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spk14: Hello. Thank you for standing by, and welcome to the Q1 2023 JNCO Solar Holding Company Limited Earnings Conference Call. All participants are in listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. And now I'd like to turn the conference over to Stella Wong. Please go ahead.
spk11: Thank you, operator. Thank you, everyone, for joining us today for Zinco Solar's first quarter 2023 earnings conference call. The company's results were released early 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. Lee Hsien-de, Chairman of the Board of Directors and Chief Executive Officer of Zinco Solar Holdings Company Limited, Mr. Jinan 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 Incosolar's business operations and company highlights, followed by Mr. Miao, who will talk about the sales and marketing, and then Mr. Pan, who will go through the financials. We will all be available to answer your questions during the Q&A session that follows. Please note that today's discussion will concern forward-looking statements made under the Steve Harper Provisions of the U.S. Private Security 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 Thinko Solar's public filing with the Securities and Exchange Commission. Thinko 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. Lee Sander, Chairman and CEO of Zinco Solar Holdings. Mr. Lee will speak in Mandarin, and I will translate his comments into English. Please go ahead, Mr. Lee.
spk07: Mr. Lee, I am very pleased to receive the increase in revenue from the same ratio as the revenue from the same ratio as the revenue from the same ratio as the revenue from the same ratio as the revenue from At the same time, the advantage of building a global marketing network and N-type products is that there are nearly 50% of N-type products in the market. Part of it contributes to the increase in profit, with a profit margin of 17.3% compared to 15.1% in the first quarter last year. The profit of the first quarter company can be affected by the loss of U.S. capital funds. We have taken active measures to deal with it. Passage efficiency and U.S. market output are gradually increasing. As we progress, we expect the US market to improve. Recently, our main operating company, Jiangxi Jinke, has successfully issued RMB 10 billion in cash. The sum of the money will provide us with high-efficiency energy products. According to the market demand, China's market belongs to the long-term chain. The return of the price and the opening of the 2022 year-end project A record of 33.7 GW of China's mining equipment has been increased by 154.8%. The number of mining equipment in China has surpassed that of water power, becoming the country's second largest source of energy. The export data is also very strong. A record of China's export of mining equipment and batteries has been increased by 131.3 billion US dollars. Compared to the same period last year, the level of water has increased by 15.3%. Since the second quarter, the price of raw materials has entered a gradual rhythm due to the relatively stable play of industry chains. With the continuous release of raw material products, the decline in the price of raw materials will greatly increase the demand for the market. The first-tier enterprises look forward to developing and acquiring more market share in the market by using stronger supply chain management and market layout development and products. We look forward to the growth of the global market in 2023 and the opportunity for new technologies to emerge. In the foundation of the global supply chain and marketing network, we continue to increase the development and investment of N-type products, and continue to explore and actively respond to market competition in the PV plus field. At the end of the first quarter, the top-com battery line of the top-com battery line of the top-com battery line of the top-com battery line of the top-com battery line of the top-com battery line of the top-com battery line of the top-com battery line of the top-com battery line of the top-com battery line of the top-com In addition, we have strengthened the transition of the N-type ecological chain through the preservation of key main materials, the replacement and processing of core technologies, and the improvement of the process. Not only do we strengthen the competitive advantage from the N-type chip battery components to the all-round competition, but also the expansion of the current industry technology is relatively rapid. Our technology performance and cost indicators are constantly improving, and we hope to continue to dominate the industry. In the recently published module tech financing rating report by PVTECH, we have won 3A ratings, and have been recognized by the industry for its excellent manufacturing, financial and technical advantages. As of the end of the year, our engine components have accumulated more than 16GW in total, and have provided support to hundreds of projects around the world in the past year. In January 2023, we released the second TECHNEW series of components, The upgraded version of TECNIO includes 54 pieces, 445 watts, 72 pieces of 615 watts, and 78 pieces of 635 watts, three series. The maximum efficiency ratio has reached 22.27%, 22.23%, and 22.72%. At the same time, we have increased the investment and training of the storage business, not only to bring more effective, more reliable, safe, and cost-effective light solution solutions for customers, We believe that the future competitiveness will be the competitiveness of comprehensive strength. We have confidence in the development of the global industrial chain and the advantage of N-type research and development. We will further improve our global market competitiveness and profit level. Before I hand over the topic to Jenna, I would like to introduce the performance index. It is expected that at the end of 2023, the efficiency of N-type battery production will reach 25.8%. We are pleased to deliver year-over-year improvements in module measurements, total revenues, and growth margins.
