晶科能源 (JKS) 2015 Q4 法說會逐字稿

Thank you for standing by, and welcome to the Q4 2015 JinkoSolar earnings conference call.

(Operator Instructions).

I must advise you that this conference is being recorded today, March 1, 2016.

I would now like to hand the conference over to your host today, Sebastian Liu.

Please go ahead, Mr. Liu.

Thank you, operator.

Thank you, everyone, for joining us today for JinkoSolar's fourth-quarter 2015 earnings conference call.

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

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

On the call today from JinkoSolar are Mr. Chen Kangping, Chief Executive Officer; Mr. Cao Haiyun, Chief Financial Officer; and Mr. Gener Miao, VP Global Sales and Marketing.

Mr. Chen will discuss JinkoSolar's business, operations and the Company's highlights, followed by Mr. Gener Miao, who will talk about the sales and marketing.

And then Mr. Cao will go through the financials.

They will all be available to answer your questions during the Q&A session that follows.

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

Forward-looking statements involve inherent risks and uncertainties.

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

Further information regarding this and other risks is included in JinkoSolar's public filings with the Securities and Exchange Commission.

JinkoSolar does not assume any obligation to update any forward-looking statement, except as required under applicable law.

Please be noted that to supplement its consolidated financial results, presented in accordance with the United States Generally Accepted Accounting Principles, or GAAP.

JinkoSolar uses certain non-GAAP financial numbers.

The Company believes that the use of non-GAAP information is useful for analysts and investors to evaluate JinkoSolar's current and future performances based on the more meaningful comparison of net income and diluted net income per ADS when compared with its peers and historical results from prior period.

These measures are not intended to represent or substitute numbers as measured under GAAP.

The submission of non-GAAP (technical difficulty) is voluntary and should be reviewed together with GAAP results.

It is now my pleasure to introduce Mr. Chen Kangping, CEO of JinkoSolar.

Mr. Chen will speak in Mandarin, and I will translate his comments in English.

Please go ahead, Mr. Chen.

(Interpreted).

Thank you, Sebastian.

Good morning and good evening to everyone, and thank you for joining us today.

I am pleased to report a strong finish for the year, with a record-high margin shipment in revenue.

Global demand remains strong, especially in key solar markets, which gave us good visibility to the entire year and leave us very confident about our future prospects.

Total module shipment during the quarter reached a record high of 1,710 megawatts, which translates into module shipments for the entire year of 4.5 gigawatts, a 53.3% increase over 2014.

Revenue during the fourth quarter reached $937.7m, representing an increase of 104.4% over the same period last year, which translates into revenues for the entire year of $2.5b, an increase of 61% over last year.

Non-GAAP net income for the year reached $177m.

During the fourth quarter, electricity output was 154.4 gigawatts, down 34% sequentially.

Electricity revenue generated RMB136.3m.

We connected 161 megawatts of projects to the grid during the quarter, which brings our total capacity of connected projects of 1,007 megawatts.

Excluding the factor of seasonality, power output was impacted by curtailment in China's western regions, mainly in Shenzhen and Gansu and stronger-than-usual rainfall in eastern regions, which reduced power output to some extent.

And due to some events beyond our control, such as delays in subsidy catalog and retake in land rental and the grid connection process in China's eastern provinces, we fell short of our connection target of the year.

We are confident, however, that we have assets and the development experience in place to rapidly make up for the shortfall in 2016.

We have a unique strategy and a view in place that leverages the competitive advantage of our downstream business.

And we are focused on long-term sustainability rather than speculation in the short term.

We are now accelerating the spin-off process in order to maximize shareholders' value.

The depreciation of RMB over the past half year has caused considerable turmoil in global markets.

We have also been increasing our hedge ratio to ensure that its impact on us is limited.

We have also put in place detailed plans to redeem or pay back our convertible bonds in 2016, which Charlie will go through later.

We have all been hearing a lot about the possibility of a hard landing of the Chinese economy, deep problems in China's banking system and local financial systems.

Despite these concerns, we remain positive about China's long-term development.

Employment remains stable, the economy, although it gears down a little, continues to grow, and the PBOC still has monetary policy tools at its disposal to use.

We should be more confident, rather than panic.

