JinkoSolar Holding Co Ltd DR

Hello, ladies and gentlemen. Thank you for standing by for Ginkgo Solar Holding Company Limited second quarter 2022 earnings conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded. I would like to now turn the meeting over to your host for today's call, to Ms. Stella Wang, Ginkgo Solar's investor relations Please proceed, Stella. Over to you.

Thank you, operator. Thank you, everyone, for joining us today for Zinco Solar's second 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 Jiande, Chairman of the Board of Directors and Chief Executive Officer of Zinco Solar Holdings Company Limited, Mr. Zhennan Miao, Chief Marketing Officer of Zinco Solar Company Limited, Mr. Pan Li, Chief Financial Officer of Zinco Solar Holdings 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 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. Both 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 Dinko Solar's public filing with the Securities and Exchange Commission. Zinco 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 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. 二季度总出货量约10.5个GW, 主电出货量约10.2个GW,

The growth rate is about 26.8%. The total revenue is about 28.1 billion U.S. dollars. The growth rate is about 27.6%. In the context of the constant rise in oil costs, we have reduced the cost of internal control by technological improvement and industrial improvement, and partially reduced the impact of high-cost oil on the company's profit. The profit margin is 14.7%. The first quarter of the year, the basic food, We had a good quarter and a difficult market condition. Total solar measurements in the second quarter were 10.5 gigawatts. Module measurements in the second quarter were 10.2 gigawatts, up roughly 27% sequentially.

And the total revenues were... $2.81 billion, up 27.6% sequentially. These upstream costs continue to rise. They actively worked to control internal costs through technical advancement and process improvement, which partially offset the impact of higher upstream costs on our profitability. Growth margin was 14.7%, relatively flat compared with the first quarter. excluding the impact of the convertible senior notes and the share-based compensation expenses. Adjusted net income in the second quarter was $55 million, improving sequentially. 随着越来越多的国家和企业加速能源转型, 以及受到俄乌冲突造成的能源供应危机驱动, 关武需求持续增长。 根据InfoLink统计分析中国海关出口数据显示,

China exported 78.7GW in the first half of the year, which increased by 102% in the same ratio. Europe is the most active market for imported components in the first half of 2022. In the first half of the year, China imported 42.4GW of raw materials, which increased by 137% in the same ratio. The domestic market demand is also very strong. In the first half of the year, the domestic new equipment was about 30.9GW, which increased by 136% in the same ratio. Then, the production and release of raw materials is more than the need to exceed the expected normalization, reduction, limited power, epidemic restrictions, and other factors, which further increases the supply and demand of raw materials. The price of raw materials has been rising all the way up to 310 yuan per kilogram recently. The price of components has also risen, due to the difference in the requirements of different customers for income, and the decrease in the price of current components, and the decrease in the speed, and the decrease in the release of goods. 我认为三去度的硅料价格会持续上涨并达到顶点。 而随着硅料的产出在四去度陆续释放, 硅料价格预期有所缓和,有望驱动下游需求逐步恢复。 Driven by accelerating energy transition in several countries and business, as well as the energy supply crisis caused by the Russia-Ukraine conflict, demand for solar products has exploded in many markets.

According to the statistics and analysis of China's customs export data by Infolink, China's export of modules in the first half of the year reached 8.7 gigawatts, a year-over-year increase of 102 percent. Exports to Europe reached a total of 42.4 gigawatts of PV modules, a year-over-year increase of 170 percent. Demand in the China market was also strong. During the first half, solar PV installations in China reached 30.9 gigawatts, a year-over-year increase of 136%. Given this better-than-expected growth in demand, released polysilicon production came up short and was further aggravated by annual maintenance programs and power rationing and anti-pandemic restrictions in certain regions of China. As a result, polysilicon prices rose continuously and reached the recent high of RMB 310 per kilogram. Thinning module price is higher. Regular discussions with other clients indicated that some of them found higher module prices to negatively affect project yield, and as a result, some demand slowed down. We believe polysilicon prices will continue to increase and reached their peak in the third quarter. Then, as polysilicon production ramped up in the fourth quarter, polysilicon prices increased, expected to moderate, driving a recovery of downstream demand.

and our market capacity has been uncertain for a long time. It is expected to have a certain impact on the company's business performance in 2022. We actively take various measures to reduce the impact of limited supply to the company's production and operation, including coordination of other resources, supply and security, and actively communicate with the local government. At the same time, we flexibly adjust the production and delivery plans of the components, and make the most effort to meet the customer's needs.

