JinkoSolar Holding Co Ltd DR

Hello, ladies and gentlemen, and thank you for standing by for JNCO Solar Holding Co. Limited's second and third quarter 2025 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 our meeting over to your host for today's call, Ms. Stella Wang, JNCO Solar's Investor Relations. Please proceed, Stella.

Thank you, operator. Thank you, everyone, for joining us today for Zinco Solar's second and third quarter 2025 earnings conference call. The company's results were released earlier today and available on the company's IR website at www.zincosolar.com, as well as on U.S. Wealth 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 Xiangde, Chairman and CEO of Zinco Solar Holding Company Limited, Mr. Zhang Miao, CMO of Zinco Solar Company Limited, Mr. Pan Li, CFO of Zinco Solar Holding Company Limited, and Mr. Charlie Tao, CFO of Zinco Solar Company Limited. Mr. Li will discuss Zinco Solar's business operations and company highlights, followed by Mr. Miao, who will talk about the sales and marketing, and then Mr. Pan Li, who will go through the financial They will all be available to answer questions during the training session that follows. Please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private 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 Zinco Solar's public filing with the Securities and Exchange Commission. Zinco Solar does not assume any obligation to update any forward-looking statements, except as required under the applicable law. Now it's my pleasure to introduce Mr. Li Xiangge, 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.

In the previous three seasons, the global stock price was 61.9GW. The global stock price rose again to the first place. With superior product performance and a leading position in the overseas high-price market, the second-season profit margin was 2.9GW, the third-season profit margin was 7.3%, and the profit margin was significantly improved. What is new is that in the past two years, we have been growing in the field of product development. and are gradually gaining sales. The first three seasons, the total amount of products accumulated has exceeded 3.3 gigawatts. In the next two seasons, there will be a lot of growth and an increase in the proportion of overseas markets. The profitability of the energy industry has significantly improved. Considering the installation, adjustment and reading process of the energy products, the confirmation of the report will be relative. We are confident that with the gradual improvement and continuous increase in competitiveness of the corresponding scale, In the first three quarters of 2025,

Our global module measurements totaled 61.9 gigawatts, once again ranking number one worldwide. DragonBot averaged outstanding product performance and a strong presence in high-value overseas markets. Growth margin improved sequentially for two consecutive quarters to 2.9% in the second quarter and 7.3% in the third quarter. Net loss continued to narrow sequentially. We are pleased to see that our intensive efforts devoted to storage, R&D, and products in the past two years started to bear fruit gradually. In the first three quarters of our cumulative energy storage system, the ESS shipments exceeded 3.3 gigawatt hours. increasing significantly for two consecutive quarters. This, combined with the rising share of overseas markets, has helped the profitability of our energy storage business improve noticeably. Considering that energy storage products are in the process of installation, commissioning, and acceptance, there will be a lag in revenue recognition in our financial statements. We are confident that as economics of scale accelerates and competitiveness continues to improve, our energy storage business will more than double next year. Its revenue contribution is expected to rise significantly and serve as a key driver of our overall gross margin expansion.

二季度和三季度,我们的组件开工力维持在合理水平。 三季度以来,上游硅料硅片电池环节有一定幅度的涨价。 The price of the main building is steadily rising. Due to the good news of 136, the individual pricing mechanism is still at the bottom. The business model and business model of the project in the central part of the central part of the central part of the central part of the central part of the central part of the central part of the central part of the central part of the central part

In the second and third quarter, we continue to keep module utilization rates at a reasonable level. Since the third quarter, prices of polysilicon wafers and cells have all risen, and module prices showed some upward trends. Given that feeding rules in all provinces are still in implementation phase, central and state-owned enterprises need some time to calculate their IR returns and adjust their business model for end projects. It is expected that demand will take some time to release. However, we have seen some positive signals in the raw material segment. Supported by rising raw material prices, module prices in overseas markets have also increased.

