晶科能源 (JKS) 2010 Q3 法說會逐字稿

Hello, ladies and gentlemen.

And thank you for standing by for JinkoSolar Holding Company Limited's third quarter 2010 earnings conference call.

At this time, all participants are in a listen-only mode.

After management's prepared remarks, there will be a question and answer session.

As a reminder, today's conference is being recorded.

I would now like to turn the meeting over to your host for today's call, Ms.

Yvonne Young, JinkoSolar Investor Relations Manager.

Please proceed, Yvonne.

Thank you, Peter.

Hello, everyone.

Thank you for joining us today for JinkoSolar's third quarter 2010 earnings conference call.

The Company's were released earlier today and available on the Company's IR website at www.jinkosolar.com, as well as on newswire services.

We have already provided supplemental presentation for today's earnings call, which can also be found on our Company's IR website.

On the call today from JinkoSolar are Mr.

Kangping Chen, Chief Executive Officer, Mr.

Arturo Herrero, Chief Strategic Officer, and Mr.

Longgen Zhang, Chief Financial Officer.

Mr.

Chen will discuss our JinkoSolar's business operations and company highlights, followed by Mr.

Herrero, who will talk about the Company's business strategies.

And then Mr.

Zhang will go through the financials and guidance.

Then they'll all be available to answer your questions during the Q&A session that follows.

Please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve inherent risk and uncertainties.

As such, our future results may be materially different from the views expressed today.

Further information regarding this and other risks and uncertainties is included in our registration statements or Form F-1 as amended and other documents filed with the US Securities and Exchange Commission.

JinkoSolar Holding Company Limited does not assume any obligations to update any forward-looking statements except as required and applicable law.

It's now my pleasure to introduce Mr.

Kangping Chen, CEO of JinkoSolar.

Mr.

Chen will speak in Mandarin.

I will translate his comments into English.

Please go ahead, Mr.

Chen.

(interpreted) Thank you, Yvonne.

Welcome, everyone.

Thank you for joining us today.

In the third quarter 2010, we continued to deliver record financial results.

Our revenue and shipments exceeded our previous guidance to a large degree.

We have improved gross margin substantially and increased the net income by more than 40% to a record high of $38.8 million.

Continued strong demand for our solar products, particularly our solar modules, resulted in record total shipments of 134.8 megawatts in the third quarter.

Combined with an increasing solar module average selling price or ASP, we achieved a record revenue of $215 million, and increase of approximately 50% from the previous quarter.

We continued our transition from a wafer manufacturer to an integrated module producer.

We shipped 92.5 megawatts modules, an increase of over 70% more than the second quarter.

Our module shipments accounted for 59% of total shipments in the third quarter and increased from 54% in the second quarter.

Additionally, we are pleased to announce that in the third quarter we have significantly lowered our average non-silicon cost throughout the value chain ahead of our schedule.

Throughout the quarter, we continued to build our brand name and execute our strategy to build a long-lasting relationship with the leading players in the solar industry, such as Tozzi Renewable Energy, [Enow], Enfinity, and IBC Solar.

Our high product quality, timely delivery and after-sale support have led to high customer satisfaction and trusting partnerships that have helped us secure additional contracts with both new and existing customers, including Saint-Gobain, M + W, Tozzi, and Enfinity.

We have already secured solar module contracts of more than 400 megawatts for 2011.

In response to the growing local demand, we expect to expand our wafer sale and module capacities to 600 megawatts each from our previous targets of 500 megawatts each by the end of this year.

This will further strengthen our vertical integration, which has enabled us to lower our average cost as a result of economies of scale and improve our product efficiencies through better control over the production process.

In the third quarter, we drove down our average non-silicon cost to $0.77 per watt from $0.83 per watt in the second quarter, largely due to technological advancements and improved operating efficiency and reduced the average purchasing cost due to increased purchase volumes.

In terms of raw material supply, we have signed long-term contracts with some polysilicon suppliers, including [Waka], Hoku, and other domestic players, to secure a stable supply of raw materials for 2011.

During the quarter, we also established a US subsidiary with our office in San Francisco, California, to capture the opportunities in the North American market, particularly the US market, which we view as a potentially large market for JinkoSolar.

The new office will function as a marketing and service space.

We are housing our customer services and facilitating our business -- new business in the region.

Our excellent customer service supported by robust market demand positions us well for future growth in both existing and emerging solar markets.

We expect to continue our strong momentum in the fourth quarter and believe we're in a good position to get our 2010 capacity and sales package as well as lead into a successful 2011.

Finally, I want to mention that the Company recently filed a registration statement with the ICC for the sale of 3.5 million ADS.