Recently, the local government of Sichuan Province has imposed the province-wide power rationing measures, and the production capacity of our manufacturing facilities in Sichuan Province has been temporarily affected. We are currently unable to evaluate the extent to which our business operations and financial performance for four years 2022 will be affected by the power rationing measures in Sichuan Province. As it remains uncertain how long the power rationing measures will persist and when our strong manufacturing facilities can resume full production, we are actively monitoring the situation and have implemented various measures to minimize the adverse impact from the power rationing on our business operations and financial performance, including but not limited to having other manufacturing facilities assume more production, and actively communicating with the local governments about power supply-related matters. We also flexibly adjusted the module production volumes and shipment plans in order to meet delivery to our clients.

二G度大尺寸产能占比环比提升,一体化结构持续优化。 年初投产的16GW TopCom的电子产能已于二G度末满场,量产效率超过 In the second quarter, the proportion of large-sized capacity increased sequentially.

Further improving our integrated structure, the 16 gigawatts of top-count cell capacity that started production at the beginning of the year reached full production at the end of the second quarter, with mass production efficiency of over 24.8%, and yield rates and integrated costs in line with our expectations. We recently started production at an additional 8 gigawatts of N-type cell capacity in Hefei and the common construction of another production project with 11 gigawatts of N-type cell capacity in Henning. The increase in our in-house high efficient capacity ratio will continuously improve our competitiveness.

We have more and more top-com technology and continue to grow. In recent years, we have completed the key technology promotion in the path of choosing top-com technology, and have had relevant barriers such as engineering technology. In the large-scale mass production, we have achieved the leading efficiency, quality, and cost level of the industry. We believe that top-com is currently the largest business in the post-POG era,

As an industry pioneer embracing the top-con technology, we have recently achieved key technology breakthroughs in the currently selected top-con technology roles that we believe we have created an entry barrier related to core process and technology with industry-leading mass production efficiency, yield rate, and cost levels. We believe Topcon is currently the high-efficiency cell with the greatest value for commercialization mass production in the post-perf era and has relatively ample development opportunities. We will continue to maintain our leading position through technical iteration. 人行产品持续受到海内网客服的关注,目前订单可见度高。

In addition, due to the advantage of N-type technology compared to P-type technology, we have confident to complete the N-type all-year export target set up at the beginning of the year. With the improvement of the new energy market and the N-type product market in 2023, it is expected that the N-type export ratio will increase further.

Our n-type products' type-new modules continue to be well-received by global customers, and so far, we have high visibility in our audibles. Compared with p-type products, n-type products command a competitive premium as a result of improved technical parameters and additional power generation gain. We are confident that we will complete our four-year n-type shipment goal. In addition, Considering the release of new capacity in 2023 and the increase in market penetration, we expect that the proportion of untyped shipments to further increase.

产能扩张方面,考虑到今年供应量和市场情况, 我们调整了硅片电池组件的扩展节奏。 到年底,单金硅片电池组件的产能预计分别达到60GW, 55GW和65GW。

In view of the current and expected supply chain and market conditions, we have adjusted our capacity expansion pace for wafer, cell, and modules for the rest of this year. And as a result, we are currently expecting the annual production capacity for monowafers, cells, and modules to reach 65 and 65 gigawatts respectively by the end of 2022.

Before turning over to Jenna, I would like to go over our guidance for the third quarter of 2022. We expected that the total measurements to be in a range of 9 to 10 gigawatts for the third quarter this year and

And we reiterate our total shipment of 35 to 40 gigawatts for the full year of 2022.