The upgrade of high-performance products has become an important direction to accelerate the development of high-quality industries. This also combines the needs of mid-end customers for high-performance products to achieve more reliable Our investment report is that we are the first company in the industry to carry out industrial upgrade. The high-performance product upgrade of commercial equipment has been recommended by the website. At present, we have delivered a part of the high-performance Feifu series products. Compared to the un-upgraded products, the price is 1 to 2 US dollars. With the highest performance, the Feifu 3 series products with a capacity of 670 watts can be gradually completed and upgraded. We expect that the demand for high-performance products in 2026 will gradually increase.

The upgrade towards high-power production capacity has become an important direction for accelerating industry high-quality development. This technical upgrade also meets end customers' demand for high-power products to achieve more reliable investment returns. As an industry pioneer to upgrade existing top-com capacities, through technology enhancement, we made steady progress in high-power product upgrades in the third quarter. We have already delivered some high-power products, carrying a premium of one to two US cents per work, compared to the conventional products. As upgrades of the third generation tag new products with maximum power of 670 Wp is completed, we expect the shipment's proportion of high-power products to increase quarter-over-quarter that year, accounting for 60% or above in 2026.

央声6号文取消强制配储后, 国内储能正在加速市场化, 分股价它的拉大, 叠加容量电价,容量补偿等政府支持, 多个省份的独立储能项目可实现较好的经济性。 在经济性和能源转型的驱动下, The demand for overseas areas such as Europe, Asia, Thailand, Middle East, Latin America, etc. is also growing rapidly in the United States. The rapid expansion and growth of the AI center in the United States has brought unprecedented electricity demand, and local electricity supply is facing challenges to help families become safer and easier to deploy. We have long accumulated channels, brands, and customer support advantages, which can provide customers with localization and a solid solution. At the same time, The company currently has 12 gigawatts of system integrated capacity and 5 gigawatts of telecom capacity. Through the breakthrough of self-propelled technology, the performance and competitiveness of renewable energy products are constantly improving. In the market, we have gathered high-performance overseas markets. The focus is on large-scale renewable energy and industrial and commercial projects. The exchange period is long, but the demand is abundant, providing stable and sustainable growth momentum for the company's renewable energy business.

Since market-based electricity reform has removed the mandatory energy storage requirements, China's energy storage industry is accelerating its market-oriented development. With the increasing gap between peak and off-peak electricity prices and the implementation of policies such as capacity pricing and capacity compensation, independent energy storage projects in multiple provinces can achieve sound economic returns. Driven by both improving economics and global energy transition, demand is increasing in Europe, Asia Pacific, Middle East, and Latin America. In the US, a rapid expansion of AI data centers has led to unprecedented surge in electricity demand. Straining domestic electricity supply, solar plus storage has therefore emerged as a safer and more easily deployed solution. We expect a global demand for energy storage to experience explosive growth, driving by increasing renewable energy penetration and declining storage system costs. This once again validates our strategic decision to invest in the energy storage business in line with our industry trends. And it has helped us build a long-term competitive advantage. As a leading enterprise in the PV sector, We possess long-established advantages in channels, brand reputation, and customer resources, enabling us to provide a localized one-stop solar plus storage solution. On the manufacturing side, we currently have 12 gigawatt-hours of pack capacity and 5 gigawatt-hours of battery cell capacity and continuously improve product performance through self-developed technological breakthroughs. On the market side, we focus on high-margin overseas markets, particularly utilities bill and industry and commercial projects. Although delivery cycles are relatively long, demand remains strong, providing stable and sustainable growth momentum for the company's energy storage business.

In general, the global supply chain is speeding up and the balance of supply and demand is gradually improving. As technology upgrades and promotes high-quality development in the industry, the market share of high-performance and high-value products will gradually expand and become a leader in price. As the bidding market is more focused on technical capabilities and long-term reliability, the capital companies with good comprehensive capabilities, bank financing and other resources are also focusing on the capital companies. The market share is also expected to improve further. In summary, the global supply chain is reshaping, and the balance between supply and demand is gradually improving.

