大全新能源 (DQ) 2015 Q4 法說會逐字稿

Hello, and welcome to the Daqo New Energy Group fourth quarter FY15 conference call. (Operator Instructions). Please note that this call is being recorded.

I would now like to turn the conference over to Kevin He. Mr. He, please go ahead.

Hello, everyone. I'm Kevin He, the Investor Relations of Daqo New Energy. Thank you for joining our conference call today. Daqo New Energy just issued its financial results for the fourth quarter and FY15, which can be found on our website at www.dqsolar.com. To facilitate today's conference call, we have also prepared a PPT presentation for your reference.

Today, attending the conference call, we have Dr. Gongda Yao, our Chief Executive Officer; and Mr. Ming Yang, our Chief Financial Officer.

The call today will feature an update from Dr. Yao on remarks and -- on market and operations, and then Mr. Yang will discuss the Company's financial performance for the fourth quarter and FY15. After that, we will open the floor to Q&A from the audience.

Before we begin the formal remarks, I would like to remind you that certain statements on today's call, including expected future operational and the financial performance and industrial growth, are forward-looking statements that are made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995.

These statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those containing any forward-looking statements. Further information regarding these and other risks is included in the reports or documents we have filed with, or furnished to, the Securities and Exchange Commission. These statements only reflect our current and the preliminary view as of today and may be subject to change.

Our ability to achieve these projections is subject to risks and uncertainties.

All information provided in today's call is as of today, and we undertake no duty to update such information, except as required under applicable law.

Also, during the call, we will occasionally reference monetary amounts in US dollar terms. Please keep in mind that our functional currency is the

Chinese RMB. We offer these translations into US dollars solely for the convenience of the audience.

Without further ado, I now turn the call to Dr. Yao, please.

Hello, everyone, and thank you for joining our call today. First, let me provide some updates on the recent industry developments in China.

Based on various (technical difficulty) reports and analysis, global solar PV installations in 2015 totaled approximately 57 to 58 gigawatts, which represents about 27% increase in PV installations compared to 45 gigawatts in 2014.

China, Japan, and the United States are the three biggest solar PV markets globally in 2015, with both China and the US experiencing significant growth, while India is also growing significantly and has become a major PV end market.

China installed approximately about 15 gigawatts solar PV systems in 2015, ranking number one globally in terms of volumes after three consecutive years. As China (technical difficulty) solar PV installation reached 43 gigawatts by end of the year, in the draft version of China's 13th five-year-plan, the solar PV installation is expected to reach 150 gigawatts by 2020, which means China would need to install an additional 100-plus gigawatts over the next five years, from 2016 to 2020, in order to meet the target.

With strong support and backing from China's central government, we expect China's PV installation activities to continue to be strong over the next several years.

In December 2015, United States announced the five-year extension for solar investment tax credit, which provides a 30% tax credit for solar systems on residential and commercial properties.

The extension will significantly support the development of solar energy in the United States over the next seven years. We expect the US to remain large and a significant end market for solar.

In addition, many emerging solar end markets are experiencing high growth, including India, Southeast Asia, Latin America and Africa. In particular, based now on various industry reports and the analysis, India's solar PV installation in 2015 grew to about 2 gigawatts from approximately 1 gigawatt in 2014, growing 100% year over year. It is now the world's fifth biggest solar PV market in the world.

For 2016, based on feedback from our customers and various industry reports, India's newly added solar PV installation is expected to double again to about 4 to 5 gigawatts.

According to several market forecast reports, the global solar PV operation in 2016 is expected to be in the range of 62 to 65 gigawatts. We believe the overall solar PV demand will remain strong in 2016, resulting in favorable demand environment for polysilicon for the year.

After relatively soft installation activities and the end market demand in the first half of 2015, global PV industry witnessed a very strong global demand in the second half of 2015. As the industry demand continued to be strong towards the end of the year, we saw significant reduction of industry polysilicon inventory towards end of the year.

Also, as poly price coming down, we saw some industry production stoppage, due to the planned maintenance and shut-downs at our peers. This strong end-market demand our downstream customers added the capacities across the wafers, cell and module. We began to see those capacity add additions come online in the first quarter of 2016.

With wafer capacity additions, and increasing wafer production, we saw increased customer demand of our high purity polysilicon product. In February of 2016 we began the surprise recovery in polysilicon ASPs. With the polysilicon industry inventory already reduced to the normalized level by strong end-market demand, by March the spot market price for polysilicon bounded to approximately 15%, as compared to December of 2015.

