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spk21: Hello, ladies and gentlemen, and thank you for standing by for Jinko Solar Holdings Co. Limited 4th Quarter 2023 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 now like to turn the meeting over to your host for today's call, to Ms. Stella Wang, Jinko Solar's Investor Relations. Please proceed, Stella.
spk24: Thank you, operator. Thank you, everyone, for joining us today for Ginkgo Solar's fourth quarter 2023 earnings conference call. The company's results were released early today and are available on the company's IR website at www.ginkgosolar.com, as well as on Newswire's services. We have also provided a supplemental presentation for today's earnings call, which can also be found on the IR website. On the call today from Jinko Solar are Mr. Lee Hsien-de, Chairman and CEO of Jinko Solar Holding Company Limited, Mr. Jenna Miao, CMO of Jinko Solar Company Limited, Mr. Pan Li, CFO of Jinko Solar Holding Company Limited, and Mr. Charlie Cao, CFO of Jinko Solar Company Limited. Mr. Li will discuss Jinko Solar's business operations and company highlights, followed by Mr. Miao, who will talk about the sales and marketing. and then Mr. Pan Li 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 contain forward-looking statements made under the Steve Haber provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding this and other risks is included in Zinco Solar's public filings 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. Lee Sander, 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.
spk18: For the efforts we have made in terms of cost optimization, the annual profit level has increased significantly. The annual net profit is 16%, which is 4.8% compared to 2022. The net profit is 4.856 billion US dollars, which is 4.56 times higher than before. The adjusted profit is 5.736 billion US dollars, which is 1.93 times higher than before. There are 26.3 projects in total, exceeding our expectations. We are pleased to have achieved very impressive operational and financial results in a challenging year by leveraging our advantages in n-type top-con technology, globalized operations, and integrated capabilities.
spk24: Thanks to strong execution by our team, our module shipment for the full year increased 76.4% year-over-year to 78.5 gigawatts, back to the top position in the industry. Benefiting from our efforts in cost optimization, our profit ability for the full year improved significantly year-over-year, with growth margin at 16% compared to 14.8% in 2022, Net income was US$485.8 million, up 4.56 times year-over-year. Adjusted net income was US$573.8 million, up 1.93 times year-over-year. Module shipments in the fourth quarter was 26.3 gigawatts, exceeding our guidance. As module prices fell more than expected in the fourth quarter, and nearly 50% of our modules were sold to the Chinese market at lower prices. Growth margin for the fourth quarter was 12.5%, a significant decline from 19.3% in the third quarter. 国内光复新增装机达到了216.88GW,同比增长了148.1%,
spk18: At the same time, the supply and demand of industry chains has led to a drop in prices, leading to a drop of more than 40% at the end of the middle price at the beginning of the year, and a drop of 1 yuan per watt. In 2023, the export volume of light products increased significantly, but due to the drop in prices, the export volume also dropped significantly. In January and February of this year, the supply and demand fell, and part of the two-way competition increased market panic and the irrationality of prices. In addition, some companies that do not have cost and product competitiveness have reduced or stopped. Our opening power can remain at the leading level in the industry. In March, with the need to warm up and store depletion, the price gradually rose. Part of the bidding price has returned. In the medium term, the decline in the price will significantly improve the economy of Guangfu. It is expected that the demand for global welfare markets in 2024 will continue to grow, as well as the rapid delivery of new technologies and the elimination of old and old industries will accelerate the integration of the industry. Topos's company's market share is expected to rise from 70% in 2023 to more than 90% in 2024. We are confident that in this round of weekly fluctuations, In China, newly added PV installation reached 216.88 gigawatts in 2023, up 148.1% year-over-year, to a historical high.
spk24: At the same time, excess supply in various links of the industrial chain led to price declines. Tender prices for modules at the year end decreased over 40 percent to below RMB 1 yuan per watt. Compared to the beginning of the year, export volumes of PV products in 2023 increased significantly year over year, whereas export volume fell slightly as a result of decreasing prices. In January and February 2024, seasonality combined with extreme competition from certain manufacturers intensified market panic and irrational prices. We remained cautious and rational in the face of abnormally low tenders. In addition, while some manufacturers without competitive cost or advanced products reduced or suspended production, we maintained our leading utilization rates in the industry as a result of cost advantage and high order visibility. In March, as demand picked up and inventory reduced, module prices gradually stabilized and some bidding prices rebounded slightly. In the short to mid-term, we expect the decline in module price will significantly improve the economics of solar energy, and we anticipate demand in the global PV market will continue to increase in 2024. Rapid iteration of new technologies and the elimination of obsolete production capacity will also accelerate the consolidation of the industry. Market share for the top 10 module manufacturers is expected to increase from 70% in 2023 to over 90% in 2024. We are confident to consistently enhance our competitiveness through Psychological fluctuations and we expect our market share to further increase in 2024.
spk18: 受于垂直一体化的制造战略和在N型TopoCom长期的领先地位, 截止四季度末,我们的N型产能已经超过70个GW,成本结构持续优化。 目前N型TopoCom电池量产效率超过26%, N型一体化的成本相比于P型基本持平。
spk24: Thanks to our integrated manufacturing strategy and leading position in N-type popcorn technology in the early stage, by the end of the fourth quarter, our N-type capacity exceeded 70 gigawatts, and our cost structure continues to improve. Currently, our mass-produced N-type cell efficiency exceeds 26%, while the integrated cost of N-type is almost on par with P-type. With the continuous introduction of new cell technologies and optimization of cost-reducing process, our cost structure is expected to become more competitive.
spk18: We highly value the preservation of intellectual property, focusing on the preservation of intellectual property by the general public,
spk24: We attach great importance to intellectual property rights and are fully focused on sustaining our technical leadership based on extensive intellectual property rights. By the end of the fourth quarter, we had been granted 330 TOPCOM patents. one of the largest portfolios of Granted Top Competence in the world.
spk18: With the largest of the 12 G-Watts in the industry, and the outstanding supply chain tracking system, we have become the most reliable main supply chain supplier in the U.S. market. It is expected that there will be obvious profit and loss in the next 24 years. The innovative production model and investment will also pay off as time goes by. The first and second phase of the big base in Shanxi will be planned This largest overseas integrated capacity of over 12 gigawatts in the industry and an effective supply chain traceability system, we have become the most reliable module supplier to the U.S.
spk24: market. which is expected to generate significant profits in 2024. Furthermore, our investment in innovative production model is expected to generate returns over time. Phase 1 and 2 of our integrated projects in Shanxi will start production in the first half of 2024, as planned, and gradually ramp up in the second half. The full integration of automation can greatly improve labor efficiency and operation turnover efficiency, and is expected to bring a significant reduction in operating costs after reaching full production.
spk18: In the medium term, the rapid expansion of AI and electric vehicles may lead to global power supply tensions, and the global demand for clean energy generation is expected to grow further. In the mid to long term, the rapid expansion of AI and electrical vehicles
spk24: many too tight power supply in the world, and the demand for clean power generation is expected to further increase. So far, reduced solar cost has significantly increased the competitiveness of solar in the energy sector. In the future, solar as a new quality productive force is set to play an increasingly important role in face of energy crisis and energy transformation. We are bullish about PV market growth in the mid to long term, and we are confident we will continue to lead the industry with advanced technologies and premium high-efficiency products.
spk18: According to the supply chain and market situation, the investment intensity in 2024 is significantly reduced compared to 2023. We are focused on advanced N-type energy investment, including 28 GW of integrated N-type energy from the Sanxi Grand Basin and about 4 GW of Vietnamese N-type batteries and components.
spk24: Taking into account supply chain and market conditions, we are reducing investments in capacity expansion in 2024. We are focusing on expanding our advanced N-type capacity, including 28 gigawatts of integrated capacity in our Shanxi plant and about 4 gigawatts of N-type cell and module capacity in Vietnam. We continue to focus on improving working capital efficiency and achieving sustainable growth in operating cash flow.