As technological upgrades accelerate industry high-quality development, the market share of high-power and high-value products will continue to expand, and become a dominant force in market pricing. As market competition, particularly in projects of bidding, increasingly favors leading enterprises that demonstrate strong technological capabilities and long-term reliability, resources such as bank financing are also concentrating towards leading enterprises, further strengthening their market share. The strong technological capabilities, long-term reliability, and global diversification of our energy storage business, we are well positioned to further strengthen our competitiveness and benefit from the industry next up towards the cycle.

近期,国家对新能源行业的支持力度持续加强。 十五规划意见明确提出加快能源供应端与消费端的低谈化。 国家发改委能源局近期发布了关于促进新能源消耗与电力调控的指导意见。 The 15th Five-Year Plan proposed accelerating the decarbonization of both the energy supply

and the construction sectors. The National Development and Reform Commission and the National Energy Administration have also recently issued guidance on promoting renewable energy integration and power system regulation, further emphasizing the critical role of energy storage in the construction of a new energy system. We expect that these matters will further strengthen the competitiveness of China's renewable energy sector and steer the industry back onto a healthy and a rational development path.

We will continue to respond to the requirements of high-quality industry development, reasonably control the opening power, focus on the upgrade of high-efficiency capacity, and at the same time actively respond to the changes in overseas policies to ensure sustainable supply and supply to customers. We will also continue to strengthen the competitive advantages in technology innovation and globalization. Looking forward to the fourth quarter and the fourth year, we will continue to actively respond to the industry's call for rational development by maintenance.

reasonable production levels, and focusing on upgrading and transforming high efficiency capacity. At the same time, we will proactively adapt to changes in overseas policies to ensure sustainable supply for our customers. We will keep strengthening our competitive advantages in technology and global operations, achieve a balance between scale and profitability, while consolidating our industry-leading position. We expect the total shipments, including solar modules, cells, and wafers, to be between 85 gigawatts to 500 gigawatts for the four-year of 2025. And ESS shipments to be 6 gigawatts over for the four years 2025.

Thank you, Missy. Puzzle shipments were 21.5 gigawatts in the sub-quarter, with module shipments accounting for 93%. By the end of 2004, we became the first module manufacturer in the industry to achieve a cumulative global module shipment of 370 gigawatts, with total cumulative shipment of TigerGeo series departing 200 gigawatts, the best-selling module series in history. In terms of a geographic mix, In the third quarter, we focused on high-value overseas markets with shipments accounting for over 65%, achieving strong growth in Asia-Pacific, emerging markets, and Europe. Shipments to the U.S. were nearly 1.3 gigawatt in the third quarter, doubled sequentially. Against the backdrop of the electricity market reform, customer demand for high-power products continues to rise. Our high-power Technio 3.0 series, with its artificiality rate of 85% and excellent low-light performance, can generate stable electricity during storm, dark, and cloudy weather, effectively extending power generation hours. At the same time, In a market environment with increasing volatility in electricity spot prices, the outstanding power generation performance of Tiger Neo 3.0 enables more power generation during peak price periods in the morning and evening, creating higher yield and more reliable returns for clients. According to our outward field test data, in Chengdu, China, under low-light conditions such as strong and dust, Tiger News achieves a 7.2% gain compared to BC products. And in Kagoshima, Japan, Tiger News shows 10.79% yield gain over BC products in low-light conditions. In the third quarter, we delivered some 5-hour products that carried 1 to 2 US cents premium compared to conventional products. We expect our highest power, the HydroNeo 3.0 product, with maximum power of up to 671 feet, to be produced in large scale next year, further strengthening our competitiveness on the product side. We, once again, taught that the PBTAC 2025 Q3 module check bankability reported with AAA readings thanks to our solid operational capabilities, outstanding technological innovation, and a strong recognition from global customers. As one of the few enterprises to continuously maintain top-tier creditworthiness and technological strength in the global PV industry, In the latest release of BNEF energy storage Tier 1 list of 4Q2025, we were recognized as Tier 1 energy storage provider for the seventh consecutive quarter. Our continuous efforts in sustainable development have also earned international recognition repeatedly. In the recent MSCI ESG rating, we were upgraded to an A rating, maintaining our position in the top tier of ESG performers in the global fuel industry. Additionally, our SNTCSA score continues to improve from 2024, rising significantly to 78, far ahead of the industry. On the demand side, we expect global PV demand to slightly contract in 2026. In China, due to the implementation of policy reform 136, the pace of carrying out 15th five-year plan, as well as industry self-discipline and anti-involution measures, demand is expected to slightly decrease year over year in 2026. Markets outside China are generally expected to remain healthy. In the mean to long term, the urgent power demand from AI data centers, combined with most countries' commitment to reduce carbon emissions, will join nationwide growth in the global deployment of clean energy and new grid infrastructure over the next three to five years. The Information Office of the State Council recently released the White Paper of China's Action on Carbon Picking and Carbon Neutralities, which emphasizes that energy storage is a key support for building a new type of power system and advocates actively developing the renewable energy plus energy storage solutions. In the United States, We are already seeing some tech giants deploying co-located or nearby solar-plus storage at their data centers to meet rapidly growing electricity needs. We believe renewable energy-plus energy storage has become an invisible and accelerating trend. We remain optimistic about the long-term prospects of the U.S. market. Although trade policies impose certain constraints on the manufacturing side, we have taken proactive measures and made early strategic deployments adjusting our manufacturing and supply chains in response to policy changes to provide U.S. customers with long-term, stable, and reliable solutions. We are confident that leveraging our advantages in technology innovation, high-power products, and global network, we can continue to satisfy our global clients' demand for clean, safe, high-efficiency, and reliable integrated solar and storage solutions. We will also continue to improve our competitiveness in global markets.