JinkoSolar is expected to offer 2 million ADS.

And certain selling shareholders are expected to offer 1.5 million ADS with an overallotment option for further 525,000 ADS.

The registration statement is available on ICC website.

Subject to regulatory review and market conditions, we may launch the deal at any time.

We intend to use the proceeds from the offering to expand our production capacity, including procuring new equipment and expanding or constructing our manufacturing facilities in response to the robust demand in the local PV market as well as for working capital and other general corporate purposes.

Now I would like to pass you over to our CSO Arturo, who will go into further detail of our Company -- our business expansion and current strategies.

Thank you, Mr.

Chen.

As Chief Strategic Officer of JinkoSolar, I would like to emphasize our business strategies and highlight some of our achievements during the third quarter.

We continued to focus on developing a strong brand awareness through our high-quality standard, new and technologically advanced equipment, vertical integration, and automatic module assembly lines.

Our second focus is in the rapid market development, diversification, and expansion of our business in both consolidated and emerging PV markets covering residential, commercial, and utility segments.

Our strategy is to take a local approach in each of these countries where we are doing business.

During Q3, we have continued to diversify our customer base while maintaining existing customers.

So far, we have established strong commercial relationships with more than 50 customers across more than 15 countries.

During the quarter, we improved our sales and deliveries across a range of markets.

We continued to excel in Germany, a key driver in global solar demand, as well as expand our business in Italy, Belgium, and France, naturally due to the establishment of our European headquarters in Munich in the second quarter.

We also made substantial headway in the US, Australia, and Israel.

In the third quarter, total solar product shipments were 134.8 megawatts, consisting of 33.7 megawatts in wafers, 8.6 megawatts in cells, and 92.5 megawatts in modules.

We delivered approximately 78% of total module shipments to Europe, including around one-third to Germany with our remaining module shipments sent to the USA, accounting for 6%, and the rest of the world.

This compares to 85% of total module shipments to Europe, including over 50% to Germany, in the second quarter.

Third, we are succeeding in building a strong partnership network with distributors, PV developers, and ETC contractors across the globe.

Among the biggest customers in the third quarter, I would like to mention IBC, Tozzi, [Magasolar], Enfinity, Upsolar, [Enel], and M + W.

Each of them is an important player in its own market, further highlighting the quality and reliability of our products.

In addition, during the quarter we were selected as the supplier for the Swiss Federal Institute of Technology in Lausanne, or EPFL, Europe's number one university for engineering, technology, and computer sciences, with modules to be installed on the campus building roofs in the creation of Switzerland's largest solar park.

We're creating value-added differentiation by offering flexibility to our customers, including OEM or white-labeled modules and local services, such as [white] house and logistic solutions.

Our OEM or white-label business accounted for roughly 30% within third quarter shipments, on target with our strategy to reduce our OEM business to 20% of overall shipments in 2011 and lower than the 40% seen in the second quarter, a sign that we're enhancing the Jinko brand and raising the demand of our solar products.

Our OEM contracts include customers such as IBC, Magasolar, and Upsolar.

In terms of marketing, we're increasing our activities through exhibitions, advertisements, direct marketing, and extensive communication.

Our communications focus on the quality and competitive cost of our products and [will enhance] our reliability to customer service.

We remain committed to our marketing efforts in the third quarter by attending and participating in conferences and exhibitions.

We actively participated in several conferences and solar exhibitions around the world, including Solar Power International in 2010 in the USA, PVSEC in Valencia, Spain, and Renewable Energy in India.

(inaudible) we're also participating in PV Taiwan and [Innergaia] in France.

In line with our commitment to become closer to our markets so that we may provide our customers with better services, (inaudible) our European headquarters in Germany, we also opened a new subsidiary in USA, which Mr.

Chen touched on earlier, to enhance our marketing and sales efforts in North America.

The US subsidiary has (inaudible) our relationship with existing North American customers and should help us assert new business in the region, as we can provide low-cost, high-quality solar modules to fast-growing markets, such as California.

We expect to open a new office in Europe, this time in Italy in Bologna, in the first quarter to capitalize on Italy's booming solar market and support our growing demand in the region.

In regard to bankability, this is a good example of larger-scale utility segments, who successfully and timely fulfill our agreement to supply solar modules for Tozzi Renewable Energy's 35 megawatt ground-mounted solar power plant in Romagna -- near Romagna, Italy, which will be one of the largest projects this year, not only in Italy but also in the whole Europe.

The larger scale of Tozzi project is a testament of our brand recognition and increasing bankability.

