JinkoSolar Holding Co Ltd DR

Hello, ladies and gentlemen, and thank you for standing by for JNCO Solar Holding Corporation Limited's fourth quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to your host for today's call, to Ms. Ripple Jang, Jinko Solar's Investor Relations Manager. Please proceed, Ripple.

Thank you, operator. Thank you, everyone, for joining us today for Jinko Solar's fourth 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's 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 are Mr. Li Xiande, Chairman of the Board of Directors and Chief Executive Officer of Jinko Solar Holding Company Limited, Mr. Charlie Cao, Chief Financial Officer of Jinko Solar Holding Company Limited, and Mr. Janet Niao, Chief Marketing Officer of Jinko Solar Company Limited. Mr. Li will discuss Jinko 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 Solar'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. Li Xander, Chairman and CEO of Jinko Solar Holdings, Mr. Li will speak in Mandarin and I will translate his comments into English. Please go ahead, Mr. Li.

The increase in supply and demand, as well as the increase in RMB exchange rate, and various uncertain factors have led to a large wave of industrial chain profits. In this year full of challenges, we have never stopped continuing to promote cost-efficient steps through technical improvements and detailed management. The market has achieved its expected profit and loss in the past year. At the same time, our brand's advantages in the global marketing channel have been further reflected in the market fluctuations. The global market share has increased rapidly. In 2020, the total number of new arrivals was historically high. Since the end of 2020, our total number of new arrivals has reached 70 million. It has become the largest number of new arrivals in the industry. We expect that the total number of new arrivals in 2021 is expected to remain at more than 30%.

2020 was a very challenging year for the solar industry, but it kept its momentum for strong growth, despite the year being shrouded in uncertainty as we went through the COVID-19 pandemic globally scale. Although demand for solar installation was affected, and we experienced the domino effect of the global economic slowdown and went through some of the lowest points, we were still able to recover rapidly as restrictions eased in major markets. In the second half of 2020, shortages of polysilicum and solar glass, rising shipping costs, and the appreciation of RMB, together with the impact of COVID-19, lead to significant volatility in the industrial value chain. In an year full of extreme challenges, we continued relentlessly to optimize costs through technical innovation and improved process. Growth margins in the fourth quarter were within our expectations, and both revenues and shipments for the full year recorded significant growth compared with 2019. Meanwhile, our brand and global distribution channels further demonstrated our strong advantages and resilience during market volatility, and we were able to actually increase market share and solidify our leading status in the global PV industry. Our solar module shipments during the quarter and for the full year 2020 both hit historical highs, As of the end of 2020, our accumulated module shipments reached 70 gigawatts, making Jinko Solar the world's largest PV manufacturer. We expect our shipments to sustain a growth rate of over 30% in 2021.

The global supply market performance in 2020 is better than expected. The new equipment will have a capacity of 134 units. By 2019, the same growth rate will be 22%. During the pandemic, all countries have launched economic and social projects for the national economy. It has brought a wave of development opportunities for the renewable energy industry. The economic stimulus means large-scale capital investment. The planning and management of these funds will directly determine the path of economic recovery and will continue to play an effective role in the next few decades. More than 170 countries around the world have developed specific policy goals and development of renewable energy for the development of the industry. The development of renewable energy has become a national trend. It is indispensable as China's market, which accounts for one-third of the global new energy level, To achieve the carbon footprint in 2030, the carbon neutralization plan in 2060, and the two major goals of energy security and economic development, in order to achieve the new energy-based new energy system, China's changes from new applications to new energy systems are accelerating. Since then, global evaluation has also brought about rapid development of energy and distribution. After the development of the new energy system,

As the global economy continues to face unprecedented impacts from the COVID-19 crisis, the solar industry has shown solid resilience against the pandemic and achieved rapid recovery amidst positive news and heightened enthusiasm for clean energy. In 2020, the performance of the global solar market exceeded expectations with newly added installations worldwide of approximately 134 gigawatts, an increase of 22% year-over-year compared with 2019. During the pandemic, governments introduced stimulus packages which ushered in a wave of new opportunities for renewable energy to develop across the global industry chain. Economic stimulus often leads to large-scale capital investments, These investments will most likely determine the direction of the economic recovery now and for decades to come. More than 170 countries in the world have made specific policy objectives to encourage the development of renewable energy, a unified move that has not only boosted the industry but made the move to clean energy solutions unstoppable. For the Chinese market, which accounts for about one-third of the world's total new PV installations, the pledge to reach the peak of carbon dioxide emissions by 2030 and carbon neutrality by 2060 cover both considerations for energy safety and economic development by adopting supportive policies and measures in China's near-term decarbonization plans in order to switch electricity generation from fossil fuel to renewable energies as the primary source. China has been accelerating the application of new technologies and the reform of the electricity system. Meanwhile, great parity worldwide has brought rapid development to improve distributed photovoltaic generation and energy storage systems. Following the proliferation of clean energy globally, the solar industry will continue rolling out its ambitious plans and leveraging all opportunities. So we are in for strong growth momentum over the next few years. 2020年四季度至今,规料扩展周期教堂带来的供需策备叠加短期非合理的市场情绪,推动规料价格迅猛上行。

