JinkoSolar Holding Co Ltd DR

Hello, ladies and gentlemen, and thank you for standing by for Ginkgo Solar Holdings' first quarter 2022 conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a questions and answers session. As a reminder, today's conference call is being recorded. I would like now to turn the meeting over to your host for today's call, Ms. Stella Wang, Ginkgo Solar's Investor Relations. Please proceed, Stella.

Thank you, Operator. Thank you everyone for joining us today for Zinco Solar's first quarter 2022 earnings conference call. The company's results were released earlier today and available on the company's IR website at www.zincosolar.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 Zinco Solar are Mr. Li Xiande, Chairman of the Board of Directors and Chief Executive Officer of Zinco Solar Holding Company Limited, Mr. Janet Miao, Chief Marketing Officer of Zinco Solar Company Limited, Mr. Pan Li, Chief Financial Officer of Zinco Solar Holding Company Limited, and Mr. Charlie Cao, Chief Financial Officer of Zinco Solar Company Limited. Mr. Li will discuss Zinco Solar's business operations and company highlights, followed by Mr. Miao, who will talk about the sales and marketing, and then Mr. Pan Li, who will go through the financials. They will all be available to answer your questions during 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 Sinko Solar's public filings with the Securities and Exchange Commission. Sinko Solar does not assume any obligation to update any forward-looking statements except as required under the applicable law. It is now my pleasure to introduce Mr. Li Xiande, Chairman and CEO of Zinco Solar Holding. Mr. Li will speak in Mandarin, and I will translate his comments into English. Please go ahead, Mr. Li.

We have achieved the same amount of income and sales growth with excellent globalization and supply chain management. The annual income is 14.8 billion RMB, which is 86% of the total growth. The total sales volume is 8.4 GW, which is 57% of the total growth. Our integrated cost structure continues to improve, and the net profit is increased by 60%.

Leveraging our competitive advantages in supply chain management and a global network, we delivered solid results in the first quarter of 2022 with total revenues of RMB 14.8 billion, an increase of 86% year-over-year, and quarterly shipments up by 57% year-over-year to 8.4 gigawatts. Despite a very challenging environment due to microeconomic uncertainties, and supply chain disruptions from the resurgence of COVID-19 in many parts of the world. We continued to improve our in-house cost structure and our gross profit in the first quarter increased by more than 60% year-over-year.

While silicon prices and shipping costs remain high and volatile during the quarter,

Since March, the surge in local COVID-19 cases in China triggered epidemic prevention and containment policies. This has led to logistic congestion and sharp reductions in transport capacity, further affecting the timeliness of materials and finished product deliveries, and increasing cost pressures for many enterprises. To mitigate the risks and production uncertainties caused by the pandemic, we took early action to ensure ample supply of new materials as well as close cooperation and coordination of production, supply chain, and sales department in order to meet production and delivery timelines. 长行业来看,数字与产业链供需和疫情等因素影响,

The supply and demand of some domestic projects is better than expected, but the demand in the market is relatively strong. Since the beginning of the year, various provinces have launched a policy to increase the value of electricity prices, which has further stimulated the supply and demand, especially for the supply and demand of industrial and commercial industries. The demand for large-scale ground-based power stations has also gradually shown positive feedback. Project bidding is in full swing. By the end of March, the total number of public bidding in domestic and foreign countries has exceeded more than 500,000 watts. Foreign demand is strong, and no conflict has stimulated the outbreak of European demand. It is expected that the demand for more light will rise this year and increase steadily in the future. In addition, the demand for light will rise rapidly for countries with low-carbonity and high-definition global power, electricity, and firepower. The size of the market is expected to be about 250 GW this year.