spk11: With polysilicon prices being volatile in the first quarter, we adjusted our supply chain strategy to effectively control our costs. Meanwhile, the ratio of anti-product shipments approached nearly 50% of our total module shipments, thanks to their high efficiency and our strong global marketing network, which partially contributed to the improvement in our profit ability. Gross margin was 17.3% compared with 15.1% in the first quarter last year. Our profit ability in the first quarter remained under pressure from the demurrage cost in the U.S. market. We have proactively taken matters to address this, and we have seen both the efficiency of customers' clearance and the size of our module shipments to the U.S. market gradually improve recently. As we continue to make effective progress, we expect our shipments to the U.S. market to gradually increase in the coming quarters. Recently, our majority-owned principal operating subsidiary, Doss Zinkel, successfully issued convertible funds in a principal amount of RMB 10 billion to strongly support the expansion of our high-efficient N-type capacity. Growth in PV demand in the first quarter remains strong, despite some signal factors. The Chinese market benefited from falling prices of PV projects and delays in PV projects from 2022. The new installations of PV reached 33.7 gigawatts, an increase of 154.8% year-over-year. As a result, the cumulative installations of PV has surpassed that of hydro power for the first time, making PV the second largest power source in China. In addition, exports of solar cells and modules from China's overseas markets remained strong in the first quarter. Total overseas shipments of modules and cells reached US$13.1 billion in the first quarter. an increase of 15.3 year-over-year. Since the second quarter, as pricing gains between different segments along the supply chain relatively stabilized, we see price of polysilicon started to decrease moderately, and current module prices has been attractive for the economics of PV projects. With more production volumes gradually released during the year, we believe polysilicon price declines will stimulate large market demand. The top manufacturers are expected to increase their market shares thanks to stronger supply chain management, market footprint, and the competitiveness of their R&D and products. We are optimistic about global market demand and opportunities brought by new technologies in 2023. We will continue to invest in R&D and advance the N-type capacity to enhance our N-type leadership in terms of mass production capabilities, product performance, and cost, while exploring the PV plus area to proactively respond to competition. The second assist of 11 gigawatt TopCon cell capacity in Jianshan has reached full production, and the average mass-produced efficiency of 182 N-type TopCon cells reached 25.3%. We have also further improved our N-type ecological chain, constantly enhancing our all-around competitive advantages of N-type wafer cell and modules. with improving supply chain management for key and auxiliary materials, iteration of core technologies, and process improvement. As our technology, product performance, and costs are all improving continuously, we expect to maintain our leading position in the industry. Recently, we were ranked in the highest AAA category in the Q1 edition of PVTECH's Module Tech Bankability Report. a recognition by the industry of our advantages from outstanding manufacturing, finance, and technology. By the end of the first quarter, our accumulated anti-model shipments exceeded 16 gigawatts, providing support for hundreds of projects globally in the past year. In January this year, we launched the second generation TigerNeo panel family The module efficiency of the upgraded Tiger Neo family of 445 Wp for 54 cells, 615 Wp for 72 cells, and 635 Wp for 78 cells were up to 22.27%, 23.23%, and 22.72%, respectively. Meanwhile, we increased investments in energy storage business Furthering its development and continuously provided our clients with high efficient, reliable, and safe solutions at competitive cost to lead the clean energy transformation. In conclusion, future competition will be based on comprehensive strengths. We are confident in our ability to further increase our competitiveness and profitability in the global market. with our continuously improved global industrial chain and cutting-edge N-type technologies and products. Before turning over to Jenna, I would like to go over our guidance for the second quarter and full year of 2023. By the end of this year, we expect mass-produced N-type cell efficiencies to reach 25.8% and high-efficient N-type cell capacity to account for over 70% of our total solar cell capacity. We are confident we will achieve our module shipment target set at the beginning of the year, with anti-modules accounting for about 60% of total module shipments. We expect the module shipments to be in the range of 16 to 18 gigawatts for the second quarter of 2023. Thank you.
spk16: Total shipment in the first quarter reached about 14.5 gigawatts, which is about 90% of module shipment. From a regional perspective, China and Europe accounted for over 60% of the total shipment. Shipments to China market increased more than two-fourths on a year-over-year basis, while the Europe market grew over 50% year-over-year. In addition, emerging markets like Latin America and the Middle East and North Africa also made a remarkable contribution. Recently, the industry value chain price has gradually returned to a normal level, and the domestic utility-scale PV projects have started their big innovation. The current module price is acceptable to clients, which can support them to achieve their predetermined installation target at a stable order pace. We expect that the decrease of industrial supply chain price will drive the growth of utility-scale PV demand, especially in China market. The European PV market has vast potential, and the decrease in industrial chain prices is expected to further drive demand for distributed and utility-scale power stations. The US market has robust demand. and some utility-scale power station demand may be delayed until 2023 due to price factors and supply constraints, with an expected 40 gigawatt EC of PV installed capacity in U.S. by 2023. Over the past year, we have continuously improved our risk management capabilities, continuously improved our supply chain visibility system, and maintain close communication and coordination with customers, suppliers, and other parties to jointly promote the efficiency of the customer clearance in the U.S. Based on the experience of supply chain construction and the marketing network layout, we are committed to meeting our customer delivery with outstanding products and services. Regarding the product. Tiger New achieved a shipment volume of near 60 gigawatts in the first quarter, maintaining a competitive premium. China, Europe, and emerging markets have become the main contributors to shipment. At the same time, we observed that Tiger New is accelerating its penetration in market like nature. Recently, we were awarded the title of our trade number one market brand for 2022 by Sunwise. Tiger Neo not only has multiple advantages, such as high conversion efficiency, high power output, and the beneficial factor, but also leads the industry in terms of degradation rates, temperature coefficient, and weak light performance, meeting customers' demand for household . With the release of anti-capacity, and the continuous improvement of Tiger News product performance, Tiger News penetration rate and premium are expected to continue to lead the market. In terms of business, distribution market accounted for more than 40% in the first quarter. Considering the standard demand for utility scale power station this year, we expect the proportion of distribution to be around 40% for the whole year. In 2023, our order book visibility exceeds 60%, with the majority being overseas orders. As upper stream raw material costs decrease, we expect the market price to experience a slight decline. Our signing price will fluctuate within a reasonable range in line with market trends. We will continue to focus on customer-centric approaches to provide high-quality products and services to our customers. At the same time, we will adjust our marketing strategies to flexible according to market conditions. With that, I will turn the call over to Penn.