At the same time, the price of mass-produced products is rising, and the pressure of production cost is gradually increasing by the downfall of the industrial chain. To this end, part of the current investment has widened the bottom line of profitability, but the price of the industrial chain can adjust the movement and play. We expect that the stock will continue in the second quarter of this year. Due to the potential demand of the machine, it can wait for a while. This industrial chain has a large share of supply and supply. We are optimistic about the global equipment of 2021.

Since the fourth quarter of 2020, mismatch between supply and demand drove up the price of polysilicon caused by the relatively long capacity expansion circle for polysilicon production and volatile short-term market sentiment. At the same time, with the price increases of bulk commodities, higher production costs were passed down the industrial value chain, which resulted in significant price increases in modules in response Some investors in solar power generation have accepted lower yields. However, prices in each upstream and downstream segment continue to fluctuate. And we predict we'll do so into the second quarter of this year. Since installations are still likely to increase, and supply is sufficient in most segments of the supply chain, we anticipate that demand for modules will revive once market prices stabilize. While there are still supply shortages, there is enough polysilicon to support over 180 gigawatts for module production. This will help balance demand with supply in the year. We remain optimistic about global installation levels in 2021.

and flexible in adjusting the production rhythm of each link. At the same time, the drop in non-contradictory factors is also a more adaptable company with a higher degree of sensitivity to the market and a greater production space. We are continuously optimizing our supply chain management. On the one hand, we have signed a long-term agreement on the supply of materials in advance to ensure the supply of core materials. On the other hand, we have a relatively serious link in the short term, The continuous volatility in the industrial value chain further highlighted the resilience to risk of integrated manufacturers.

Meanwhile, economic uncertainties continued to concentrate key players and heightened competition for survival of the fittest and rewarded highly adoptive companies to gain more market share. We closely monitored market trends, adjusted with flexibility each link of the production process, and continuously optimized our supply chain management throughout our network and partners. Firstly, we signed long-term agreements with material suppliers to secure the steady supply of core materials. Secondly, we continued to build symbiotic partnerships along upstream and downstream to share resources, especially for segments with more severe supply shortages, and actively establish clusters forming an industrial ecosystem. In addition, we maintained flexible tracking and storage of alternative technologies and materials to minimize market risk caused by supply chain volatility.

In addition, the products for the African region and the U.S. and Japan will also enter the market in the second half of 2021. At the same time, the business of the global Fengxia market shows a fast-growing trend. EIPV construction and construction of integrated products has been installed and used in many domestic commercial real estate projects. The business of good brands and the team's efficient implementation is rapidly advancing.

As the solar industry enters the era of great parity around the globe, Jinko Solar continues to expand successfully with more business scenarios and business models, leveraging our brand reputation built on years of global marketing and excellent service. We have established the Gantt foothold to build specific standardized and industrialized energy storage development models in eight major regions worldwide. At present, we have shipped our energy storage products to the Middle East and Africa and will launch products specially designed for the U.S. and Japanese markets in the second half of 2021. Meanwhile, our business in the global distribution market is showing a rapid upward trend, and our products for BIPV systems have been installed in a number of commercial real estate projects in China. Jinko Solar's renowned brand and expert teams continue to drive the successful execution of our business, from stable supplies of global customers to localized after-sales services that guarantee the reliability and consistency of our products and services.

我们致力于产品的创新和产业布局提速探索。 在未来一到两年,我们的技术目标是实现N型单体电池实验室最高效率25.5%以上, 叠层电池最高效率29%以上。 截至目前,我们的新一代旗舰产品TagPro已累计千单超过10个G网, This is the best match for the maturity and efficiency of the current industrial chain and high-efficiency large-scale products. Our E-Tech Probe series of products will account for 40% to 50% of our total output this year. In addition, Jinko Energy is also actively preparing for the industrial technology of light and light, light and solidification, light and solidification, and other light and solidification. Provide the leading technology innovation ability to promote the construction of safe and efficient energy.

Jinko Solar is committed to promoting the acceleration of carbon neutrality through product innovation and operating excellence. Over the next one or two years, our technical goal is to reach the highest laboratory efficiency of 25.5% for the M-type monocrystalline silicon solar cell and 29% for the multi-junction solar cell. So far, our new generation TigerPro flagship products have accumulated orders of over 10 gigawatts. TigerPro provides the best match between maturity of the industry and high efficiency large area products. We expect the TigerPro service to account for 40% to 50% of our total shipments this year. In addition, we will continue to leverage our leading technical innovation capabilities to promote the development of safe and highly efficient energy systems in response to increasing demand of this space. We have been actively deploying solutions for the solar plus industries, such as technical storage for photovoltaic, hydrogen, production, and integrated PV storage smart system.