spk18: Before I hand over the topic to Jenna, I would like to introduce the performance guidance. It is expected that at the end of 2024, the efficiency of N-type batteries will reach 26.5%. The capacity of N-type high-efficiency batteries will reach 120GW, 114GW, and 130GW respectively. The capacity of N-type batteries will be more than 90%. Before turning over to Jenner, I would like to go over our guidance for the first quarter and full year of 2024. By the end of 2024, we expect mass-produced N-type cell efficiency to reach 26.5%.
spk24: We expect our annual production capacity for monowafers, solar cells, and solar modules to reach 120, 110, and 130 gigawatts, respectively, by the end of 2024. This end-type capacity accounting for over 90% of total capacity. We expect the module measurements to be in the range of 18 to 20 gigawatts for the first quarter of 2024. and 100 gigawatts to 110 for the four-year 2024, with N-type accounting for nearly 90% of total module shipment.
spk25: Thank you, Ms. Li. Thank you, Ms. Li.
spk17: We are pleased to have achieved a historical high in quarterly and annual module shipment thanks to our excellent global marketing network and the power of our product. Total shipments were 27.9 GW in the first quarter, with module shipment accounting for approximately 95%. Annual module shipment increased 76.4% year-over-year to 78.5 GW. And both module shipments in the first quarter and the full year 2024 ranked world number one. We continued to improve product quality and build our customer service network to expand the influence of our brand. By the end of the first quarter, our accumulated global module shipment exceeded 210 gigawatts, covering more than 190 countries and regions. In terms of geographic mix, China and the Asia-Pacific became our major shipment regions in the fourth quarter, accounting for approximately 70%. For the full year 2023, shipment to Asia-Pacific and North America grew significantly, more than doubling year over year. As we continue to expand our footprint in overseas markets and build our integrated capacity, we move on to invest in North America and emerging markets. Based on our business conditions and market trends, China and Europe will continue to be the major contributor to the shipment in 2024, with North America emerging markets and the Asia-Pacific expected to flourish. On the product front, the competitive High-efficiency Tiger New accounted for 70% of the shipment in the first quarter, with average premium of RMB $0.10 per watt versus P-type modules. And Tiger New accounted for approximately 60% of annual global shipment, achieving the goal we set at the beginning of the year, and accelerated its market penetration globally. Currently, the power output of Tiger Neo modules is more than 30 watt peak higher than that of the similar P-type module, providing our customers with higher power generation yield. Difference of our Tiger Neo were expected to account for over 85% in the first quarter of 2024 and its product strength to continue to lead the industry. We are always committed to bring greater economic value to our customers with high-efficiency, highly reliable products, and sustainable solutions. Recently, we unveiled the first new green panels produced with renewable energy. These panels were produced in factories that were awarded the Zero Carbon Factory Certification by TUV Rheinland. Jinko Dollar is also the first company in the industry to be awarded with zero-carbon factory certification by TUV for silicon in the manufacturing, wafer cutting, cell manufacturing, and module manufacturing. We also continue to improve our ESG practices and optimize our traceability system. In the first quarter, we were awarded with the ESG Transparency Award from EUPD Research, which recognized our far-reaching commitment to sustainability and transparency. Recently, bidding for some domestic projects began to activate. EU inventories became depleted, and we have seen additional demand, especially in DG business. This gradually improved the PV economics and the growing demand for transmission to clean energy globally. PV demand in the global market is expected to further increase in 2024, but at a relatively slower pace than in 2023. In longer term, the requirement of AI for computing power will further increase the demand for electricity and electrical equipment, ensuring strong growth potential for PV plus storage As a responsible global company, we are always committed to providing clients with reliable and highly efficient products and solutions, practicing the values we share with our clients, partners, and investors to accelerate to a greener future. With that, I turn the call over to Pat.
spk20: Thanks to solid execution of our operations and management strategies, as well as successful efforts in cost optimization, we delivered excellent financial performance. For the full year, key metrics such as total revenues, gross margins, income from operations, and net income all significantly increased year-over-year. We also improved working capital efficiency and optimized operating cash flow. By the end of the fourth quarter, we had cash and cash equivalents of $2.75 billion, and our net debt decreased by over 20% year-over-year. In December, we announced the extension of our existing share repurchase program, and by the end of February this year, We had repurchased nearly 1 million ADAs in aggregate amount of approximately US dollar 28 million. With our advantages in N-type TopCon technology, globalized operations, and integrated capacity, we are very confident in our growth prospect and will continue to improve working capital efficiency and achieve sustainable growth in operating cash flow. Let me go into more details now. Total revenue was 4.6 billion, an increase of 3% sequentially and more than 9% year-over-year. Gross margin was 12.5% compared with 19% in the third quarter and 14% in the fourth quarter of 22. The decreases were mainly due to the decrease in average selling prices of solar modules. Total operating expenses were $526 million. The increases were mainly attributed to loss of disposal on PPE and expense in relation to settlement of a dispute with customer. Operating margin was 1.1% as compared with two last year. Excluding the impact from a change in fair value of the notes and long-term investments and share-based compensation expenses, adjusted net income attribute to Jinko Solar Holding Company, ordinary shareholders were 65 million compared with 45 million in the fourth quarter last year. Up 73% year-to-year. Now I'll brief you on our 23 full-year financial results. Total motor shipments were 78.5 gigawatts, up 76% year-over-year, and total revenues up 43% year-over-year. For the full year 2023, gross profit was about 2.5%. $7 billion, an increase of 55% year-over-year. Gross margin was 16% compared to 14.8%. The increase was mainly attributed to a decrease in the material cost of solar modules. Total operating expenses for 1.8 billion have 9% year-over-year. The increase was mainly due to an increase in pavement loss on PPE, an expense in relation to settlement of dispute with customer, and increasing in staff cost. Operating margin for the full year of 23 was 5% compared to 0.5% last year. Excluding the impact from a change in fair value of notes, long-term investments, and share-based compensation expenses, adjusting net income attribute to Jingle Solar Holdings ordinary shareholders was about $574 million, up nearly two times a year. Let's move into the balance sheet. As mentioned, at the end of the fourth quarter, our cash and cash equivalents were significantly higher at $2.75 billion. has from 1.93 billion at the end of the third quarter and 1.64 billion at the end of the fourth quarter of 2022. AR turnover days were down to 76 days in the fourth quarter from 87 days in the third quarter. Inventory turnover days were down to 57 days from 67 days. days in the third quarter. The total debt was $4.38 billion at year end compared to $4 billion last year. The net debt was $1.6 billion compared to $2.3 billion last year. This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed.
spk21: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Philip Shen with Roth MKM. Please go ahead.
spk05: Hi, everyone. Thank you for taking my questions. First one is on pricing. Was wondering if you could share with us the Q4 ASP. Sorry if I missed it. And then what do you expect that ASP to be in Q1 and Q2 as we get through the year? Thanks.
spk15: Hey, Jenner, would you like to answer a question? Hey, Philip, can you hear me?
spk06: Yes, I can hear you.
spk17: Hey, Philip, I'm traveling, so I didn't get all of your questions, but I heard it's about pricing, right? So is it The pricing, actually, the pricing significant drop happens across December to January. So that means if we compare the ASP between Q4 and Q1, definitely there will be a big gap in the course of the market price changes. The detail number-wise, I don't have that with me. Sorry about that.
spk05: Okay. Hey, Jenna, thanks for that. So can you share what the ASP was in Q4 for modules and And then can you quantify how much lower Q1 might be? Thanks.
spk17: Charlie, can you take that? I don't have the number with me now.
spk14: Yeah, yeah. Philip, I think the most important thing is we believe it's kind of the panic cells, you know, the module. You know, let's say two quarters. We don't believe the price, particularly in China, is sustainable. And we are expecting, as well as the market, expecting the module price has been stabilized and maybe up a little bit. And back to the pricing, depending on different markets, the US is pretty significant in price premium. Europe is a little bit better than China and different segments. DG, which is the utility, has different price difference. But the answer to your question, I think you want to explore is for sure. If Q1, Q2, versus Q4 last year, we think the ASP is still in the downward trend. But it's not dramatically, but slightly. And we think it's reaching to the bottom in the first half of year 2024 for the ASP.
spk05: Okay. But you have the average selling price for all the regions for Q4, right? Can you share that price for Q4?