As the industry and our customers continue add additional wafer capacity through 2016, we anticipate that demand for the polysilicon will remain strong; and we expect to see stable improving polysilicon ASPs in the coming quarters, supported by strong end-market demand.

Operation update. Not only provide you with updates of Company's operational performance for the fourth quarter of 2015. We delivered a strong operation and financial results that were beyond our internal expectations.

Our polysilicon facilities were running successfully at full capacity for the entire quarter. We are excited to report that both our external sales volume and the cost structure exceeded our prior guidance.

We achieved record high quarterly polysilicon production volumes of 3,547 metric tonnes, an increase of 31.9% from 2,689 metric tonnes in the third quarter of 2015; and about 12% above our name plate capacity.

Thanks to our technology and operations team, we made a solid progress on our cost reduction efforts; and reduced our polysilicon average total production cost and the cash cost even further, to $9.74 per kilo and $7.69 kilo respectively, which is our lowest-ever cost and ahead of our cost reduction road map.

In the fourth quarter of 2015 we generated revenue of $59.3 million, increase of 27.3% as compared to third quarter of 2015.

We achieved an EBITDA margin of 39.5%, which increased upon 32.1% in the third quarter of 2015.

Our income from operation was $14.3 million, an increase of 113% as compared to $6.7 million third quarter of 2015, with operation income margin of 24%.

Despite a 7.5% reduction polysilicon ASPs in fourth quarter, as compare with the third quarter of 2015, we were able to deliver high gross margin, operation margin and end margin in the fourth quarter, as compared to the third quarter, primarily as a result our successfully cost reduction efforts in polysilicon manufacturing.

Additionally, our Chongqing wafer subsidiary was operating well, and contributed meaningfully to the Company's financial performance, with a gross margin on a standalone basis grew to 25.8%. That's a substantial increasing from third quarter gross margin of [17.4%] (sic - see slide 14, "18.4%").

The improvement of the gross margin was driven primarily by 9% improvement of production pricing, as well as the further reduction in manufacturing costs, due to our technology upgrade, which saw a meaningful reduction per unit energy consumption and a cost.

As we continue to execute our technology enhancement project at our wafer manufacturing facility, to increase production volume and further reduce cost, and reach an annualized production in capacity of 100 million pieces per year by middle of 2016, we anticipate our wafer subsidiary will continue to contribute positively to the Company's financial results.

Outlook for the first quarter of 2016. For the first quarter of 2016, Company expected to sell about 2,800 metric tonnes to 3,000 metric tonnes of polysilicon to external customers. The above guidance reflects increasing consumption of polysilicon internally by our own wafer subsidiary, due to the increased wafer production, and the wafer capacity expansion.

Wafer sales volume is expected to be about 21.5 million to 22 million pieces during the quarter. This outlook reflected our current and preliminary review of the data of this press release, and it may be subject to change.

Now, I will turn the call to our CFO, Ming Yang, for the financial update.

Thank you, Dr. Yao; and good day, everyone. Thank you for joining Daqo New Energy's earnings conference call. Now, I will provide the financial update for the fourth quarter of 2015.

Revenues were $59.3 million, compared to $46.6 million in the third quarter of 2015, and $49.5 million in the fourth quarter of 2014.

Revenue from polysilicon sales to external customers were $42.9 million, compared to $34.1 million in the third quarter of 2015 and $33.8 million in the fourth quarter of 2014. The increase in polysilicon revenue [was] driven primarily by increasing external polysilicon sales volume, offset by lower ASPs.

External sales volume was 3,092 metric tonnes during the fourth quarter, compared to 2,277 metric tonnes in the third quarter of 2015, and 1,646 metric tonnes in the fourth quarter of 2014.

With the successful ramp-up of the Company's Phase 2b polysilicon expansion in Xinjiang, the Company reached full production capacity during the quarter, and produced 3,547 metric tonnes of polysilicon in the fourth quarter of 2015, an increase of 32% from 2,689 metric tonnes in the third quarter of 2015.

Average selling price of polysilicon was $13.86 per kilogram in the fourth quarter of 2015, a decrease of 7.5% from $14.98 per kilogram in the third quarter of 2015.

Revenue from wafer sales were $16.4 million, compared to $12.5 million in the third quarter of 2015, and $15.7 million in the fourth quarter of 2014.