We look forward to the medium-sized production space of the light and dark market, and continue to invest in new products with technology and cost competitiveness in various segments, We remain bullish on the mid- to long-term growth of the solar market space and continue to invest in new production capacity with technical and cost competitiveness.

Taking into consideration multiple factors like technical maturity and stability to meet increasing downstream demands for high-efficiency products, we expect our in-house annual production capacity of monosilicon wafers, high-efficiency solar cells, and modules to reach 33, 27, and 37 gigawatts respectively by the end of 2021. We expect the proportion of our in-house production capabilities to reach over 75% in 2021, which will enable us to become even more resilient to risks and continued volatility of the supply chain and technical upgrades. This long-term investment in our business will help to optimize operational efficiency and increase profitability.

Before I introduce you to Jenna, let me introduce you. In 2021, the first quarter, the company's main supply was between 4.5 to 5 GW. The revenue was between $1.8 billion to $1.3 billion. The profit was between 12% to 15%. According to the current forecast, the total supply of 2021, including chips, batteries, and components, was between 25 to 30 GW.

Before turning over to Jenna, I would like to go over our guidance. We expect total solar module shipment to be in the range of 4.5 gigawatt to 5 gigawatt for the first quarter of 2021. Total revenue for the first quarter is expected to be in the range of $1.18 billion to $1.3 billion. Growth margin for the first quarter is expected to be in the range of 12% to 15%. Based on current estimates, the full 2021 shipments, including wafer, sail, and modules, to be in the range of 25 gigawatts to 30 gigawatts.

