大全新能源 (DQ) 2010 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth quarter 2010 Daqo New Energy earnings conference call. My name is Katie, and I will be your coordinator for today. At this time all participants will be in a listen only mode. We will be conducting a question and answer session towards the end of the conference call.

(Operator Instructions)

I would like to now hand the call over to your host for today, Jimmy Lai, CFO. Please, proceed.

Thank you, Katie, and thanks, everyone, for joining us today for Daqo New Energy's fourth quarter and full year 2010 financial results conference call. A few hours ago, Daqo New Energy issued its fourth quarter and full year 2010 earnings release, which can be found on the Company's website at dqsolar.com.

On the call today, from the Company, are Dr. Gongda Yao, Director, Chief Executive Officer, and me, Chief Financial Officer. The call today will feature a short presentation from Dr. Yao, covering business and operational developments, and then, I will take you through a discussion of the Company's financial performances. After that, we will open the floor for questions from the audience.

Before we begin, we would like to remind audience that this presentation contains forward-looking statements within the meaning of the Section 21E of the Securities and Exchange Act of 1934, as amended, and as defined in the US Private Securities Litigation Reform Act of 1995. Daqo New Energy does not undertake any obligation to update any forward-looking statements, except as required under the applicable law. All information provided in this press release and in the attachment is as of the date of this press release, and Daqo New Energy undertakes no duty to update such information, except as required under the applicable law. I will now turn the call over to Dr. Gongda Yao. Gongda?

Thank you, Jimmy. Hello, everyone, and thank you for joining us today. I am pleased to announce that in the fourth quarter of 2010, we achieved record operation results in almost every operation metric, including revenue, gross profit, operation income, and net income. On top of that, we have also successfully completed a Phase 1 polysilicon debottlenecking project, which enabled us not only enhance our name plate capacity from 3,300 metric tons to 4,300 metric tons, but also through the improved quality of our products. In early 2011, we will continue to see strong demand for quality polysilicon from our customers. As a result, the price environment continues to be favorable, which should lay a good foundation for a successful 2011.

We have started preparation work for our Phase II polysilicon project in Xinjiang, Western China. We expect this new facility will be ready for ramping up in Q3 2012. Our wafer facility in Wanzhou is ready for commercial production late this month. We expect to ramp up the capacity to 250 megawatts by end of year. We also expect to ramp up our PV module capacity in Nanjing to about 200 megawatts sometime this year. In the meanwhile, we will continue to figure out ways to reduce productions costs and to further the improved quality with our current Phase I polysilicon facility. I will now turn the call to our CFO, Mr. Jimmy Lai, to discuss our fourth quarter and the full year 2010 financial results. Jimmy, please.

Thank you, Gongda. Let's walk through these financial performances. Let's start with the fourth quarter 2010 revenue. Revenue in the fourth quarter of 2010 were $81.9 million, an increase of 29.6% from the third quarter of 2010 and 158.2% increase from the fourth quarter of 2009. The increase was primarily attributable to an increase in revenue generated from the sales of polysilicon. The Company sold approximately 966 metric tons of polysilicon, which contributed revenue of $73.4 million, compared to revenue of $55.2 million for 973 metric tons of polysilicon sold in the third quarter 2010 and revenue of $31.7 million for 597 metric tons of the polysilicon sold in the fourth quarter of 2009.

The sequential increase was primarily due to a higher average selling price for the polysilicon product. The year over year increase was also primarily due to the higher average selling price of polysilicon product, combined with a higher sales volume. In the fourth quarter of 2010, the Company also generated $6.6 million and $1.9 million for the sales of PV modules and wafers, respectively.

Gross profit and margin. Gross profit in the fourth quarter 2010 was $45.8 million, compared to $26.9 million in the third quarter of 2010 and $8.1 million in the fourth quarter of 2009. Gross margin was 55.9% in the fourth quarter of 2010, compared with 42.5% in the third quarter of 2010 and 25.5% in the fourth quarter of 2009.

Operating expenses. Total operating expenses in the fourth quarter of 2010 were $4.5 million, an increase of $1.6 million from the third quarter of 2010 and $5 million from the fourth quarter of 2009. The sequential increase was primarily due to a $1.2 million expenses, as a result of a shutdown in December, 2010. The year over year increase was primarily due to the decrease of government subsidy.

