晶科能源 (JKS) 2022 Q4 法說會逐字稿

Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co., Ltd. Fourth Quarter 2022 Earnings Conference Call. (Operator Instructions). As a reminder, today's conference call is being recorded.

I would now like to turn the meeting over to your host for today's call, Ms. Stella Wang, JinkoSolar's of Investor Relations. Please go ahead, Ms. Stella.

Thank you, operator. Thank you, everyone, for joining us today for JinkoSolar's Fourth Quarter 2022 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 on 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, Mr. Xiande, Chairman of the Board of Directors and the Chief Executive Officer of JinkoSolar Holding Co., Ltd.; Mr. Gener Miao; Chief Marketing Officer of JinkoSolar Holding Co., Ltd, Mr. Pan Li, Chief Financial Officer of JinkoSolar Holding Co., Ltd.; and Mr. Charlie Cao, Chief Financial Officer of JinkoSolar Co. Ltd.. Mr. Li will discuss JinkoSolar's business operations and company highlights followed by Mr. Miao, who will talk about the sales and marketing; and then Mr. Pan Li, who will go through the financials.

We 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 U.S. 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 statements, except as required under the applicable law.

It's now my pleasure to introduce Mr. Xiande, Chairman and CEO of JinkoSolar Holding. Mr. Li will speak in Mandarin, and I will translate his comments into English. Please go ahead, Mr. Li.

(foreign language)

[Interpreted] We closed our challenging 2022 with satisfactory results as we delivered strong operational and financial performance in the fourth quarter leveraging our outstanding global supply chain management and marketing network. Our total shipments and total revenue increased significantly year-over-year.

At the end of 2022, we became the first in the industry to have delivered a total of 130 gigawatt solar modules. Throughout the year, as raw material costs continued to rise, we continue to optimize our cost structure through technical advancement and manufacturing process improvements, which partially relieved the pressure on our profitability, and new shipments of high-efficiency premium and type modules exceeded 10 gigawatts, further optimizing our product mix and gradually improving our profitability. Net income was approximately USD 102.9 million, up 29.1% sequentially and nearly triple year-over-year.

(foreign language)

[Interpreted] Throughout 2022, the increase in demand for solar products did not slow down despite compounded challenges such as the surge in raw material costs, pandemic disruption and macroeconomic uncertainties. In particular, the energy crisis caused by the Russia-Ukraine conflict caused prices of traditional energies to rise quickly and the PV remains the optimum solution countries to achieve energy transformation because of its low carbon footprint and economic advantage.

Global PV demand in 2022 was approximately 320 to 330 gigawatt DC, up about 50% year-over-year, even in the more price-sensitive Chinese market, newly added installations grew 59.3% year-over-year to reach 87.4 gigawatts AC, approximately 105 gigawatts DC and distributed installations grew nearly 75% year-over-year.

(foreign language)

[Interpreted] At the end of December, the cost of a seasonal imbalance between polysilicon supply and demand combined with inventory adjustments across the supply chain, prices of polysilicon wafer sales and modules were adjusted to varying degrees. And this volatility led to some downstream customers to force orders.

Since February, polysilicon prices have rebounded and pricing gains between the upstream and downstream of the solar industrial chain have, to some extent, impacted market sentiment.

With polysilicon supply is sufficient to support module demand throughout the whole year 2023, we believe the short-term rise in polysilicon prices were not less. And instead, a decline in polysilicon prices will drive down module prices and improve the economics of PV projects. Global PV demand is expected to continue to grow in 2023, increase -- we are confident that we will further improve our competitiveness and profitability in the global market with our well-developed global industrial chain and the advantage of our N-type products.

(foreign language)

[Interpreted] During the fourth quarter, as the industrial chain remained volatile, we continue to enhance operational management, including statically controlling inventories and flexible adjusting production scheduling and volumes. The second phase of 8 gigawatt to TOPCon capacity reached full production in the fourth quarter and the second phase of 11 gigawatts TOPCon cells capacity in Xinxiang is expected to reach full production in March 2023. This our 35 gigawatts of TOPCon cell capacity gradually reaching full production in the coming quarters. Our integrated capacity structure continued to rise, driving blended costs lower.

(foreign language)

In December, the lab efficiency of our f N-type TOPCon cells set a new record with maximum conversion efficiency of 26.4%, improving on our previous record of 26.1% set in October. At the end of 2022, the mass produced efficiency of our TOPCon cell capacity that has reached the full production reached 25.1%, and our integrated cost of N-type almost on par with C-type. We are confident we will maintain our leading position in terms of the R&D net produce efficiency and production capacity.

(foreign language)

[Interpreted] At the end of 2022, we became the first model manufacturer in the world to ship over 10 gigawatts of N-type products. We are already a preferred supplier for global clients, thanks to our well-established global marketing footprint and the technological advantage of our N-type products.