During the third quarter, we made significant steps in relation to bankability of our modules.

Our business development team has been in touch with more than 40 banks since March this year.

As a result, over 15 banks have now financed our Jinko-branded modules versus a total of six banks at the end of the second quarter.

Our high-quality modules produced at a competitive cost, mainly due to the increased vertical integration in our value chain and better control over our cost structure, provided strong indications for bankability.

In relation to certifications, we obtained the main PV certifications for our products, including the MCS and CEC certification, so the California Energy Commission.

That will allow us to further penetrate new markets, such as UK And USA, including California.

In relation to ASP, let me point out that we will provide some slides and also a market outlook for 2011.

Module ASPs increased during the quarter from $1.81 versus $1.70 in the second quarter as a result of better brand recognition and better sales performance.

We expect fourth quarter ASPs to trend slightly higher, while the first half of 2011 will see a slight decline due to seasonality and a cut of the [feeding] tariff.

We see strong demand for our modules in 2011, particularly in Germany, Italy, and Belgium.

We're in a strong position to maintain growth as a result of several important agreements with strategic partners, not only for 2010 but also for 2011.

We have signed contracts to supply in excess of 400 megawatts for 2011.

We have been able to obtain prepayment for most of our contracts.

During the quarter, our sales team signed several important contracts with more than 15 customers, including an agreement to supply Enfinity with 100 megawatts of solar modules during 2011, an agreement to supply Saint Gobain with 50 megawatts in 2011, and an agreement to supply IBC with 130 megawatts also in 2011, which includes both white-label and Jinko-branded modules.

We have built credibility with our customers through our excellent service and reliability as well as high-quality solar products and our competitive prices supported heavily by our vertical integration strategy.

And bankability places us at an advantage over our competitors in the ability to supply modules for future projects and large PV systems.

Now I would like to turn the call over to Zhang, who will introduce our financial results and guidance for the fourth quarter and full-year 2010.

Thank you, Herrero.

Good morning and good evening to everyone on the call.

Thank you for being with us today.

Before I go into the line items, let me give you a quick review of our third quarter performance.

We delivered impressive results in the third quarter, achieving record highs across mot of our financial metrics and exceeding third quarter revenue and shipment guidance.

Total revenue increased 59.7% sequentially, while solar module shipments increased 70.3% sequentially.

Our forecast on solar module production supported by vertical integration has lowered cost and improved efficiency.

During the third quarter, our operating profit increased by 151.7% from the second quarter to $56.7 million.

And net income increased by 43.6% from the second quarter to $38.8 million with fully diluted earnings per American depositor share, or ADS, of $1.75.

Now let me run through the details of our financial results.

Total solar product shipments in the third quarter were a record of 134.8 megawatts, consisting of 33.7 megawatts of silicon wafers, 8.6 megawatts of solar cells, and 92.5 megawatts of solar modules, an increase of 34.9% over the previous quarter and 110.6% over the same period last year.

Total revenues for the third quarter of 2010 were a record of $215 million, an increase of 59.7% sequentially and 260.5% year over year.

The sequential increase in revenues was primarily due to the increase in the sales volume, particularly solar modules, as our product mix shifted from wafer to module, as well as an increase in the average selling price or ASP of our solar modules.

Third quarter gross margin, gross profit margin, was also a record, 33.5% compared to 26.9% for the second quarter of 2010 and 15.8% for the third quarter of last year.

The significant increase was mainly due to an increase in the ASP of our solar modules and a further decrease in average non-silicon cost as we continue to benefit from the vertical integration of our production process.

As one of the leading vertical-integrated solar product manufacturers with low cost structure, we continue to make impressive progress in lowering our average non-silicon cost in the third quarter.

Non-silicon cost decreased to $0.77 per watt from $0.83 per watt in second quarter, ahead of our year-end target of $0.79 per watt.

Our great economies of scale from vertical integration and capacity expansion, continuous improvements in [yearly] rate and tight cost control has contributed to the non-silicon cost reduction.

In addition, our average blended silicon cost increased from $0.31 per watt to $0.34 per watt as a result of rising polysilicon price in the third quarter.

We expect to further reduce our average non-silicon cost as we ramp up capacity to an integrated 600 megawatts at the end of 2010.

Operating profit in the third quarter of 2010 was $56.7 million, an increase of 151.7% sequentially and 1[,467.4%] year over year.

Total operating expenses in the third quarter of 2010 were $15.3 million, or 7.1% of the third quarter net revenue, a decrease from 10.2% in the second quarter and 9.8% in the third quarter last year.