Thank you, Ms. Li. Total solar shipment in second quarter was 10.5 gigawatts, of which over 97% were module shipment, up nearly 27% quarter-over-quarter and a double year-over-year. Since the Russia-Ukraine conflict, global energy transformation accelerated and showed strong growth momentum, especially in Europe. In second quarter, our shipment to European market grew steadily, and the proportion of shipment to Europe remained high, reaching 25% to 30% range. In China, the distributed generation business demonstrated strong momentum. Newly added installation in China in the first half grew remarkably by 136% year-over-year. In the second quarter, our shipment to the Chinese market grew exponentially year-over-year, more than doubling sequentially. Our shipment to emerging markets also registered stable sequential growth. While demand was strong, we also noticed some potential challenges. For example, demand in some European countries for the second half is expected to slow down sequentially as a result of the problem affecting the logistics chain. and some of our domestic clients are waiting to fully access the impact from continuous rise in supply chain costs. In addition, the execution of some large-scale utility projects might be delayed to 2023 due to issues with grid connections and power transmission. Taking these challenges into consideration, we have been adjusting our geographic mix as well as our sales and contract signing strategy while keeping in close communication with our clients. So far, both our contract signing and execution are maintained at a satisfactory level. In U.S. market, tightened supply chain tracking should dampen demand in the short term. In the long run, with President Biden's ex-executive order to spur clean energy manufacturing and the recently passed Inflation Reduction Act of 2022, which includes $369 billion in climate and energy-related funding, we expect the demand to remain positive. In order to improve our resilience to risks, We will continue to closely monitor market and policy developments, adjust the production and marketing strategies accordingly, and further strengthen our overseas supply chain and global sales and marketing network. The proportion of large-size product shipments gradually increased to nearly 90% in the second quarter, further optimizing our product structure. Shipments through distribution channels where growth in demand is strong accounted for nearly 50%, with shipment through distribution channels in European and some APAC markets accounting for more than half. Tiger Neo modules continue to be acclaimed by clients all over the world, with high order book visibility and pricing premium in line with our expectations. We estimate that Tiger Neo shipment for the full year of 2022 will reach approximately 10 gigawatts. The transformation to clean energy is now an irresistible trend and with the need for energy security. Global PV demand is expected to achieve rapid growth this year. Nevertheless, some markets are experiencing experiencing temporary pain this year due to the invisible short-term volatility that comes with rapid growth. As the market continues to adjust, we remain optimistic about global PV development. We will provide a various view of materials and versions based on Tiger Neo to cater to diversified client needs in different countries. We expect to achieve shipment growth that exceeds market growth, further increasing our competitiveness in the global market. With that, I will turn the call over to Pat.

Thank you, Jenner. For the second quarter of 2022, both solar module shipments and total revenue increased significantly year-over-year. Nevertheless, the growth margin was relatively flat in the first quarter. and decreased year over year, primarily due to an increase in the material cost of solar modules. Due to significant increase in the company's stock price in the second quarter, we recognize the loss from a change in fair value of the convertible senior notes of $80 million in this second quarter. including the impact of the convertible senior notes and the share-based compensation expenses. Adjusted net income attribute to the Jinko Holding Company Limited ordinary shareholders in the second quarter was $55 million, improving sequentially. Let me go into more details. Total revenue was $2.8 billion. up about 27% sequentially, and a significant increase of 137% year-on-year. Gross margin was 14.7% compared with 15.1% in the first quarter and 17.1% in the second quarter last year. Total operating expenses were $457 million, up 40% sequentially. The increases were mainly attributed to an increase in shipping costs for solar modules, an increase in disposal and impairment loss on property, plant, and equipment, and an increase in the share-based compensation expenses. Total operating expenses accounted for about 16% of total revenues in the second quarter, up from about 15% in the first quarter and 13% in the second quarter last year. EBITDA was $186 million compared with $126 million in the first quarter this year, excluding the impact from a change in fair value of the notes and the share-based compensation expenses, the adjusted net income attribute to the JNCO solar holding company limited ordinary shareholders was $55 million, improving sequentially. Due to the continued appreciation of the U.S. dollar against RMB, we realized a net foreign exchange gain including changing fair value of foreign exchange derivatives of approximately $34 million in the second quarter this year, compared with the net gain of $12 million in the first quarter. Moving on to the balance sheet. At the end of the second quarter, the company had cash and cash equivalents of $2.15 million. slightly down from $2.66 billion at the end of the first quarter and up from $1 billion at the end of the second quarter last year. AR turnover days were 69 days in the second quarter compared with 66 days in the first quarter. Inventory turnover days were 104 days in the second quarter compared with 117 days in the first quarter. Total debt was $3.8 billion at the end of the second quarter, down sequentially from $4.3 billion. Net debt was $1.7 billion compared with $1.6 billion at the end of the first quarter this year. This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed.

Thank you so much, management. I request participants to press zero and then one to ask questions. I'll repeat. To ask a question, you need to press zero and then one. First question of the day we have from Laurence Huns from Rob Capital Partners. Your line is unmuted, Laurence. Please go ahead.