Thank you, Ms. Lee. In the fourth quarter of 2020, total shipments of solar modules reached 5.8 gigawatts. And for the full year of 2020, total annual shipments were 18.8 gigawatts. Even though supply and demand remains volatile, we were still able to reach our shipment target for the full year 2020. Our modules were shipped to nearly 160 countries and regions in the world. As our overseas markets remain our main shipment destinations with the Asia Pacific, U.S., and Europe accounting for the major portions. Shipments in Asia Pacific achieved a significant growth of over 60% in 2020. During the fourth quarter, we strategically increased the portion of shipments to emerging markets in order to capture growth opportunities as these economies gradually recovered from the pandemic. Our well-recognized solar brand global network of localized real-time customer service, quality products, and advanced technology were major assets that helped mitigate risks and increase our global market share in 2020. Shipment of high-efficiency monocrystalline products increased significantly from 74% in 2019 to nearly 100% in 2020. In May 2020, we launched a new generation of flagship products for the Tiger Pro series. leading the industry to fully enter the era of ultra high power efficiency, about 500 watt peak. As technology innovation continues to accelerate products iterations, we estimate that shipments of Tiger Pro modules will reach 40% to 50% of total shipment in 2021, which will greatly reduce the LCOE for the customers under the same conditions. Recently, we launched a new ultra high efficiency Tiger Pro product specially designed for distributed DG market and well suited for a wide range of distributed scenarios including industrial and commercial rooftops and residential rooftops. In the future, we will continue to launch premium PV products and diversified solutions and continue to expand our brand influence in the field of distributed generation segments. In the recent price hikes along the supply chain caused a correlated increase in module prices and pressured downstream installations demand. However, we believe the short-term price rise will have relatively limited impact on demand. Following China's pledge to achieve peak carbon emission by 2030 and carbon neutrality by 2060, state-owned enterprises were assigned a mandatory target for renewable energy installations. According to client feedback, several major Chinese SOE investors have already lowered EU's target for the power generation projects, bringing strong installation expectations for the downstream market. We believe that newly added PV installations will sustain significant growth momentum in 2021. In the mean to long term, global transition to clean energy will become irresistible, As more and more countries launch policy and grow to carbon emissions, demand-side incentives are expected to partially offset cost pressure. The solar industry will continue its strong growth momentum. Next, I will detail each region's market trend. In China, 2021 is the first year of the 14th Five-Year Plan. and it is also the first year for the solar industry except the residential sector to enter into the era of grid parity without subsidies. In one aspect, according to the new 2021 policy draft, projects should be won through bidding. Otherwise, new installation would be approved as a result of reductions of subsidies on existing projects. This will lead to lower-priced projects going forward, and increased solar generation capacity will further drive down the cost of solar power. Furthermore, because delayed projects not connected to the grid by June 30th will lose subsidies, this will account for most of the connections to the grid this year, including residential projects worth 10 gigawatts. the Chinese market is expected to achieve a growth rate of 25% year-over-year, a new installation reaching 55 gigawatt level in 2021. Average annual installations during the 14th five-year plan is expected to reach 70 to 90 gigawatts. According to the latest report of Bloomberg New Energy Finance, New solar installation capacity in the U.S. reached a record high of 16.5 gigawatts in 2020. The solar industry showed tenacious vitality in the midst of the pandemic's doom and gloom atmosphere and economic contraction. President Biden has announced that the U.S. will rejoin the Paris Agreement and that the House of Representatives has reintroduced the Green Act. a critical bill that includes a five-year extension of solar investment tax credit. The economic recovery policy in the post-COVID era and the accelerating decarbonization of the US energy system will further enhance the attractiveness of solar power and energy efficiency. In 2021, newly added solar installations are expected to exceed 20 gigawatts for the first time. Compared with other renewable energy sources, The price of solar power in the U.S. is very competitive, and the market competition is more rational because of its unique supply-demand relationship and the market entry rule. We are confident about maintaining our leading position in the U.S. market with our stable supply capability, excellent customer service, and high-quality product advantages. In 2020, our shipments in Asia Pacific market reached a historical high with Vietnam contributing the largest growth in the shipments. Affected by expiration of old FIT projects, Japan rushed to install a large number of projects in September 2020. As the economic advantage of rooftop projects continue to grow in Japan, rooftop solar power generation is expected to replace utility-scale projects. and become the main source of the newly added power generation capacity for the country. Affected by some adverse factors, including the pandemic and excessively high electricity costs, new installations in India experienced a decline. However, it is worth mentioning that Ministry of New and Renewable Energy will impose tariffs of 40% and 25% on solar modules and cells, respectively, from April 2022. This move is expected to stimulate a new round of installation rush before the deadline. Demand in other markets in the region, such as Australia, is expected to remain stable. According to the European Market Outlook for the Solar Power 2020 to 2024, published by Solar Power Europe, The European market reached 18.7 gigawatts of newly installed solar power, producing a double-digit growth of 11% in 2020, the highest growth rate since 2011. In terms of market performance, the new Renewable Energy Source Act will benefit the development of rooftop installation in Germany. The long-established leader in solar generation, and the residential energy storage is expected to become another emerging growth driver. The spotlight was on Spain in 2020 as the country led Europe's subsidy-free market growth and became the third largest solar market in Europe. In January 2021, Spain awarded a total of over 3 gigawatts solar and wind power capacity in the first renewable energy auction held since 2017, with the lowest LCOE for solar at 1.8 U.S. dollar cent per kilowatt hour. In addition, solar markets in the Netherlands, Poland, and France all maintain solid momentum. We remain bullish on the long-term development of the European market. Most countries in emerging markets like Latin America and the Middle East are actively promoting solar power projects. Applications for solar power generation have been extensive and a major driving force for solar power development in emerging markets. Brazil's state-owned energy research office recently announced that it has registered a total of nearly 67 gigawatts of renewable energy projects for auction in June this year. including 1,050 solar projects with a total capacity of over 41 gigawatts. The Dubai Supreme Council of Energy recently announced a significant increase in renewable energy share of Dubai's total energy mix. Following a strong recovery from the severe impact of the pandemic, emerging markets are expected to become a powerful contributor to the development of the global PV industry. We see solar generation becoming widely popular in more and more countries, and the growth of the global solar market will no longer rely on single or dominant market like the US, Europe, or India, and will continue to diversify. The general trend of the global clean energy transition will open up a new growth cycle for solar plus energy storage projects to achieve cost-effective, integration of flexible resources in smart distribution grids. At present, we have developed diversified solutions for our residential CNI and utility customers in our major markets around the world. We will cooperate with leading companies in the energy storage supply chain to accelerate deployment to the entire energy storage business chain. Recently, we won overall high achievers award in the 2020 Photovoltaic Module Index Report published by the Renewable Energy Testing Center. Our high performance across three essential indicator categories, reliability, performance, and the quality demonstrated our commitment to product excellence. As the world's first global solar manufacturer to join RE100, Jinko Solar was the first company in the industry to sign the global framework principles for decarbonizing heavy industry. In 2021, we will strengthen our distribution channels, expand our network of value-added customer service, and bring greater value to our global customers with high-quality, reliable modules and premium services. With that, I will turn it over to Charlie.