Thank you, General. We are pleased that our focus on high-performance products and high-value markets as well as our efforts in cost and expenses control have delivered steadily improved financial results. First profit margin turned positive in the second quarter and continued to improve by 4.4 percentage points in the third quarter. Net loss and adjusted net loss narrowed sequentially for two consecutive quarters. Operating cash flow was $340 million in the third quarter, improving significantly quarter over quarter. Operating cash flow is expected to be positive for the full year 25. Moving to the details in the third quarter. Total revenue was $2.27 billion, down 10% sequentially. and 34% year-over-year. The sequential decrease was mainly due to a decrease in the solar module shipment, and the year-over-year decrease was primarily due to a decrease in average selling price of solar modules. Gross margin was 7.3%. The sequential improvement was mainly due to a lower unit cost product sold. And the year-to-year decrease was mainly due to the decrease in ASP of solar modules. Solar operating expenses were $363 million, up 36% sequentially and down 32% over a year. The sequential decrease increase was due to an increase in the impairment of long-lived assets. While the year-to-year decrease was mainly due to the decrease in shipping costs, our solar module shipment decreased and the average freight rate declined during the third quarter this year. Total operating expenses accounted for 16% of total revenues compared to 10.6% in the second quarter and 15.4% in the third quarter last year. Operating loss margin was 8.7% compared with operating loss margin of 10.7% in the second quarter this year and operating profit margin of 0.3% in the second quarter last year. Moving to the balance sheet. At the end of the third quarter, our cash, our cash equivalents were 3.3%. billing compared with $3.4 billion at the end of the second quarter of 2025 and $3.2 billion at the end of the third quarter of 2024. Air turnover days were 105 days compared with 97 days in the second quarter. Inventory turnover days were 90 days compared with 66 days in the second quarter this year. At the end of third quarter, total debt was 6.4 billion compared to 6.7 billion at the end of second quarter. Net debt was 3.1 billion compared with 3.3 billion at the end of second quarter this year. Debt conditions improved sequentially. Let me go into more details of the second quarter. Total revenue was $2.51 billion, up 30% sequentially and down 25% year-to-year. The sequential increase was primarily due to increase in the solar module shipments, while the year-to-year decrease was mainly due to a decrease in the ASP of solar modules. Gross margin was 2.9%. The sequential improvement was mainly due to a lower unit cost of product sold, while year-over-year decrease was mainly due to the decrease in ASP of modules. Total operating expenses were $266 million, down 24% sequentially and 50% year-over-year. The sequential decrease was mainly due to the reduced expected credit loss expense in the second quarter while the year-to-year decrease were mainly due to three points, a decrease in the impairment of loan leave assets, reduced expected credit loss expenses, and decreased shipping costs as the average freight rate declined during the second quarter this year. Total operating expenses accounted for 10.6% of total revenues, compared to 18.1% in the first quarter of 25, and 16.9% in the second quarter of 24. Our present loss margin was 7.7% compared to 20.7% in the first quarter this year and 4.7% in the second quarter last year. Moving to the balance sheet. At the end of the second quarter, our cash and cash equivalent was 3.4 billing compared with 3.77 billing at the end of the first quarter this year and 1.9 billing at the end of the second quarter last year. AI turnover days were 97 days compared with 111 days in the first quarter this year. Inventory turnover days were 66 days compared to 84 days in the first quarter. Our operating efficiency is improving. At the end of the second quarter, total debt was $6.7 billion compared to $6.4 billion at the end of the first quarter. Net debt was $33.3 billion compared to $2.6 billion at the end of the first quarter this year. This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed.