Operating income and margin. As a result of the foregoing, operating income in the fourth quarter of 2010 were $41.3 million, compared to $24 million in the third quarter of 2010 and $8.6 million in the fourth quarter of 2009. Operating margin was 50.4%, compared to 38% in the third quarter of 2010 and 27.1% in the fourth quarter of 2009.

Net interest expenses. Net interest expenses in the fourth quarter of 2010 was $1.8 million, compared with $2.3 million in the third quarter of 2010 and $1.7 million in the fourth quarter of 2009. The decrease from the third quarter of 2010 was primarily due to the reduction of debt level. Foreign exchange losses. The foreign exchange loss in the fourth quarter of 2010 was $0.5 million, compared with $0.7 million in the third quarter of 2010.

Income tax expenses. Income tax expense in the fourth quarter of 2010 was $6 million, compared to $3 million in the third quarter of 2010 and income tax benefits of $3.2 million in the fourth quarter of 2009. The sequential increase was primarily due to the higher income before tax in the fourth quarter of 2010, while the year over year increase was primarily due to the lower R&D tax deduction and the lower investment tax credit in the fourth quarter of 2009 -- sorry, 2010.

Net income attributable to our shareholder, margin and earnings per share. Net income attributable to the Daqo New Energy shareholders were $32.8 million in the fourth quarter of 2010, compared to a net income of $17.7 million in the third quarter of 2010 and $10 million in the fourth quarter of 2009.

Net margin was 40.1% in the fourth quarter of 2010, compared with 28% in the third quarter of 2010 and 31.4% in the fourth quarter of 2009. As a result, earnings per fully diluted ADS was $0.95, compared with $0.64 in the third quarter of 2010 and $0.40 in the fourth quarter of 2009. Earnings per fully diluted ordinary share was $0.19, compared with $0.13 in the third quarter of 2010 and $0.08 in the fourth quarter of 2009.

Now, let's turn to the full year of 2010 results. Revenue for 2010 were $242.7 million, compared to $111.2 million for 2009, an increase of 118.3% from the previous year. This increase was primarily due to increase in revenue generated from the sale of polysilicon. The Company sold approximately 3,650 metric tons of polysilicon during 2010, compared to 1,498 metric tons during 2009.

Gross profit and margin. Gross profit for 2010 was $106.2 million, compared to $41.9 million for 2009. Gross margin was 43.8% for 2010, compared to 37.7% for 2009. Operating expenses. Total operating expenses for 2010 were $13.7 million, compared to $5.5 million for 2009. The increase in operating expenses was primarily due to a decrease in government subsidy of $3.2 million and $2.7 million charges related to a withdrawn IPO during the first quarter of 2010.

Operating income and margin. As a result of the foregoing, operating income for 2010 was $92.5 million, compared to $36.4 million for 2009. Operating margin for 2010 was $38.1 million for 2010, compared to $32.8 million for 2009. (sic - see Press Release)

Net interest expenses for 2010 was $9.3 million, compared to $6.2 million for 2009. FX loss. There was FX exchange loss of $1.2 million for 2010, due to the continuing strengthening of RMB against US dollar during 2010.

Income tax expenses. Income tax expenses for 2010 were $12.8 million, compared to $0.2 million in 2009. The increase was primarily due to a high income tax -- higher income before tax in 2010, combined with a lower R&D tax deduction and lower investment tax credit in 2010.

Net income attributable to Daqo New Energy Corporation shareholder was $68.6 million for 2010, compared to $30.8 million for 2009. Net margin was 28.3% for 2010, compared to 27.7% for 2009. Earnings per fully diluted ADS for 2010 was $2.32, an increase of 60.4%, compared to $1.45 for 2009.

Financial conditions. As of December 31, 2010, the Company has $203.7 million (Company corrected after the conference call) in cash, cash equivalents, and restricted cash, compared to $75.2 million as of September 30, 2010. As of December 31, 2010, the accounts receivable balance was $10.7 million, compared to $31.3 million as of September 30, 2010. Also, as of December 31, 2010, total bank borrowings were $154.6 million, of which $83 million were long-term borrowings, while total bank borrowings were $166.8 million, of which $106.9 million were long-term borrowing as of September 30, 2010.

Let's turn to the Q1 2011 outlook. For the first quarter of 2011, the Company expects its total revenue to be in the range $81.5 million to $83.5 million. The Company expects to ship between 1,075 metric tons to 1,100 metric tons of polysilicon and generate revenue from the sales of polysilicon between $74 million to $76 million in the first quarter of 2011. The Company also expects its revenue from the PV module sales to be approximately $7.5 million, with the sales of approximately 4 megawatts of PV module under the Company's own brand name, sales of approximately 8 megawatts of PV module outsourcing for our own customers. I would now open the floor for questions. Katie?