Hi, this is Lawrence Sun on behalf of Phil Shen. Thanks for taking the question. I was wondering if we could get some more color on the Sichuan power shutoff. Specifically, you know, from what we gathered, Jankos has about 18 gigawatts of capacity in Sichuan. That's about like half of your total capacity. So given that you've shut down for about 10 days, would that be an estimated, you know, 5% of Q3 capacity offline so far?

I think you are talking about the impact from China's power cuts, the impact for the production from our factories for the wafers. It's a pervasive impact for the for the system performance, which is because of the, I think, the drought induced power cuts. And it did have, I think, the 10 days to 15 days impact for our wafer capacities, which is roughly 25 gigawatts and 25 gigawatts for annual capacities. So converting to monthly production, it's 2 gigawatts a month. So we estimate the rough It's around 700 megawatts impact for the wafer. But we have global, let's say, we have four factories for the wafer in different regions, including three factories in China. So we try to maximize the productions from our wafer capacities, other regions. From management teams, we tried to minimize impacts, and they did have some impact from the production side and our cost side in this quarter.

Okay, thanks. So thanks for the details. So I believe the impact to cost side, would there be any impact from purchase of external wafers in order to meet your, you know, shipment guidance? If so, do you know what... No, no, no. Yeah.

Yeah, I think no, because, you know, if you look at our guidance, which is, you know, 9 gigawatts to 10 gigawatts, we have taken into, you know, this situation in consideration. So it's... We don't have plan to... purchase the waiver from third party.

Okay, great. Thanks for the info. So, you know, would it be safe to say the leading indicator for recovery in Suquan is the recovery of water levels? You guys are mostly driven by hydropower, right?

Yeah, yeah. It's already, you know, in recovery state, you know, standards, and the series is getting better, you know, particularly in the recent two days, and our capacity are expected to for capacity in the next couple of days.

OK, that's really great to hear. I had another set of questions on, you previously said earlier in the call, you touched on it, tied in supply chain tracing. Does that have to do with the USLPA? And if it is related to the USLPA, could you please help us quantify the number of gigawatts that you've maybe shifted from shipping into the U.S.

towards EU or other countries?

Yeah, I think we're preparing this traceability topic not only for U.S. market, but also for other market as well. We have recent months, of course, we have intensively getting inquiry from different countries or different customer about traceability topic, right? That's why we believe in the future we have to prepare the capability of tracing traceability of the product, including the polysilicon and some other key material as a necessary step for the future. I think that includes U.S. market. For U.S. market itself, we are still working hard together with CBP and our consultant to make sure. So currently the customer clearance is not that smooth as usual, especially under UFLPA. So we have to work on lots of details to make it happen, and we are working hard on it.

Okay. Thanks for the details there. Could I just get a little bit more on you know, you said it's not smooth, right? So for what type of modules is it not smooth? German poly, Southeast Asian modules, China poly, Southeast Asian modules, U.S. poly, Southeast Asian modules, or all?

Well, let's say based on our knowledge and awareness, I don't see there's any difference between China polysilica or European polysilicon or American polysilicon, right? So we have to provide the right documents to meet the requirement from CBP officials.

OK. One last question before I hand it off. What's the utilization rate of your Southeast Asian facilities? Can you keep it at around the same level by shifting module shipments to other countries?

And what's the rough mix, please? Thank you.

Yeah, obviously, we have to look into the different part across the whole value chain. For the upper stream-wise, like the wafer and cell, I think it's in short of supply. They're full of demand, not only for US market, but also for the other market. And for the module side, since it's targeting the U.S. market, we have to be very careful about the traceability. We won't ship or we won't manufacture the product if we cannot guarantee the traceability is in the right place.

Okay, thank you. Thank you.

Before taking next question, I'll repeat. If you wish to ask a question, you need to press zero and then one. Next, we have Alan from Jefferies. Your line is unmuted, Alan. Please go ahead.

Thank you, operator. And thanks a lot, management, for taking my question. So my first question is about what is the expectation or the current situation of the top coin products and what is the premium out there? Is it 1 cent or 1.5 US cents compared to PERC?

Yeah. Firstly, about the product itself, I think the N-type Topcon product that we call Tiger New is highly competitive compared with the standard PERC product, right? I think it's based on the 72 pieces product, Tiger New is almost 20 watt peak higher than the standard PERC product, and also together with other good features like the degradation and, you know, et cetera. So definitely it's generating extra benefit for the customer end and bring additional value to the project site or to the installations of solar system. That's why we can, you know, getting the premium from the market. Currently the premium we are expecting or we are looking at is around the $0.01 to $0.01 range. Sometimes it's up to $0.02, but let's say the It's a broader range. It will be 1 to 1.5 cents. Thank you.