With China only going through the first year of its new five-year plan with deeper structural reform of supply-side politics expected.

Despite steep drop in the price of crude oil and other economic volatilities, global demand for solar is growing steadily.

We remain the market leader in China, where payment terms have improved significantly, and a large number of rush orders have been coming in before the FIT cut due at end of June.

This will make the first and second quarters stronger than usual and the whole year demand more balanced, especially for our high-end products, which are already in short supply.

In the US, we already signed a big orders with good ASPs in 2016, which will help us further expand market share and generate larger profits.

With the extension of ITC, the biggest market uncertainty has been removed in the US market, which provided us with good visibility on the market stability well into 2018.

Strong demand also has a positive impact in keeping ASPs stable globally.

In particular, ASPs in major markets are expected to further stabilize during the first quarter of 2016.

We have always remained cautious when it comes to the competitive expansion and we have decided to expand production capacity to 3.5 gigawatts for wafer, 3.5 gigawatts for cell and 6.3 gigawatts for module in 2016.

This expansion should only allow us to meet the minimum expectations for the market demand in the future.

On the technology front, we continue to optimize our cost structure.

We are constantly working to overcome technological barriers in order to create real breakthroughs in the manufacturing.

We were honored to become the first solar module manufacturer in China to receive Top Runner Program's level-one certification from the China Quality Certification Center.

JinkoSolar's insistency on maintaining the highest quality control standard in the industry allows us to provide our customers with reliable and high-efficiency PV products.

In conclusion, we finished off the year on a very strong footing, with record shipment and revenues that demonstrate efficiency of our operations and value that our customers all over the world place on our brand and products.

I am confident that our growth prospects will further expand as we continue to deliver long-term value to our shareholders.

Finally, I'll go over the guidance of the first quarter and the full-year 2016.

In the first quarter of 2016, the Company estimates total solar module shipments to be in the range of 1.3 to 1.4 gigawatts, which will include 1.2 to 1.3 gigawatts module shipments to third parties.

For the full-year 2016, the Company expects total solar module shipments to be in the range of 6 to 6.5 gigawatts, which includes 5.4 to 5.7 gigawatts shipment to the third party.

The Company expects to connect solar power projects with new capacity of 600 to 800 megawatts in 2016.

With that, I would now like to hand the call over to our recently appointed Vice President of Global Sales and Marketing, Mr. Gener Miao.

Gener has been with JinkoSolar for more than five years, previously serving as the Chief of Staff to our Chairman.

He is experienced in our business and operations, and I am confident, and he will benefit the Company greatly in his new role.

Gener, please?

Thank you for the warm introduction, Mr. Chen.

I am pleased that we report another great quarter of sales results, which allowed us to finish the year on a strong note.

We also have good visibility on the first half of the year, leading us to be very confident that 2016 will be another strong year.

We shipped 1,670 megawatts to third parties during the quarter and have further diversified our geographical distribution as we increased our market share in many key markets.

Taking a closer look, we shipped about 37% to China, 24% to North America, 40% to Asia-Pacific, 13% to Europe and 12% to emerging markets.

Looking at the full year, we shipped a total of 4.5 gigawatts to 836 customers in 64 countries, including 604 megawatts to our own projects.

Total module shipments represent a 53.3% increase from 2014.

This includes around 500 megawatts each for Europe, emerging markets and the Asia-Pacific region, as well as our 1 gigawatt to North America and 1.5 gigawatts to China.

I will now go into a bit more detail for each of these important markets and provide you with some insights into our strategy and outlook going forward.

With good customer reputations and higher ASPs, the US market remains one of our most important priorities.

With ITC extended, one of the biggest market uncertainties has been removed, though we will continue to keep an eye on the tariff issues as things move forward.

While ITC extension factor out some rush orders, 2016 US market will still be quite strong, and those orders will move to 2017, making 2017 more predictable and the market growth more steady.

We already have about 1.5 gigawatts in orders earmarked to go into the US market in 2016.

We therefore expect to reach record price shipments there, and we also plan to increase our market share in rooftop markets for both commercial and residential segments, with our partners such as [Vivent].

China retained its position as our largest market in 2015, while ASPs here remained stable.

Payment terms have improved significantly.

Rush orders have been coming in before the feed-in tariff cut by the end of June 2016.