spk08: Thank you, Jenna. We're pleased to report a year-over-year increase of about 73% in our shipments in the first quarter, with strong demand from global markets. In response to the political price decline, we adjusted our procurement strategy and achieved significant year-on-year growth in key financial metrics, including revenue, gross profit, and operating margin. Let me go into more details now. Total revenue was $3.4 billion. an increase of 58% year-on-year. Gross margin was 17.3% compared with 14% in the fourth quarter and 15.1% in the first quarter of last year. The sequential and year-on-year increase were mainly due to the decrease in the cost of polysilicon and the increase in the shipment of M-type modules which had a premium compared with P-type modules. Total operating expenses were $412 million, down 21% sequentially and up 29% year-over-year. The sequential decrease was mainly due to a decrease in shipping costs for solar modules and a decrease in impairment loss on property, plant, and equipment. An year-on-year increase was mainly an attribute to an increasing loss of disposal on PPE and an increase in demurrage charges. Total pricing expenses accounted for about 12% of total revenues. Compared with even in the fourth quarter and 15% in the first quarter, last year, improving year-over-year. Operating margin was over 5% compared with 2% in the fourth quarter, excluding the impact of a change in fair value of notes, a change in fair value of long-term investments, and our share-based compensation expenses. Adjusting net income attribute to Jinko Solar Holding Company Limited Auditory shareholders was over 121 million, half over two times sequentially, and up 1.5 times per year. Moving to the balance sheet. At the end of the first quarter, our cash and cash equivalents were about 1.5 billion, down from 1.6 billion at the end of the fourth quarter and compared to its $2.7 billion at the end of the first quarter of last year. Total debt was about $4.4 billion at the end of the first quarter compared to $4 billion at the end of the fourth quarter last year. Net debt was about $2.9 billion compared to $2.3 billion at the end of the fourth quarter of last year, and our total deaths per fire has improved. This concludes our prepared remarks. We are now happy to take your questions. Alpreza, please proceed.
spk14: Yes, thank you. If you wish to ask a question, please press star then 1 on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press star then 2. If you're on a speaker phone, please put up your hands up before asking the question. And the first question comes from Ryan Lee with Goldman Sachs and Company.
spk13: Hey, everyone. Thanks for taking the question.
spk03: Hi. I guess the first question I had was just around the ASP environment. I know you guys have seen some good margin expansion here quarter on quarter, it sounds like most of that was driven by the decline in polysilicon costs. What's the status of that? How much more sort of leverage do you have to lower polysilicon costs relative to what you're shipping out and your inventory base today? And then can you kind of give us a sense of what you expect module ASP trends to look like in the TQ and maybe the back half of the year we are hearing there's, you know, sort of double-digit declines in certain markets for solar panels. I'm wondering where your pricing strategy kind of is trending for the next few quarters.
spk13: Thanks. Hey, Brent. This is Jenner. Thanks for the question.
spk16: Firstly, about the price side, so the market price is somehow stable in Q1 and Q2, mainly in first half. So I don't see there's too much, let's say, different opinion across the industry about the first half module price. But for the second half module price, we have seen some different opinions based on different expectations of the polysilicon price. However, in our opinion, the 42nd price might steadily going down step by step. We are not expecting a significant free fall over the second half, but we are more expecting a stable stepping down quarter over quarter. So based on that expectation, I think that's how we expect the market price will go for the rest of the year. And I hope that answers your question.
spk03: Yeah, that's helpful. And then maybe just, I know you made some comments around the USM market. Can you give us your latest thoughts around shipping into the country, how you're navigating the USLPA, and then also any thoughts around or expanding your manufacturing base domestically in the U.S.?
spk13: So for the U.S.
spk16: market side, I think we are closely working with our suppliers, even, you know, sub-suppliers to make sure we can provide the document or feasibility document needed for the U.S. LTA. We have successfully done that based on quite a lot of shipment in the last quarter. And we are expecting with more and more experience, we can ship or we can get more approved based on what we are doing right now. At least that's the expectation. And based on that, we are planning to resume our shipment in U.S. market gradually. And we hope we can get back to a relatively stable or, let's say, or make the situation under control in the next quarter, let's say two to three quarters.
spk03: Okay. Understood. And the last question from me. I don't know if I might've missed it. Maybe you didn't provide it, but, uh, can you get the, um, what the CapEx was in the quarter, what the free cashflow was in the quarter and then, uh, any, any thoughts on kind of, um, the financing needs and strategy for the rest of the year to, uh, to cover the CapEx here. Thank you.
spk02: Hey Brian, this is Holly and, uh, You know, we have, you know, the subsidiary, you know, the Tinko Solar, we have completed the 10 billion convertible bonds in Chinese capital markets recently. And second one is the CapEx, you know, it's a range of 1.5 billion to 2 billion RMB. And the focus is to solidify our leading position in type. you know, the supply chain, including the, you know, vapor cell and module capacities. And we're expecting, you know, the performance, you know, if you look at that Q1 performance, it's pretty good. And we continue to expand, expect, you know, the expansion of the gross margin and our properties. And the operating cash flows last year, you know, it's kind of the I think it's around 0.4 billion RMB and continue to improve. So the financing is already there and it's sufficient enough to meet our needs for the CapEx.
spk05: Okay, fair enough. I'll pass it on. Thanks, guys. Thank you.
spk14: Thank you. And once again, if you wish to ask a question, please press star then one on your telephone and wait for your name to be announced. And the next question comes from Philip Shen with Roth MCAM.
spk15: Hi, everyone. Thanks for taking my questions. First one, as a follow-up to Brian on the UFLPA question, how many gigawatts have been released thus far in the U.S.? ? And how many gigawatts did you have detained total?