Thank you. Thank you. And so it's actually pretty decent. So when it comes to production cost perspective, so have we already achieved cost parity versus PERP in terms of the production cost of top corn? And what is the current yield rate right now?

You know, in the second quarter, the TopCon capacity is in the running out stage, and our R&D and the operational team is working very hard to improve, you know, the output, you know, efficiency, and as well as the cost. And right now, you know, the integrated cost of the TopCon, you know, the modules, compared to the traditional P-type modules, it's, you know, the difference is within the range of lower than RMB 5 cents. And our plan is, you know, we're continuing to improve the cost structures and we target by the end of this year and the top integrated cost could reach to, you know, the same level of the PERC by the end of this year.

Understood. So that will effectively mean that you will have same cost and then you will make an extra 1 or 1.5 cents of net profit on top of perk rate.

Yeah, you're right. We did, you know, when we sell the top-cut modules, we did have the premium, you know, general mention. And as a cost fracture, we need to work continuously and to improve and it's on the track, and we expect our targets by the end of this year, it could be, you know, reach the same level.

I understand. So thanks a lot. And there's another question. It's about what is your view on one of the major policy player who is entering into the module space? So this is one of the hottest topics in the market recently. So what is your view on this?

I think there's a very big market, even for the existing market, the market goes right in the next decades. And if you look at the top five companies, module companies, the market share now is 60-65%. There are a lot of tier 2, 3 companies. They are taking 30, 35 markets a year. And if you look at the growth rate, we expect 30% in the next couple of years. So we believe this is a lot of potential room for, let's say, the big players to penetrate the markets. But in the module, the business is not purely a production site. And we built this business for over 10 years. It is more like global manufacturing and global marketing, sales, bankability, and strong sales relationship with customers. So what we are doing is we continue to solidify our strong branding, marketing, and product competitiveness.

Thanks a lot. So I would also like to know, the management has also mentioned the Inflation Reduction Act in the US. And one of the key incentives in the act is, of course, the subsidies of the installation. But also there are a lot of subsidies on building factories in the US. So I would like to know if Jinko Solar is considering further expansion into U.S. in terms of factories.

Yeah. I think it's a very hot topic. The IRA, you know, to be effective in the U.S. starting from next year, and it did provide a lot of subsidies from manufacturers in the U.S. And we already had a very small module capacity, 400 megawatts, which will be eligible for the And for the expansion topic, we are in the early stage to further evaluations. But I think we expect there will be more local U.S.-based capacities in the next couple of years, given the strong support from the IRA policies. But we are at the early stage of evaluations.

So I think my last question is what is your outlook on the solar installation in this year and next year and probably in 2022 through 2025, the global installation and a brief breakdown if you may provide.

Yeah, we estimate roughly 250 megawatts in a gigawatt installation this year. And the next year, given the bottleneck of the policy, it will be gone. And we expect a strong growth in China, US, as well as the European markets. And we estimate roughly 25%, 30% the market growth next year. So that's more than 300 gigawatts.

Probably, we are talking about 320 gigawatts.

In general, I think we are optimistic, not because the policy is at a very high level. It did delay particularly the utility scale projects in China and as well as in other regions. So given next year, the more volume input and we expect the installation will be at a very quick speed.

Thanks a lot. So I wish the company will benefit from the strong demand and also the upside of the popcorn product. And I'll leave the floor to other investors. Thank you, management.

Thank you.

If you wish to ask a question, you need to press 0 and then 1 on your telephone keypad. Once again, participants, if you have questions, please press 0 and then 1. We have a question from Rajiv Chaudhary from Samsara Capital. Rajiv, your line is unmuted. Please go ahead.

Good morning, and thank you for taking my question. Actually, I have a few questions. The first one is just on the model. As I look at the unit shipments that you had in the second quarter and compare them to the unit shipments in the first quarter, it seems that your average price realized per module went down quarter to quarter and quite significantly by almost by about one full penny or maybe more than one cent. Can you explain why that would be happening in an environment where prices in general were stable or up?

Sorry, are you asking about the Q1 and the Q2 ASP changes?

Yes.