So traditionally slow Q1 and Q2 are expected to be quite strong, as our higher-end products are already in short supply.

Given this trend, we expect China's growth to become more balanced this year, as it embarks the first year of the new national five-year plan.

While European markets are growing, we maintain a strong presence in key countries.

Demand from major European markets remains, such as the UK and Germany and France as rooftops increasingly taking a larger share of the market over ground-mounted projects.

We are focused on increasing our market share in non-EU regions, such as Turkey, where we are number one in terms of the shipments.

I would also like to emphasize that facing a slowing-down market, our European customers are very active in developing new markets, especially emerging markets such as Latin America and the Middle East.

Thanks to their loyalty to JinkoSolar brand, we have great opportunities to work hand in hand with them again to [attack] those markets and make success.

The Asia-Pacific region is a mix of both rapid growth and flat.

Demand from previously ramped-up Japan has begun to cool off a little, but it's being offset by other markets in the region that are growing rapidly, such as India.

We have already begun redistributing resources to these markets to meet the strong demand that we expect.

Our continuous efforts are increasing JinkoSolar's brand recognition in emerging markets, especially in Latin America, have begun to take effect.

We have taken the leading position and almost a 20% share of the market in Latin America.

This is particularly pronounced in major markets such as Chile, Mexico and Brazil.

We also maintained our market-leading position in South Africa and are very active across the Middle East countries such as Kuwait, Jordan, Egypt and the UAE.

ASPs have remained stable globally as a result of strong demand, despite pronounced currency fluctuation.

Our ASP during the quarter was $0.56 per watt, the same as the last quarter.

ASPs in major markets are supposed to [be] further stabilized during the first quarter of 2016.

Moving to marketing and branding, we participated in a number of events, exhibitions and conferences.

In October, Chairman of JinkoSolar Mr. Xiande Li participated in final UK energy dialogue during the Chinese President Xi Jinping's visit to the UK.

In December, we were awarded [today's transformation] for 2015 by the United Nations and China.

In January, JinkoSolar was invited to Business 20 summit in Beijing that promotes the energy reform as an agenda item for the G20 summit held this year.

We attended close to 100 industry conferences and exhibitions around the world in 30 countries during 2015.

For example, during PV (inaudible) in July 2015, we launched our Eagle Black and Eagle Dual product.

To attack the residential market in Japan, we also launched the 48-cell mono module.

During September SPI in US, we launched the Jinko MX smart module.

Through those invests, JinkoSolar further strengthened its leading position in brand value and recognition.

Now, I would like to turn the call over to Charlie, who will go over our financial results of the fourth quarter and the whole year 2015.

Thank you, Gener.

Our Q4 2015 and annual results set records for the Company.

Total solar module shipments in the fourth quarter 2015 were 1.7 gigawatts, up 31% sequentially and up 39% year over year.

Total revenue was $938m, up 30% sequentially and up 104% year over year.

Gross margin was 19.5%, compared to 21.3% in the third quarter 2015.

The sequential decrease was from lower gross margin of [an] existing revenues due to the seasonality and curtailment of projects in the west region of China.

ASP was $0.56 per watt, the same as last quarter.

We continued to cut our in-house manufacturing costs to $0.39 per watt, from $0.41 in the third quarter.

The blended costs, including the US power costs, was $0.45 per watt, the same as the last quarter.

Our operating expenses, excluding stock-based compensation, the change in provision for doubtful accounts and the impairment of fixed assets represented 9.7% of its total revenues, compared to 12.2% in the third-quarter 2015.

We recorded an exchange gain of $11m, including change in fair value of forward contracts.

Due to the anticipated depreciation of RMB, we have taken proactive hedging strategy to minimize the foreign exchange impact.

I also want to emphasize here again that almost all our cost is in RMB, while our revenues are global.

The depreciation of RMB, if it continues, is positive from an operational perspective.

Now, we have two outstanding convertible bonds by the end of December 2015.

The first one is $100m, due in May 2015, and the second one is $150m, due in 2019, with put options in February 2017.

During the fourth quarter, we repurchased $23m of the first one, with the time in place to redeem or pay back those convertible bonds thanks to our healthy balance sheet, strong operating cash flows and the financing capabilities.