The sequential decrease was primarily due to a decrease in auction expenses as we recognized significant accumulated expenses in relation to the grant of options to our directors, officers, and employees upon IPO in the second quarter of 2010 and our stringent cost control measures through cost savings in payroll, entertainment, transportation, and other miscellaneous expenses.

Third quarter operating margin was 26.4% compared to an operating margin of 16.7% in second quarter of 2010 and 6.1% in third quarter of 2009.

We recognized a tax expense of $5.7 million for the third quarter compared with the tax expense of $4.4 million in the second quarter of this year and a nil tax expense in the third quarter of 2009.

For the full year of 2010, we estimate an effective tax rate of 13.5%.

Net income for the third quarter of 2010 was a record of $38.8 million, an increase of 43.6% sequentially and [1,766.9%] year over year, which translates into basic and diluted earnings per ADS of $1.78 and $1.75, respectively, for third quarter of this year.

Now I would like to take a quick look at our balance sheet.

As of September 30, 2010, we had $67.5 million in cash.

Our working capital balance was negative $9.8 million as a result of the Company's significant capital expenditure during the quarter to expand its manufacturing capacity.

Total short-term banking borrowings, including the current port of long-term banking borrowings were $201.9 million, as of September 30, 2010.

We have total long-term borrowings of $40.2 million as of September 30, 2010.

Our long-term bank borrowings are to be repaid in installments until their maturities in 2011, 2012, and 2013.

Capital expenditures were $62.8 million for the third quarter, primarily for the addition of new silicon wafer, solar cell, and solar module manufacturing equipment to expand our production capacity.

We have entered into foreign currency forward contracts with local banks to hedge our exposure to foreign currency risks, including both euros and US dollars in the third quarter of 2010.

We recorded a loss of $11 million from a change in the fair market value of forward contract derivatives as a result of appreciation of the euro against renminbi, partially offset by the gain from depreciation of the US dollar against renminbi.

By comparison, we had a gain of $11 million in the second quarter of this year.

Now let me turn to our guidance.

For the fourth quarter of 2010, we expect total solar product shipments to be in the range of 130 megawatts to 140 megawatts with module shipments expected to be between 100 megawatts to 110 megawatts.

Total revenues are expected to be in the range of $210 million to $220 million.

For the full year 2010, we have raised our total solar product shipments guidance to a range of 448 megawatts to 458 megawatts, with module shipments expected to be between 257 megwatts to 267 megawatts.

We have also raised our full-year 2010 revenue guidance to a range of $638 million to $648 million.

We have also raised our full-year guidance on capacity expansion and expect to increase our in-house annual silicon wafer, solar cell and module production capacities to approximately 600 megwatts each by the end of 2010.

At this time, we are happy to take your questions.

Operator?

Operator?

The question and answer session for this conference will now begin.

(Operator Instructions)

Your first question this even comes from the line of Satya Kumar from Credit Suisse.

Your line is open.

Please go ahead.

Yes, thank you.

And congratulations on the strong quarter.

I just wanted to run through the models or the metrics.

What were the wafer and cell price you realized in Q3?

What is your shipment volume expectations for -- between panels and wafers in Q4?

And how do you expect your pricing to track for wafers and cells in Q4?

The question is from Satya Kumar from Credit Suisse and about the ASP of wafer, cell, and module in Q3 and also the future shipments in our estimates.

In Q3, our -- we realize our module ASP is $1.81.

And the wafer ASP is $0.89.

And the cell is $1.34.

And we see the ASP, the price in Q4 is slightly go up.

And for the shipments on the wafer and cell, we think we will continue to reduce the percentage of the wafer and the cell accounted for the total shipments.

But I cannot give you the actual figure.

Your next question this evening comes from the line of Mr.

Mark Bachman from Auriga.

Your line is open.

Please go ahead.

Yes, thank you.

Congratulations, gentlemen, on your excellent results and accomplishments here.

Following up to that question on the wafer and cell, selling these in the market, how do I think about that in terms of Jinko still wanting to sell both wafers and cells in the open market while also trying to build a brand with its modules?

Do these wafer and cell sales recognize kind of the mismatch of your mono versus multi production?

First of all, I think -- first of all, in Q3, our wafer sales only account for 12.1% of our total shipments, the revenue, and also the cell only 4.9% of our total revenue.

So the module's 82%.

Speaking of Jinko, because we are starting some wafer and downstream vertically integrated, so in the transition period from a wafer manufacturer to a vertical integrated, so our capacity on the wafer side always -- right now, is always higher than the module.

And also, the modules depend on the market.

The sales and marketing continue to go up.

So basically, in a transition period, yes, we have small portion of wafer and cell to sell to our side.