Thank you, Jedder. In the fourth quarter, driving costs of raw materials and shipping costs combined with R&D appreciation put pressure on our probabilities. Close margin was 16% or 14.3% if excluding the reversal benefit of AD and CBD in line with our guidance. Our long-term competitive advantage in branding and distribution channels and demand for our high-efficient products and customer services have helped to partially offset pressures from the upstream price volatility. As costs along the supply chain stabilize, our highly-efficient production capacity releases and better integration will continue to give us a competitive edge in the industry. Let's go into more details about the quarter now. Total revenue was 1.4 billion U.S. dollars, a decrease of 1.1% year over year. Gross margin was 16% compared to 17% in the third quarter of 2020 and 18.2% in the fourth quarter of 2019. Excluding the ADCVD reversal benefit, gross margin was 14.3 percent in line with our previous guidance. Total operating expenses in the Q4 were 220 million U.S. dollars, an increase of 51 percent sequentially, and an increase of 26 percent year-over-year. The sequential and year-over-year increase was mainly attributable attributable to an increase in disposal and in common losses on equipment as a result of companies' upgrade of production lines. Total operating expenses accounted for 15% of total revenues in the fourth quarter of 2020, compared to 10.8% in the third quarter of 2020 and 11.9% in the fourth quarter of 2019. Operating margin was 0.8% in Q4, compared to 6.2% in Q3 and 6.2% in Q4 last year. EBITDA was $100 million, compared to $144 million in third quarter. Long-gap net income was $5.1 million, a decrease of 92% year-over-year. which translates into non-GAAP diluted earnings per 8 years of $0.11. Taking into account the loss from the change in fair value convertible senior notes and corruption due to the sharp increase in stock price or company in Q4, GAAP net loss was $57 million. I'll brief you on our 2020 four-year financial results. 2020 was dramatically stronger compared with 2019. Total solar module shipments were 18.8 gigawatts, up 31% year-over-year. Total revenues were $5.4 billion, up 18% year-over-year. Benefited from an increase in shipment of solar modules and production volumes of our integrated high-inflation capacity, as well as cost reduction from companies' industry-leading integrated cost structures. Close perfect for the full year was $945 million, an increase of 13.6% year-over-year. Close margin was 17.6% compared to 18.3% in 2019. Excluding the ADCVD reversal benefit, close margin was 17% flat with 2019. Operating margin for the full year 2020 was 5.1% compared to 5.8% for the full year 2019. Operating expenses were 12.5% of total revenues in 2020 flat with 2019. EBITDA was $463 million U.S. dollars compared to $376 million in 2019. Net debt to EBITDA ratio was 3.4 times. Long gap net income was 147 million US dollars, compared to 139 million US dollars in 2019. This translates into long gap basic and diluted earnings per eight years of 3.28 cents. Moving to the balance sheet. At the end of fourth quarter, our balance, or cash and cash equivalents, were 1.2 billion U.S. dollars, compared to 943 million U.S. dollars by the end of third quarter, and our cash levels significantly improved. AR turnover days improved to 50 days, compared to 61 days in Q3. Inventory turnover days were 97 days, flat with the third quarter. Total debt was 2.8 billion U.S. dollars, compared to 2.5 billion U.S. dollars at the end of third quarter and 1.9 billion U.S. dollars by the end of last year, in which 150 million U.S. dollars was related to international solar projects. Net debt was 1.5 billion U.S. dollars compared to 1.59 billion U.S. dollars third quarter and 1 billion U.S. dollars by the end of last year. In September 2020, we announced our plan to list our principal operating subsidiaries, Jiangxi Jingkou, on the stock market in China. By the end of October 2020, Jiangxi Jingkou completed an equity financing of RMB 3.1 billion. This process is progressing smoothly. This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed.

Thank you. Ladies and gentlemen, we will now begin our question and answer session. If you have any questions for your speakers today, please press 0 followed by 1 on your telephone keypad and wait for your name to be announced. If you'd like to cancel your request, please press 0 followed by 2. Again, that's 01 on your telephone keypad now. As a reminder, everyone, that's 01 on your telephone keypad to enter the queue. Your first question is from Philip Shen, who's from Roth Capital Partners. Your line is now open, Philip. Please go ahead.

Hi, everyone. Thank you for taking my questions. With Q1 over now, can you talk about what you see for pricing in Q2, as well as shipments and margins? I know you have not provided official guidance, but any color on the Q2 outlook would be very helpful. Thanks.

From the pricing perspective, the input costs continue to be relatively high, given particularly the polysilicon, the supply bottleneck. And we are seeing that we balance negotiation with our customers. And the module price globally, including China, under, I think, a trend to go up, to absorb, to reflect the input cost, the impact. So we didn't give the guidance of second quarter. But I think, overall, the gross margin to be relatively stable throughout the first half year. But we are expecting some positive factors, the solar glasses prices, you know, the market price is down. The RMB, you know, the depreciation, you know, looks like, you know, it's positive. And, you know, to offset some, you know, the input cost pressure from, you know, specifically the policy that can impact. But, you know, I think that it's a, It's a little bit, you know, impact on the global demands from the module perspective because of the high, you know, input cost. And I think most of the tier one companies like to balance the shipments versus, you know, the module shipments versus, you know, the high input cost. And so... I think, you know, the shipments, we are not expecting, you know, the Chevron companies in the second quarter, and quarter-by-quarter shipments will have significant increase.