Net income was $54m.

This translates into basic and diluted earnings per ADS of $1.72 and $1.68, respectively.

Non-GAAP net income was $78m.

This translates into non-GAAP basic and diluted earnings per ADS of $2.48 and $2.44, respectively.

Now, I will briefly review our full-year 2015 financial results.

We concluded our 2015 with total solar module shipments of 4.5 gigawatts, meeting the high end of the Company's guidance.

Total revenues for 2015 were $2.5b, up 61% from $1.6b in 2014.

Gross margin for 2015 was 20.3%, compared to 22.4% for 2014.

Operating expenses represented 12% of total revenues for 2015 compared to 13.1% for 2014.

Net income for 2015 was $106m, compared to $109m in 2014.

This translates into basic and diluted earnings per ADS of $3.40 and $3.32, respectively.

Non-GAAP net income in 2015 was $177m, compared to $129m in 2014.

This translates into non-GAAP basic and diluted earnings per ADS of $5.68 and $5.32, respectively.

Now, I'd like to take a quick look at our balance sheet.

As of December 31, 2015, the Company has $654m in cash, cash equivalents and restricted cash.

The total debts were $1.6b, of which $760m were from Jinko Power.

The Company's working capital was negative $85m (sic - see press release "negative $98.9m"), compared to a deficit of $150m as of December 30, 2015.

Without consolidation of Jinko Power, the working capital is positive $131m.

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

Operator?

Operator?

Operator, we are ready to take questions.

(Operator Instructions).

Philip Shen, Roth Capital Partners.

Yes, thanks for taking my questions and congrats on the nice results.

It seems like your seasonality in Q1 is better than typical with the strength in the US.

Can you talk about the visibility you have into Q2?

How much of your production have you sold or booked and also the visibility into Q3?

Hi, Philip, this is Gener.

So mainly for the first half, our book are almost fully booked.

We would like to say around 80% to 90% are fully booked and for the whole year we can see the visibility of around 6% -- 60% to 70%.

Great.

And how do you expect your geographic mix to evolve in the year?

You mean for 2016 or 2015?

For 2016.

Okay.

So for 2016, we are expecting that both North America and China market will still be the top market for Jinko.

And the shipment numbers will take around like 30% -- 20% to 25% for China and 25% to 30% for North America and the rest, Asia Pacific, Europe and the emerging markets are taking around 10% to 15% each.

Philip, just like Gener said, we believe 2016 is very strong.

And the key drivers is the United States, China and India and other emerging markets.

We believe it's more balanced in terms of allocation of first half year and the second half year.

Okay, great.

And then in terms of margin too, you had this impact from the curtailment in Q4.

What's the margin outlook for Q1 and how do you expect margins to evolve throughout 2016 as well?

Looking to the outlook for the gross margin, we expect the Q1 gross margin will improve slightly.

And for the module business, the gross margin is pretty stable.

It's in the range of 18% to 20%.

And for the downstream Q4, the gross margin is very low.

It's only 34%.

And we explained in the prepared remarks, it's due to the seasonality and curtailment for the projects in the west regions.

We experienced extreme weather conditions in the fourth quarter including strong rainfall and snowstorm.

And we expect our (inaudible) revenue will grow by 30% in the first quarter.

And in terms of gross margin for the downstream, we estimate that in the first quarter it's in the range of 40% to 45%.

And we expect with the improvement of curtailment situations for the projects in the west region and additional projects connected in the east and south China, we expect the gross margin for the power unit in the second quarter will be in the range of 55% to 60%.

So look at the 2016, the trend of gross margin for the module business for the first half year, we believe it's stable.

But in the second half year with more shipments to the US market from our overseas capacities, we believe the module business gross margin may improve in the second half year.

Okay, great.

Thank you, Charlie; thank you, Gener.

And I'll jump back in the queue.

Welcome.

Thank you.

Patrick Jobin, Credit Suisse.

Hi.

Thanks for taking the questions here.

Just a few form my side.

I just want to follow up first on the gross margin expectations thinking about Q1 and Q2.

Given what we're seeing in wafer pricing coming up and being short of some wafer capacity from the Jinko side.

Did I hear currently you think 18% to 20% gross margin for the module business in the near term?