But as the time going, by the end of this year, we'll will thoroughly integrated.

We think in our wafer and cell, the sales will become nil almost.

I'm not sure I answered your question or not.

It did.

I guess the point being there that you're producing more wafers than what you can actually make into modules at this time.

And I was under the impression that you might be producing more mono sales right now than multi.

And so that's probably a reason for maybe the cells being sold into the open market right now.

That's only one reason, another reason because we also have long-term contracts on the wafer side with one of the clients.

So basically, yes, because you see our vertical integrated is to first increase the wafer and the cell capacity, then increase the module.

So basically, right now, today, the wafer and the cell account of total revenue is a small portion.

Thank you.

Your next question this evening comes from the line of Mr.

Gary Hsueh from Oppenheimer Company.

Your line is open.

Please go ahead.

Yes, thank you for taking my question.

And congratulations to a great quarter here.

Sam, just kind of looking at your guidance, first of all, my first question is kind of what gives you confidence in terms of doubling your cell capacity.

Do you have sort of early sort of preproduction, yield results, or anything that you can share with us that gives you a little bit more confidence on Jinko's ability to execute in terms of cell capacity expansion in Q4?

And then second quick question here is just based on some of these numbers in terms of capacity, it looks like you don't need to externally source or buy any cells.

Could you confirm that?

And does that imply basically your expectations for gross margin?

Does that imply something north of 40% for gross margin in Q4?

Okay.

I think to answer your question, first of all, I think in the cell capacity, today, we are 300 megawatts.

And also, the new production line is already -- it's installed right now.

I think by the middle of December, we will reach 600 megawatts.

And during this quarter, basically, in the third quarter, we still buy outside actually wafer and cells because this is not only -- because sometimes it's not balanced between mono and multi and also the timing, you see.

So basically, I think in this quarter, by the end of this year, we will vertically integrate 600 megawatts.

But this quarter, we still will sell some wafer and cell and maybe also buy some wafer and cell from outside.

So this is really I think -- if you compare actual gross margin, it always is below the theoretical gross margin.

For the third quarter, I think gross margin -- I cannot give you the guidance.

And but we think estimating maybe is around 28% to 29%.

Okay, Sam.

And what's your expectation for external sale purchases as a percent of total megawatts of shipments in Q4?

I think at this moment, we think the cell and the wafer accounts for revenue maybe below 15%, maybe 10% to 15%.

Okay, Sam.

But just a quick clarification, how much in terms of cells do you anticipate buying externally?

This is actually difficult.

I can't tell you how much because, in third quarter, we temporary buy from outside 13 megawatts cell and 16 megawatts in wafer.

It all depends on, in the rushing hour.

It's the timing.

It's the -- I cannot give you the exactly figure.

Your next question this evening comes from the line of Mr.

Mark Bachman from Auriga.

Your line is open.

Please go ahead.

Sure.

Hey, Sam, thanks for taking my questions here again.

Can you go back over both your poly and non-poly cost in Q3, where you expect them to trend in Q4?

And then also, how do we think about 2011 for the first half?

In Q4 -- in Q3, our silicon cost is $0.34.

It's based on $57 every costing the polysilicon we bought.

And the consumption is 5.9 [around] per watt.

So it's $0.34.

Then the non-silicon cost is $0.77, of which the wafer is $0.25.

The cell is $0.17.

And the module is $0.35.

So add together, it's $1.11.

We think the polysilicon price in the third quarter will go up compared with Q3 because Q3 most poly is bought in Q2.

So right now, the silicon price is around $0.75 to $0.80.

So our estimate maybe is around $0.40 to $0.45 on the silicon cost.

On the non-silicon cost, we are planning continue to review from right now $0.77 to $0.75.

The major reduce is I think from module, will turn into reducing module from right now $0.35 to $0.33.

So basically, in Q4, we think the total cost may be around $1.15 to $1.18 or $1.20.

And, Sam, how do we think about that, about your poly cost going into 2011?

What have you been able to secure so far?

You had made mention in your prepared comments that you've actually entered into some long-term poly contracts.

But how do those really affect what you're going to be paying for poly in 2011?

I think that's a good question.

I think Jinko is -- we are vertically integrated.

So that's why we actually put our two ends into the market.

One is SP, most close to the market price.

Then also the polysilicon price also is close to the market price.

So when the polysilicon price dropped in the Q4, we think partially the polysilicon price increase -- the cost increase for silicon were (inaudible) to the failing price.

So that's why we say the SP in the Q4 will slightly go up.

Then for the next year, we already booked -- the polysilicon is around 2,210, which including Waka 720.10 and Hoku and also [Sung High] and [Sung Bin].