In China, deliveries for some projects were to some extent delayed due to the supply chain imbalance and logistic disruptions as a result of COVID-19 resurgence in certain parts of the country. However, domestic demand has remained solid. Since the beginning of 2022, many Chinese provinces have issued time-of-use terrorist policies, which have further stimulated demand for distributed generations. especially for systems designed for the industrial and commercial sectors. For utility projects, consistently high prices along the slide chain convinced some of the customers to not wait any longer to start new projects. During the quarter, the number of biddings for large-scale projects grew gradually, and by the end of March, the bidding faces for more than 50 gigawatts, of such projects had been completed. In Europe, the Russia-Ukraine war has largely boosted demand for solar energy, and incremental demand is expected to be released within the year and will steadily increase over time. In addition, with the low carbon nature and economies of scale of PV The demand for distributed generation will rapidly increase in countries with a high proportion of gas-fired power and thermal power in their energy mix. We remain confident and optimistic about the year's outlook, with total global installations expected to reach about 250 gigawatts. 总之,我们认为疫情对生产基因的影响偏短是切可控。

In short, we believe that the impact of the pandemic on production and operations is temporary and under control.

The PV industry's resilience in the face of volatility and fluctuations has been increasing. With the gradual recovery of logistics and the gradual release of polysilicon, we are confident about the gradual recovery of the industry and the growth in shipments and installations. We reiterate our guidance on total shipments, which remains unchanged for the full year of 2022.

In the field of N-type R&D and commercial chain, we continue to be a leading industry. Currently, our electronic chain of Hefei and Hainan 16GW is doing well. The efficiency of the electronic chain has exceeded 24.6. We have reserved the electronic new result upgrade and new metalization technology to continue to improve efficiency. In recent years, our high-efficiency N-type single battery efficiency has reached 25.7% to refresh the world record. 我们在N型的电子技术平台储备了大量的升级技术,通过不断优化和量产落地最新的技术来实现对同行业技术的领先。 Let's move on to our N-type R&D and commercialize the mass production sectors of our business. We continue to lead the industry in both areas of technical development and mass production volumes.

Currently, over 16 gigawatts of n-type top-con cell capacity in Hefei and Hainan is ramping up smoothly, with mass-produced cell conversion efficiency exceeding 24.6%. We are consistently investing in technology for new cell structure upgrades and new metallization methods to increase efficiency and reduce costs. Recently, we set a new world record for our n-type top-count cell with maximum conversion efficiency reaching 25.7%. At the same time, we are also performing iterations on the n-type cell technology platform to optimize and apply the latest technology for mass production and achieve technical leadership among our peers.

With the emergence of the N-type economic effect, we see global customers' contact and demand for N-type products are growing rapidly. We are confident that Tegnew will continue to grow, and we hope that our N-type market share advantage will gradually increase for profit. In addition, we will continue to be optimistic about China's market, and we will make major adjustments. In terms of domestic retail business, the construction activities of each channel have been effective so far. As the provenance and benefits of the N-type module grows, we have been seeing wider acceptance and increasing demand from global customers for our N-type products.

We are confident about ramping up to full capacity and increase sales for the Tiger Neo modules, giving us the advantage of growing our market share and increasing profits. In addition, we are optimistic on China's demand and are expanding our resources and local deployment to grow in the domestic market for DJ business in China At present, all our efforts on building different channels are already seeing results. In future, we will further coordinate our market strategy, pricing systems, and brand development. We believe this will give us technical advantages in the distributed generation sector and bring low-carbon, reliable, and highly economical products and solutions to our customers.

Based on our 16GW N-type battery capacity, we plan to expand our N-type battery capacity to 16GW. The increase in N-type battery capacity will further optimize our capacity structure and drive down the cost of integration. Our goal is to build the entire year. By the end of 2022, our current battery capacity will reach 55GW, 56GW, and 60GW.

We have successfully ramped up the 16 gigawatts of n-type cells production capacity, taking into account our advantages in n-type cells and strong market demand. We plan to invest in the second phase of n-type cells with a total production capacity of approximately 16 gigawatts. The increase in n-type cell production capacity will further optimize our production infrastructures and to reduce integration costs. As a result, we are increasing our four-year guidance. At this time, we are expecting the annual production capacity of monowafers, solar cells, and modules to reach 55 gigawatts and 60 gigawatts, respectively, by the end of 2022.

Before turning over to Jenna, I would like to go over our guidance for the second quarter of 2022. We expect the total shipments to be in the range of 8.5 to 9.5 gigawatts for the second quarter of 2022. Thank you, Ms.

Lee.