And then I have a few follow-ups.

Thanks.

Okay.

For the module business, you're right.

I think we are seeing strong wafer and cell price.

Particularly in the fourth quarter the wafer and cell price increased a little bit due to the tight capacities.

And we expect that the wafer and cell price is stable in the first half year and may go down slightly in the second half year with more capacity operating in the middle of 2016.

So looking to the gross margin for the module business, just like I said, we believe the gross margin in the first half is in the range -- it's quite stable, 18% to 20%.

And for the second half year, because we have the capacity expansion plan.

And for the fourth quarter, just to give you an example, we shipped around 450 megawatts to the US market.

Around only 20% is from our Malaysia factories.

But we expect in the second half year with more capacities, we will ship over 60% from our overseas factories to the US market.

So that is why I'm saying I expect the gross margin will improve in the second half year for the module business.

Just one point.

This is Sebastian, Patrick.

So our -- if we ship into US from our overseas factory, we can generate more than 30% gross margin.

So that's why like Charlie said in the second half of the year, we think we can maintain or even slightly increase our gross margin for the module business.

Got it.

So just two follow-ups if I can.

First, the US order book, I think you mentioned 1.5 gigawatts after some push-outs had occurred.

Can you quantify how much volume had pushed out from 2016 to 2017?

And then related to that I know previously you shared the view of some fixed pricing within that order book.

Has that remained firm after the ITC extension?

That's my first question.

Then the second question just really simply on the capacity expansion targeted for 2016, how much of that would be overseas in Malaysia or is that all within China?

Thank you.

Okay.

Thank you, Patrick.

This is Gener.

Let me answer your question regarding the US demand side.

As I mentioned previously, our current booked are about 1.5 gigawatts for the US market in 2016 and that is -- we have seen around 200 to 300 megawatts has been pushed to from 2016 to 2017.

And for the pricing side, we have seen that the US market is stable compared with in Q1.

But for the mid-term we have seen because of the oil price, because of natural gas pricing we are expecting the price to be coming down a little bit.

Okay.

So for the capacity expansion, we expect to expand our wafer by 500 megawatts, cell by 1 gigawatt and module by 2 gigawatt.

The wafer capacity addition is in China and the cell and module capacity is from both China and overseas factories.

We plan to disclose the detailed capacity plan in the middle of 2016 and the all the capacity expansion will be completed in the first half year.

Great, thank you.

Thank you, Patrick.

Vishal Shah, Deutsche Bank.

Hello, Vishal.

Hi.

Can you hear me?

Yes, yes.

Yes, thanks for taking my question.

Two questions.

First, can you talk about your expectations for wafer pricing in the back half of the year?

Do you expect -- or even for that matter Q2, do you expect pricing to continue to go up given the strong demand ahead of the June expiration of the ITC -- of the feed-in tariff?

And also can you talk about how you're looking at your balance sheet especially given the weakness of the RMB.

Are you seeing any impact of your dollar debt?

Thank you.

Regarding the wafer price, after Chinese New Year, due to the low inventory level for wafer and cell, we are seeing a little bit price increase for wafer and cell.

So we expect that the wafer and cell price will be stable in the rest of -- in the first half year.

And in the second half year it's more capacity in the market so we expect the price will go down.

And regarding the anticipated depreciation of RMB, we're taking very proactive hedging strategies.

And if you look at our Q4 financial results, we recorded $11m gains through the exchange.com.

And in general we believe the depreciation of the RMB is positive because just I said we have over 60% overseas business and our cost is in RMB.

So we don't expect any negative impact if the RMB continue the depreciation.

Vishal, this is Sebastian.

I think as Charlie and also Mr. Chen just mentioned, we have increased our hedging ratio in the fourth quarter.

Now we cover almost 100% of our overseas or like say, US dollar exposure especially from the debt side.

So just depreciation of RMB almost have nothing, no impact on us.

In addition to the increased hedging activities, actually we are maintaining more cash positions in US dollars.

At the same time we are accelerating the payment of US loans and some of the loans we plan to replace -- to be replaced by RMB loan.

That's helpful.

And just one other question.

You mentioned payment terms in China have improved.

Can you also talk about what you've seen on the feed-in tariff front?

