it's pretty flat as well. You know, if this was just a shipment timing issue, I would have thought they'd kind of move together. So, are you seeing some cancellations on, on modules? Um, Are you having to kind of remarket those, or can you give us some sense of what's happening between the AR and inventory balances here to start off the year?

You know, because we have, you know, we target 18 to 20 gigawatts, right? Each quarter, on average, we are planning, you know, four gigawatts or five gigawatts. So the inventory levels will be, you know, by nature the inventory levels will increase and you know slightly you know quarter by quarter and the first quarter the inventory level is relatively higher because last time we discussed because the China the supply is challenged and we have 400 megawatts 500 megawatts you know shipped to the second quarter and and throughout the you know the second quarter, given the challenge of international demand, we proactively managed our operation and including control of the inventory levels and we faced some order cancellations or delays as we swiftly shifted our production particularly to the customers or new customers and regions with less impact from the, you know, the virus. So we, in general, I think, you know, the inventory levels will be a very healthy level, but given our, you know, the target, 18 gigawatts, 20 gigawatts, and we are expecting the inventory level will increase a little bit, you know, throughout the next two quarters.

Okay, fair enough. Thanks a lot, Dave.

Thank you. Thank you. So, ladies and gentlemen, if you'd like to ask a question to the speaker, please press 01 on the telephone keypad. To cancel, please press 02. Our next question is from Carl Liu at CICC. Please go ahead.

Hey, Charlie. Thanks for taking my question. I have two questions. The first, could you please give us some color on the order visibility in the three-quarter and the fourth quarter? And so how would we see if we can see further, like if the order the project which delay or something cancel in the second quarter due to the coronavirus, will it move to the like second half or maybe first half in the next year? So how we look at this thing? And the second question is that we are seeing some strong demand in mainland, in China that's coming from the dew glass modules and maybe in other way of high efficiency. So could you give us some more color on our maybe the product mix, what we will have in maybe the second quarter? How was our mix coming from the high-efficiency modules and how was it from maybe the remaining normal efficiency modules? Can we have a percentage on that? Thank you.

Okay, so this is Jenna. Thanks for the question. Firstly, about your question about the order visibility, I think we have built up a very strong order book. I think over, let's say, three quarters, order book has been fulfilled. So we are very confident to achieve our target in 2020. I think that's part of the reason why we keep our guidance in 2020 as the 18 to 20 gigawatt without any change. For the market – for the possible market delay, we have seen some of the – some region or some countries has shown the tolerance to delay part of the projects into, let's say, two quarters, even three quarters. especially for some regions or countries, especially like India, which was expected to have an installation of over 10 gigawatts in 2020. But with the current lockdown prolonged, we believe the market size will be less than 10, even somewhere around 5 to 6. For sure, those projects have not been canceled. Majority of those projects will get delayed into 2021. That's why I think in our previous, let's say, especially our previous speaking, we also show our confidence about the strong demand in 2021. That's also part of our reason why we continue to expand our high-efficiency capacity. So your second question about the China demand, especially the double-glass demand, we see double-glass or dual-glass product has a certain, let's say, advantage, especially in some environments. But we do not – personally, I do not see such product become a universal standard or industry standard product yet. When I look into our Q1 book, we see less than 5% of our total shipment is double gas, which is, let's say, a very few number compared with the total shipment. With China demand picking up at second half, we believe the ratio will be higher. But honestly speaking, I do not believe such product will become, let's say, a standard product in short term. But in the long run, with more technology challenges resolved, and I believe such product has a promising future. Yes, thank you. I hope that answers your question.

Yeah, yeah. I have two follow-up questions. The first is that, like, for example, the order from India is delayed for like two or three quarters. So will that be renegotiation on our mortgage price? Or we will order this or ship this on a previous setting price? That's my first follow-up question. And the second is that, maybe I should also rephrase my question so I would just make an example on the new glasses modules in China have high demand but actually what I want to ask is that we kind of see a kind of structure demand increase in high efficient modules maybe in China it is the double glasses maybe in the overseas it's like a like a other kind of products. So, we also have, like, swan, right? It's not double glasses, but it's more lighter. So, in general, how will we see in those high-efficiency modules? Will we see much more higher demand growth than normal efficiency modules? So, how will we see that? And the percentage change in the first quarter and maybe second quarter, yeah.

Thank you. For your follow-up question about a project signed, contract signed, so I think from what I see, over 95% of a contract signed has been honored, and both parties respect the contractual obligations, and we continue with the execution of the contract, even we have some pandemic impact on it. For sure, very few contracts have to be renegotiated or even canceled because of this, we call it a force majeure. But we still believe, you know, it's not, you know, because the customer want to arbitrage on the marketplace chain. It's really because of what is happening for their project and or from their hometown. Your second follow-up question about DoubleGlass, we believe the demand in China for the DoubleGlass product is increasing. That's very obvious. Sorry to say I don't have that percentage number on my hand. We can give you some feedback after our call.

Okay, okay. Thanks, Manju. That's all my questions. Thank you. Thank you.

That's all for today's conference call. Thank you all for your participation. You can disconnect.