spk02: Philip, I think we have significantly, starting from Q4 last year, our modules. And on the UFLPA, I have started to go through the customers. And we have, I think, achieved a significant amount of the module measurements. And for the detained, I don't think we have or worry very, very small and tiny. And the most important thing is looking forward. We think the mechanism has already been there, and we have traceability, very strong traceability capabilities. And we expect quarter by quarter, our cement to the U.S. will improve gradually and hopefully We think it's possible in the third quarter our shipments to the U.S. will be back to normal situations.
spk15: Great. Thanks, Charlie. So of the more than 60% of the order book visibility, can you talk about how much of that do you expect to go to the U.S.? Thanks.
spk16: So this year the total volume we are planning to send to the US will be around 5% across the whole year's shipment pack. Because, you know, like Charlie's saying, we are gradually, you know, resume our shipment plans and revenue recognition, but the course of the, you know, time consuming of the logistics and the UFPLPA, et cetera, so the revenue side, it won't be too much. That's why we say around five, maybe five to ten, between five to ten percent.
spk15: Right, so five to ten percent of the... annual guidance is roughly 65 gigawatts. Good. So, thank you. And then, you know, our work suggests that, you know, the non-China module, non-China poly modules that you have that can access the U.S. market is roughly 5 gigawatts annually. Does that sound right? And then, is it the case that you can smoothly import modules that contain non-China poly now, so there's no issue there at all?
spk16: Thanks for the question, Bill. Currently, we are planning with multiple resources of polysilicon, at least we are trying to do, because if we rely on single resource of polysilicon, it might significantly constraint the capability of the supply for U.S. market. Personally, I still believe that might be a challenge for the U.S. customers as well. So that's what we are trying to do. Okay.
spk15: Got it. And then shifting back to margins for a bit, or to margins for a bit, can you give us a sense for how do you expect margins to trend in Q2 and Q3, especially given the ASP comments that you had earlier. Do you expect margin expansion in Q2 and then Q3, perhaps, margins to compress a little bit with some risk to back half pricing?
spk13: Thanks. I think that the market-wise, we have the confidence to gradually improve.
spk16: At least that's what we believe because that's to the new technologies, you know, entire top-term based Tiger Nu, which is highly appreciated by the end market and it did create additional values to the customers. So based on the value, additional value sharing business models, we definitely have the confidence to rapidly improve our growth margins.
spk15: Okay, great. One last question. As it relates to U.S. expansion, I think Brian asked the question, just want to check in to see if you can give a little more color on the timing of that. My guess is you have to wait for the domestic content rules to be out. And then what do you see for U.S. module pricing trends? Do you think, you know, maybe by year between, you know, this year, 2024 and 2025? Thanks.
spk13: Thank you.
spk14: And again, if you wish to ask a question.
spk05: Sorry.
spk16: I think we missed the last question. I tried to briefly talk about it. Then we can pick up the next one, right? Yes, yes. So regarding the U.S. expansion, we have the confidence that we have the plan to do it. But for sure, we are still waiting for some more clarification on the policy side or approval on the policy side. We are closely following that. Hopefully, we can get some clearance good to go in the next coming weeks or months. We will see. Thank you. Let's take the next one.
spk14: Thank you. And again, if you wish to ask a question, please press star then 1 on your telephone and wait for your name to be announced. And the next question comes from Alan Lau with Jefferies.
spk06: Thanks a lot for taking my question, and congratulations for the really great results and the expansion. So my first question is, I would like to know how much did the port charges related to the detainment in the US border has went down? And if this is going to be zero going forward, then how much would that contribute to the expansion?
spk02: In the first quarter, we have roughly 300 million RMB to 400 million RMB, the demerits and the additional storage costs for the U.S. shipment situations. And it's roughly, I think, 2%, 1.5% to 2% gross margin impact, and we're expecting it to where dramatically decreased to maybe 25% of the Q1 level. So it's going to counter build, I think, at least 1% gross margin expansion.
spk13: Thanks a lot.
spk06: So another question is, would like to know how much is the poly prices for the polysilicon purchase from WECA so is it the same is it going down at the same pace as the polysilicon price in China or it's going down a bit slower yeah so you know it's really confidential but you know it's a separate market right it's a
spk02: The poly out of China, the main purpose is for the U.S. markets, and it's no expansion or capacity for the poly outside of China, so it's kind of a very, let's say, very... Shuttle supply. Yeah, shuttle supply situation, and the price is very sticky. And the different situation in China, the poly is, the supply is sufficient, and the We expect maybe some relatively over-supply situation in the fourth quarter this year. So it's a kind of different pricing, depending on different situations.
spk06: Understood. So is it possible that if the US customs accept some of the Tongwei polysilicon, then your shipment to the U.S. will get even higher margin because you get effectively cheaper polysilicon, right?
spk16: I think it will really depend on the market principles, right? So the supply is different. Like Charlie is saying, the polysilicon of non-China polysilicon is a very short supply. And the end market is very strong, so it definitely creates a favorable market for the upper stream players. If we have additional polycycline supply approved, definitely it will make the situation easier, but how far it will go, it depends on finally still the supply versus demand.
spk13: We will see. Thank you. That's clear.
spk06: I think my last question is in relation to the Southeast Asia capacity expansion potential. So what is the latest plan in terms of the Southeast Asia capacity expansion? Thank you.
spk13: Oh, yeah.
spk02: Currently, we have 7 gigawatts integrated capacity that we have planned to expand capacity in well now. And it's possible to reach to maybe 11 gigawatt to 12 gigawatt integrated capacity by the end of this year.
spk06: Thanks a lot. That's very clear. So I'm looking forward for the great results in the second quarter. Thank you. Thank you.
spk14: Thank you. And once again, if you wish to ask a question, please press star then one on your telephone and wait for your name to be announced.