(Operator Instructions)

Your first question comes from the line of [Edwin Mok] from Needham & Company. Please, proceed.

Hi. Thanks. Congratulations for great outcome. Very nice, Jimmy. A few questions. First is, Gongda, how do you guys think about pricing trends in the market right now for polysilicon and beyond just near-term. Seems like your guidance implying something around $70 per kilogram -- somewhere around that range. Do you expect them to be sustainable, and how do you guys think about that?

Okay. Yes, Edwin, so, as you see the Q1, so far, right now, the -- because the polysilicon is upstream, we do not see much change in recent weeks, because we noticed -- because the end market, there is some news come out, so the -- for wafer, sale price actually shows some softening in last one or two weeks. But so far, the small market price -- polysilicon in China is -- stay the same as two, three weeks ago. But we do expecting this kind of a price will be adjustable for the end marketing conditions, so we are being very cautious.

But so far, the demand in China still pretty high, and we -- people are still -- is asking for small market of availability of polysilicon, and this moment, as you know, 2011, Company has been working on -- has already accepted the -- called the long-term year of contract with our key customers. So, we do have only very limited amount of disposable market. So, to us, our Q1, even to Q2 or Q3, Q4, the price is, quite as affects, stable for us. So, I -- we -- by the way, we don't see much change in the [full] market price, in this week, as well as last week.

Great. Very useful. Just to clarify, on the long-term contract, how much of that is fixed price, and is it fixed somewhere close to your guidance implied price in the first quarter?

Yes. We put the guidance reflecting the -- some fixed price, which is about 50% of the long-term contract we are fixed. And then, we have -- and then, the half is variable price. Depends on -- this is a -- this can be adjustable for quarterly basis. So, the -- in the -- this is just the first quarter. We are now just -- in the March end -- end of March, we are closing this quarter. And then, after April, May, and June, we'll be going to post -- by end of this month, we will negotiate for -- we discuss about the second quarter price for those variable price customers.

Great. Very useful. And then on the -- your own capacity for wafer [and module], that you guys are out building right now, how much do you think you can get, in terms of cost saving from (inaudible) -- any way you can quantify the margin profile for those businesses, as you progress through 2011?

Edwin, I think that for the -- [both those to] -- we call the internal -- call the business units or divisions, they are pretty much very starting age. So, like, for the wafer sector is -- for us, is just -- we even don't -- not starting the manufacture yet. However, we have our internal goal for those to be very compatible for average costing from polysilicon to wafer conversion and same as the [larger] group. So, we do not have announcement for those target yet, but we will see -- after the production started, to see that those goals can be achieved or not. But so far, I think it's very comparable for the current -- the Company average, cost wise.

Great. Just two more questions for me, quickly. First, are you benefiting from lower sales price right now? And how do you think about sales prices right now?

Well, sales -- solar sale price you're referring to, right?

Yes.

The solar sale price did not decline that much so far. So, before we can ramp up our wafer capacity, the module business -- the margin is still a bit challenging, but we're expecting, next quarter, we'll start ramping of our wafer capacity, so we can tow our wafer to a third party. So, solar sale guide, give it to a module, which will improve our margin.

I see. Okay, great. That's very helpful. And then, lastly, if you look at your guidance, 1,100 metric tons or 1,100 metric tons, that would imply, over your [name plate] capacity of 4,300 metric tons. Did you guys -- just -- I guess, two part question. One, is that more room for debottlenecking that you think can happen throughout 2011? And then, second part of question is, did you guys ever [try to do your holiday and sold that] -- the timing of that would imply that there -- you guys are producing above your name plate level? Is that correct? .

Yes. Edwin, I think it would be through the debottlenecking process. Actually, we do see, effectively, better performance, but at this moment, we do not see any possibility for further improving the capacity yet. But I think, right now, we're [pretty firm now] for 2011. We will continue to see the areas, how to more efficiently to have a cost reduction. For example, for efficiency for (inaudible) raw material and for the energy savings -- those areas. That's the key improvement we would like to see in 2011, and meanwhile, we still see our quality continue improved.