With more and more industry players building up N-type capacity, our strategy to embrace and lead N-type technology is now becoming an industry trend. Effective supply of N-type TOPCon modules in the whole industry is expected to reach 120 to 130 gigawatts in 2023, accounting for about 30% of the total PV demand.

Leveraging our accumulated experience in mass production and marketing, we expect our proportion of N-type shipments in 2023 to further increase with penetration of N-type products is far exceeding the industry average.

(foreign language)

[Interpreted] By the end of 2023, mass production efficiency of token sales is expected to reach 75.8%. We are optimistic on the growth potential for the PV market in the mid and long term, and we'll continue to invest in N-type capacity, which is now competitive in terms of technology and cost.

By the end of 2023, we expect our annual production capacity for mono wafers, solar cells and solar modules to reach 75 gigawatts, 75 gigawatts and 90 gigawatts, respectively, we expect module shipments to be in the range of 11 gigawatts to 13 gigawatts for the first quarter of 2023 and 60 gigawatts to 70 gigawatts for the full year 2023. We will continue to maintain our leading position in N-type models through technology integration, improvement in mass production capability and cost optimization.

We are pleased to announce that we have achieved a historically high shipment on a quarterly and annual basis. Thanks to our technology advantage and extensive global marketing network, the total shipment in fourth quarter of 2022 has approached to 16.8 gigawatts, where the module shipment was accounted for 95%, with a 78% increase year-over-year.

The total annual module shipments were 44.5 gigawatts doubled year-over-year. Regarding our regional markets, the shipments in China and Europe markets were the top 2 highest in 2022, accounted for more than 65% of the total amount.

In terms of absolute numbers, the annual module shipments year-over-year growth in China was more than triple. The annual module shipments to Europe were doubled, and our growth in emerging markets was nearly doubled as well.

In China market, due to COVID and cost concerns mainly brought by upstream supply, some projects that have not been connected to the grid last year have been delayed to 2023.

Considering the cost for supply chain is dropping towards a more reasonable level, we expect our installations will increase in 2023.

Europe will continue to expand PV installations due to energy crisis and increasing electricity costs. As for U.S. market, with the policy incentives brought by IRA and third-party institutions high expectations of U.S. market demand. We believe the project pipeline is sufficient there. In addition, we have seen the energy transformation accelerating in Latin America, Asia Pacific, Middle East and more regions and the countries in the world bringing more opportunities.

In 2023, we will continue to pursue our global expansion strategy with Europe and China markets continue to be our major ones, where the shipment would be accounted for over 50% of total amount and the shipments to the U.S. market were expected to recover gradually.

Our shipment structure continues to optimize. Distribution generation business accounted for over 50% for the full year improved compared to 2021. In terms of the products, our competitive N-type Tiger Neo module shipments were around 7 gigawatts with a premium remained within reasonable range. Until the year end of 2022, we have become the first module manufacturer in the world shipped over 10 gigawatts N-type module. We expect our proportion of N-type module shipments in 2023 to further increase to about 60%, which could further strengthen our leading position in N-type technology in the industry.

Moreover, the global clean energy transition has started a new growth cycle for solar plus energy storage business. So far, we have already signed a framework agreement and distribution agreement with multiple power developers and the distributors around the world.

In 2023, we will continue to expand the investment on cultivating our storage business to bring our client safer and more sustainable solar plus storage system solutions. In terms of price and orders, our order book visibility in 2023 has already achieved over 50% with overseas orders as the major contributor. Proportion of the high efficient and high premium anti target new will be significantly higher than 2022.

All this will keep our products competitive in this industry. By working through various challenges, our PV enterprise can grow up to be more resilient under this background.

We JinkoSolar, are also continuously enhancing our capacities to handle risks and strengthen our marketing network and the client relationship. We are committed to provide more reliable and high-quality products and services to our clients, bringing them more economic value, and this will also help us to further improve our global market share.

With that, I will turn the call to Pan.

Thank you, Gener. We are pleased to have achieved strong fourth quarter results based on our solid operation and management strategy. Against the backdrop of strong demand in the global market, both solar shipments and total revenues increased significantly year-over-year. Shipments of N-type modules which are premium and cost advantages more than doubled sequentially in the fourth quarter, partially contributing to our improved profitability.

In addition, we continue to enhance control over our operating expenses. Total operating expenses accounted for about 12 percentage of total revenues in the fourth quarter, a significant decrease from over 15 percentage last quarter.

Operating margin was more than 9x higher sequentially, increasing to 2.1 percentage from 0.3% in last quarter. As 35 gigawatt cell capacity put into production in 2022 reaches full production in the coming quarters, our integrated capacity structure is expected to improve further. As shipments of our competitive N-type products increased, we hope to gradually improve our profitability.