spk14: No, we don't want to we don't disclose, but you can calculate the blended, you know, if you take the total revenue. And typically, we have 95% of the revenues coming from module business.
spk05: Okay, thank you. So it sounds like the bottom could be q1 or q2. And, or do you think the bottom is more q2 or more q1 in terms of module pricing?
spk14: I think a different company has a different mix, but I think it's a relatively stable Q2 versus Q1. Maybe a little bit lower, but it's not significant. And yes, that's what we are looking at. And the most important thing is we think the China demand is exceeding the expectations. China demand is very, very good. And Europe, the D-Stock has been completed and they're picking up the stock. So we think there's a kind of improved outlook from the demand side. But still some oversupply situations. For Jinko, we have more, 90% is in-type and global sales and manufacturing capabilities. And we think we are relatively better, you know, than the other peers. But it takes time, you know, for the low-increasing capacity, you know, tier two, tier three companies phase out. But it takes time. But we think the most important thing is we focus on our effectiveness. And so, you know, a relatively challenging year, yeah.
spk05: Okay, thanks, Charles. Shifting over to margins, so you've given us a little bit of a framework for how to think about pricing trends through the year. What do you expect your margins to be for Q1? I know you haven't given official guidance, but just relative to Q4, maybe you can say a little bit up or down or something. And then as it relates to Q2, when do you see a bit of a recovery of the margins? Thanks.
spk14: Yeah, it's, you know, we estimate, you know, the Q1, Q2, first half year, it's a little bit lower, you know, slightly lower versus Q4 last year. It's not dramatic lower for the Q4 versus Q3 last year. It's slightly, slightly lower, you know, throughout the Q1, Q2. But we believe there's opportunities and for the second half year, maybe profitability will expand.
spk05: Got it. That's very helpful. And then finally, I think in your slides, you talked about two gigawatts of integrated U.S. capacity. Again, sorry if I missed this, but does that mean you might do wafer, cell, and module in the U.S.? And can you share, you know, if so, like what the locations are? And then, sorry, I'll leave it there and I have one follow-up on that topic next.
spk14: Yeah, the U.S. capacity is, We started the construction last year, and it's getting ready, I think, very quickly in March or April to start the operation. It's a 100% module, 2 gigawatts, no way for sale. But we have integrated capacity in South, East, Malaysia, the capacity is roughly 12 to 14 gigawatts. And in the combinations with the 2 gigawatts, the module capacity in the US, I think we are in a good position. And on top of that, we have separate independent supply chain from the poly, everything to the module. And we have very good traceability systems and the proof record in the last year. So we think this year is where we can we have more market opportunities and to catch up, you know, for the next two or three years, you know, for the US market.
spk05: Got it. Okay. So it's only two gigawatts of module, uh, or it is two gigawatts of module. Uh, the way it was written on the slide, slide six sounded like two gigawatts of integrated capacity could be in the US. But, uh, my follow up here and then I'll, um, wind it down is what is, and this might be a bit of a tough question, but what is your view of the discussion around, the foreign entity of concern language, which a lot of people are talking about could be added to the 45X manufacturing PTC, which might make it more difficult for you guys to add or to receive the PTC. You know, you're ramping up your facility basically now, if not maybe in a month in April. To what degree does that concern you? Are you following that topic at all? Thank you.
spk14: I'm not familiar with the topics you are talking about, the foreign entities, the regulations updates, but we will follow up after the call. I'm not sure you are talking about the semiconductor, the sensitive technology, but we think solar is more you know, pervasive and very common, you know, for each country to develop. And it's not data sensitive. But anyway, we will follow up, you know, the topic you are talking about, but not familiar with the progress.
spk05: Okay. Thank you, Charlie. I know I asked a lot of questions. Appreciate it. We'll pass it on.
spk21: Thank you. Your next question comes from Alan Law with Jefferies. Please go ahead.
spk03: Thank you for taking my question. So I would like to know, because there's a very detailed capacity expansion plan, and just would like to ask a bit on the details. So by the end of 2024, it would be 120, and then 110, 130 gigawatt for wafer, cell and module. So my question is mainly on the cell. Because the company has 70 gigawatt of popcorn by the end of 2023, and supposedly the remaining 20 gigawatt is PERC, and then by the end of this year it's 110. So will it be 100 gigawatt of popcorn plus 10 gigawatt of PERC? If that is the case, then do you mean you would impair the 10 gigawatt of PERC this year?
spk14: Actually, we will phase out 20 gigawatts of PERC capacity throughout the year. That's the plan. Everything we have discussed by the end of the year, the capacity is 100% in time. It's not pre-timed capacity. The sale capacity is 110, and the major part is the 28 gigawatts, the Sanxi, Yoshopro factories, plus what we are talking about, the well-known 4 gigawatts. As well as we have some improvement of production, the volume, existing capacity. So total is 110 for the entire capacity. We did have 28 gigawatts per capacity. And we don't have time to upgrade, and we think it's not economic. It makes sense. And the most important thing is we have depreciated the capacity over five years. So we don't believe we have significant burden for the 20 gigawatts, the perk. And we focus on the technology, the new technology and new product that is I think that is a smart decision.
spk03: So just to confirm, basically for the 20 gigawatt of PERC, they are fully depreciated. So basically they were built in 2019, and then by now they are fully depreciated. So you do not see major impairment risk this year, right?
spk14: Yes, roughly, yes. And we did have some kind of residual value, but it's not significant. Most of the assets have been depreciated.
spk03: Yes, that's impressive because a lot of peers in this industry might have a lot of impairment this year. So my next question is, what is the new signed AST for the contract that you're signing in the U.S. market? Because have been hearing different feedback saying that prices for utility projects in the U.S. are declining from 30 cents to below 30 cents since 4Q. So I'd like to learn your view on this front.
spk14: There's a kind of, I think, property index for the U.S. The price range is relatively, I think, a relatively big, you know, high 20, low 30, what kind of the, in our range, and it looks like it's in the downward trend, but relatively stable. And the different customers have different preference, and we think we are in a good position because we trace abilities, and we have separate poly through the modules. And we think we can still relatively know the price premium with some peers.
spk03: Thanks. So you have mentioned overseas polysilicon. So we'd like to have an update on the overseas polysilicon price. Is it rebounding or it's still trending down?
spk14: I think in the recent three months, really stable. Because you know the poly silicon out of China is around 100,000 metric tons. It's no new capacity expected in the next one and a half year. But the other thing is maybe some China poly, you know, China poly, you know, but I think there's a, you know, relatively
spk03: risk you know and there's a very complicated compliance and so uh we don't see significant downward and the relative stable you know i see so uh switching gear to the the european market because you have mentioned this talking has basically completed so i would like to follow up on this like are you having receiving orders in a normalized manner? Is it from the residential market or it's mainly from the utilities market in Europe?
spk14: I think both. In the recent quarter, I think the majority is the DG and the market. But this year, both. Utility and the DG will grow year over year.
spk03: So you don't see inventory as an issue even in the DG market anymore? Because last year, it was a huge issue.
spk14: Yeah, yeah. And last year, the first half year, they built the stock for the DG distributors. And this stock, so I think five or six months. And it looks like, you know, On top of that, even not only in the European market, as well as other markets, the customers, they are reading to the bottom of the module price. But it looks like, you know, stabilized. I think the price is not sustainable. A lot of customers accelerate, you know, the purchase decisions. As well as the stock, you know, the stock level is going back to the normalized level in Europe. And plus the logistic issue, flat C issues. So we see the rebound from the European market. And the second quarter, for sure, is a strong quarter for the European market.
spk27: And in your PowerPoint, I think it's the first time that you have officially put ESS.
spk03: into the whole price release. So we'd like to know, do you have any quantitative shipment target on ESS? Because I know you have capacity for more than 10 gigawatt hour. So we'd like to know on that front.
spk14: Oh, storage. Oh, storage. And we build up the capabilities, the teams, products, capacities. and majority from last year. And the key focus is we, you know, develop our R&D capabilities and products and focus on some key markets. And so far it's in the relatively early stage, but we are confident and we will discuss maybe the full year, you know, the guidance and later the this year, you know, maybe in the second quarter, third quarter. But this year, we think, you know, it's a good opportunity to catch up the markets and build a strong foundation for the next few years. So that's the key focus, not the focus for the shipment of this year.