Thank you. 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 Capital Partners.

Hi, everyone. Thank you for taking my questions. First one's on your gross margins. Can you share some color on what you see as the difference between yours and Canadian Solar's? They reported recently 15%. You guys have Q3 gross margins at about 7%. And what was the main driver, you think, for that underperformance? And then can you provide some color on the storage and solar gross margin difference? And then finally, what do you think margins look like for Q4? Thanks.

Thanks, Philip, and I think, you know, compared to our peers, particularly the Canadian solar, the gross margin difference is, you know, the different revenue contribution from the energy storage business. But if you look at the Ginkgo, you know, quarter by quarter, we did improve gross margin dramatically. It's coming from majority, you know, the module business. But for the energy storage sectors, we did want to have a, you know, very, very positive update, I think, in the prepared remarks of Chairman Lee. And we think, you know, our energy storage business is ready for the, you know, dramatically close in next year, 2026. And we're expecting significant revenue contributions and gross margin expansions. And the storage is really in supply shortage. And this year, we shifted around 6 gigawatt hours . And next year, we expect to double, at least double. And in terms of revenue recognition, different because the revenue is recognized for the Siemens with the final acceptance. It's a little bit delayed, one quarter to two quarters. And for the energy storage business, the gross margin is a decent level. We expect at least 15%, 20% gross margin. And, you know, looking forward, particularly for the ESS business out of China, and we target 70%, 80%, you know, the ESS business next year. And in terms of revenue contribution from the energy storage business, we expect 10% to 15%. I mean, you know, the revenue from ESS business compared to the total revenues of Ginkgo next year. So it's a, you know, we are actually, we think our business is shifting from purely module business to module plus ESS next year.

Great, Charlie. Thank you very much for the color. And can you share also a little more color on your view? You know, you've given us some color on the storage market. You shared that next year it could be six gigawatt hours. What might the geographic shipping mix be for 2026? And how much to the U.S., how much to China, and then maybe Europe and others? Thanks.

Yeah, yeah. This year is 6 gigawatts. Next year is double, okay. That is the total volume. In terms of geographical distributions, in China, roughly we think 70%, 80%. including United States. And United States, we are in discussion with a lot of potential customers, and it's developing. And we believe, you know, step by step, we are getting more and more orders from U.S. But we are, you know, getting a lot. We have strong pipelines, particularly, I think, from Europe, Latin America, and Asia Pacific.

Got it. Okay, great. Thank you. Shifting over to one more question here on the foreign entity of concern for the U.S., FEOC. Can you help us understand? You have a big business shipping solar modules to the U.S. Now you plan to ship batteries also to the U.S. Can you help us understand how you plan to comply with... foreign entity of concern requirements for the U.S. market. Thanks.

I'm looking for the next year. We don't believe there's a lot of, you know, kind of impact, you know, negative impact from the field. Let's say OBVB, you know, compliance. We are seeing a lot of, you know, safe harbor projects, particularly for the solar, plus some storage, you know, projects. And we committed from long-term, and I think we reshaped our supply chain globally and including, and we are exploring options for our solar module facilities in Florida. And we think from long-term, and there is going to be demand for both FILC and non-FILC. And we are in the, you know, if there is some kind of development, particularly for, you know, transforming our solar module facilities in the United States to the non-fail entities, and we will let the investor know. But we have been in the process of discussion with potential investors.