Okay. Thanks, Charles. So, and then... Yeah, Phil, I think... Hold on.

Phil. Go ahead, General. This is General. So, yeah, so regarding the shipment, I think you might have noticed our disclosure of the shipment targets includes a total shipment instead of module-only shipment, which reflecting our strategic flexibilities, because right now we see the unbalanced demand and supply from upper street to downstream right now. So that's why, like Charlie was just saying, our shipment target are still in line with what we plan, but we are keeping some flexibility between wafer, cell, and modules in order to mitigate the market risk and try to optimize our margins.

Thanks, Jenner. I did notice that and was wondering if you could share a little bit more on that, Jenner, specifically You know, how much wafer-only sales or cell-only sales could we see so that we can get to a more accurate module-only or module shipments in 21? Thanks.

We don't have that number yet because we are keeping that flexibility to make sure that we can adopt our strategy to the current market. polysilicon price hike. That's why we keep that as a flexible part. But in general, we are still taking module as our main business. But partially of our shipment will be wafer or cell. It depends on the margin on the spot market.

Okay, thanks. One other question for me. You guys added, I think, 16 gigawatts or plan to of cell capacity by the end of this year. Can you give us a little more color in that strategy around the capacity expansion and the focus on why you're investing so much in cell? And then help us with the CapEx for 2020 total and then what you expect it to be in 21. And how much do you expect that to be from partner contributions in terms of the CapEx? Thanks.

The CapEx, you know, in 2021, it's in our range of $1 billion to, you know, $1.2 billion, reflecting our investment on the, you know, dramatically on the, you know, solar cell as well as the vapor states. And for the strategy of solar cell, it's reflecting our, you know, In the recent two or three years, we didn't increase our solar cell capacities because we think the technology is not so matured in the last two or three years. And now the market is shifting to the bigger size, high-efficient and n-type solar cell technology. And we believe, you know, it's a time to increase our solar cell capacity and increase our integration levels. And that is why, you know, we increase a little bit more on the solar cell capacity in 2021. Great. And the 2020 CapEx, Charlie? 2020, I didn't have the exact number, but I think it's roughly $500 million. Okay, great. Thank you.

I'll pass it on. Thank you, Phil.

Thank you. As a reminder, if you have any questions for your speakers today, please press zero followed by one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press zero followed by two. We'll pause for a moment to build up the queue. Thank you. As a reminder, ladies and gentlemen, if you'd like to ask a question, please press zero followed by one on your telephone keypad now. Your next question is from Brian, who's from Goldman Sachs. Your line is now open, Brian. Please go ahead.

Hi, guys. Thank you for taking the question. I have a couple questions. Hello? Hi, can you hear me?

Yeah, your voice is breaking, right?

Is it better now?

Yeah, yeah, it's better.

Please go ahead.

Yeah, thank you for the questions. This is Grace on for Brian. I have a couple questions further. Just wonder how far in events are you booked for modules and is there a flexibility in pricing? or were you not able to raise pricing until the second half of 2021? Thanks.

Thank you for the question. I think for the module price, one side we have the firm commitment for the contract we signed, but also we always keep a portion of our capacities to the spot market to adapt ourselves to the volatile market changes. So for the contract signed part, We are doing our best to respect the contract, the legal commitment. But since we have a long-term partnership with many customers for years, so we are still talking to many of them, try to get their, let's say, help and flexibilities to work together to face the current challenges in the market. So that's in progress. Does that answer your question?

Yeah, yeah, thank you. And how far in advance are you booked for the module for 2021?

I think over all the book, more than half booked. But still, some of them are with a firm commitment. Some of them are with flexibilities, with framework contract only. So yeah.

Okay, great. Thanks for the color. I guess my second question is now that there are more details around the China 145-year plan, you talked about expectations for like 55 to 65 gigawatts. So I just wonder how you're thinking about the demand picture here, like in terms of like what could drive upside or downside?

Sorry, can I repeat that? What's the upside and downside for what?

For China demand, what could drive the upside or downside?

Yeah, so I think right now, in short term, we did face some challenges because of the unbalanced growth of the capacities, like our pre-market earnings speech. The growth of upper stream capacity is much slower than the expansion of the downstream demand. So it's caused short-term turbulence and volatile market situations right now. But in long-term, we are still a believer for the long-term growth of the market, including China market and other markets as well, because we see a very ambitious target announced by China government. And we have... We have accepted a very clear signal from our downstream customers about the ambitious pipelines in China. So the current challenge is the short-term market and balance the supply and demand happen in upper stream. But we expect that it could be resolved in the next, let's say, mid-term, short-term or mid-term, because the China market Let's say China, great parity projects always got a long time after the PPA signed to get great connections. So I think, yeah, the market will adapt itself based on the market principles, and the China market, together with the global market demand, will continue to be very strong and at high-speed growth.