spk12: Once again, as a reminder, if you wish to ask a question, please press star then 1 and wait for your name to be announced.
spk13: Okay, that does conclude our conference for today.
spk12: Thank you for participating. You may now disconnect your lines. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
spk00: Thank you. you Thank you.
spk14: Hello, thank you for standing by and welcome to the Q1 2023 JNCO Solar Holding Company Limited Earnings Conference Call. All participants are in this and only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. And now I'd like to turn the conference over to Stella Wong. Please go ahead.
spk10: Thank you, Operator. Thank you, everyone, for joining us today for Zinco Solar's first quarter 2023 earnings conference call. The company's results were released early 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 Xianze, Chairman of the Board of Directors and Chief Executive Officer of Zinco Solar Holdings Company Limited, Mr. Zhile 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, who will go through the financials. We will all be available to answer your questions during the Q&A session that follows. Please note that today's discussion will concern forward-looking statements made under the safe harbor provisions of the U.S. Cybersecurity 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 Dinko Solar's public filing with the Securities and Exchange Commission. Dinko 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. Alexander, 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.
spk07: I am very happy to receive the same amount of revenue as the industry, the main source of the goods and the interest rate. The price of the materials is fluctuating at a certain degree. We have immediately adjusted the supply chain to reduce the cost. At the same time, the advantage of building global marketing networks and N-type products is that there are nearly 50% of N-type products in the market. Part of it contributes to the increase in profit. The net profit is 17.3% compared to 15.1% in the first quarter last year. The profit of the first quarter company can be a burden on the US stock market. We have taken positive measures to respond. Through the exchange rate and the US market, the stock market is gradually increasing. With the positive progress we have obtained, we expect the US market to improve rapidly. Recently, our main operating company, Jiangxi Jinke, has successfully issued a $1.1 billion cash transfer. The capital will provide us with high-efficiency and long-term products. The market demand for e-cigarettes is unparalleled. China's market belongs to the industry chain. The return of the price and the opening of the year-end project in 2022 A record of 33.7 GW of China's light-emitting equipment has been increased by 154.8%. Light-emitting equipment has surpassed water power, becoming the second largest source of power in the country. China's data is also very strong. A record of China's light-emitting equipment and batteries has been increased by 131.3 billion U.S. dollars. Compared to last year, the level has increased by 15.3%. Since the second quarter, with the relatively stable play of industrial chain, the price of raw materials has entered a circular rhythm. With the continuous release of raw material products, the price of raw materials will greatly meet the needs of the market. The first-tier enterprises look forward to the development and product acquisition of more market share through stronger supply chain management and market layout. We look forward to the long-term growth and new technologies in the global market in 2023. In the foundation of global supply chain and marketing network, we continue to increase the development and investment of N-type products, and continue to explore and actively respond to market competition in the PV plus field. By the end of the first quarter, the top-com battery line of the top-com battery line of the top-com battery line of the top-com battery line of the top-com battery line of the top-com battery line of the top-com battery line of the top-com battery line has reached 25.3%. In addition, we have strengthened the transition of the N-type ecological chain through the preservation of key main materials, the delivery and processing of core technology, and the improvement of the process. Not only do we increase the competitive advantage from the N-type chip battery to the all-rounder, but also the expansion of current industry technology is relatively rampant. Our technology performance and cost indicators are constantly improving, and we hope to continue to lead the industry. In the recently published module tech financing rating report by PVTECH, we won the 3A rating. With excellent manufacturing, financial and technical advantages, we have been recognized by the industry. At the end of the year, our engine components have accumulated more than 16GW in total. For the past year, we have provided support to hundreds of projects around the world. In January 2023, we released the second TECHNEW series of components. The upgrade version of TECNIO includes 54 pieces, 445 watts, 72 pieces of 615 watts, and 78 pieces of 635 watts, three series. The maximum efficiency has reached 22.27%, 22.23%, and 22.72%. At the same time, we have increased the investment and training of the storage business, not only to bring more effective, more reliable, safe, and cost-effective light solution solutions to customers, We believe that the future competitiveness will be the competitiveness of comprehensive strength. We have confidence in the development of global industrial chain building and N-type products. To further improve our global market competitiveness and profit level. Before I hand over the topic to Jenna, I would like to introduce the performance response. It is expected that at the end of 2023, the efficiency of N-type battery production will reach 25.8%. We are pleased to deliver year-over-year improvements in module measurements, total revenues, and growth margins.