So then that will account almost 40% to 50% of our silicon.

The supply will be stable.

So rest of them, we are -- we'll buy from market.

We think today the polysilicon production capacity is higher right now.

And we foresee next year the polysilicon price maybe will stable or even slight go down.

Your next question this evening comes from the line of Mr.

Rob Stone from Cowen Company.

Your line is open.

Please go ahead.

Sam, I just wonder when do you expect to give more detailed guidance for 2011?

We will give the 2011 guidance on the earning release in our Q4.

That means maybe in February of next year.

Okay.

Thank you.

But as you know, we already released the news on the follow up that basically we go with the money, mostly for the CapEx to support our expenses to the end of next year to 1 gigawatt.

(Operator Instructions)

Your next question this even comes from the line of Satya Kumar from Credit Suisse.

Your line is open.

Please go ahead.

Yes, hi.

Thanks for taking my follow up.

I was wondering if you could comment on what you're seeing right now in Germany.

Particularly, there was some market concerns about German markets.

I was wondering if you're seeing any change in trend [in this] market.

This is Arturo.

Thanks for the question.

In fact, we're seeing still a very rough, a very tough, a very good demand, very hot market until probably November.

You know that the (inaudible) cuts will be happening at the end of the year.

So most of the companies are trying to maximize their quantity of projects installed and connected to the grid before the cut on the subsidies.

So it means that for us, producing in China, it takes around four weeks of shipments.

Consequently, all the shipments that need to be connected in Germany will be of a deadline at the beginning of -- let's say maximum half of November.

So by 15th of November, we need to ship all the goods for the German customers to be in [Italy].

However, the market is not stopping here.

What we're seeing is that the machine of the PV market is really rolling very well, so has a lot of energy.

And this energy will continue through the first months of the year 2011.

And also mainly because our main customers, like IBC or Magasolar, even they are German customers, they are doing a lot of business outside Germany in markets like Italy or like France or even like in the USA, where we are seeing a very good demand for the first quarter of 2011.

So mainly for the first year, the first half of the year of 2011, we are seeing a very strong continuation on the orders, coming both from Italian customers or US customers but also coming from Germany.

The next question this evening comes from the line of [Mr.

Kenneth Carson] from Morgan Stanley.

Your line is open.

Please go ahead.

Hi.

Thank you for taking the call.

As a shareholder, I'm not too advised of all the technical stuff.

I'm more interested in what the bottom line is and what this translates to earnings per share and price-earnings ratio and that type of thing.

Could you give me some information on that?

I think we're not clear of your question.

Basically, I hear is you want to know some basic financial information.

I think if you look at the earning release, I think most the figure you will see there.

I think our net income is $38.8 million and $1.75 per ADS.

And other information, I think the balance sheet and the income statement is attached on the release.

So you can use it to find the financial or indexes.

Did I answer your question because I cannot clearly hear your question?

Okay.

Could you tell me what is holding back on the price per share?

Most other companies in the United States have price-earnings ratio of 20 or growth companies like 20 to 50 times earnings.

And your earnings, the price-to-earnings ratio is about -- what, about 12 now?

What is holding it back?

Yes, I think we're not going to detail that.

I think, look there, you see I think the ADS outstanding right now is 21 million, 21.7 million.

I think no comments on the PE, price-earnings times.

It's no comment.

Okay?

You should judgment by yourself.

Your next question this evening comes from the line of Mr.

Rob Stone from Cowen Company.

Your line is open.

Please go ahead.

Hi, Sam.

Just wanted to follow up on 2011 if you're able to put a little more specificity around your comment about average selling prices, given that you have 400 megawatts or so of modules contracted for next year.

Can you tell us more about were you see ASPs going next year?

Thank you, Rob.

This is Arturo again.

So mainly, what Sam was mentioning before was that the first half of the year, we can see a -- we can have a very nice visibility that the market is going on, is going strong.

And the demand is still very tight.

However, due to the feeding tariff cut on the subsidies, obviously, we are signing contracts as Q1 probably and most of the second half of the second quarter mainly with a reduction on the feeding tariff from Q4.

So mainly, I would say that we can see average prices in a range of $1.65 to $1.75 per watt for the first quarter.

And then going forward in Q2, we'll be seeing slightly a reduction.

But I don't anticipate a big impact on ASP probably until the end of the year.

Probably Q3, Q4 will be a slightly higher reduction.

So you're seeing your ASPs going down significantly less than the feeding tariff decline in Germany.

Is that because of your price relative to others or because of the mix of non-German markets?