Wafer sales volume was 21 million pieces, compared to 19.1 pieces in the third quarter of 2015, and 18.6 million pieces in the fourth quarter of 2014. The increase in revenue from the third quarter was primarily due to higher sales volume and higher wafer selling prices.

Gross profit was approximately $16.9 million, compared to $8.6 million in the third quarter of 2015, and $12.6 million in the fourth quarter of 2014.

Non-GAAP gross profit, which excludes costs related to the non-operational polysilicon facilities in Chongqing, was approximately $18.9 million, compared to $10.9 million in the third quarter of 2015 and $15.9 million in the fourth quarter of 2014.

Gross margin was 28.5%, compared to 18.4% in the third quarter of 2015, and 25.4% in the fourth quarter of 2014. The improvement in gross margin compared to the third quarter was primarily due to our continuous cost reduction efforts in polysilicon manufacturing, partially offset by the polysilicon ASP decline, as well as higher wafer selling prices, combined with our improved wafer processing cost.

In the fourth quarter of 2015, total costs related to the non-operational Chongqing polysilicon plant, including depreciation, were $2 million, compared to $2.3 million in the third quarter of 2015, and $3.3 million in the fourth quarter of 2014. Excluding such costs, non-GAAP gross margin was approximately 31.9%, compared to 23.4% in the third quarter of 2015, and 32.1% in the fourth quarter of 2014.

Selling, general and administrative expenses were $2.3 million, compared to $2.9 million in the third quarter of 2015, and $4.7 million in the fourth quarter of 2014.

R&D expenses were approximately $0.5 million, compared to $0.1 million in the third quarter of 2015, and $0.2 million in the fourth quarter of 2014.

The Company recognized $1.6 million of fixed asset impairment loss in the quarter, compared to zero in the third quarter of 2015, and zero and in the fourth quarter of 2014. The Company is currently in the process of relocating and repurposing the Company's temporarily idle polysilicon machinery and equipment in Chongqing to the Company's Xinjiang polysilicon manufacturing facility.

The impairment loss incurred was related to the identified relocation assets in Chongqing that were not transferable and could not be reutilized by the Xinjiang polysilicon expansion project.

Income from operations was $14.3 million, compared to $6.7 million in the third quarter of 2015, and $7.6 million in the fourth quarter of 2014. Operating margin was 24.1%, compared to 14.3% in the third quarter of 2015, and 15.4% in the fourth quarter of 2014.

Net interest expenses were $4 million, compared to $3 million in the third quarter of 2015, and $4 million in the fourth quarter of 2014.

EBITDA was $23.4 million, compared to $15 million in the third quarter of 2015, and $14.7 million in the fourth quarter of 2014. EBITDA margin was 39.5%, compared to 32.1% in the third quarter of 2015, and 29.6% in the fourth quarter of 2014.

Net income attributable to Daqo New Energy shareholders was $9.6 million, compared to $3.1 million in the third quarter of 2015, and $3.6 million in the fourth quarter of 2014.

Earnings per basic ADS were $0.92, compared to $0.29 in the third quarter of 2015, and $0.40 in the fourth quarter of 2014.

Non-GAAP adjusted net income were $11.9 million in the fourth quarter of 2015, compared to $6.3 million in Q3, 2015. Adjusted earnings per basic ADS were $1.14, compared to $0.60 in Q3.

As of December 31, 2015, the Company had $33.6 million in cash and cash equivalent and restricted cash, compared to $68.7 million as of September 30, 2015, and $29.2 million as of December 31, 2014. The decrease in cash and cash equivalent and restricted cash compared to the third quarter was primarily due to loan repayments amounting to $31.6 million.

As of December 31, 2015, the accounts receivable balance was $19.9 million, compared to $15.4 million as of September 30, 2015, and $8.7 million as of December 31, 2014. The increase in accounts receivable balance was primarily due to higher sales volumes to customers.

As of December 31, 2015, notes receivable balance was $11.1 million, compared to $16.5 million as of September 30, 2015, and $50.2 million as of December 31, 2014.

As of December 31, 2015, total borrowings were $242.5 million, of which $118.5 million were long-term borrowings. This compares to, at the end of third quarter of 2015, total borrowings of $259.1 million, including $144 million long-term borrowings and, compared to at the end of 2014, total borrowings of $237.1 million, including $77.3 million of long-term borrowings.

As of December 31, 2015, notes payable balance was $20.2 million, compared to $52.2 million as of September 30, 2015, and $48.9 million as of December 31, 2014.