Module shipments in the first quarter were approximately 8 gigawatts, and less than 400 megawatts of wafers and cells are sold in China additionally. By the first quarter, our accumulated global module shipment has surpassed 100 gigawatts, thus becoming the first company in the industry to achieve this historic milestone. Regarding regional landscapes, Europe, Asia Pacific, and emerging markets were the regions with the most shipments. In terms of absolute numbers, our shipments to Europe increased by more than 30% quarter over quarter, and our shipments in China nearly tripled year over year. In Europe, the Russia-Ukraine war boosted solar demand, and it is expected to grow steadily in the future. The high demand of distributed generation combined with successive fees for large-scale projects continue to demonstrate strong growth momentum in the Chinese market. Although deliveries for some domestic projects have been delayed due to logistic restrictions caused by the resurgence of COVID-19 and supply chain disruption, we are still bullish on China's market. demand and are moving forward with our plans to enhance deployment in China. As a responsible global enterprise, we advocate the freedom of trade. We believe our competitive products and professional services are key to envision the wide adoption of clean and green energy on a global scale. In the U.S., policies have temporarily disrupted the market. and the short-term supply becomes difficult. But we remain bullish about the market potential in the long term. Therefore, we have been proactively deploying and working with all parties to come up with feasible solutions. The wafer cell module capacity of our integrated production facilities overseas have been wrapping up very smoothly. With a sound and comprehensive overseas supply chain, we are confident in our ability to flexibly respond to the changes in the U.S. market. In terms of contracts, we have high visibility for the full year's order book. Global customers are increasingly interested in our Tiger Neo products. We are confident about ramping up production to full capacity and sell out the Tiger News series. We hope untyped products will contribute more than 20% of our total shipment. In the face of market and price fluctuations, demand for distributed generation remains strong. We have proactively expanded our global market share in DG, for example, in Europe, APAC, and emerging markets. The proportion of distributed generation in our shipment is expected to be in the range of 35 to 40% this year. And we expect that the proportion will steadily grow quarter over quarter. In terms of product mix, the proportion of our Tiger Pro 182 millimeter large size product has already exceeded 80% in the first quarter. and is expected to exceed 90% in the whole year. Recently, we launched a new series of BIPV products covering three major application scenarios, including HACCP, industrial and commercial rooftops, and residential rooftops. With high efficiency and type technology adopted, those new and innovative products will provide customers with high quality and green building solutions. To conclude, we remain optimistic about the global PV demand in 2022. Profited by a dedicated future for global marketing network, as well as vertically integrated overseas supply chain advantage, we are confident about delivering the most competitive products and services to customers and further improve our market share. With that, I will turn it over to Pat.

Thank you, Jenner. For the first quarter of 2022, total revenues increased significantly year over year as a result of strong shipment growth and competitive motor prices. To mitigate the impact of higher coal material prices We strengthened our supply chain management. Nevertheless, gross margin decreased both sequentially and year-on-year. As we ramped up capacity of more cost-effective N-type modules and increased sales of premium N-type products, we expected a strong recovery and improvement in profitability for the coming quarters. Let me go into more details. Total revenue was 2.8%. 33 billion, a significant increase of about 86% year-over-year. Gross margin was 15.1 compared with 16.1 in the fourth quarter last year and 17.1 in the first quarter last year. Total operating expenses were $344.8 million, basically flat sequentially, but a significant increase year-over-year. Logistic constraints in many parts of the world draw up shipping costs, increasing sales expenses. To mitigate this, we flexibly adjusted shipping arrangements domestically and overseas based on market conditions and were able to benefit from favorable strategic agreements with major shipping companies. We also flexibly adjusted to other means of transport in order to reduce the impact of shipping costs on profitability. Total operating expenses accounted for 14.8% of total revenues in the first quarter this year, up from 13% in the fourth quarter and down from 15% in the first quarter of last year. We'll continue to control operating expenses and As revenues continue to grow as we scale up, we expect that operating expense ratio will gradually decrease. EBITDA was $126 million compared with $183 million in the fourth quarter last year. Net income attribute to JNCO Solar Holdings ordinary shareholders was $4.6 million. resulting diluted earnings created of one dime. The change in fair value of convertible senior notes due to an increase in the company's stock price in the first quarter this year led to a loss of $16.6 million. Our foreign exchange hedging mechanism has proven to be effective. In the first quarter of 2022, we realized a net foreign exchange gain, including changing fair value of foreign exchange derivatives, of approximately 12 million compared with a net loss of 1.65 million in the first quarter last year. We will continue our stretches to hedge against foreign exchange risk. Moving to the balance sheet. At the end of the first quarter, The company had cash and cash equivalents of $2.66 million, up from $1.4 billion at the end of the fourth quarter and $1 billion at the end of the first quarter last year. Our cash position has significantly improved, and we will continue to strengthen our liquidity. AR turnover days were 66 days in the first quarter, compared with 52 days in the first quarter last year. Inventory turnover days were 117 days in the first quarter this year, compared with 88 days in the fourth quarter last year. Total debt was $4.33 billion at the end of the first quarter of 2022, compared with about $4 billion at the end of the fourth quarter last year. was 1.6 billion compared with 2.56 billion at the end of the fourth quarter last year. After the listing of the John C. Jinko earlier this year, our finance structure is expected to improve with access to competitive financing. This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed.