spk03: Thanks. Thanks a lot for the comprehensive information. So I'll pass on. Thank you.
spk10: Thank you.
spk21: Thank you. Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. Your next question comes from William Grippen with UBS. Please go ahead.
spk01: Excellent. Thank you very much. My first question was just on your 300 plus patent portfolio. I was wondering if you could provide a little more color on where those patents are granted. Are any of them international and You know, one of your peers is out there asserting their IP rights related to some TopCon technologies. Just maybe, you know, how are you thinking about that? How do you view that relative to your patent portfolio? Thank you.
spk14: The patents and that, you know, we put a lot of R&D, you know, efforts in the recent couple of years. And we developed and discussed, right, over 300 TopCon projects. patents which we developed ourselves. On top of that, we have additional more TopCon patents by acquisition from others. And the patent is our key differentiators and the key strategies. And we licensed to one of the top 10 module company and one of the top five. know solar cell and the companies and it's a illustration how very strong and capable our rng teams on the you know the the the cutting edge technology okay yeah appreciate that and then just on the 26 mass production n-type cell efficiency that you referenced in the press release
spk01: How do you expect that to translate into mass production module efficiency? And when do you think that would ultimately be realized in mass production? Thank you.
spk14: 26% sale capacity, we have reached to that level, you know, the mass production. And our target is end of this year 26.5%.
spk26: All right, appreciate the time.
spk14: Thank you. Sorry. Yeah, sorry, sorry. And I think that for the standard, the 182, I think we are charging roughly 610 to maybe 620 watt for standard 182 modules.
spk21: Thank you. Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. Your next question comes from Rajiv Chaudhry with IntricSick Edge. Please go ahead.
spk07: Yes, good morning. I have a few questions. First of all, just in terms of housekeeping, can you tell us what the depreciation number was in the fourth quarter and what you expect it to be in 2024?
spk15: So, sorry, could you repeat again?
spk07: Yes. The question was about depreciation in the fourth quarter and what the expectation is for 2024.
spk15: Oh, depreciation.
spk14: It's roughly, I think, you know, $6 billion to $7 billion RMB, you know, for 2024. Okay. So each quarter, roughly 1.5 to, I think, 1.8 billion. Sorry, can you repeat that? 1.5 to 1.8 billion RMB?
spk07: Yes, depreciation. And that's in 2024. What about the fourth quarter? Last year, right? Yes, 23. Yes, sorry. Okay.
spk14: Yeah, similar amount. It's not significant difference.
spk07: So around $1.5 billion in the fourth quarter?
spk12: Yeah, roughly.
spk07: OK. And then what was the total CapEx capital spending in 2023, and what is the expectation for 2024?
spk20: For CapEx? Yeah. Let me go into some details. For the 2023, our total capex is around RMB 18 billion, and we expect a range in 2024 is from 11 to 15 billion, depends on the market. I see.
spk07: Okay. And out of this $11 to $15 billion, is it almost 100% related to the module business, or is there anything related to the storage business as well?
spk20: It's related to our integrated solar manufacturing.
spk07: Okay. The next question is about... the charges that you had in the operating expenses. You mentioned that the write-down of assets as well as the settlement with the customer, if they had not happened, then the total operating expense would have been the same as the third quarter. So by my calculation, that is about 60 billion RMB or about $85 million. Is that, sorry, 0.6 billion RMB or about $85 million. Is that the correct number?
spk14: You're right, we did have some kind of special one time. items, you know, in the fourth quarter of last year. One is, I think, some kind of customer dispute. It's around, you know, the 30 million U.S. dollars, 30 million U.S. dollars, which is we have some empowerment, you know, empowerment for the equipment around 10 million U.S. dollars. So we did have 40 million, you know, I think one of items. Okay.
spk07: And comparing your cost structure to the Tier 2 manufacturers, can you give us an idea? My calculation is that your cost structure in the fourth quarter was about 10 percentage points better than the Tier 2 and Tier 3 manufacturers. So, for example, if you did 12.5% gross margin, the Tier 2 and Tier 3 were operating at 2% to 3% gross margin. Can you comment on that?
spk13: We are confident our cost structure is leading, and we have advantage.
spk14: By the way, we don't comment on detailed numbers. you know, company has different, you know, situations. But you're right, but if we are, let's say, making low profit levels, I think a lot of companies, you know, doing a similar business will lose their money. That is, we're very confident. But again, I think it takes time, you know, to face out. tier two, tier three companies, and it's after the consolidation and the phase-out, and we think we can get more market share and make decent profitability, but it takes time.
spk07: Do you think at this point your cost structure is better than other tier one manufacturers?
spk14: I don't do 100% guarantee, but we are confident.
spk07: So you are confident that your cost structure is already equal to or better than other Tier 1 manufacturers?
spk14: Yeah, we are confident that our cost structure, capacity, technology is leading.
spk07: Can you elaborate on the expected cost improvements that are likely to happen as a result of the integrated production that you're going to roll out next year of the Shanxi plant? How much of a cost advantage are you going to create as a result of the integration and everything happening in one location?
spk14: Yeah, it's not purely cost advantage. It's the Sanxi, you know, sugar factories. It's digitalized and automatic. And, you know, the EST traceability is low carbon, everything. And we integrated a lot of advanced equipment and streamlined a lot of the even... phase out some production phase, stage, and have significant workforce efficiency and very high turnover ratios and very good location to serve the customers in the West China as well as the global market customers. So the cost structure is, you know, it's reflecting the advantage, and it's a big amount, we believe, you know, but we don't disclose. We think it's a big advantage, you know, with this existing production structures for the industry.
spk07: And finally, I want to confirm a number that I think Jenner gave The total volume of shipments of N-type in the fourth quarter, was it 70% of total shipments?
spk14: That's 70%, yes, 70%.
spk07: And did he say that in the first quarter it will be 85%?
spk14: Full year, let's say it's full year, it's around 90%. So gradually from 70% to 95% quarter by quarter. And this year, so Q1 this year, I think it's roughly 80%.
spk07: Okay. Okay. So in terms of going back to the gross margin, So you are suggesting that the first quarter gross margin should be slightly lower than the fourth quarter. So are we still looking at a number around 12%?
spk08: You mean the absolute number?
spk07: Yeah, the actual gross margin.
spk14: Yeah, we don't disclose that, but I said, you know, it's very slightly, slightly, you know, downwards, but not dramatically. But we think it's bottom and it's reaching the bottom, yeah, for the first half of the year.
spk07: So if the gross margin is around 12% in the first quarter and the prices stabilize from March, April onwards, is it reasonable to think that gross margins would improve in the second quarter because your costs will keep on coming down? and also your shipments to the U.S., which are higher ASP, will go up?
spk14: We think, you know, we have more likelihood to improve in the second half year. The input outlook, you know, the demand outlook, and you're talking about U.S. shipments, it's the second half year loaded, and I think roughly maybe, let's say, 65% shipments in the U.S. in the second half year. As well as, you know, the Shanxi Super Factory is doing the pilot productions, you know, the first half year, that will be 100% operational by the end of the third quarter. So everything, you know, together, we think it's the margin expansion it's likely to, you know, in your second half year.
spk07: And what do you think the impact of, you mentioned that in the fourth, by the fourth quarter, you expect that tier one companies or top 10 manufacturers will have as much as 90% of the market. That basically means tier three will have shut down and tier two will will be selling much lower output than they are selling right now. What do you think that does to pricing by the fourth quarter?
spk15: The fourth quarter this year, right?
spk07: Yes.
spk15: Yeah.
spk14: It's difficult to estimate, but I think it should be stabilized. And on top of the most important things, I think by the end of the fourth quarter, I believe a lot of industry players for Tier 2, Tier 3, and as well as the companies that never in the solar industry but entered, you know, in this one or two years, those guys are going to, the capacity will be phased out 100%. So that's my estimation, yeah.
spk07: Okay, great. Thank you very much, and good luck in 2024.