Got it. Okay. Thank you, Charlie. I'll pass it on. Welcome.

So our next question comes from Alan Lau with Jefferies.

Hello. This is Alan from Jefferies. Thanks for taking my question. So my first question is about the ESS business. I would like to know if there's any discussion with any of the AI data centers or hyperscaler clients, and what type of demand Are they requiring, like, are they more like two to four hours of capability compatible demand, or it's more like even longer hours of storage requirement?

Thank you. Yeah, we think the AI-driven data center, you know, is going to put a lot of demands for the global necessities from long term, and we're Our ESS team is in discussion with potential pipelines for the data center, including US, Europe, and including China. But it's still in progress, and we believe we are able to reach a significant milestone early next year.

I see. Thanks. In relation to the geographical breakdown, we'd like to know if the gross margin of ESS is similar across the regions, or it should be higher in Europe or the US. How do you see the margins in different regions that you operate?

You mean the ESS margin, different regions, right? Yeah. Yeah, you know, it's depending on different markets, and China is still a little bit low, but I think it's recovering a little bit, you know. Yes, it's very competitive in China, but Europe and U.S. is, you know, it's still, we think that there is a decent growth margin. So, you know, and the Middle East is a little bit low, and I think China and Middle East is, yes, the pricing, you know, the competitiveness, and the margin is relatively low to other regions, but we think it's still a very healthy business in the next two years.

I'd like to know on the cost side of ESS, because I've noticed that the upstream raw materials are all, the cost of raw materials are increasing, or searching, any plans to lock in any raw materials or how has your view on different raw materials like batteries or like even more upstream battery materials like lithium carbonate, et cetera? Yeah, yeah.

Yeah, we, you know, because some demand the materials like in the upper works and Firstly, we have five gigawatts in battery capacity, which put us at a disadvantage. And the second one, we partner with key materials and suppliers. And the second one, when we negotiate a contract, we did anticipate some kind of material cost upwards. So it's a combination. I think it's a little bit challenging, we think we can manage and how to minimize the impact of the material, you know, the pricing.

I see. I think my next question is about the demand on the solar module market. So how do you see the demand growth in next year for maybe both solar and ESS? What is the growth rate you see?

Yeah, for the demand side, definitely we should look in separately for PV and BES. So for PV side, I think we are, in a conservative way, we are expecting more or less a flat year in 2026 versus 2025. The main reason is because China demand, you know, we believe it will have a drop compared with 2025, which because the weight of China demand is so high in the global demand, so which drive even with the other markets booming or other markets growth, we still expect the total demand of the globe in the PV industry for next year will be more or less flat year. However, when we look into the best, it is in a different scenario. With more and more renewable installed, the grid needs more security for the best contribution. Definitely, we are seeing a sharp increase for the best side. That's why, from the best, we are still keeping an optimistic opinion. expectation for next year's installation. If we need to quantify that, we think it will be at least a 25% increase for the best year-over-year.

Thanks, Gana. We'd like to know what type of installation in China are you looking at? Because there are different numbers flowing around. Are you looking at low 200 or even below 200 gigawatt in China?

I'm not that conservative for China because recently I visited a lot of our distributors and even installers in China in all the different provinces. I think most of them are still keeping an optimistic view for next year. Having said all those, I believe that it will be around... Let's say module-wise, it will be around mid-200s, let's say around 250, about. And if we look into the grid connection number, it should be somewhere around low 200s.

That's very clear. Thanks a lot. I think my last question is on the buyback. We'd like to know if the company would start buyback after the blackout, which is basically this result, and how is the pace of the buyback will look like?

Thank you.

You know, we monetized 3%, right, eight years, and I think end of October, and we are in a process to get money out of China and after the regulatory approval. And we have paid, you know, withholding tax, and we expect to get the money by the end of this month. and very soon and for the shareholder returns and we commit at least 100 million US dollars a year and we had deferred dividend early this year and we bought some shares, certain shares and I think last quarter in the middle of this year and after the window, you know, after the early release, and we plan to purchase a share through the end of the year.