When do you expect the next catalog, subsidy catalog to be announced and what sort of (background noise) you're seeing on projects right now?

Thank you.

We're seeing very positive progress and China increased the renewable surcharge from -- by 30% I think in the last quarter.

And the Ministry of Finance requested all the solar operators to submit applications by the end of last month and for the projects, all the projects financing by end of February 2016.

We expect China will approve the next round subsidy catalog in the second quarter and we will receive the cash payment in the second half year.

Hello?

Thank you.

Yes, that's helpful.

Thank you.

Thank you, Vishal.

Sheng Zhong, Morgan Stanley.

Thank you very much for taking my question and congratulations on the very strong results.

My first question is about the module business.

So what's your production cost outlook for 2016?

And you say there's some cost reduction?

Can you also give some more colors on where's the reduction from?

The cost reduction targets for 2016 is 5% to 8% by the end of 2016.

In Q4 our in-house module cost was $0.39, down $0.02 quarter over quarter.

The reduction of the cost is coming from different factors including the continual improvement of cell converting efficiencies and production efficiencies, through improving the automatic levels and new materials and new process.

We are also doing the R&D research just like we plan to use the diamond wire technology to cut the matching wafers.

So we are very confident we can achieve our target in 2016.

To make it clear, it's 5% to 8% of non-silicon costs.

Okay, thanks.

And the second question about the downstream business.

You mentioned that your target for 2016 will be 600 megawatts to 800 megawatts.

So how much of the -- you expect to be connected in the first half and how much in the second half?

You know by the end of last year we have 1 gigawatt in operation and around 500 megawatts in construction.

And ahead of the feed-in tariff reductions by the end of June 2016, our target is to connect another 500 megawatts in the first half year.

And I just want to explain more about our target for 2016.

We don't want to over-strain our parent company from the project business, so our project scale target 600 megawatts to 800 megawatts is very prudent.

We target to reach cumulative 1.6 gigawatts to 1.8 gigawatts by the end of 2016, which is based on our current financing and the anticipated operating cash flow.

The current financing is sufficient for cumulative 1.4 gigawatts and we expect in the second half year we will receive over $100m from subsidy payments from the new subsidy catalog projects.

And we have also the bridge loan arrangement in place to help to support the constructions in 2016.

Understand.

That is quite nice.

So as mentioned that in the western region there were some curtailments.

So we see lots of activities from the government that are trying to help the renewable energy.

And some method may be the direct supply, but looks like that the price will be -- I mean the tariff will be impacted.

So what's your -- what's the Company's view on the coming some government policy, especially the -- especially like the direct power supply, if that will impact your IRR or your electricity price in the future?

This is Gener.

So regarding this direct supply agreement we have seen the current news released recently.

From our point of view, the feed-in tariff is a kind of fixed price for the next 20 years and the commitment is from the central government and the NDRC, which we do not expect to change the electricity price though the direct supply electricity price are really competitive.

And from our point of view, in the long term we are expecting the solar, electricity coming from solar projects are in the low -- are becoming lower and lower, compared with what we have now and previously.

But in the short term, we're believing that the government will stick to its commitment and trying to find out all the solutions.

One way is to stop the curtailment.

You have seen the supply, direct supply agreement, the high voltage transmission line, etc.

And another side we have seen the China government has ambitions to solve the catalog issues and the payment for the feed-in tariff by increasing the surcharge, etc.

So from our point of view, we do not see any [threatens] to the electricity price we have right now.

But in the future we are expecting the electricity price of feed-in tariff in China or even all over the world will become lower and more competitive.

And the exposure to curtailment for Jinko is going to become smaller and smaller.

We shifted our focus to east and south China in 2015.

All the project development in 2016 will be in the east and south China.

And in terms of the percentage for the projects in the west region, as of the total capacity, we expect it will drop from 30% by the end of last year to 20% in the middle of this year.

Understood.

And my last question is you mentioned that you are accelerating the spin-off process of the downstream business.

So maybe can you give some update on this?

Okay.

The capital market is still volatile.

Thus we are taking steps to accelerate the spin-off process.

Our target is to complete the spin-off process as quickly as possible in 2016 to maximize the shareholder values.

The detailed plan has been evaluated for certain times and we are confident the plan is doable.