As I said, in the beginning of the call, is, after debottlenecking, I will see -- we see broadening areas -- we see the quality of polysilicon, as we improved through this process, and we are very happy to see that. So, the -- as you see, with the -- even, we indicated that Q1 outlook will be in the range -- I think, in the range of our name place capacity, [probably], 4,300 metric tons, and we will keep that pace for through the whole year. That's our plan.

Great. Very helpful. Thanks, and congrats for [a very solid quarter].

Thank you.

Thank you, Edwin.

Your next question comes from the line of Ahmar Zaman from Piper Jaffray. Please, proceed.

Hi, gentlemen. This is Shawn Lockman for Ahmar this morning. Just real quick, wanted to just kind of get some color on your Q1 poly pricing. We would -- as we sort of look at 4Q, we're estimating you -- that you did -- you had ASPs somewhere in the neighborhood of $75 to $76. How should we look at that in 1Q? I assume that the price is going to be pulling back a little bit, based on your shipment guidance, but just wondered if you could give us a little more color there.

Shawn, as indicated by Gongda previously, in 2011, our supply contract -- some of them are fixed price already, and those are fixed at around $50, and the rest are of a variable price. So, this guidance is actually blended between the two.

Okay, great. So then, on a blended basis, should we be looking for -- how should we be looking at it then?

Well, I mean, you have the revenue range, and then, you have the shipment quantity.

Yes. Okay.

Yes, this is guidance, right? So, you basically -- the spot price is jumping around, and then, if variables, actually, pretty much also fixed. The -- but you probably noticed that beyond the capacity name, but we signed a contract is -- total is 3,300 metric tons. So, any above that production, if not using for wafer production, then we can sell in the spot market. Those prices -- it would reflect on daily basis changes, but in last -- I said, in last three weeks, actually, we see the poly price in China, actually, is very strong, and it's pretty high, in compared with -- in the February before Chinese New Year, I would say.

We do not know this trend will be continued or not, but as of today, this is what we see in the market. So, the overall forward-looking is also reflected from possible -- possibility of the softening into March, but we don't see yet. So, you take that, as average, I would have to say, for sure, for Q1, we will see, probably, by the end of this month, we are pretty sure -- if that can be the average pricing.

Okay. And as far as your poly costs for 4Q and 1Q -- I mean, I -- we had expected that the poly costs -- or, your production costs for poly would be a little higher in 4Q, just due to the maintenance that you were doing during the quarter. Can you tell us where those -- where that level was? I mean, have we gotten closer below the $30 level yet?

Actually, if you look at the cost of sale, our poly production cost in Q4 was a little bit below $30, and one of the reasons is the -- for the shutdown for the maintenance in December. Under the US GAAP requirement, all the depreciation and labor expenses associated with the shutdown should be treated as period expense, and so, that expense got captured in the G&A. It's about $1.2 million. So -- and that's why our production cost is just a little bit under $30 in Q4.

Q1 -- keep in mind, the -- again, the utility cost is typically the highest during the season, although, through the debottlenecking, we enhanced our capacity. That might offset some of the impact of the high utility cost, but we do expect the Q1 cost, probably, a little bit higher than the Q4 cost, as a result of that.

And can you tell us a little bit about your -- are you doing OEM for modules now? And how should we think about that, going forward?

Yes, we do, in the Q1 now, do the OEM for modules. We will continue to do that to -- first, we need to ramp up the production, because the quality, or the production -- the yields for the module is quite successful, compared with our customer, which is outsourcing the module production for us. So, it's quite satisfactory for the quality. So, the amount of [tooling] to our plant has been significant increased from Q4 to Q1. We are keeping doing some capacity, using our (inaudible) for tooling, and some of them [get] our brand names for our module lines. The quantity of those two is for -- it will be announced by Jimmy for Q4, and we'll continue to those kind of ratio for Q1.

Great. Thank you very much. That's it for me.

Your next question comes from the line of Phil Shen from Roth Capital Partners.

Hi. Thanks for taking my questions. My first question is about module sales. I believe, on the Q3 call, you suggested total module sale volume in 2011 could range between 100 megawatts and 150 megawatts. Does that still hold? And if not, what your current expectations?

You're talking about 2011?

That's right.

Okay. Right now, our expectation is still around 120 megawatts to 125 megawatts' processing of the solar module in 2011. Some of them might be the OEM for third party, and some of them might be our brand name.

Can you give us a sense for what that mix might be?

It's hard to tell right now. It depends on the market situation.