I think according to our data, the Q1 and the Q2 price are pretty stable. I think close. So our P2 average price has a very tiny job compared with Q1 ASPs. Mainly it's because in some historical orders we have to execute it, which is lower than market price. The rest are pretty normal. So in our view, we believe the quarterly ASPs are staying in market condition. There's no big changes on that.

Yeah, I mean, just based on the revenues and the unit shipments, it looked like the average selling price in the first quarter was around 28.4 cents and the second quarter was around 27.2 cents. So that looked like a pretty decent drop. But you're saying that some of it was because of legacy shipments at a lower price? Are those legacy shipments behind you or do you think Sorry.

Let me correct you on this. For the revenues including manufacturers, right, not only module revenues. Even module revenues are the majority of it, but we're still including other parts included in the revenue. That's why you cannot, you know, use the revenue to divide the shipment to add ASP. That's not accurate enough.

I see. Okay.

I think an additional factor is, you know, maybe the RMB depreciation, and you use the U.S. dollar, there's maybe, you know, the flexing, as well as, you know, second quarter, China is taking more portion. But, again, the ASP is stable, and the second quarter is slightly, you know, a little bit down, very small.

Yeah, okay, Chadi, I understand. So along the same lines, can you give us some feeling for what the ASP will be in the third quarter and the fourth quarter for the year?

Yeah, for the third quarter, the ASP will be as stable as the first quarter and the second quarter. For the first quarter, even if it has not been fully closed, we are still closely monitoring the market situation. We are expecting market prices as well.

You are expecting the first quarter to be flat also?

More or less flat, but since it's still far away from the fourth quarter, there are still unknown factors to factor in. We don't have any disclosure on the fourth quarter ASPs, but my personal expectation will be the fourth quarter ASPs, the market price will be more or less stable compared with Q3.

Another question is on the stock-based compensation. Can you quantify roughly how much it is per quarter and what it was in the second quarter and how it is expected to trend in the third and fourth quarters?

The stock-based compensation, the company granted in the first quarter, second quarter, it's a one-off item. Given, you know, in the future, we expect that the amount will be very small. And for the second quarter, the exact amount, you can calculate because, you know, because we have discussed adjusting the income, which is $55 million, and, you know, including the convertible bonds and the stock-based compensation. I think it's roughly, I think, $20 or $25 million, but, you know, you can do the calculations later.

So it's 20, 25 million, and you're saying that in the third and fourth quarters, that number is going to go down?

Yeah, we're very small. We'll be very small in the future, yeah.

Okay. So the shipment cost on a per watt basis, did the shipment cost go up quarter to quarter on a per watt basis?

Yeah, shipment cost is at a high level. I think it's roughly... 1.5 to 2 cents, U.S. cents per watt. And quarter by quarter, it's relatively stable. And the shipping cost will maintain at, I think, a very high level. But given, you know, more mix to China in the second half of the year, blended will be lower in the second quarter. But, you know, next year, we expect, you know, given the global economies were awake, and we expect next year, the logistics will be, you know, the cost will be, you know, in the downward trend.

Okay. And can you also tell us what the depreciation and capex numbers were for the second quarter and what your expectation is for the full year now?

For capex and the first quarter, In the first half of this year, it's reached $1.4 billion. And for the whole year, we forecast it still remains on $3 billion.

And depreciation?

Depreciation, I think, you know, let's say roughly per watt basis, it's roughly, I think, you know, per watt basis, it's 5 to 6 RMB cents per watt. So it's roughly 55 to 60 RMB for second quarter.

And the final question is on the polysilicon business. As you know, the polysilicon gross margins are right now in excess of 70%. And even though they will come down as prices come down, the expectation is that the polysilicon business will maintain gross margins that are maybe 35% or 40%, much higher than the module business. Canadian Solar has expressed an intention to get into the polysilicon business. Do you have any thoughts about getting into the polysilicon business yourself?

Polysilicon, it's a bottleneck in the recent two years, but next year, for sure, the supply is more sufficient and it's in a downward trend. So from the PolySilicon side, we don't believe it's a bottleneck for our business in the future. Our supply chain team is doing a partnership with the leader of the PolySilicon producers, and the site is a long-term PolySilicon supply contract. And as well as we invest, as minority investors, We invest to companies as minority interest and to strengthen our relationship for the top polysilicon supplier. So we don't have plan, let's say, to do the business of the polysilicon so far.