spk21: Thank you. There are no further questions at this time, and that does conclude our conference for today. Thank you for participating. You may now disconnect. Thank you. you Thank you. Thank you. Thank you. you Thank you. Thank you. Thank you.
spk00: Bye. music music
spk24: Thank you, operator. Thank you everyone for joining us today for Zinco Solar's fourth quarter 2023 earnings conference call. The company's results were released early today and are 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 Jinko Solar are Mr. Lee Hsien-de, Chairman and CEO of Jinko Solar Holding Company Limited, Mr. Jenna Miao, CMO of Jinko Solar Company Limited, Mr. Pan Li, CFO of Jinko Solar Holding Company Limited, and Mr. Charlie Cao, CFO of Jinko Solar Company Limited. Mr. Li will discuss Jinko Solar's business operations and company highlights, followed by Mr. Miao, who will talk about the sales and marketing. and then Mr. Pan Li, 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 contain forward-looking statements made under the Steve Haber provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding this and other risks is included in Zinco Solar's public filings 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. Lee Hsien-de, 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.
spk18: Thank you, Mr. Li. For the efforts we made in terms of cost optimization, the annual profit level has increased significantly. The annual net profit is 16%, which is 4.8% compared to 2022. The net profit is 4.856 billion US dollars, which is 4.56 times the growth rate. The adjusted profit is 5.736 billion US dollars, which is 1.93 times the growth rate. The four systems have a total output of 26.3 GW, exceeding our expectations. We are pleased to have achieved very impressive operational and financial results in a challenging year by leveraging our advantages in anti-top-com technology, globalized operations, and integrated capability.
spk24: Thanks to strong execution by our team, our module shipment for the full year increased 76.4% year-over-year to 78.5 gigawatts, back to the top position in the industry. Benefiting from our efforts in cost optimization, our profit ability for the full year improved significantly year-over-year, with growth margin at 16% compared to 14.8% in 2022, Net income was US$485.8 million, up 4.56 times year-over-year. Adjusted net income was US$573.8 million, up 1.93 times year-over-year. Module shipments in the fourth quarter was 26.3 gigawatts, exceeding our guidance. As module prices fell more than expected in the fourth quarter, and nearly 50% of our modules were sold to the Chinese market at lower prices. Growth margin for the fourth quarter was 12.5%, a significant decline from 19.3% in the third quarter. 国内光复新增专机达到了216.88GW,同比增长了148.1%,
spk18: At the same time, the supply and demand of industry chains has led to a drop in prices, and the price of the main target is down by more than 40% at the end of the year and has fallen by 1 yuan per watt. In 2023, the export volume of light products will grow significantly, but due to the drop in prices, the export volume will drop significantly. This year, in January and February, the supply and demand have dropped, and some of the two-way competition has intensified the market panic and the irrationality of prices. In addition, some companies that do not have cost and product competitiveness have reduced or stopped. Our opening power can maintain the leading level in the industry. In March, as the demand for heat recovery and storage deteriorated, the price gradually rose. Part of the bidding price has returned, but in the medium term, the decline in the price will significantly improve the economy of Guangfu. The demand for global light supply markets in 2024 will continue to grow, as will the rapid delivery of new technologies and the acceleration of the integration of industries by old and new industries. Topos's company's market share is expected to rise from 70% in 2023 to more than 90% in 2024. We are confident that in this round of weekly fluctuations, In China, newly added PV installation reached 216.88 gigawatts in 2023, up 148.1% year-over-year, to a historical high. At the same time, excess supply in various links of the industrial chain led to price declines.
spk24: Tender prices for modules at the year end decreased over 40% to below RMB 1 yuan per watt. Compared to the beginning of the year, export volumes of PV products in 2023 increased significantly year over year, whereas export volume fell slightly as a result of decreasing prices. In January and February 2024, seasonality combined with extreme competition from certain manufacturers intensified market panic and irrational prices. We remained cautious and rational in the face of abnormally low tenders. In addition, while some manufacturers without competitive cost or advanced products reduced or suspended production, we maintained our leading utilization rates in the industry as a result of cost advantage and high order visibility. In March, as demand picked up and inventory reduced, module prices gradually stabilized and some bidding prices rebounded slightly. In the short to mid-term, we expect the decline in module price will significantly improve the economics of solar energy, and we anticipate demand in the global PV market will continue to increase in 2024. Rapid iteration of new technologies and the elimination of the obsolete production capacity will also accelerate the consolidation of the industry. Market share for the top 10 module manufacturers is expected to increase from 70% in 2023 to over 90% in 2024. We are confident to consistently enhance our competitiveness through Psychological fluctuations and we expect our market share to further increase in 2024.
spk18: 受于垂直一体化的制造战略和在N型TopoCom长期的领先地位, 截止四季度末,我们的N型产能已经超过70个GW,成本结构持续优化。 目前N型TopoCom电池量产效率超过26%, N型一体化的成本相比于P型基本持平。
spk24: Thanks to our integrated manufacturing strategy and leading position in N-type popcorn technology in the early stage, by the end of the fourth quarter, our N-type capacity exceeded 70 gigawatts, and our cost structure continues to improve. Currently, our mass-produced N-type cell efficiency exceeds 26%, while the integrated cost of N-type is almost on par with P-type. With the continuous introduction of new cell technologies and optimization of cost-reducing process, our cost structure is expected to become more competitive.
spk18: We pay great attention to the preservation of intellectual property, focusing on the preservation of intellectual property by the general public
spk24: We attach great importance to intellectual property rights and are fully focused on sustaining our technical leadership based on extensive intellectual property rights. By the end of the fourth quarter, we had been granted 330 TOPCOM patents. one of the largest portfolios of granted top competence in the world.
spk18: With the largest 12 GW of global and overseas production capacity and an unparalleled supply chain tracking system, we have become the most reliable main supply chain supplier in the U.S. market. It is expected that there will be obvious profit and loss in the next 24 years. The innovative production model and investment will also return with the return of time. The first and second phase of the big base in Shanxi will be planned according to This is the largest overseas integrated capacity of over 12 gigawatts in the industry and an effective supply chain traceability system. We have become the most reliable module supplier to the U.S.
spk24: market. which is expected to generate significant profits in 2024. Furthermore, our investment in innovative production model is expected to generate returns over time. Phase 1 and 2 of our integrated projects in Shanxi will start production in the first half of 2024 as planned and gradually ramp up in the second half. The full integration of automation can greatly improve labor efficiency and operation turnover efficiency and is expected to bring a significant reduction in operating costs after reaching full production. 中长期来看,AR和电动车的迅速扩张可能导致全球电力供应紧张, 全球对清洁能源发电的需求有望进一步的增长。
spk18: In the mid to long term, the rapid expansion of AI and electrical vehicles
spk24: many too-tight power supply in the world, and the demand for clean power generation is expected to further increase. So far, reduced solar cost has significantly increased the competitiveness of solar in the energy sector. In the future, solar as a new quality productive force is set to play an increasingly important role in face of energy crisis and energy transformation. We are bullish about PV market growth in the mid to long term, and we are confident we will continue to lead the industry with advanced technologies and premium high-efficiency products.
spk18: Considering the supply chain and market situation, the investment intensity in 2024 is significantly reduced compared to 2023. We are focused on advanced N-type energy investment, including 28 GW of integrated N-type energy from the Sanxi Grand Basin and about 4 GW of Vietnamese N-type batteries and components.
spk24: Taking into account supply chain and market conditions, we are reducing investments in capacity expansion in 2024. We are focusing on expanding our advanced N-type capacity, including 28 gigawatts of integrated capacity in our Shanxi plant and about 4 gigawatts of N-type cell and module capacity in Vietnam. We continue to focus on improving working capital efficiency and achieving sustainable growth in operating cash flow.
spk18: Before I hand over the topic to Jenna, I would like to introduce the performance guidance. It is expected that at the end of 2024, the efficiency of N-type batteries will reach 26.5%. The capacity of high-efficiency batteries in Nanjing will gradually reach 120GW, 114GW, and 130GW. Of which, N-type batteries will account for more than 90%. Before turning over to Jenner, I would like to go over our guidance for the first quarter and a full year of 2024. By the end of 2024, we expect mass-produced N-type cell efficiency to reach 26.5%.