Thank you. Ladies and gentlemen, if you wish to ask a question, please dial 01 on your telephone keypad. We have a first question from Philip Shen from Ross Capital. Please go ahead. Mr. Philip Shen, please, your line is open. You may ask your questions. The person from Ross Capital, please, your line is open. You may ask your questions. Apologies, ladies and gentlemen, for this. Once again, ladies and gentlemen, if you wish to ask a question, please dial 01 on your telephone keypad. We have a question from Alan from Jefferies. Please go ahead.

Thank you, operator. And thanks a lot, management, for taking my questions. And here's a couple of questions. So we note that for the A-share subsidiary of the company, they issued a preliminary first quarter result which indicates a net profit of around 400 billion RMB. And this number is quite different from net profit at the US level. So we also know that the company has no longer issued the non-GAAP incomes which have excluded the changes in fair value of the federal bonds. So we would like to know how to compare the profit levels, what is the difference between the profit levels in these two entities, and what is the more fair estimates of the like core profits of the U.S. level.

This is Charlie speaking, and, you know, there's a, you know, in terms of net income cancellations, basically, you know, the Jinko Solar holding, it's holding companies and reported under the U.S. gap, and the subsidiaries, the ACRs, is, you know, reported under PRC gap. And one of the most significant differences, the holding companies only have, let's say, 58% of the ACR of the companies. On top of that, the holding companies had convertible bonds, which had, I think, a loss because of fair value triggering from the ADS tiers. is up during this first quarter. And on top of that, I think there's some gap differences. Except for that, there are also some, let's say, the holding companies have some international projects. So I think it's actually a question. The big difference is because of the holding, the differences. of the 58% of the underlying each year. On top of that, convertible bonds, it's a big change because of the increase of the share price. And there are some small differences because of the gap reporting differences, as well as some international project assets.

Understood. Thank you. And my second question is about the investment polysilicon with Ongwei and also Shinta. So I would like to know would there be material contribution in profits because we have seen that in other companies. So I wonder if that will materialize later in later quarters of this year. What is the magnitude of that amount?

Okay. So, you know, it's a... So the... The answer is no. We don't expect any, you know, income or investment income, you know, in the future because, you know, we did have arrangements with TEBA. You know, we invested 9% of equities for the, you know, for the solar silicon plant and which has the capacity, I think, 10,000 tons. And we hold 9% of equity and invest it around, I think, 300 million RMB. From the accounting perspective, because we only have 9%, it's a very small minority, and we record it under the cost message. And if we hold, let's say it's over 20%, we can pick up the net income from the accounting perspective. And on top of that, we also have arrangement with Tongwei, Paula Selleckan, And we plan to have 15%. So it's the same situation. From the accounting perspective, we are not recording any, let's say, investment income unless the underlying, let's say, the subsidiaries declare dividends.

Understood. Thanks a lot. So it's basically because of cost method. Okay. So my last question is about the increased capacity guidance. So we'd like to know how much of shipment has been materialized in first quarter for the anti-top corn and or how much of orders have been secured for like second quarter for the N-type products because I suppose the amount is huge that the company is competent to expand its capacity for another 16 gigawatt, isn't it?