OK. And my final question is about storage. Can you give us an update on what you are doing in the storage space? What sort of orders and revenues and feedback you are getting from the marketplace?

Well, the storage business is still in the early stage. We believe it's not the right timing to talk about it. And we will share our strategy and our plan once it is ready. Thank you for your attention.

Thank you, thank you very much.

Thank you.

Next, we have Gary Joe from Credit Suisse. Your line is unmuted.

Hello, management. Thank you for taking my questions. So I have three questions. So firstly, on the module shipment, So just wondering if the company has a breakdown of our module shipment for this year for the China market and overseas market. And if possible, can we talk a little bit on the unit profit difference between domestic sales versus overseas module sales? And the second question is on the .com. So I noticed that some of our competitors They also have some TopCon capacity coming out in the fourth quarter this year. So just wondering, do we believe this 1 to 1.5 cents US dollar ASP premium can be maintained going forward? And also, you know, comparing our TopCon products versus peers, can management talk about what's the advantage of our products? And lastly, a quick question on the Polysilicon side. So basically the near-term Polysilicon price is still high, probably supported by the SUTRAN kind of supply disruption. But just wondering if the management has a view at what time or which months can we kind of start to see the Polysilicon price to drop? Thank you.

Thank you. There's a lot of questions. I will try to cover it as much as I can. Firstly, about the geographic mix for the full year, we are expecting that China and the Europe market are the two largest contributors to Jinko Solar's shipment for the full year, which accounted for around 25% to 30%. And followed by emerging market, which will be contributing, we're expecting contributing between 20% to 25%. And the APAC market will be around 15% to 20%. And the rest will be followed by other markets, including North America and Middle East Africa, et cetera. And the second question about this Tiger Neo as an untyped product premium. The way we are pricing the product is to sharing the benefit together with the customer. It's not a competition for, let's say, a gaming negotiation. It's really a benefit-sharing model, which means that approximately, let's say, by using Tiger Neo N-type products, the customer's project can get additional benefit of around... 2.5 to 3 cents per watt, so then we are establishing the business model to share the benefit by approximately half to half with the customer. That's why we believe such business model is sustainable and consistent, and it doesn't have to go to the price competitions. Even with more and more peers joining the TOPCON group, we believe we can jointly leading the technology innovation and create a bigger market for solar industry. We don't have to go to the prize competitions. Compared with our followers or our peers at TOPCON Technology, we believe as a pioneer in this area. Our cost structure and our efficiency, including our product performance, will continue to have a competitive advantage or at least a leading position in this market, and we are so confident on that. Lastly, about the polysilicon prices, we believe in the long run, like Charlie is saying in the previous conversations, We believe the polysilicon will be debottlenecked in the next coming, let's say, quarters, which will create a bigger market for solar installation in the downstream, especially for the utility project, which has been significantly delayed due to the CapEx problem. We are having a big hope on that. Hope that answers your question.

Yeah, okay. Thank you, management. This is very helpful and I'll pass on. Thank you.

Thank you very much.

Next question is coming from Renly from Goldman Sachs. Your line is unmuted.

Hi, thanks for taking the questions. This is Grace on for Brian. Just a quick question on the margin expectations. Just given the elevated poly pricing and also the power control in Sutron, which may impact your utilization rate, how should we think about your growth margin in 3Q and also for the next couple of quarters? Thanks.

The growth margin we expect is expanding a little bit, expanding in the next quarters. And we did face, you know, the elevated price of the polysilicon, and as well as the power cuts, you know, from Sichuan province. But, you know, our top count, you know, module, you know, sale capacity is operating in a very good status, and we all contribute more portions of our revenue and the product mix, which has a relatively higher gross margin for our contributions. So, we have the confidence and the margin will be expanded, you know, in the second half year compared to the first half year.

Okay, understood. Thank you. And then on your op-ex, your op-ex increased pretty significantly in 3Q. I guess that's partially due to the stock calm. I think you mentioned Stockholm will be very minimal in 3Q. So can you talk about your OPEX expectation in the second half? Thanks.

So you're talking about operating expense, right? Operating expenses. You know, operating expenses, I think, you know, it's given we have more shipments in the second half year, you know, compared to first half year. we expect the operating expenses against the revenue will be slightly lower, you know, in the second half year.

Okay, thank you. I'll take the rest offline.

Thank you.

At this time, there are no further questions. So that does conclude our second quarter conference call. You may all disconnect now. Thank you so much, all.