spk10: With polysilicon prices being volatile in the first quarter, we adjusted our supply chain strategy to effectively control our costs. Meanwhile, the ratio of anti-product shipments approached nearly 50% of our total module shipments, thanks to their high efficiency and our strong global marketing network, which partially contributed to the improvement in our profit ability. Gross margin was 17.3% compared with 15.1% in the first quarter last year. Our profit ability in the first quarter remained under pressure from the demurrage cost in the U.S. market. We have proactively taken measures to address this and we have seen both the efficiency of the customer's clearance and the size of our module shimmers to the U.S. market gradually improve recently. As we continue to make effective progress, we expect our shipments to the U.S. market to gradually increase in the coming quarters. Recently, our majority-owned principal offering subsidiary, Dow Stinkel, successfully issued convertible funds in a principal amount of RMB 10 billion to strongly support the expansion of our high-efficient N-type capacity. Growth in PV demand in the first quarter remains strong despite some seasonal factors. The Chinese market benefited from falling prices of PV projects and delays in PV projects from 2022. The new installations of PV reached 33.7 gigawatts, basically an increase of 154.8% year-over-year. As a result, the cumulative installations of PV has surpassed that of hydro power for the first time, making PV the second largest power source in China. In addition, exports of solar cells and modules from China's overseas markets remained strong in the first quarter. Total overseas shipments of modules and cells reached the U.S. dollars 13.1 billion in the first quarter. an increase of 15.3 year-over-year. Since the second quarter, as pricing gains between different segments along the supply chain relatively stabilized, we see price of polysilicon started to decrease moderately, and current module prices has been attractive for the economics of PV projects. With more production volumes gradually released during the year, we believe polysilicon price decline will stimulate large market demand. The top manufacturers are expected to increase their market shares thanks to stronger supply chain management, market footprint, and the competitiveness of their R&D and products. We are optimistic about global market demand and opportunities brought by new technologies in 2023. We will continue to invest in R&D and advance the N-type capacity to enhance our N-type leadership in terms of mass production capabilities, product performance, and cost, while exploring the PV-plus area to proactively respond to competition. The second assist of 11 gigawatt popcorn cell capacity in Jianshan has reached full production and the average mass produced efficiency of 182 N-type popcorn cells reached 25.3%. We have also further improved our N-type ecological chain, constantly enhancing our all-around competitive advantages of N-type wafer cell and modules. with improving supply chain management for key and auxiliary materials, iteration of core technologies, and process improvement. As our technology, product performance, and cost are all improving continuously, we expect to maintain our leading position in the industry. Recently, we were ranked in the highest AAA category in the Q1 edition of PVTECH's Module Tech Bankability Report. a recognition by the industry of our advantages from outstanding manufacturing, finance, and technology. By the end of the first quarter, our accumulated anti-model shipments exceeded 16 gigawatts, providing support for hundreds of projects globally in the past year. In January this year, we launched the second generation Tiger Neo panel family, The module efficiency of the upgraded Tiger Neo family of 435 Wp for 54 cells, 615 Wp for 72 cells, and 635 Wp for 78 cells were up to 22.27%, 23.23%, and 22.72%, respectively. Meanwhile, we increased investments in energy storage business Furthering its development and continuously provided our clients with high-efficient, reliable and safe solutions at competitive cost to lead the clean energy transformation. In conclusion, future competition will be based on comprehensive strengths. We are confident in our ability to further increase our competitiveness and profitability in the global market. with our continuously improved global industrial chain and cutting edge N-type technology and products. Before turning over to Jenna, I would like to go over our guidance for the second quarter and full year of 2023. By the end of this year, we expect the mass produced N-type cell efficiency to reach 25.8 percent and high efficient N-type cell capacity to account for over 70 percent of our total solar cell capacity. We are confident we will achieve our module shipment target set at the beginning of the year, with anti-modules accounting for about 60% of total module shipments. We expect the module shipments to be in the range of 16 to 18 GW for the second quarter of 2023. Thank you.
spk16: Total shipment in the first quarter reached about 14.5 GW, of which about 90% are module shipments. From a regional perspective, China and Europe accounted for over 60% of the total shipment. Shipments to China market increased more than two-fourths on a year-over-year basis, while the Europe market grew over 50% year-over-year. In addition, emerging markets like Latin America and the Middle East and North Africa also made a remarkable contribution. Recently, the industry value chain price has gradually returned to a normal level, and the domestic utility-scale PV projects have started their big innovation. The current module price is acceptable to clients, which can support them to achieve their predetermined installation target at a stable order pace. We expect that the decrease of industrial supply chain price will drive the growth of utility-scale PV demand, especially in China market. The European PV market has vast potential, and the decrease in industrial chain prices is expected to further drive demand for distributed and utility-scale power stations. The U.S. market has robust demand. and some utility-scale power station demand may be delayed until 2023 due to price factors and supply constraints, with an expected 40 gigawatt EC of PV installed capacity in U.S. by 2023. Over the past year, we have continuously improved our risk management capabilities, continuously improved our supply chain visibility system, and maintain close communication and coordination with customers, suppliers, and other parties to jointly promote the efficiency of the customer clearance in the U.S. Based on the experience of supply chain construction and the marketing network layout, we are committed to meeting our customer delivery with outstanding products and services. Regarding the products. TigerNeo achieved a shipment volume of near 60 gigawatts in the first quarter, maintaining a competitive premium. China, Europe, and emerging markets have become the main contributors to shipment. At the same time, we observed that TigerNeo is accelerating its penetration in market relaxation. Recently, we were awarded the title of our trade number one market brand for 2022 by Sunwise. Tiger Neo not only has multiple advantages, such as high conversion efficiency, high power output, and the beneficial factor, but also leads the industry in terms of degradation rates, temperature coefficient, and weak light performance, meeting customers' demand for household and family. With the release of anti-capacity, and the continuous improvement of Tiger News product performance, Tiger News penetration rate and premium are expected to continue to lead the market. In terms of business, distribution market accounted for more than 40% in the first quarter. Considering the standard demand for utility scale power station this year, we expect the proportion of distribution to be around 40% for the whole year. In 2023, our odor book visibility exceeds 60%, with the majority being overseas odors. As upstream raw material costs decrease, we expect the module market price to experience a slight decline. Our signing price will fluctuate within a reasonable range in line with market trends. We will continue to focus on customer-centric approaches to provide high-quality products and services to our customers. At the same time, we will adjust our marketing strategies to flexible according to market conditions. With that, I will turn the call over to Ken.
spk07: Thank you, General.