Sure, sure. For the N-type, you know, the new capacity is 16 gigawatts. You know, the large size N-type top-count capacities is under ramping up stage. the output is very small and very, very small, you know, in the first quarter. And I expect it to, you know, reach to full capacity by the end of the second quarter. So the first quarter, we didn't have any, you know, you know, the measurements from the new capacity. And from the order perspective, it's very, you know, attractive from the customer perspective. We are confident we are able to ship over, you know, 10 gigawatts shipments for the full year. And I think the second quarter may take 10%, 15%, and the second half year is, you know, taking up around, you know, 85%, 90%.

Thanks a lot for Charlie, and I will leave the floor to others. Once again, thank you.

Thank you. Thank you. Ladies and gentlemen, as a reminder, if you wish to ask a question, please dial 01 on your telephone keypad. We have a following question from William Gripping from UBS. Please go ahead.

Thanks and good morning. Just curious if you could, you know... Help us understand any initial impact you're seeing from the ongoing anti-dumping, countervailing tariff investigation in the U.S. and how that's impacted your plan and potential future shipments as of now.

So, General, would you like to take the question?

Okay, sure. Let me take that one. For the anti-circ investigation, yes, it is impacting the whole industry a lot, right? So because, you know, the potential risk of retroactive tariff, even the potential, you know, the higher end of the range of the possible tariff might, you know, put a lot of uncertainty for the manufacturer side. That's why, you know, many factories and peers choose to take a stop and to wait to see the consequence or the announcement from the U.S. government side. And for JNCO, I think we have established a vertical integrated supply from China. wafer down to cell and module together with the long-term contract we have secured with many, quite several key, let's say, key non-China polysilicon suppliers. So combine all those factors together, I think we can or we are capable to offer one of the most comfortable and you know, reliable solutions from the solar panel manufacturing side. That's why we have seen many positive feedback about the customers from U.S. about their strong interest to secure, you know, the supply from Jinko's side. But meanwhile, you know, we are still cautiously managed the manufacturing process to make sure that, you know, the company's risk is within the tolerance we can afford.

Thanks. And just to follow up on that, could you speak to kind of how your contracts with your customers are structured in terms of should there be a retroactive tariff? Who's actually responsible for that? Does it vary based on your contracts? And just help us understand kind of how that works. Thank you.

I don't think we are capable to disclose the details of the contract, but from the company's perspective, definitely we cannot afford the huge potential risk of a desert. That's why we are reaching different solutions with different customers. Some of the customers choose to ship the modules themselves. Some of the customers choose to take the risk. Some of the customers may choose to delay the project. Some customers may take a stop for a while until the announcement happens. So a different customer has different appetite and different solutions.

Got it. Very helpful. Thanks. Appreciate the help.

Thank you very much.

Thank you.

Ladies and gentlemen, as a reminder, please dial 01 on your telephone keypad if you wish to ask a question. We have a next question from Philip Shen from Ross Capital. Please go ahead.

Hi, guys. Thanks for taking my questions. Sorry about the mix-up earlier. I was navigating two earnings calls. In terms of the anti-circumvention case, I think you guys had before the anti-circ case came up, a clear solution to address the U.S. market that would avoid the WRO situation. And so can you talk to us about how much you were expecting to ship into the U.S. before anti-circumvention hit in 2022? And then now how much do you expect the shipment into the U.S. could be? So maybe before... you're in the 3 to 4 gigawatts, and maybe now you're maybe sub-500 or something. Is that directionally accurate? Just trying to get a sense for the magnitude of the change. And then if, given that difference in the change or that delta, because you didn't change your annual guidance, where do you expect those modules to be going if it's not the U.S.? Is Europe taking up the the Slack.

Thanks. Thank you, Phil. For that, I think Ginkgo is one of the early victims of the WRO. We got disrupted, I think, by second half of last year. So that's why we have prepared several solutions to make sure we can find an ultimate solution You know supply solutions to the US market. That's why you know the currently our wafer capacity in Vietnam is ramping up smoothly and I we believe you know, we we could be Very we could offer a very unique solution to the US market and to quantify that for quantified for for the volume is still difficult to tell because I The logistic is not very, let's say, predictable as a current status, especially considering the customer clearance timing is totally out of our control as well. Sorry to say, but we don't have a very detailed number to disclose before the anti-circ case investigation started. But in general, our current capacity wrapping up plan is still on schedule and smooth, and we are expecting to supply U.S. market with our unique solution very soon. And the second question for the guidance, we still are bullish about the global demand this year, especially for U.S. After the U.S. got hit by this anti-circusing, we have seen this European demand is booming rapidly and strongly. Together with the China demand picking up, we believe that's quite a lot in terms of demand. So I think that will be good enough to cover the loss we had in U.S. market earlier this year.