Well, it's not only a question of German markets feeding tariff cut.

Also, Italy is going to reduce on a quarterly basis by 6% to 10%.

Also, Czech Republic is anticipating a reduction on the feeding tariff.

So there are several markets that they will continue going on.

The demand is still very strong but at a different level of prices, obviously.

But it's not a big impact because, as you know, this Q3, our ASP was $1.81.

Q4 will be slightly higher.

And then we will come again to normal basis of $1.75, $1.65 to $1.75 range that I was mentioning to you.

So it's quite a stable base in terms of price ASP, and also because we have a strong partnership with customers that have signed contracts, more than 420 megawatts in signed contracts with prepayments.

So we can feel quite comfortable that at least Q1 and probably Q2 are very stable for us.

Your next question this evening comes from the line of Satya Kumar from Credit Suisse.

Your line is open.

Please go ahead.

Yes, just a model clarification question, I was wondering if you could comment on how we should be modeling other income, the foreign exchange other income in Q4.

The other income in Q4 -- I think right now for this quarter, we have some other income because I think we have some other income from the ADS.

So I think you can put a zero for other income for Q4.

The other income is not including the fair market value change, right, in the forward contract, right?

Satya, are you including the fair market value change on the forward -- the foreign exchange deliverables?

Your next question this evening comes from the line of Mr.

Vishal Shah from Barclays Capital.

Your line is open.

Please go ahead.

Yes, hi.

Thanks for taking my question.

I apologize if I missed this.

But I wanted to know what your outlook for polysilicon procurement is for next year.

Are you -- what percentage of your 2011 requirements have you already contracted and what kind of pricing, fixed, variable, with spot?

And how do you think spot prices are doing in the next -- in Q4 particularly?

Thank you.

Okay.

First of all, I think right now, the current in our polysilicon spot price is around $0.70 to $0.80.

And we think the -- for the continue forward for next year, we think the price should be slight go down, first of all.

Second is Jinko, we always book contracts around 2,210.

They're accounted for almost 40% to 50%.

It depends on the next-year capacity.

So basically, we think the polysilicon production capacity right now increased a lot, like [MMC], [OCI], always planning to expansion.

And compare the market for next year, the demand, we think the polysilicon supply is little over than the demand.

So basically, we think the price will go down to a reasonable price, maybe around $0.40 to $0.50.

That's what we think.

And the good thing is because we are -- Jinko is vertically integrated.

And from the value chain, we can manage those volatility on the polysilicon price, just as I said, because over -- for example, for 2011, we already booked 423 megawatts contracts and with down payments, just like Arturo said.

Partial is fixed price.

Partial is market price.

So anything change on the polysilicon price can partially [complement] to selling price.

So if ASP of modules go down, that means the silicon price also will go down and as you know that.

So basically, that's our whole advantage on our business model.

Your next question will be from the line of Mr.

Timothy Lam from Citigroup.

Your line is open.

Please go ahead.

(inaudible question - microphone inaccessible).

This is Arturo, the CSO.

Unfortunately, your line was not so clear.

But if I understood correctly, you wanted to clarify the ASPs for Q1 and next year 2011.

So what I was mentioning is that we have arranged currently with some contracts that goes to $1.65, even to $1.80 dollars per watt.

So it's quite a stable and strong ASP for Q1.

And going forward, we will see a slightly reduction, only slightly in Q2, because the market is also very strong for the second quarter, especially coming from markets like Italy or Belgium.

And then this third quarter and Q4 will be -- the reduction on the ASP will be stronger, probably at the level of $1.50 to $1.55 per watt.

Your next question this evening comes from the line of Vishal Shah from Barclays Capital.

Your line is open.

Please go ahead.

Can you talk about what the mix was between domestic suppliers from China and also to the international suppliers for the 2,210 metric tons of volume that you [expect] for next year?

And what kind of pricing are you looking at for that amount of supply?

Are we talking about the $40 to $50 range that you mentioned or slightly higher or maybe depend upon the market conditions?

Today, we signed a contract for next year 2,210.

Mostly it's come from partial I think is 50% from abroad, from Waka and Hoku and partially from domestic, Sung High and Sung Bin.

[Sung Way].

Sung Way, yes.

I think the price I think is -- we have some market price, some with the fixed price.

The fixed price I think within the release and the F1.

And I cannot say.

It's almost below right now, below the market price right now.

And I think for the market price, it depends on next year the supply and demand.

Really, I cannot tell you the detailed figure.

Your next question this evening comes from the line of Mr.

Timothy Lam from Citigroup.

Your line is open.

Please go ahead.

Hi.