spk08: We are pleased to report a year-over-year increase of about 73% in our shipments. in the first quarter, with strong demand from global markets. In response to the policy price decline, we adjusted our procurement strategy and achieved significant year-on-year growth in key financial metrics, including revenue, gross profit, and operating margin. Let me go into more details now. Total revenue was $3.4 billion. an increase of 58% year-on-year. Gross margin was 17.3% compared with 14% in the fourth quarter and 15.1% in the first quarter of last year. The sequential and year-on-year increase were mainly due to the decrease in the cost of polycythicum and the increase in the shipment of M-type modules which have a premium compared with P-type modules. Total operating expenses were $412 million, down 21% sequentially and up 29% year-to-year. The sequential decrease was mainly due to a decrease in shipping cost for solar modules and a decrease in impairment loss on property, plant, and equipment. An year-on-year increase was mainly an attribute to an increasing loss of disposal on PPE and an increase in demurrage charges. Total pricing expenses accounted for about 12% of total revenues. Compared with even in the fourth quarter and 15% in the first quarter, last year, improving year-over-year. Operating margin was over 5% compared with 2% in the fourth quarter, excluding the impact of a change in fair value of notes, a change in fair value of long-term investments, and our share-based compensation expenses. Adjusting net income attribute to Jinko Solar Holding Company Limited Ordinary shareholders was over 121 million, half over two times sequentially and up 1.5 times per year. Moving to the balance sheet, at the end of the first quarter, our cash and cash equivalents were about 1.5 billion down from 1.6 billion at the end of the fourth quarter and compared to its $2.7 billion at the end of the first quarter of last year. Total debt was about $4.4 billion at the end of the first quarter compared to $4 billion at the end of the fourth quarter last year. Net debt was about $2.9 billion compared to $2.3 billion at the end of the fourth quarter of last year, and our total deaths per fire has improved. This concludes our prepared remarks. We're now happy to take your questions. Operator, please proceed.
spk14: Yes, thank you. If you wish to ask a question, please press star then 1 on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press star then 2. If you are on speaker phone, please put up your hands up before asking the question.
spk13: And the first question comes from Ryan Lee with Goldman Sachs and Company. Hey, everyone. Thanks for taking the question.
spk03: Hi. I guess the first question I had was just around the ASP environment. I know you guys have seen some good margin expansion here quarter on quarter it sounds like most of that was driven by the decline in poly silicon cost so what's the status of that how much more sort of leverage do you have to lower polysilicon costs relative to what you're shipping out and your inventory base today? And then can you kind of give us a sense of what you expect module ASP trends to look like into TQ and maybe the back half of the year we are hearing there's sort of double-digit declines in certain markets for solar panels. I'm wondering where your pricing strategy kind of is trending for the next few quarters.
spk13: Thanks. Hi, Brent. This is Jenner. Thanks for the question.
spk16: Firstly, about the price side. So the market price is somehow stable in Q1 and Q2, mainly in first half. So I don't see this too much, let's say, different opinion across the industry about the first half module price. But for the second half module price, we have seen some different opinions based on different expectations of the political price. However, in our opinion, the political price might steadily go down step by step. We are not expecting a significant free fall over the second half, but we are more expecting a stable stepping down quarter over quarter. So based on that expectation, I think that's how we expect the market price will go for the rest of the year. And I hope that answers your question.
spk03: Yeah, that's helpful. And then maybe just, I know you made some comments around the USM market. Can you give us your latest thoughts around shipping into the country? you know how you're navigating the uh the uflpa um and then also any thoughts around manufacturing or expanding your manufacturing base domestically in the u.s so for the u.s market side i think we are closely working with our
spk16: suppliers, even stock suppliers to make sure we can provide the documents or the feasibility documents needed for the U.S. LTA. We have successfully done that based on quite a lot of shipment in the last quarter and we are expecting with more and more experience We can ship or we can get more approved based on what we are doing right now, at least that's the expectation. Based on that, we are planning to resume our shipment in U.S. market gradually. We hope we can get back to relatively stable or make the situation under control. in the next quarter, I think two to three quarters.
spk03: Okay. Last question from me. I don't know if you, I might have missed it, maybe you didn't provide it, but can you get the, what the CapEx was in the quarter, what the free cash flow was in the quarter, and then any thoughts on kind of the financing needs and strategy for the rest of the year to cover the CapEx here? Thank you.
spk02: Hey Brian, this is Charlie. We have the subsidiary, the Jinko Solar, we have completed the 10 billion convertible bonds in Chinese capital markets recently. The second one is the CapEx. It's a range of 1.5 billion to 2 billion RMB and the focus is to solidify our leading position in type, the supply chain, including the vapor scale and module capacities. And we're expecting the performance. If you look at that Q1 performance, it's pretty good. And we continue to expand. It expects the expansion of the gross margin and our probabilities and operating cash flows Last year, you know, it's kind of the, I think it's around 0.4 billion on me, and it continues to improve. So the financing is already there, and, you know, it's sufficient enough, you know, to meet our needs for the CapEx.
spk04: Okay, fair enough. I'll pass it on. Thanks, guys. Thank you.
spk14: Thank you. And once again, if you wish to ask a question, please press star, then 1 on your telephone, and wait for your name to be announced. And the next question comes from Philip Shen with Roth MKM.
spk15: Hi, everyone. Thanks for taking my questions. First one, as a follow-up to Brian on the UFLPA question, how many gigawatts have been released thus far in the U.S.? ? And how many gigawatts do you have detained total?
spk02: Philip, I think we have significantly, starting from Q4 last year, our modules. And under UFLPA, I have started to go through the customs and get to our customers. And we have, I think, achieved a significant amount of the module shipments. For the detained, I don't think we have or worry very, very small and tiny. The most important thing is looking forward. We think the mechanism has already been there and we have very strong traceability capabilities. We expect quarter by quarter our cement to the U.S. will improve gradually and hopefully We think it's possible in this third quarter our shipments to the U.S. will be back to normal situations.