Okay, thanks for that, Tyler. If I can bring one more. I just thought, how should we... think about like the vaccine 2021 should we think about like as a percentage of cell like around 12 to 11 percent and and how should we think about the growth margin in the second half of 2021 versus the first half you know the growth margin and we are expecting you know some

you know, more competitions among tier one companies. And one of the, you know, the bottleneck is still the materials, you know. So we are expecting, you know, the second half year with more debottleneck, you know, for the materials. And the costs are expecting to be improved compared to the first half year. And we have more possibilities with the integration level increase with the department of the key materials and to improve our goals margin in the second half year.

Pardon the interruption, Grace. Are you still there? We lost you for a minute there.

Yeah, yeah. Thanks for the color. And the OPEX, how should we think about the OPEX? Is it, do you expect to still around, return to like a normal, kind of like normal range, like 11 to 12% of the sales, net sales?

Yes, it's still in the range, 11 to 12% against the total revenue.

Okay, thanks. I'll pass it on.

Thank you.

Thank you. Your next question is from Philip, who has a follow-up question, who's from Roth Capital Partners. Please go ahead.

Hi, everyone. Thank you for taking my follow-ups. One of the questions I had was around polysilicon, and given where pricing is and the dynamic there of pricing continuing to go higher, was wondering if you could share how much polysilicon you've secured for 2021, possibly in metric tons.

So, Phil, I think from the supply side, we have secured enough polysilicon supply. But the challenge is, you know, because of this market situation, all those secured polysilicon supply is always up to the market condition. So that's a big pressure or it's a big challenge for everyone. But currently, it's extremely, almost mission impossible to secure a long-term policy on pricing. So we secure the volume. I think it's enough. But from the pricing-wise, it's still always up to the market.

And what's your view, Jenner, as to when that pricing can become released? I think Tongwei has some capacity coming online at the end of this year. Do you think we have to wait until Q4? And if we get relief before that, what causes that relief?

We think it will relieve step by step. It won't change overnight. But gradually, I think that the pressure will be released. The challenge here right now is the demand side is very hot right now. That's why the upper stream is always holding their expectations that the demand will support the price. In short term, we are still expecting a volatile market in the up and down. But in the long run, like you said, the pressure will release step by step and follow the market principles.

OK. And then as it relates to Q2 shipments, we talked about this earlier, Jenner. But when I look at Q1 relative to what we forecasted, the Q1 levels are what you guided to were lower. For Q2, should we expect something similar, meaning If you think back to what you expected to do in Q2 back at the end of last year, do you expect the shipments to be lower in Q2 now versus then? Because the raw material outlook is so challenging, and as a result, your customers and you are pushing out orders. So do you expect to build less in Q2 than you previously had imagined?

I think, Phil, the principle we are holding in the company is to keeping the module capacity more flexible than others. So our wafer and the cells are in the full range. And for the module side, we are holding more flexibilities up to what we say, the margins and the market conditions. That's why the shipment contains all three segments we have. So I think we will hold the same principle for Q2 as well. The number-wise, I don't think it's the right time to talk about it. Maybe we can talk about it next time.

Okay. All right. Appreciate that. And then in terms of the China listing, Charlie, I know you mentioned some details on that. I was wondering if you could share if there's – what's the potential for the China listing to be in Q3 or Q4 of this year? Is it meaningful or is it more likely in the early part of 2021 – sorry, 2022 – I know you guys have talked about perhaps taking a two-year process, but I wanted to see if the others are going this year, like DOTCO, and then I think Canadian Solar has a chance of getting out there this year. I'm thinking you guys have a chance to get there this year as well, a China listing, but wanted to get some color from you guys. Thanks.

Okay. For the China listing, we have a separate team working on This process is, you know, more complicated compared to the U.S. listing. And the process is still, you know, it's on track and everything is very smooth. And we're expecting, you know, to reach some significant milestone in the next couple of months. And we will keep the market, you know, in progress. And in terms of timetable, you know, how long we will get the China listing done. It's really out of, you know, a lot of process, it's out of the company's controls. And particularly from the, you know, typically there's a couple rounds of, you know, submission and, you know, response, different, you know, comments from the regulators. And the regulators, they have, you know, they have, you know, different, you know, tendencies, you know, to control the total volume of China listings. So it's, you know, from the company perspective, we try to drive the passes, you know, as quick as possible and more efficiently. But some of the passes, it's depending on from the government regulator's perspective.

Okay. Thanks very much for the follow-up questions. I'll pass it on.

Thank you, Phil.

Thank you. Our next question is from Johnny Chen, who's from GreenCorp Capital. Your line is now open, Johnny. Please go ahead.