Is there, like, how much shares have been purchased, or, like, will the company looking to basically buy all the remaining amount in the buyback program in the remaining one month?

Yes, and I think we, you know, we plan to use the proceeds around the monetization issues and the key, you know, funding, which is available, and it's around 178 million US dollars. So I think we, depending on how the market moves, we definitely will repurchase the shares by the end of this year. And roughly, I think... This year, you know, 100 million U.S. dollars, and we had to take care of dividend, I think, 50, 60 million. So that's our, you know, the base plan.

That's clear.

We will take care of that. Yeah. It's a year-over-year plan, and next year it's roughly the same plan.

I see. That's clear. Thank you. Thanks, Charlie. 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 Chaudhary with Sensora Capital.

Good morning. My first question is regarding your guidance for module shipments for the fourth quarter. You know, it's a very big range, 18 to 33 gigawatts, and you're essentially kept to the same range that you gave for the full year back in the early part of the year. But now we are halfway through the fourth quarter. Could you help us narrow down what the range would be for Q4 for module shipments?

Yeah, I think we're close to the lower end of the range. I think because of the regulatory requirement, we have to keep that range as before. But from the operational level, we believe the lower end of the range is more, let's say, realistic.

I see. So related to that, what do you think the global shipments of modules would be for the industry as a whole in 2025?

Well, we technically believe from the production-wise, we are looking at roughly 700 gigawatts. That's the high-level numbers we are estimating for the whole industry.

And do you believe that 700 gigawatts would actually have been shipped out by the industry as well, or that was just the production?

Well, I think it's more realized to a production, closer to the production side, but because every company has slightly different ways to calculate or announce their shipment numbers, so that's why it's difficult to figure out what's the real shipment number. But production-wise, I think the number is more realistic.

I see. Okay. Okay. So, moving on to another question relating to CapEx. Could you give us the CapEx target for 2025 and also for 2026?

It's roughly five billion, you know, RMB, this year and next year. And next year, we'll begin to have any, you know, plan to, you know, expand, you know, and it's kind of upgraded to a next-generation top-count technology, and it's going to have significant high-end, high-power output solar modules that we are able to provide to our customers next year, roughly 60%. Right. With those, you know, with price premium and relatively good margin contributions, next year, quarter over quarter, the capacity for the high end, you know, upgrade high end module capacity will be released quarter by quarter.

So Charlie, just to be clear, this year the capex is 5 billion RMB and next year it will be flat at 5 billion?

Yeah, roughly, roughly. But next year, I'll talk about it. This year, it's roughly payment, payment of outstanding, you know, amount, you know, $5 billion. Next year, we are doing the upgrade. We are doing the upgrade existing capacity and to the next high-level, you know, top-down capacity. And we foresee a lot of strong demands and with higher demand. module price and higher gross margin contributions.

So you made a very interesting point that operating cash flow will be positive in 2025. It looks like you will be generating operating cash flow positive in 2026 as well and maybe substantially higher than 2025 because the gross margin will be higher. Is that a correct assessment?

Yes. That's right. That's right. And, you know, we talk about firstly, I think the catalyst is first one is ESS storage business next year. We are looking to, you know, 10% to 15% revenue contributions from ESS with decent gross margin and positive net profitability. And second one is the module business. We have, I think, the most advanced top count, you know, upgrade capacities in the industries. and developed by ourselves for technology and which will roughly have 60% shipment of the modules coming from the next generation JNCO developed top capacities with higher, you know, gross margins. And second one, we think from the high-level standards of the industry and the involutions you know, taking the effect step by step and the capacity will accelerate, you know, phase out and leading by the, you know, on top of that industry leading self-discipline, you know, control production volume and the reasonable, you know, pricing based on the cost will take further, I think, enforcement. So combined together, I think the industry is reaching the low point and is recovering step by step, and JNCO, we are getting ready for the market and product perspective, and the plus, we are shifting solar plus ESS story and business. So the basic plan next year, we are confident that we are able to navigate the cycles and turn to positive earnings. That's kind of the business plan next year.