spk15: Great. Thanks, Charlie. So of the more than 60% of the order book visibility, can you talk about how much of that do you expect to go to the U.S.? Thanks.
spk16: So this year, the total volume we are planning to send to the U.S. will be around 5% across the whole year's shipment path. Like Charlie was saying, we are gradually you know, resume our shipment plans and the revenue recognition, but the course of the, you know, time consuming of the logistics and the UFTLPA, et cetera, so the revenue side, it won't be too much. That's why we say around five, maybe five to ten, between five to ten percent, I guess.
spk15: Right, so five to ten percent of the annual guidance is roughly 65 gigawatts.
spk00: Yeah.
spk15: Good. Thank you. And then, you know, our work suggests that, you know, the non-China module, non-China poly modules that you have that can access the U.S. market is roughly 5 gigawatts annually. Does that sound right? And then is it the case that you can smoothly import modules that contain non-China poly now so there's no issue there at all?
spk16: Thanks for the question, Bill. Currently, we are planning with multiple resources of polysilicon. At least, we are trying to do, because if we rely on single resource of polysilicon, it might significantly constrain the capability of the supply for US market. Personally, I still believe that might be a challenge for the US customers as well.
spk13: That's what we are trying to do.
spk15: Okay, got it. And then shifting back to margins for a bit, or to margins for a bit, can you give us a sense for how do you expect margins to trend in Q2 and Q3, especially given the ASP comments that you had earlier? Do you expect margin expansion in Q2 and then Q3, perhaps, your margins to compress a little bit with some risk to back out prices?
spk13: Thanks. I think that the margin-wise, we have the confidence to gradually improve.
spk16: At least that's what we believe. Thanks to the new technology, the entire top-term based technology, which is highly appreciated by the end market and it did create additional values to the customers. So based on the additional value sharing business models, we definitely have the confidence to gradually improve our growth margins.
spk15: Okay, great. One last question. As it relates to U.S. expansion, I think Brian asked the question, just want to check in to see if you can give a little more color on the timing of that. My guess is you have to wait for the domestic content rules to be out. And then what do you see for U.S. module pricing trends? Do you think, you know, maybe by year between, you know, this year, 2024 and 2025? Thanks.
spk13: Thank you.
spk14: And again, if you wish to ask a question.
spk16: Sorry. I think we missed the last question. I tried to briefly talk about it. Then we can pick up the next one, right?
spk00: Yes.
spk16: Regarding the U.S. expansion, we have the confidence that we have the plan to do it. But for sure, we are still waiting for some more clarification on the policy side or approval on the policy side. We are closely following that. Hopefully, we can get some clearance good to go in the next coming weeks or months. We will see. Thank you. Let's take the next one.
spk14: Thank you. And again, if you wish to ask a question, please press star then one on your telephone and wait for your name to be announced. And the next question comes from Alan Lyle with Jefferies.
spk06: Thanks a lot for taking my question and congratulations for the really great results and the expansion. So my first question is, I would like to know how much did the port charges related to the detainment in the US border has went down? And if this is going to be zero going forward, then how much would that contribute to the expansion?
spk02: In the first quarter, we have roughly 300 million RMB to 400 million RMB, you know, the demerits and the additional storage costs for the U.S. treatment situations. And it's roughly, I think, 2%, 1.5% to 2% gross margin impact. And we're expecting a Q2... where dramatically decreased to maybe 25% of the Q1 level. So it's going to contribute, I think, at least 1% of gross margin expansion.
spk13: Thanks a lot.
spk06: So another question is, would like to know how much is the poly prices for the polysilicon purchase from WECA so is it the same is it going down at the same pace as the polysilicon price in China or it's going down a bit slower yeah so you know it's really confidential but you know it's a separate market right it's a
spk02: The poly out of China, the main purpose is for the U.S. markets, and it's no expansion or capacity for the poly outside of China, so it's kind of a worry, let's say, worry.
spk16: Shutter of supply.
spk02: Yeah, shutter of supply situations, and the price is very sticky. And the difference situation in China to the poly is the supply is sufficient, and the we expect maybe some relatively over-supply situation in your fourth quarter this year. So it's a kind of different pricing depending on different situations.
spk04: Understood.
spk06: So is it possible that if the U.S. customs accept some of the Tongwei polysilicon, then your shipment to the U.S. will get even higher margin because you get effectively cheaper polysilicon, right?
spk16: I think it will really depend on the market principles, right, or the supply design. Like Charlie's saying, the polysilicon of non-China polysilicon is a serious shortage of supply. And the end market is very strong, so we're definitely need to create a favorable market for the upper stream players. If we have additional political supply approved, definitely it will make the situation easier, but how far it will go, it depends on finally still the supply versus demand.
spk13: We will see.
spk06: Thank you. That's clear. I think my last question is in relation to the Southeast Asia Capacity Expansion Plan. So what is the latest plan in terms of the Southeast Asia Capacity Expansion? Thank you.
spk13: Oh, yeah.
spk02: Currently, we have 7 gigawatts integrated capacity, but we have a plan to expand the capacity in well now. And it's possible to reach to maybe 11 gigawatt to 12 gigawatt integrated capacity by the end of this year.
spk06: Thanks a lot. That's very clear. So I'm looking forward for the great results in what I have. Thank you. Thank you.
spk14: Thank you. And once again, if you wish to ask a question, please press star then one on your telephone and wait for your name to be announced. Once again, as a reminder, if you wish to ask a question, please press star then one and wait for your name to be announced. Okay, that does conclude our conference for today. Thank you for participating. You may now disconnect your line.
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