Okay, thank you for the color.

Okay, I have a question.

Yep, thank you. Shifting gears to Q2, you gave some guidance there. I was wondering if you could talk through the margin outlook. Do you expect, you know, with the pricing power of module pricing going higher and then just pricing through the whole supply chain going higher, is there any chance that you could expand margins in Q2, or is there a risk that it – can contract or do you expect it to be flat in Q2? Thanks.

So, Pan, would you like to take the question?

This is Pan. For Q2, we expect that the gross profit margin would be stable.

Okay, stable versus Q1, Pan?

Yeah, versus Q1 this year, yeah.

Great, okay, thanks. And then in terms of the dividend that you guys talked about, the dividend at the shareholders for the ADR, since you guys received it from the subsidiary, do you expect to pay out to do a buyback, or is there a chance that you just keep it? Can you talk through the plans a little bit more? I'm sorry if somebody addressed this earlier. Again, I was navigating two calls earlier. Thanks.

okay so for the dividend it's uh you know it's a not big number it's a word you know it's a small number and we're expecting to to receive the dividend after you know paying your tax i think in in late or may and we we didn't we didn't you know we haven't taken the you know positions how we are use the dividends and we may you know discuss with the board and to make the decision later.

Okay. Thanks, Charlie. Can you talk through the options? Would you consider a buyback or what's on the table? Thanks.

Yeah, it could be the holding companies. We don't have any you know, significant operating assets except for the, you know, the equities for the eight years. And so we may consider to take some investment opportunities, particularly for the, you know, the solar, for the companies which supply our, you know, equipment or the materials and which we can let's say through the minority investment to build some ecosystem for the solar. This is one of the options. And the second option is we may be paying dividends as well for the U.S. investors. But I think, you know, just I talked about, it's a small number. And, you know, so we didn't have the, you know, have the decision yet

Got it. OK. Thanks, Charlie. And then in terms of module pricing, can you talk about, Jenner, how do you expect that to trend in Q2, 3, and 4? Is the idea that should we be forecasting or thinking about module pricing increasing as we get through the year? And do you think that continues into 23, or do you think it comes back down in 23?

Thank you for the question, Phil. In our opinion, the module price is stabilizing. It's stabilizing in the range around the current market price, maybe up and down half cents, one cent, but it's more or less a stabilized range, which is broadly accepted by more and more customers and end customers day by day. The reason is, you know, we have seen a very, let's say, robust polysilicon prices from last year to this year. And also, meanwhile, we have seen the demand is picking up, you know, significantly. Even if there are some turbulence in U.S. market, but considering other markets, for example, China, Europe, et cetera, the market demand is still there and it's strong as well. So considering both end, many projects, many customers started to adjust their plan, and they don't wish for the price sharply going down overnight. They started to build up their business plan based on the current module pricing or the solar system cost. which will make the whole ecosystem of solar industry more sustainable, in my opinion. Meanwhile, Jinko's untyped product itself will provide added value to the customers who have a very limited budget or have very high IRR targets. So I think that gives us a perfect window to promote the Tiger Neo products. And partially, that's the reason why we are continuing to expand our entire capacity.

That's it. Thank you. Great. Thanks for the call. One last one. I appreciate taking all the questions. And that's on just a quick housekeeping question. Can you share what the Q1 cash flow from operations was? Thanks.

Let's take the numbers back to you after the call. I think it's a positive. I cannot remember the exact numbers.

Okay, great. Thank you very much, Charlie, Pan, and Jenner. I'll pass it on. Thank you.

Thank you. We have a last question from Brian Lee. If you would please unmute your line and go ahead for your questions.