Yeah. Hi, everyone. Can you hear me? Yes. Hi. Hello. Thank you for taking my question. And I have two questions for Johnny. for you. So firstly, we know that the company has been developing untapped solar cell technology, especially in TopCon. So would you please elaborate a little more on the capacity, plan, and the efficiency and the success rate? And my second question is that is there any possibility that the company developed another untapped technology we call HJT? Thank you.

Okay. You know, we build up our R&D capabilities on the entire couple of years. And I think 2019, starting from 2019, we have built around 800 megawatts, you know, top-down-based, you know, capacities. The efficiencies have been reached to, I think, roughly 24%. And now, this year, we are building more capacity on the solar cell capacities. And, you know, the capacity is large-sized space solar cell capacity, as well as we have flexibility to upgrade, you know, or quickly upgrade to the, you know, the Top Gun-based, you know, technology very quickly. And in terms of HJT, You know, we still believe, you know, it's not cost-effective at this stage, and we have the, you know, R&D and the technology available and continue to watch out the maturities, particularly from the equipment perspective, the raw material perspective. So we don't have plans to lower out, you know, the large-sized SCL-HJT. in recent one or two years.

Thank you, thank you. I have a follow-up. Would you please, I want to make sure that I heard you right. So what is your capacity, expansion plan for TopCon again this year in 2021?

Well, 2021, we didn't have plan to increase our TopCon capacity, but I just emphasize, The new capacity, all the capacities are already, you know, easy and convertible, and we have flexibility, and the purchase is available, you know, Zoom, you know, to upgrade to the top car immediately.

Yeah, so the capacity expansion is based on the part-time technology, right? Yes, you're right, P-type, yeah. Yeah, thank you, thank you. That's all for me.

Thank you.

Thank you. Your next question is from Kim Powell, who's from Broxham. Your line is now open, Kim. Please go ahead.

Hi. Can you hear me? Hello? Oh, hi. Thank you for taking my call. I have a couple of questions. One is, You mentioned in your opening remarks that SOEs are willing to accept now lower than normal returns with their new solar farm projects. Can you give us a little bit more color on that, like what kind of returns they're willing to accept now? And second, my second question, I want to ask a little bit more about your view as to the current supply-demand situation of polysilicon materials. When do we think we would see a a return to normal pricing for Polycyclican and also at what level currently if you were to maintain a margin from your end of, let's say, 2020s normal operating margin, what kind of policy and price would you need to actually get there?

Thank you. So regarding a question about Chinese SOEs, our expectations, actually I think that there are a lot of Chinese SOE IPPs who have set up very ambitious renewable targets for this new five-year plan. And according to what we have heard from the market, I think their IRR expectations have been lowered from previously around 8 to 10 to right now around 6 to 8. So I think that's a very big, let's say, jump, or let's say a big decline, in order to pump up more renewable projects in the renewable sector, which gives a lot of hopes and ambitious targets for the whole industry, especially in China. Regarding your second question about supply-demand relationship, especially for polysilicon, I think in the previous question to Phil, We have provided our views that for the polysilicon, you know, it's because of the tension of the polysilicon supply is mainly driven by the, you know, unbalanced growth or expansions between upper stream and downstream because the ramping up phase for the upper stream is much, much lower than downstream. That's mainly the reason. And for the price range or how much weight will go back to so-called, let's say, 2020 level, it depends on the supply and demand relationship as well. So that's why we see in short term our view is that the volatile market driven by the shortage of the polysilicon or the upper stream material will continue. in the short term. But in mid and long term, we deeply believe the market principles, which will automatically balance between the supply and demand across the different sectors in this industry. And we believe, in the long run, renewable is still a very promising industry. Hopefully, that answers your question.

Can I have a follow-up?

Sure.

Hello. Hello?

Yes, go ahead.

Oh, okay. I'm just thinking, so, like, in terms of time, given the fact that there are not that much new supply for polysilicon coming on stream until towards the end of the year, do you think we should be able to reach some kind of... When you say mid- to long-term, do you think we should be able to reach a more reasonable polysilicon price and margin levels for us as a result towards the end of the year?

Well, you know, firstly, about the polysilicon, I think there are capacities starting wrapping up, and the new capacities start to release the polysilicon materials to the market. It's just, you know, step by step. It won't be, you know, it won't happen overnight. So, I think you can look into, you know, the main polycystic manufacturers ramping up. I think that there's a lot of public information available. And regarding your margins question, I think the margins will follow the market principle as well, right? It will go up and down. For example, recently the solar glass price has dropped significantly, which helped the module makers more or less ease the pressure from the upper stream a little bit. It happens. We prefer to look into this industry in the mid or long term instead of one month or two. Thank you. Thank you.

Thank you. There are no further questions at this time. Ladies and gentlemen, this concludes our conference call for today. Thank you all for your participation.