For the 12 months ended December 31, 2015, net cash provided by operating activities was $66.4 million, compared to net cash provided by operating activities of $45.6 million in the same period of 2014.

For the full year 2015, net cash used in investing activities was $74.1 million, compared to $90.6 million in the same period of 2014. The net cash used in investing activities in both 2014 and 2015 was primarily related to the capital expenditure of the Company's Xinjiang Phase 2b polysilicon project.

For the full year 2015, net cash provided by financing activities was $15.2 million, compared to $44.3 million in the same period of 2014. The net cash provided by financing activities in 2015 was primarily contributed by the net proceeds from the follow-on offering in February 2015 and net bank loan borrowings.

Now, I will discuss the results for the FY15. Revenues were $182 million in 2015, compared to $182.6 million in 2014. Revenue from polysilicon sales to external customers were $125.9 million in 2015, compared to $127.7 million in 2014. Polysilicon sold in 2014 and 2015 was mostly contributed by our Xinjiang facilities.

During the third quarter of 2015, we successfully ramped up our Phase 2b expansion project, which increased our annual capacity from 6,150 metric tonnes to 12,150 metric tonnes. As a result, our polysilicon production volume increased to 9,771 metric tonnes in 2015, up 49% from 6,560 metric tonnes in 2014.

External polysilicon sales volume increased 38% from 5,972 metric tonnes in 2014 to 8,234 metric tonnes in 2015. The improvement in the external sales volume was offset by the decrease of our annual polysilicon average selling prices, which decreased from $21.37 per kilogram in 2014 to $15.29 per kilogram in 2015.

Revenue from wafer sales were $56.1 million in 2015, compared to $54.9 million in 2014. Wafer sales volume was 76.4 million pieces in 2015, compared to 70.5 million pieces in 2014. The increase in wafer revenue, as compared to 2014, was primarily due to higher sales volume.

Gross profit for 2015 was $37.6 million, a decrease of 13.2% from $43.3 million in 2014. Gross margin was 20.6% in 2015, compared to 23.7% in 2014. The decrease in gross profit and gross margin was primarily due to decreased profitability of our polysilicon sector, offset by the improved gross profit and gross margin by our wafer sector.

In 2015, total costs related to the non-operational Chongqing polysilicon plant, including depreciation, were $10.7 million, compared to $13.9 million in 2014. Excluding such costs, the non-GAAP gross margin was approximately 26.5% in 2015, compared to 31.3% in 2014.

SG&A expenses were $12.7 million in 2015, compared to $10.3 million in 2014. The increase in SG&A expenses was primarily due to increased shipping cost, as a result of higher polysilicon shipping volume.

R&D expenses were $0.9 million in 2015, compared to $1.5 million in 2014. The R&D expenses in 2015 and 2014 primarily resulted from continuous technology improvement projects for polysilicon and wafer production.

In the fourth quarter of 2015, the Company recognized $1.6 million of impairment loss for long-lived assets for its Chongqing (sic - see press release, "Wanzhou") polysilicon facility. In 2014, no long-lived asset impairment loss was recognized.

Other operating income was $3.8 million in 2015, compared to $0.6 million in 2014, which mainly consisted of unrestricted cash incentives that we received from local government authorities, which fluctuate from period to period at the discretion of the government.

Income from operation was $26.2 million in 2015, compared to $32 million in 2014. Operating margin was 14.4% in 2015, compared to 17.5% in 2014.

Net interest expenses were $12.7 million in 2015, compared to $15.3 million in 2014. The decrease in net interest expenses was primarily due to a decrease in bank borrowing balance combined with a decreased average borrowing interest rate.

Income tax expenses were $1.1 million in 2015 compared to nil in 2014. In 2015, one of our senior subsidiaries started to pay corporate income tax along with the recovery of accumulated loss.

Net income attributable to Daqo shareholders was $13 million in 2015 compared to $16.7 million in 2014. Earnings per basic ADS were $1.26 in 2015 compared to $2.02 in 2014.

Non-GAAP adjusted net income attributable to Daqo shareholders was $27.4 million in 2015 compared to $32.3 million in 2014. Non-GAAP adjusted earnings per basic ADS were $2.65 in 2015 compared to $3.91 in 2014.

That concludes the official part of our presentation. And with that, I'd like to turn the call over for questions.

(Operator Instructions). Sheng Zhong, Morgan Stanley.

Congratulations on the strong result. I have two questions. One is you have a very impressive cost reduction on the polysilicon income. So can you give us some more color on the cost break-down and your further outlook of the production cost in 2016?