Hey, guys. Good evening. Thanks for taking the questions. Sorry, I jumped on late, so I apologize if some of this has already been covered. But I guess one question on the ADCVD circumvention investigation as it relates to your... your operations or your shipments into the U.S. Have you, I guess, considered or are your customers asking you about taking products, panel products, from your mainland China operations as opposed to buying from your sites in Southeast Asia? I guess, is that an option that either your exploring or your customers are asking you about just so they can avoid some of the uncertainty that exists around the Southeast Asian countries right now?

Thank you for the question. I think we covered that a little bit in the previous answers, but let me briefly repeat it again. So for the customer end, I think we are experiencing many different customers' appetite about the risk, about these solutions. So I think from Genco's perspective, we are not ruling out any solutions from the customer end. But our bottom line is very clear. We are only capable to accept the risk, a very limited risk, from the company's position. Anything beyond our tolerance, risk tolerance, we have to find a solution. Otherwise, we prefer to stay quiet for a while like others to wait until more clarity on the tariff side. So that's the direction we are going. And we are experiencing many different solutions. Again, some of them taking the goods themselves. Some of them put it in warehouse somewhere. Some of them saying they want to delay. Some of them saying, you know, just taking the product to the other market. So many different solutions. So every customer is different from one to another.

Yeah, no, I can appreciate that. And I understand the situation is quite fluid and sensitive. Maybe just technically speaking, if a customer were to... you know, purchase, uh, panels from you that were shipped in from mainland China. Could you remind us, um, cause I know these rates have changed over the years. What is your, um, company specific anti-dumping and countervailing duty tariff assessed on the, the Chinese made products right now?

Uh, it's, uh, yeah, yeah, it's, uh, It's just like what you said, you know, different companies have different, you know, separate rates. But some of the rate is still ongoing. And, for example, we're expecting, let's say, the PR bar, PR8, the final rate is going to come out. Based on the preliminary rate for Ginkgo, the ADCVD is roughly, I think, 50%. On top of that, we do pay, you know, 201 and the 14, 15%, and the 301, I think, 25%. So it's totally, I think, 90 to 100%.

Okay. That's, yeah, that's quite significant. Helpful. Thank you, Charlie. And the last question for me, I'm sure you covered it, so apologies again, but the capacity increases here. I would assume it means there's a CapEx increase as well. What's the new CapEx budget you're outlining for 2022? Yeah.

So, Pan, would you like to take? The CapEx.

Hello? Okay, this is Pan. And as you mean the CapEx for this quarter?

Yeah, just the CapEx forecast for the full year.

Okay. For the full year of this year, the expected CapEx would be $3 billion.

$3 billion. $3 billion?

Yeah, exactly. That's right. Because I think we got $1.5 billion through the know the china you know ipo and we're expecting generate you know positive cash flows as well as we we we we we also increase some you know project loans from financial institutions okay you know the purpose is to build up the capacities uh for the next generation you know technology and type top com capacities

Okay, but just so I'm clear, I think in March you had said US $1.8 to $1.9 billion, so now that's going to $3 billion, correct?

Yes, yes, because we increase the capacity outlook, you know, by the end of this year, you know, and up to, I think, up to 55, 55, 60 gigawatts for wafer cell module. Okay.

I guess this doesn't seem like, this is the last question, I promise, and I'll let you go. It doesn't seem like your, you know, this capacity increase isn't impacting your shipment guidance, which you reiterated. So this is all, you know, mainly going to be end of the year and then flow into 23. Any kind of early sense of what the growth you could anticipate in shipments for next year would be? Because it's a lot of capex and you're not getting any benefit of it in your P&L this year. It'll be next year. So what's sort of the general sense of growth we should expect?

Yeah, you're right. The plans for, you know, I think some of the capacities, the new capacity starting out construction from second quarter is for the preparations next year. So if you look at the capacity, you know, 55, 55, 60, I think it's a, you know, it's our range at least, right? 55 to 60 gigawatts. And we are, you know, overall, I think we are optimistic, you know, for the next year. And this year, you know, the polycycline is still at a high price. And the volume, you know, poly volume is still relatively limited. And we believe next year with the bottleneck, you know, without the bottleneck of the policy, we think the market will accelerate again.

Okay. Fair enough. Makes sense. Thank you. Appreciate it.

Thank you. Thank you. We have no other questions. Ladies and gentlemen, thank you very much for your participation in this conference call. You may now all disconnect.