spk24: We expect our annual production capacity for monowafers, solar cells, and solar modules to reach 120, 110, and 130 gigawatts, respectively, by the end of 2024. This end-type capacity accounting for over 90% of total capacity. We expect the module measurements to be in the range of 18 to 20 gigawatts for the first quarter of 2024. and 100 gigawatts to 110 for the full year 2024, with N-type accounting for nearly 90% of total module shipment.
spk25: Thank you, Ms. Li.
spk17: Thank you, Ms. Li. We are pleased to have achieved a historical high in quarterly and annual module shipment thanks to our excellent global marketing network and the power of our product. Total shipments were 27.9 GW in the first quarter, with module shipment accounting for approximately 95%. Annual module shipment increased 76.4% year-over-year to 78.5 GW. And both module shipments in the first quarter and the full year 2024 ranked world number one. We continued to improve product quality and build our customer service network to expand the influence of our brand. By the end of the first quarter, our accumulated global module shipment exceeded 210 gigawatts, covering more than 190 countries and regions. In terms of geographic mix, China and Asia-Pacific became our major shipment regions in the fourth quarter, accounting for approximately 70%. For the full year 2023, shipment to Asia-Pacific and North America grew significantly, more than doubling year over year. As we continue to expand our footprint in overseas markets and build our integrated capacity, we move on to invest in North America and emerging markets. Based on our business conditions and market trends, China and Europe will continue to be the major contributor to the shipment in 2024, with North America emerging markets and the Asia-Pacific expected to flourish. On the product front, the competitive High-efficiency TigerNEW accounted for 70% of the shipment in the first quarter, with average premium of RMB $0.10 per watt versus P-TECH modules. And TigerNEW accounted for approximately 60% of annual global shipment, achieving the goal we set at the beginning of the year and accelerated its market penetration globally. Currently, the power output of Tiger Neo modules is more than 30 watt peak higher than that of the similar P-type module, providing our customers with higher power generation yield. Difference of our Tiger Neo were expected to account for over 85% in the first quarter of 2024 and its product strengths to continue to lead the industry. We are always committed to bring greater economic value to our customers with high-efficiency, highly reliable products, and sustainable solutions. Recently, we unveiled the first new green panels produced with renewable energy. These panels were produced in factories that were awarded the Zero Carbon Factory Certification by TUV Ryland. Jinko Dollar is also the first company in the industry to be awarded with zero-carbon factory certification by TUV for silicon in the manufacturing, wafer cutting, cell manufacturing, and module manufacturing. We also continue to improve our ESG practices and optimize our traceability system. In the first quarter, we were awarded with the ESG Transparency Award from EUPD Research, which recognized our far-reaching commitment to sustainability and transparency. Recently, bidding for some domestic projects began to activate. EU inventories became depleted, and we have seen additional demand, especially in DG business. This gradually improved the PV economics and the growing demand for transmission to clean energy globally. PV demand in the global market is expected to further increase in 2024, but at a relatively slower pace than in 2023. In longer term, the requirement of AI for computing power will further increase the demand for electricity and electrical equipment, ensuring strong growth potential for PV plus storage As a responsible global company, we are always committed to providing clients with reliable and highly efficient products and solutions, practicing the values we share with our clients, partners, and investors to accelerate to a greener future. With that, I turn the call over to Pat.
spk20: Thanks to solid execution of our operations and management strategies, as well as successful efforts in cost optimization. We delivered excellent financial performance. For the full year, key metrics such as total revenues, gross margins, income from operations, and net income all significantly increased year over year. We also improved working capital efficiency and optimized operating cash flow. By the end of the fourth quarter, We had cash and cash equivalents of $2.75 billion, and our net debt decreased by over 20% year-over-year. In December, we announced the extension of our existing share repurchase program, and by the end of February this year, we had repurchased nearly $1.8 million in aggregate amount of approximately $28 million. With our advantages in N-type TopCon technology, globalized operations, and integrated capacity, we are very confident in our growth prospects and will continue to improve working capital efficiency and achieve sustainable growth in operating cash flow. Let me go into more details now. Total revenue was $4.6 billion. an increase of 3% sequentially and more than 9% year-over-year. Gross margin was 12.5% compared with 19% in the third quarter and 14% in the fourth quarter of 2022. The decreases were mainly due to the decrease in average selling prices of solar modules. Total operating expenses were $526 million The increases were mainly attributed to loss of disposal on PPE and expense in relation to settlement of a dispute with customers. Operating margin was 1.1 percentage compared with two last year. Excluding the impact from a change in fair value of the notes and long-term investments and share-based compensation expenses, adjusted net income attribute to Jinko Solar Holding Company, ordinary shareholders were $65 million compared with $45 million in the fourth quarter last year, up 73% year-over-year. Now I'll brief you on our 23 full-year financial results. Total motor shipments were 78.5 gigawatts, up 76% year-over-year, and total revenues up 43% year-over-year. For the full year 2023, gross profit was about $2.7 billion, an increase of 55% year-over-year. Gross margin was 16% compared to 14.8%. The increase was mainly attributed to a decrease in the material cost of solar modules. Total operating expenses for 1.8 billion have 9% of a year. The increase was mainly due to an increase in pavement loss on PPE, an expense in relation to settlement of dispute with customer, and increasing in staff cost. Operating margins for the full year of 23 was 5% compared to 0.5% last year. Excluding the impact from a change in fair value of notes, long-term investments, and share-based compensation expenses, adjusted net income attribute to Jinko Solar Holdings' ordinary shareholders was about $574 million. have nearly two times a year. Let's move into the balance sheet. As mentioned, at the end of the fourth quarter, our cash and cash equivalents were significantly higher at $2.75 billion, half from $1.93 billion at the end of the third quarter, and $1.64 billion at the end of the fourth quarter of 2022. AR turnover days were down to 76 days in the fourth quarter from 87 days in the third quarter. Inventory turnover days were down to 57 days from 67 days in the third quarter. The total debt was $4.38 billion at year end compared to $4 billion last year. A net debt was $1.6 billion compared to $2.3 billion last year. This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed.
spk21: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Philip Shen with Roth MKM. Please go ahead.
spk05: Hi, everyone. Thank you for taking my questions. First one is on pricing. I was wondering if you could share with us the Q4 ASP. Sorry if I missed it. And then what do you expect that ASP to be in Q1 and Q2 as we get through the year?
spk15: Hey, Jenner, would you like to answer a question? Go ahead. Philip, can you hear me?
spk06: Yes, I can hear you.
spk17: Okay, so I'm traveling, so I didn't get all of your questions, but I heard it's about pricing, right? So the pricing, actually the pricing significant drop happens across December to January. So that means if we compare the SP between Q4 and Q1, definitely there will be a big gap in the course of the market price changes. So detail number-wise, I don't have that with me. Sorry for that. Okay.
spk05: Hey, Jenna, thanks for that. So can you share what the ASB was in Q4 for modules? And then can you quantify how much lower Q1 might be? Thanks.
spk17: Charlie, can you take that? I don't have the number with me now.
spk14: Philip, I think the most important thing is we believe it's kind of the panic sales, you know, the module. You know, let's say two quarters. And we don't believe the price, particularly in China, is sustainable. And we are expecting, as well as the market, expecting the module price has been stabilised and maybe up a little bit. Back to pricing, depending on different markets, the U.S. is pretty significant in price premium, and Europe is a little bit better than China, and different segments, DG, which is the utility, has different price difference. And the answer to your question, I think you want to explore this for sure. If Q1, Q2, versus Q4 last year, we think the ASP is still in the downward trend. But it's not dramatically, but slightly. And we think it's reaching to the bottom in the first half of the year, 2024, for the ASP.
spk05: Okay, but you have the average selling price for all the regions for Q4, right? Can you share that price for Q4?
spk14: No, we don't disclose, but you can calculate the blended, you know, if you take the total revenue with this module share. And typically we have, I think, 95% of the revenue is coming from module business. Okay.