And secondly is also about polysilicon production. We see that the total national -- I mean, the China domestic polysilicon production was around [165,000] metric tonnes in 2015 and that is about 30,000 metric tonnes higher than 2014.

So that means even the polysilicon price is going to low level, the domestic production volume still grows very fast. I think that volume is not only from the big manufacturers; also, some input from the small manufacturers.

So can you please share some -- what's your view about the domestic production in 2016, given the polysilicon prices is currently at low level? Thank you.

Okay. So first question. This is the fourth quarter is 2015 is our first quarter fully ramped to the capacity. As we forecast after Q3 of 2015, we expecting to gradually go into the full ramp-up and our new technology used after -- in the second quarter, hydrochlorination process very, very successfully running.

So we reached our goal actually, originally, we targeted for 2016, is our costs will be $10 -- under. So, fortunately, because as I mentioned in early, our operation team did a great job. So we actually reached the target of under $10 ahead of schedule.

As for 2016, we will continue take some measures to further reduce our costs. At this moment, we still -- for the same guidance the cost is under $10. I would say, at least at the same level as we achieved the first quarter.

As you know, our phase 3a still underway -- doing. We expecting we're enjoying the production in the first half of 2017. By that time, we will expecting further cost reduction by that time.

For the China production of polysilicon, your second question, 2015 is about 150,000 metric tonnes -- roughly about 150,000-odd to 150,000 metric tonnes. We do not expecting any increasing capacity in 2016, because we do not see any upgrade in the capacity or new manufacture construction for polysilicon.

Actually, as a matter of fact, as of right now, only very solid core projects to expansion of polysilicon is from our Company. We have 6,000 metric tonnes added will be within this year and the next year we're starting production.

So we do expecting the polysilicon -- because the restriction of the US polysilicon to China and we also see REC and also SunEdison's polysilicon manufacture shutdown. We do expecting polysilicon supply and demand will be more balanced in 2016 and we do expecting, in coming quarters, the ASP of polysilicon will slightly increasing.

I think our polysilicon demand is very strong, as we see, actually, first the end of the first quarter. I think our Q2 demand probably will be more strong in first quarter as we see.

So that answer your two questions.

Yes, that's very helpful. Thank you very much, Mr. Yao.

Pierre Maccagno, Northland Capital Markets.

Congratulations for such a great (inaudible). (inaudible) ahead of an FIT decrease, like, that's one that is scheduled in China for about June-time. There is a very strong [plan] at that time, and probably that definitely increases the ASPs, but what happens after the June FIT [plan]? What are your expectations in terms of the demand or ASPs? What is the plan for that or your (inaudible)?

Okay, Pierre, so a whole [hosting] area right now we see and also the report is a whole year, as you know, installation for China is very strong. Also, our customers' expansion for the wafer and the cell manufacturing are very prickly right now, as we see from first quarter starting the -- as the capacity will be online, so as that's driving the polysilicon demand and going higher.

We do not expecting bigger impact from current point of view, because all those -- the policy change already are marked in for our customers' mind for their production schedules.

We saw several -- we meet with several customers, key customers and everyone forecasting for 2016 their production volume was -- they've been increasing from high volume basis in 2015.

So again, we do expecting strong demand in China and we don't believe that will impact any volume production of downstream for module audio centers, their production.

Hi, Pierre. This is Ming, CFO of the Company. So let me just follow up with what our CEO just said.

So if you look at China's National Energy Administration, their head -- the head of foreign, this week, talked about how their plans for the 13th five-year plan for renewable energy, particularly for solar, they're planning to install at least 15 to 20 gigawatts of PV every year over the next five years. So that's the government target and we think the whole [market] will certainly be driven by that.

Okay, and a follow-up question. What are your plans for further expansion at this point?

Yes, so we first stated we are very focused on the 6,000 metrics are added. We expecting our online full production first half of 2017. The long-term target is we will improve in -- build our Company's capacity to total about 25,000 metric tonnes, but that's second stage. We are not decide yet when we will starting construction.

Obviously, we will see the market situation, as well as the Company capital situation, bonding, those areas.

And my final question to you is how do you see the costs of your competitors in China? I know there's FBR, (inaudible), and GCL. Do you expect competitors to increase their costs going forward?

We believe, at this moment, our cost is ahead of most peers' in China. And also, some of -- most of peers China polysilicon, they have a slightly different business model, because they utilize almost 100% of polysilicon for their internal using for wafer production, for instance. So their cost is maybe less sensitivity for ASP, because they were converting to wafer, and the wafer ASP in last six months is very strong.