So, you talked about the premium products and the fact that they've got premium pricing. But on the cost side, will your costs for these premium products still be lower than the cost for the standard products this year? In other words, do the costs keep going down even as the price goes up?

Yes, yes. Initially, by design, the cost is a little bit higher, but a very, very small incremental cost. And by the way, our R&D team continues to dive into the details and to try to further improve the cost. But back to your question, I think the high-end product cost is It's a very, very small incremental cost increase at the beginning, but we believe over time, our R&D team with our operational teams will continue to improve the cost.

Final question, Charlie, on market share. In the past, in 2023 and 2024, your global market share had gone up to somewhere between 15% and 16% of the global market. This year, it is down a little bit. I guess partly because you have restrained production because of the pricing. Should we expect that your market share next year will go up again and maybe go up a lot more than 16% because...

industry itself as it's consolidating so and and and what do you think the range for next year module shipments could be the consolidated markets here after consolidation outcome you know the industry consolidation and the face out of capacity the industry you know turn turn into the kind of a normal situation it's for sure it's a very good for tier one companies. If you look at the long term, we are confident and we will continue to penetrate the market share. And the next year is still, I think, from the top-down approach, and I think China will continue to launch, implement the anti-involution policies. We don't expect significant shipments increase for the module bins, but yes, different stories.

I see. Okay. Thank you very much.

Welcome.

Your next question comes from Philip Shen with Roth Capital Partners.

Hey, guys. Thanks for taking my follow-up question. I want to check back in with you in terms of Q4 margin outlook. What kind of muscle or muscle ASP could we see Q4, and then what kind of margin for the overall quarter of the week to expect?

We expect a relatively stable Q4 versus Q3, but the ESS business is contributing more revenues, and we estimate our ESS business in fourth quarter is going to reach positive profitability levels, and But the contribution is not significant, but next year is a different story that we have talked about. And for the module business, we expect relatively stable.

OK. Got it. Thanks. And then can you talk about module ASPs for Q1 and Q2 of next year? And then also the trajectory for margins as you blend in more battery. Thanks.

Phil, I think it's difficult to share those numbers or estimations right now because what is happening is like some of the key markets, there are some key or some important policies upcoming. For example, the U.S., the guidance of the FIOC or material assistance, or even upcoming 232, which will significantly impact the market prices. Like in China, you know, there's anti-involution policies, and there's even more rumors coming out regarding the polysilicon, even to the other part of the manufacturing value chain as well. So those changes could significant change in the market price overnight. That's why we believe it's still too early to share our estimation on the prices for next year.

Okay, Janet, that makes sense. You talked about the rumors on Poly. Can you give us a little bit more color on that? Thanks.

I don't have too much more to share based on there's a lot of rumors on the market or on the Internet. I don't know what you're referring to.

Yeah, you mentioned it, so I thought I would try to see if there's more color.

We are not part of the game, so I don't have too much to share with everyone. But thank you for your question.

No problem. Okay, thank you, guys. I'll pass it on.

Your next question comes from Brian Lee with Goldman Sachs.

Hey guys, this is Tyler Bissett on for Brian. Thanks for taking our question. Just quick housekeeping questions. Can you share what was DNA and CapEx and 2Q and 3Q?

You mean the absolute number of percentage, right?

Hello? Hello? Oh, sorry, like the actual number.

I think in the financial statement, you're going to check out the financial statement, the R&D and the operating expenses, and we have discussed quarter by quarter. So what would be your key question you want to explore?

Sorry, DNA and CapEx in 2Q and 3Q, like the absolute numbers. You mean depreciation or capex? Sorry. Depreciation or anencephalic capex.

Okay. Depreciation by quarter, I think it's roughly, you know, and I think 300 million U.S. dollars a quarter. And the capex, I think it's the first half of the year we you know, spend roughly two billion on me.

Thank you.

Okay. That is our last question, and that does conclude our conference for today. Thank you for participating. You may now disconnect.