Okay. And where are you guys selling these modules, in terms of in geographic location?

Still -- because we're still small, right? And most majorities still go to Europe right now.

Okay. Can you give us a sense for who your OEMing the modules for?

We cannot disclose those names, but we have several companies we're working with.

There are about three or four companies we're working with.

Okay. Great. And then, let's move to CapEx for a moment. I think your expectations for 2011 was $210 million in CapEx. Is that still the right number, and can you give us a sense for how that will be deployed by quarter?

Okay. Yes, that is still -- we still in the range about $210 million CapEx. We will start spending it, probably -- starting in the Q2, when the down payment for the constructions and equipment will be paid. I would say Q2, Q3, Q4, it's pretty -- probably pretty evenly distributed among those three quarters.

Great. That's helpful. And then, let's move on to poly contracts. I know you guys have a couple contracts that were two year contracts, I think, with Yingli and MEMC. Have you guys started conversations about establishing longer term contracts or extending those contracts? And is the fixed -- so, for instance, for 2012, what do you expect that your current volumes have in -- how much of your current volume for 2012 may have been contracted already?

You mean 2012? Not yet. And I think, the -- in the -- the customer is starting to contact us to -- asking for even longer term for their contract for next two, three years. We starting the talking with several customers. We don't have the contract yet, at this moment.

Okay, great. That's good for me. Thanks.

Thanks, Phil.

Your next question -- I'm sorry. Your next question comes from the line of Mark Bachman from Auriga. Please, proceed.

Hi, gentlemen. Congratulations with the good results.

Thank you, Mark.

Gongda, talk to me about module manufacturing here. I know that you're trying to build a brand, but you can't do it by module tolling for people. So, maybe walk us through -- first off, I take it that you're just receiving cells from these customers, and you're just putting the modules together, but how does that help you build a brand, if you're not putting your name on the side of the module?

Well, Mark -- yes, good question. If you do not just do brand -- you not do the module itself, only 100% for tooling for other people, and you probably cannot do the brand name. However, I think we try to do is the module -- compared with upstream sectors in the PV products, the module is very, very thin, compared with our polysilicon wafering process. So, in order to reduce the cost in the production line, we have to fill in the capacity, the output, as much as we can. So, the one way is while we are slowly [upgrading], we are very -- I think I'm very optimistic we are doing our branding modules. However, the sales of the contract is gradually increasing, as we projected, from -- through the Q1 to Q4 of 2011.

In the meanwhile, the extra capacity we like to fill in with the OEM, with the good name customers. They [have been] very good sales channels. So, through that is, basically, just reduced depreciation, also, other overhead costs of the Company in the line. So, our strategy is gradually improve the ratio of our brand name manufacture, in the long run, and in the short run, we will maximize utilization of the facility to using both ways for our own brand name, as well as for the OEM production.

So, at some point, should we start to see the modules that you're producing with the DQ brand on the side of it outpace what you're doing on your OEM side?

Yes, definitely. Definitely, that's the goal, and our planning is by sometime middle of this year, as we transition almost all the sale wafers, so they are our polysilicon through the wafers, through the tooling sale line. We know the quality. We know -- we have control of the product, and it will be more and more the module we made for those - raw material we like to put Daqo name on top of that.

Okay. Excellent. And then, we touched a little bit, this, on the capacity already, but it looks like that you're running closer to 4,400 metric tons. Is it safe to say that that is a sustainable rate, then, for the last part of the year? I mean, you're able to accomplish this in Q1, when there's even the spring festival there in China. How do we think about that? I know you keep saying 4,300 name plate, but you're running above that now.

Oh, yes. So, we're talking about the forecasting as the -- so far, like, as Jimmy talking about the forecasting, is there really is -- not considering any shutdown in Q1. Okay. Now, in the annual planning, we always do, as usual, as -- in the last quarter of the month -- of Q4 is we're always planning to have about two to three weeks of shutdown for any maintenance or improvement work, and by saying that is we have reserved those times for, if necessary, anything happens, we'll do that time. You don't necessarily always need two weeks, but in -- if you come to that, and our output would be very close to 4,300 metric tons.

Of course, as usual, we will update our progress on the quarterly basis. If any new finding, new tune-up of the line, we like to update to everybody out here. So -- but at this moment, we will stay with our capacity about 4,300 metric tons, and in Q1, Q2, Q3, probably pace little bit faster than that, and in Q4, we will see some the lower quarter for compare with the first three quarters.