So we believe we will continue leading in a cost side and we are very focused on that side ourselves. Also, we have temptation our peers and costs aside and we try to do more technical improvement in this year or in probably five, we will do our best to continue reduce our costs. We know we still have some room to improvement for next two years.

That, we believe, is our strength of the Company. We will continue trying to leading that area.

Well, thank you very much.

Thank you, Pierre. Thank you.

Thank you. (Operator Instructions). Philip Shen, ROTH Capital Partners.

Good work on the progress you're making on lowering your cost structure. So let's talk about the inventory situation. You alluded to that in your remarks and I think in your release. Can you just give us some more color on the channel inventory now? And then can you also talk about your inventory levels currently as well?

Phil, so we know that our customers almost no inventory, because after [noticed] the poly price last December and this year January, and most of February, people -- there's no motivation to keep any inventory, because the price is keeping dropping.

Now we -- by the Chinese New Year, I think the inventory is very, very, low. So, we see the price bounce back in March. Obviously, we do not see the inventory as today.

Actually our second quarter ordering for our customers is very, very, strong. Almost every customer is increasing their demand for shipment, request the shipment. We try hard to meet our key customers demand at this moment. So obviously, they do not have much inventory as this factor.

So now for ourselves, our inventory is very low. I think that, at this moment, we're almost shipping everything to our customers. So our inventory should not be more than two to three working days upward by every end of month, if we measure that.

So inventory is as good as Q3 or Q4. It's very minimal and the best we can do. Our customer inventory checking also indicated that they do not have inventory, at this moment.

So we're expecting Q2 will be very strong quarter. We do expecting price will be strong compared with Q1, and probably we'll [strike] it up from today the price for second quarter.

Great. That's really helpful, Gongda. Let's shift over to maybe Q3 and Q4. Can you talk about your long-term contracts? Historically, what percentage of your production is set aside for long-term contracts? And then what is it now? And how much of your production, in Q3 and Q4, have you already sold?

Yes. Phil, when we enter to 2016 we signed roughly about 70% of our output for 2016 to our key customers. And just as I said, actually even when we're into from exiting Q1 to Q2, almost those customers they raised demand for April shipments. So, which means since like even we signed 70% maybe remaining will be higher percentage we'll be shipping to those key customers. Also, a lot of small customers on the line waiting for polysilicon.

On the other side, our wafer manufacture also demanded more polysilicon for our internal using. So our total output of polysilicon shipments will be very, very, tight to meet, even only maybe possibly the key customers, plus our internal usage. So that's why we -- at this moment, we will forecast 2016 is very tight supply.

So just to add a little bit more color, so if you look at our order book for example the April month, that's what we're negotiating right now. So the customers demand -- some customers actually have increased their month procurement by more than 50%. So that really indicates to us that the very tight -- [well], a very low level of inventory and the margin's very tight.

At the same time, they increased procurement level is actually based on a higher pricing versus the current pricing right now. So that really bodes well for a very strong market currently for polysilicon.

And if you look at the orders versus what we could supply, we could probably only supply maybe 70% of what our current orders have, which is probably one of the best situations that we have. So a lot more demand than what we could supply right now.

Great. Those comments are very helpful. One last question here, and it's somewhat related. Can you update us on your customer base, discuss how the customer base maybe diversifying, evolving; and talk about the concentration? Thanks.

At this moment, the majority of customer base is similar to 2015. There are some changes where starting to shipping polysilicon to. One is our traditional wafer customer. I think in 2015 we're starting to ship poly.

And the second hand is from the last quarter of last -- of 2015 we starting shipping meaningful volumes to mono-wafer customers for high efficiency wafers. And we do expecting we will develop more mono wafer customers in 2016. I think we will have a high percentage maybe into 2017 from that.

We're starting shipping to mono-wafer high efficiency sales manufacture customers in 2017. So that's the -- we will continue to serve our multi-wafer customers' needs in 2016. We're starting shifting some -- putting some efforts to increasing to the mono-wafer customers from this year. We think it will be meaningful percentage for 2017. That's our goal.

Great. Thanks again; congrats again. I'll jump back in the queue.

As there are no more questions at the present time, I would like to return the call to management for any closing comments.

Thank you, everyone, again for joining our call today. Should you have any queries, please feel free to contact the Investor Relations of the Company. Thank you. Bye, bye.

Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.