spk05: Okay, thank you. So it sounds like the bottom could be Q1 or Q2, or do you think the bottom is more Q2 or more Q1 in terms of module pricing?
spk14: I think different companies have different mix, but I think it's a relatively stable Q2 versus Q1, maybe a little bit different. lower, but it's not significant and Yeah, that's what we are looking at and the most important thing is we think the China the demand is Exceeding the expectations, you know China demand very very good and Europe, you know, the D stock has been completed and they're picking up, you know the stock so we think there's a kind of the improved, you know, outlook, you know, from its brand side. But still some, you know, oversupply situations. But for Jinko, we have more, you know, 90% is in time and global sales and manufacturing capabilities. And we think we are relatively better, you know, than the other peers. But it takes time, you know, for the and low low inflation say capacity you know tier two tier three companies face out but it takes time but we think is the most important thing we focus on our independence and throughout the you know a relatively challenging year yeah yeah okay thanks charles shifting over the margins so you've given us a little bit of a framework for how to think about pricing um trends through the year
spk05: How do you expect, like, what do you expect your margins to be for Q1? You know, I know you haven't given official guidance, but, you know, just relative to Q4, you know, maybe you can stay a little bit up or down or something. And then as it relates to Q2, when do you see a bit of a recovery of the margins? Thanks.
spk14: Yeah, it's, you know, we estimate, you know, the Q1, Q2 first half of the year, it's a little bit, lower, you know, slightly lower versus Q4 last year. It's not dramatic lower for the Q4 versus Q3 last year. It's slightly lower, you know, throughout the Q1, Q2. But we believe there's opportunities and for the second half year, maybe profitability will expand.
spk05: Got it. That's very helpful. And then Finally, I think in your slides you talked about two gigawatts of integrated U.S. capacity. Again, sorry if I missed this, but does that mean you might do wafer, cell, and module in the U.S.? And can you share, you know, if so, like what the locations are? And then, sorry, I'll leave it there and have one follow-up on that topic next.
spk14: Yeah, the U.S. capacity is We started the construction last year, and it's getting ready, I think, very quickly in March or April to start the operation. It's a 100% module, 2 gigawatts, no way for sale. But we have integrated capacity in South, East, Vietnam, Malaysia, the capacity is roughly 12 to 14 gigawatts. And in the combinations with the two gigawatts, the module capacity in the US, I think we are in a good position. And on top of that, we have separate independent supply chain from the poly, everything to the module. And we have very good traceability systems and the proof record in the last year. So we think this year, we can we have more market opportunities and to catch up, you know, for the next two or three years for the US market.
spk05: Got it. Okay. So it's only two gigawatts of module, uh, or it is two gigawatts of module. Uh, the way it was written on the slide, slide six, it sounded like two gigawatts of integrated capacity could be in the US. But, uh, my follow up here and then I'll, um, wind it down is what is, and this might be a bit of a tough question, but what is your view of the discussion around, the foreign entity of concern language, which a lot of people are talking about could be added to the 45X manufacturing PTC, which might make it more difficult for you guys to add or to receive the PTC. You know, you're ramping up your facility basically now, if not maybe in a month in April. To what degree does that concern you? Are you following that topic at all? Thank you.
spk14: I'm not familiar with the topics you are talking about, the foreign entities, the regulations updates, but we will follow up after the call. I'm not sure you are talking about like the semiconductor, the sensitive technology, but we think solar is more you know, pervasive and very common, you know, for each country to develop. And it's not data sensitive. But anyway, we will follow up, you know, the topic you are talking about, but not familiar with the progress.
spk05: Okay. Thank you, Charlie. I know I asked a lot of questions. Appreciate it. We'll pass it on.
spk21: Thank you. Your next question comes from Alan Law with Jefferies. Please go ahead.
spk03: Thank you for taking my question. So I would like to know, because there's a very detailed capacity expansion plan, and just would like to ask a bit on the details. So by the end of 2024, it would be 120, and then 110, 130 gigawatt for wafer, cell and module. So my question is mainly on the cell because the company has 70 gigawatt of popcorn by the end of 2023 and then suppose supposedly the remaining 20 gigawatt is PERC so and then by the end of this year it's 110. So will it be 100 gigawatt of popcorn plus 10 gigawatt of PERC? If that is the case then do you mean you would impair the 10 gigawatt of PERC this year?
spk14: The answer is we will phase out, phase out 20 gigawatts, you know, the PERC capacity throughout the year. That's the plan. And we have one, everything we have disclosed by the end of the year, the capacity is 100% N-type. It's not, you know, P-type capacity. The sale capacity is 110, and the major part is the 28 gigawatts, the Sanxi, Shoper factories, plus what we are talking about, the well-known 4 gigawatts. As well as we have some improvement of production, the volume, existing capacity. So total is 110 for the entire top capacity. We did have 28 gigawatts per capacity. And we don't have time to upgrade. And we think it's not economic. It makes sense. And the most important thing is we have depreciated the capacity over five years. So we don't believe we have significant burden for the 20 gigawatts, the perk. And we focus on the technology, the new technology and new product that is I think that is a smart decision.
spk03: So just to confirm, basically for the 20 gigawatt of PERC, they are fully depreciated. So basically they were built in 2019, and then by now they are fully depreciated. So you do not see major impairment risk this year, right?
spk14: Yes, roughly, yes. And we did have some kind of residual value, but it's not significant. Most of the assets have been depreciated.
spk03: Yes, that's very impressive because a lot of peers in this industry might have a lot of impairment this year. So my next question is, what is the new signed AST for the contract that you are signing in the U.S. market? Because have been hearing different feedback saying that prices for utility projects in the U.S. are declining from $0.30 to below $0.30 since 4Q. So I'd like to learn your view on this front.
spk14: There's a kind of, I think, property index for the U.S. The price range is relatively, I think, relatively big. You know, high $20, low $30, what kind of... in our range and it looks like it's in the downward trend but relatively stable and the different customers have different preference and we think we are in a good position because we trace abilities and we have separate poly through the modules. And we think we can still relatively know the price premium with our peers.
spk03: Thanks. So you have mentioned overseas polysilicon. So we'd like to have an update on the overseas polysilicon price. Is it rebounding or it's still trending down?
spk14: I think in the recent three months, really stable. Because you know the poly silicon out of China is around 100,000 metric tons. It's no new capacity expected in the next month, half year. But the other things, it may be some China poly, you know, China poly, you know, but I think there's a, you know, relatively
spk03: risk you know and there's a very complicated compliance and so uh we don't see significant downward and the relative stable you know i see so uh switching gear to the the european market because you have mentioned this talking has basically completed so i would like to follow up on this like are you having receiving orders in a normalized manner? Is it from the residential market or it's mainly from the utilities market in Europe?
spk14: I think both. In the recent quarter, I think the majority is the DG and the market. But this year, both. Utility and the DG will grow year over year.
spk03: So you don't see inventory as an issue even in the DG market anymore? Because last year, it was a huge issue.
spk14: Yeah, yeah. And last year, the first half year, they built the stock for the DG distributors. And this stock, so I think five or six months. And it looks like, you know, On top of that, even not only in the European market, as well as other markets, the customers, they are reading to the bottom of the module price. It looks like, you know, stabilized. I think, you know, the price is not sustainable. A lot of customers accelerate, you know, the purchase decisions, as well as the stock, you know, the stock level is going back to the normalized level in Europe, and plus the logistic issue, flat fee issues. So we see the rebound from the European market. And the second quarter, for sure, is a strong quarter for the European market.
spk27: And in your PowerPoint, I think it's the first time that you have officially put ESS.
spk03: into the whole price release. So we'd like to know, do you have any quantitative shipment target on ESS? Because I know you have capacity for more than 10 gigawatt hour. So we'd like to know on that front.
spk14: Oh, storage. Oh, storage. And we build up the capabilities, the teams, products, capacities. and majority from last year and the key focus is we develop our R&D capabilities and products and focus on some key markets and so far it's in the relatively early stage but we are confident and we will discuss maybe the full year the guidance and later the this year, you know, maybe in the second quarter, third quarter. But this year we think, you know, it's a good opportunity to catch up the markets and build a strong foundation for the next few years. So that's the key focus, not the focus for the shipment of this year.