And we plan to communicate with investors in detail when the process reach a significant milestone in the near future.

Our target is to finish this year.

So it's one of the management's priorities.

I understand.

Thank you very much and congrats again on the results.

Thank you.

Thank you.

Frank He, Goldman Sachs.

Thank you for taking my questions.

So just a follow-up question on the curtailment situation right now in China.

So we understand that Xinjiang has already been curtailing a 100% during the winter heating period.

And so just wonder if there's any recent pick-up in the power supply to the state grid since March or April or you have received any notice officially from the state or municipal government regarding the power supply to the grid recently.

We didn't receive any official communications from the local grid.

But the situation in Xinjiang province is improving.

And so far in the first quarter, the projects in Xinjiang province for Jinko can generate 30% to 40% of capacity.

We expect after the winter season, the curtailment situation will continue to improve.

Just like you said, the purpose is to stabilize the heating system in the winter season.

Okay.

And also regarding the subsidy catalog, so you mentioned the project that by end of February last year could be able to receive the subsidy in Q2.

So how much capacity Jinko has submitted to MOF so far for the subsidy catalog?

It's around 400 megawatts.

So after approval, we will reach cumulative 500 megawatts in the subsidy catalog.

We have -- now we have 100 megawatts.

So plus 400 megawatts, we will have 500 megawatts in the subsidy catalog.

After [turn-off season].

Yes.

Okay, got it.

And also last question is about the investor communities in the solar in China right now.

Given we face the curtailment and also the receivables delayed payment, are you seeing changes in the investor profiles in China's solar investment side.

I mean the downstream side or operation.

Okay.

I don't see any significant change.

And China is expected to continue to ease the monetary policies.

And the last week, the G-20 is calling for the green financing which is supported by the Chinese government.

And thanks to the stable cash flow and the low risk of solar projects, we continue to see the policy bank, commercial banks and financial leasing company are very active in providing the loans for the solar projects.

This is Gener.

One more point here is for the Chinese, especially for the Chinese solar assets, the heavy investors are always the giant group or giant investors because the power business is always dominated by the sizeable company instead of short-term investors.

So from our point of view currently the customer -- sorry, the investor portfolio are kind of stable.

Okay.

That's helpful.

Thank you.

Thank you.

Thank you, Frank.

Pierre Maccagno, Northland.

Congratulations on the quarter.

Most of my questions are answered here.

Any comments on the silicon pricing.

Do you expect a pick-up during the year?

The polysilicon price dropped to $13 to $14 in the fourth quarter.

So after the Chinese New Year, the price increased a little bit by 3% due to the, I think the low inventory levels in China.

We don't expect upward pressure for the polysilicon price due to the oversupply situations and continued cost reduction for the Tier 1 polysilicon suppliers.

We expect the polysilicon price will be stable in the first half year and it may go down slightly in the second half year.

Okay.

And can you go a little bit over again on the gross margin decrease?

I didn't quite understand.

You talk about some seasonality in the quarter regarding the electricity revenues.

Looking to gross margin we expect that Q1 blended gross margin will improve.

And for -- if you break down the two business, module and downstream, the module business is pretty stable and with the improvement of the curtailment situations, we expect the gross margin for downstream will increase in the first quarter.

Okay.

Well, thank you very much.

Thank you, Pierre.

[Andrew Thorne, Platform].

Yes, thank you very much.

Good afternoon, everybody.

I just wanted to come back again on the question of the spin-off that you mention in the press release to maximize shareholder value.

It sounds -- well, you said it was a management priority for 2016.

Can you tell us what decisions have clearly been made there?

Is it going to be a listed entity and if so is that listed in Hong Kong or could it be a sale?

We're not in a position to discuss the plan in details.

But you know the Chinese capital markets is the first option and we have the plan in place with the assistance of our consultants which we believe is doable.

And I think we will complete the process as soon as possible in 2016.

Okay, thank you.

There are no further questions at this time.

I will now turn the call back to Sebastian.

Sebastian, please proceed.

Thank you everyone.

On behalf of the entire JinkoSolar's management team I want to thank you for your interest and participation on this call.

If you have any further questions or concerns, please feel free to contact us.

Have a good day or good evening.

Thank you, everyone.

Goodbye.

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.