Sorry.

Can you hear me better this time?

Yes.

Yes, much better.

Okay.

Sorry about that.

My question earlier was, since you said about the prices for first quarter, what you see now for the contracts is $1.65 to $1.80, what is the chance of risk that this price maybe revised based on the conditions or the policies [on] price?

And if so, how much lead time do you have before they revise down the prices?

It's more I just want to understand are you -- I thought that these prices adjustable based on a quarterly or monthly basis.

Is that correct?

No, not necessarily.

It depends on the contract-by-contract basis.

It is true that we can adjust some of the contracts in case of the raw material going up.

And this is obviously if silicon goes up that we don't think so, then we will adjust these contracts, this price for these contracts.

But normally, the prices of Q1 is a mix of many different contracts, different customers that they have given to us down payments between 5% to 15%.

These prepayments give us quite comfortable in terms of delivering on time and at the right prices already signing the contracts.

What I was saying mostly is that in Q2, Q3, prices with some of these contracts are negotiable.

So Q1, we can say that more or less are -- most of the contracts are completely fixed.

And for Q2, Q3, Q4, in some of the contracts, there still is room for negotiation on a win-win situation.

Thank you.

Just to follow up on the prices here, when you look into the -- your cost of production, do you see room in the wafer or cell production also to come down as well, as you mentioned that module is probably the main area you consider cost reduction?

I think if you look on Q3, the wafer cost is already lower.

I think it's around $0.25 and cell $0.17 and module $0.35.

We think the potential for us for Q4 is the module because by ramping up the volume, we can continue with these $0.02 per watt.

So that's why we're planning to reduce the non-silicon cost from $0.77 to $0.75 for Q4.

Of course, in the future, as the [conversion] rate increases and also -- and the rest of them also can continue to reduction.

Your next question this evening comes from the line of Vishal Shah from Barclays Capital.

Your line is open.

Please go ahead.

Yes, hi.

Thanks for taking my follow up.

I wanted just to get a better sense of your Q shipments.

What percentage of your Q1 capacity today is contracted under these 423 megawatts of contracts?

And what percentage of those shipments are going to the Italian market?

Thank you.

Thanks, Vishal.

This is Arturo again.

Mainly for Q1, we are almost sold out.

So practically 90% of our expected capacity is already contracted in these 420 megawatt contracts.

These 420 megawatts is for the whole year.

But Q1 is taking a big part.

Going to your second question, mainly, as you know, Germany is -- due to the seasonality is under a very weak quarter in -- traditionally, every year, Q1 is very slow in Germany.

However, we have not only very strong customers from Italy, such as Tozzi that we signed this 50 megawatt contract or Enel or Enfinity in Belgium, but also our customers in Germany are selling a lot in Italy.

So I would say that the Italian market probably will overtake the German orders in Q1.

For Q3, as we announced before, around one-third of our shipments goes to Germany in this Q3.

So going forward, we will see a reduction on Germany distribution in terms of share.

And Italy will take the lead.

Your final question this evening comes from the line of Mr.

John Segrich from Gabelli Funds.

Your line is open.

Please go ahead.

Hi, guys.

I'm just wondering if you can just go back over your ASPs for wafer, cell, and module.

If I use the ones that you gave on the call and I use the shipments that you gave on the call, it looks like there's still about $7 million or $8 million of revenue that isn't accounted for.

So either maybe was one of the numbers wrong?

Or is there something else that is helping to boost the revenue that doesn't fall into those categories that we should be aware of?

I think I'm not sure.

The total -- the revenue recognized, the capacity of total is nil.

I think I'm not sure you got the revenue.

Wafer revenue -- the Q3 total revenue is $211.5 million, the wafer $25.6 million, the cell $10.3 million, and the module is $173.8 million.

And some shipments does not mean the recognized revenue.

It's a little different, slight different, because some shipments maybe still not recognized revenue at the end of the quarter.

We're now --

The revenue recognized as the wafer is [29], the cell is [9], and module is [96].

So if you use those figures, probably the one is 34 times the ASP, wafer is $0.89, cell is $1.34, then module is [$0.81].

It should be correct.

We're now approaching the end of today's conference call.

I will now turn the call over to JinkoSolar's Investor Relations Manager Ms.

Yvonne Young for her closing remarks.

Again, thank you for joining us today.

If you have any further questions, please do not hesitate to contact us.

You will find all the contact details on our Company's IR website at www.jinkosolar.com.

Thank you.

Thank you for your participation in today's conference.

This concludes the presentation.

You may now disconnect.

Good day.

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call.

The interpreter was provided by the Company sponsoring this Event.