spk03: Thanks. Thanks a lot for the comprehensive information. So I'll pass on. Thank you.
spk10: Thank you.
spk21: Thank you. Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. Your next question comes from William Grippen with UBS. Please go ahead.
spk01: Excellent. Thank you very much. My first question was just on your 300 plus patent portfolio. I was wondering if you could provide a little more color on where those patents are granted. Are any of them international and You know, one of your peers is out there asserting their IP rights related to some TopCon technologies. Just maybe, you know, how are you thinking about that? How do you view that relative to your patent portfolio? Thank you.
spk14: The patents and that, you know, we put a lot of R&D, you know, efforts in the recent couple of years. And we developed and discussed, right, over 300 TopCon projects. patents which we developed ourselves. On top of that, we have additional, more top-down patents by acquisition from others. And the patent is our key differentiators and the key strategies. And we licensed to one of the top 10 module company and one of the top five. you know, solar cell and the companies. And it's an illustration how very strong and capable our R&D teams on the, you know, the cutting-edge technology.
spk01: Okay, yeah, appreciate that. And then just on the 26% mass production N-type cell efficiency that you referenced in the press release, How do you expect that to translate into mass production module efficiency? And when do you think that would ultimately be realized in mass production? Thank you.
spk14: 26% sale capacity, we have reached to that level, the mass production. And our target is end of this year, 26.5%.
spk26: All right.
spk14: Appreciate the time. Thank you. Sorry. Yeah, sorry, sorry. And I think, you know, that for the standard, the 182, I think, you know, we are talking roughly 610 to maybe 620 watt, you know, for standard 182 modules, yeah.
spk21: Thank you. Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. Your next question comes from Rajiv Chaudhry with IntricSick Edge. Please go ahead.
spk07: Yes, good morning. I have a few questions. First of all, just in terms of housekeeping, can you tell us what the depreciation number was in the fourth quarter and what you expect it to be in 2024?
spk15: So, sorry, could you repeat again?
spk07: Yes. The question was about depreciation in the fourth quarter and what the expectation is for 2024.
spk15: Oh, depreciation.
spk14: It's roughly, I think, you know, $6 billion to $7 billion RMB, you know, for 2024. Okay. So each quarter, roughly 1.5 to, I think, 1.8 billion. Sorry, can you repeat that? 1.5 to 1.8 billion RMB?
spk07: Yes, depreciation. And that's in 2024. What about the fourth quarter? Last year, right? Yes, 23. Yes, sorry. Okay.
spk14: Yeah, similar amount. It's not significant difference.
spk07: So around $1.5 billion in the fourth quarter?
spk12: Yeah, roughly.
spk07: Okay. And then what was the total CapEx capital spending in 2023, and what is the expectation for 2024?
spk20: For CapEx? Yeah. Let me go into some details. For the 2023, our total capex is around RMB 18 billion, and we expect a range in 2024 is from 11 to 15 billion, depends on the market. I see.
spk07: Okay. And out of this $11 to $15 billion, is it almost 100% related to the module business, or is there anything related to the storage business as well?
spk20: It's related to our integrated solar manufacturing.
spk07: Okay. The next question is about... The charges that you had in the operating expenses, you mentioned that the write-down of assets as well as the settlement with the customer, if they had not happened, then the total operating expense would have been the same as the third quarter. So by my calculation, that is about 60 billion RMB or about $85 million. is that, sorry, 0.6 billion RMB or about $85 million. Is that the correct number?
spk14: You're right. We did have some kind of special one-time items in the fourth quarter last year. One is some kind of customer dispute. It's around the 30 million U.S. dollars, 30 million U.S. dollars, which is we have some empowerment, you know, empowerment for the equipment around 10 million U.S. dollars. So we did have 40 million, you know, I think one of items you can excuse. It's not recurring items.
spk07: Okay. And... Comparing your cost structure to the Tier 2 manufacturers, can you give us an idea? My calculation is that your cost structure in the fourth quarter was about 10 percentage points better than the Tier 2 and Tier 3 manufacturers. So, for example, if you did 12.5% gross margins, The Tier 2 and Tier 3 were operating at 2% to 3% gross margin. Can you comment on that?
spk13: We are confident our cost structure is leading, and we have advantage.
spk14: By the way, we don't comment on detailed numbers, and different companies have different situations. You're right, but if we are, let's say, making low profit levels. I think a lot of companies, you know, doing a similar business will lose their money. That is where we're confident. But again, I think it takes time, you know, to face off the tier two, tier three companies. And it's after the the consolidation and the phase out, and we think we can get more market share and make decent profitability, but it takes time.
spk07: Do you think at this point your cost structure is better than other tier one manufacturers?
spk14: I don't, you know, do 100% guarantee, but we are confident.
spk07: So you're confident that your cost structure is already equal to or better than other Tier 1 manufacturers?
spk14: Yeah, we are confident that our cost structure, capacity, technology is leading.
spk07: Can you elaborate on the expected cost improvements that are likely to happen as a result of the integrated production that you're going to roll out next year of the Shanxi plant? How much of a cost advantage are you going to create as a result of the integration and everything happening in one location?
spk14: It's not purely a cost advantage. It's the Shanxi, you know, and automatic and the ESG traceability, low carbon, everything. And we integrated a lot of advanced equipment and streamlined a lot of the even phase out some production phase stage and have significant workforce efficiency very high turnover ratios and very good location to serve the customers in the West China as well as the global market customers. So the cost rush is, you know, it's reflecting the advantage and it's a big amount, we believe, but we don't disclose. We think it's a advantage with this existing production structures for the industry.
spk07: Finally, I want to confirm a number that I think Jenner gave. The total volume of shipments of N-type in the fourth quarter, was it 70% of total shipments?
spk14: That's 70%, yes, 70%.
spk07: And did he say that in the first quarter it will be 85%?
spk14: Full year, let's say it's full year, it's around 90%. So gradually from 70% to 95% quarter by quarter. And this year, so Q1 this year, I think roughly 80%. Okay.
spk07: Okay. Okay. So in terms of going back to the gross margin, so you are suggesting that the first quarter gross margin should be slightly lower than the fourth quarter. So are we still looking at a number around 12%?
spk08: You mean the absolute number?
spk07: Yeah, the actual gross margins.
spk14: Yeah, we don't disclose that, but I said, you know, it's worse slightly, slightly, you know, downwards, but not dramatically. But we think it's bottom and it's reaching the bottom, yeah, for the first half of the year.
spk07: So if the gross margin is around 12% in the first quarter and the prices stabilize from March, April onwards, Is it reasonable to think that gross margin could improve in the second quarter because your costs will keep on coming down and also your shipments to the U.S., which are higher ASP, will go up?
spk14: We think, you know, we have more likelihood to improve in the second half year. The input outlook, you know, the demand outlook, and you're talking about U.S. shipments, it's the second half year low list. And I think roughly maybe, let's say, 60%, 65% in the U.S. in the second half year. As well as, you know, the Shanxi Super Factory is doing the pilot productions, you know, the first half year. That will be 100% operational by the end of the third quarter. So everything, you know, together, we think it's a... you know, the margin expansion is likely to, you know, in the second half year.
spk07: And what do you think the impact of, you mentioned that in the fourth, by the fourth quarter, you expect that tier one companies or top ten manufacturers will have as much as 90% of the market. That basically means tier three will have shut down and tier two will will be selling much lower output than they are selling right now. What do you think that does to pricing by the fourth quarter?
spk15: The fourth quarter this year, right?
spk07: Yes.
spk15: Yeah.
spk14: It's difficult to estimate, but I think it should be stabilized. And on top of the most important things, I think by the end of the fourth quarter, I believe a lot of industry players for tier two, tier three, and as far as the companies, they never in the solar industry, but enters, you know, in this one or two years, those guys are going to, the capacity will be phased out 100%. So that's my estimation.
spk07: Okay, great. Thank you very much, and good luck in 2024.
spk21: Thank you. There are no further questions at this time, and that does conclude our conference for today. Thank you for participating. You may now disconnect.
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