Excellent. That's a good answer and explains it fully. Lastly, on the polysilicon shipments, from the press release, you shipped a little over 20 metric tons into tolling for PV wafers. How do we think about that, going into the model in Q1? Are you going to be setting aside some production there for some wafer tolling arrangements as well?

Mark, it will be -- if there's any, it will be very, very little. We did have some inventory at the end of Q3, at the wafer customer's side, and those was processed into wafer and sell to the third party, but we don't have much inventory out there, and we probably will not continue that process on ongoing basis, now that our own wafer capacity is coming up next quarter.

Okay. And, Jimmy, is there any change at all to your expected output on what you're going to sell in wafers this year? If I remember correctly, you're expecting to sell 115 megawatts by the end of the year. Is that correct?

Yes, we plan to produce about that amount, but as indicated by Gongda, a lot of that will probably go to solar cell processing tolling arrangement and give it to our module, and that's why we are confident that, throughout the year, we will have more and more our own module brand name sales. We don't have to rely on third party solar cell.

Okay. Thank you so much.

Thank you.

Your next question comes from the line of Sam Dubinsky from Wells Fargo.

Hey, guys, Sam Dubinsky here. Couple quick questions. Could you give an update on the regulatory environment in China for polysilicon? And are there any polysilicon assets out there worth acquiring? Then I have a couple follow-ups.

Are you talking about government regulation or guidance for those? Those are not a surprise and is (inaudible) -- actually, is somehow to align with the previous -- the public -- published the guidance. Only thing probably add at this time is the requirement of some quantity for electricity consumptions, which, we don't believe is big concern for our side, but we don't know, overall, the landscape of other poly makers in China. So, we will see.

I think they are about -- and according to the -- some news in China, is about 15 of the poly makers, their actual capacity is less than 3,000 metric tons. So, those companies have to quickly improve their capacity through some add-on facility, or they have to face the -- some --government is -- being forced to shut down. And so, those things we don't know -- if government will force them to shut down, I don't know which kind of method they were using. It's still just new in China.

And so, it's just announced about -- in February, so we don't know if this follow-on -- follow-up for action is from government, it would be when and when it would be carried out, because the requirement is through the end of 2011, so we'd probably would see those kind of action and the reaction -- and the reaction, probably, would be starting [for now], but the action probably would be some early next year, if any. Earliest we will see that in the earlier 2012.

So, as of now, you haven't looked at any -- making any distressed acquisitions out there?

Excuse me.

So, as of now, no one has come to you. You haven't looked at any distressed poly plants or assets out there? You're just waiting it out.

Oh, no, no. No, no, no, no, no. This is interesting. If you really think about that -- if you are running a small poly plant, if the government want to know details, they have those things. Of course, you can work with the power company to calculate how much electricity use, and it's quite a deep job to calculate the amount of output produced or sales. Those details -- there is no detail for how to audit those things has come out yet. So, we will see.

Okay. And then, how should we think about OpEx as a percentage of sales going forward? Seems like it was just a tad high in Q4.

Yes, the reason it's high, as I explained in the MD&A, is we have a $1.2 million charges related to the shutdown in December.

Okay.

Got the expense in the G&A section. Going forward, I think this year, it's probably logical to assume that quarterly run rate between $4.5 million to no more than $5 million per quarter.

Okay, great. And then, my last question is for 1Q, you mentioned that you'll ship about 4 megawatts of panels under your own brand and, I believe 8 megawatts under tolling arrangements for customers. Could you maybe provide an ASP split between each business? What is the ASP for [2010]?

I mean, our own brand name module sale is pretty much in line with the market rate, and I believe market, now, is ranged from $1.60 to $1.70 -- in that range.

Okay.

And the rest of that will be the processing service fee.

And what is your module processing cost today?

Very little, because all we -- it's just merely absorbing our depreciation expense for the equipment and, probably, just some labor.

Okay. Great. Thank you very much. Good quarter.

Thank you.

(Operator Instructions)

At this time, sir, I'm showing we have no further questions. I'd just like to turn the call back over to management for closing remarks.

Okay. Thank you, everyone, for your participation, and we are looking forward to talking to you after our Q1 earning result, and thank you for your support. Okay. Good-bye.

Good-bye.

Ladies and gentlemen, thank you very much for your participation in today's conference call. You may now disconnect. Have a wonderful day.