Let me go into more details now. Total revenue was $4.4 billion, an increase of about 56 percentage sequentially and 85 percentage year-over-year. Gross margin was 14.1 percentage compared with 15.7 in the third quarter this year and 16.1 percentage in the fourth quarter last year. The sequential and year-over-year decreases were mainly due to an increase in the cost of solar module raw materials.

Total operating expenses were $526 million, up 21% sequentially and up 68% year-over-year. The increases were mainly attributed to an increase in shipping costs for solar modules and an increase in impairment loss on property, plant and equipment.

Net income attributable to the JinkoSolar Holdings ordinary shareholders was about $103 million in the fourth quarter excluding the impact from a change in fair value of the notes long-term investments and the share-based compensation expenses, adjusted net income was $45 million up 33 percentage year-over-year.

Now I'll brief you on our 2022 full year financial results. Total module shipments were 44.5 gigawatts doubled year-over-year, and total revenues were $12 billion also doubled. For the full year of 2022, gross profit was $1.8 billion, an increase of 85% year-on-year. Gross margin was 14.8 percentage compared to 16.3 percentage last year. The decrease was mainly attributed to an increase in the cost of solar module raw materials.

Total operating expenses were $1.7 billion increased year-over-year, increase was mainly attributed to an increase in shipping cost for solar modules, an increase in impairment loss and disposal of PPE, an increase in share-based compensation expenses.

Net income attributed to the JinkoSolar Holdings ordinary shareholders was about $96 million in the fourth quarter excluding the impacts from a change in fair value of the notes, long-term investments and share-based compensation expenses, adjusted net income was and $208 million up 1.7x year-over-year.

Moving to the balance sheet. At the end of the fourth quarter, our cash and cash equivalents were USD 1.6 billion compared with $2.1 billion at the end of the third quarter and $1.4 billion at the end of the fourth quarter last year. AR turnover days were 73 days in the fourth quarter compared with 69 days in the third quarter this year.

Inventory turnover days were reduced to 59 days in the fourth quarter compared to 117 days in the third quarter. Total debt was about USD 4 billion, and net debt was $2.3 billion at the end of 2022.

This concludes our prepared remarks. We're now happy to take your questions. Operator, please proceed.

(Operator Instructions). The first question will come from Brian Lee with Goldman Sachs & Company.

This is Miguel on for Brian. My first question was just on the capacity expectations for 2023. You're guiding to the very strong growth in capacity for the year. What are your CapEx requirements for 2023 to support this growth?

Yes. Miguel, I think we are in the middle of a calculation right now. I think our team will follow up with you after the call for the further details of CapEx numbers, Right?

Okay. I appreciate that. And then my follow-up question was just on margins during the fourth quarter. Given the overall decline in the market prices for polysilicon was observed in the fourth quarter. Could you just give more color on what drove the lower quarter-on-quarter gross margins? And then what are your expectations for polysilicon prices and then also on margins through the first quarter of '23 and through the rest of the year.

Yes. For the polysilicon, I think overall, we are observing oversupply of polysilicon in the long run. So we believe the recent turbulence is just the start of the market trend. But in general, we believe the polysilicon will go back to the market-based pricing. So that's what we believe in the long term.

In short term, for sure, because of the different seasonalities and the behavior of, let's say, top players in the polysilicon industry, we still believe there might be some short-term challenge or turbulence, that's what we see.

For the margin wise, we still believe with more and more capacity online, especially the N-type-based, high-end capacity online. With the premium and competitive cost structure we have, the margin will gradually improve quarter by quarter if there's no big surprises in the market. Hope I answered your question.

Yes. If I could just squeeze in a follow-up on that. Just on the 4Q margins, I guess what -- if the -- were you able to realize any of the lower market prices for polysilicon that we saw in the fourth quarter? Or I guess, what drove the -- specifically in the fourth quarter, what drove the lower gross margins?

I think if you look into financial figures, I see the turbulence happened in the polysilicon prices in early Q1 this year will not be helpful for the Q4 margins. And if you look into the Q1 margins, we have to look into the overall polysilicon cost instead of short term, let's say, 1 week or 2 weeks a low price of polysilicon. So in my opinion, that will not significantly change the margin expectations. Again, we will gradually improve the margins.

But most of them is due to our internal, let's say, management improvement and the cost structure improvement instead of polysilicon turbulence. Because you have to think about the polysilicon inventory numbers, right? So that number is a very important impact factor to the cost of the polysilicon.

The next question will come from Philip Shen with ROTH MKM.

First, I'd like to address the U.S. market and the U.S. LPA situation. So I was wondering if you could share how things are improving. So specifically, you expect to -- have you ramped up manufacturing in Southeast Asia for fresh shipments to the U.S. When do you expect those new shipments to reach the U.S.? And what is the utilization of the Southeast Asia capacity set aside for the U.S.

Thanks for the question. For the U.S. market, especially regarding the UFLPA inspections, we are -- let's say, we have seen the light at end of the tunnel and we see the improvement, the efficiencies, the turnover days, et cetera, is gradually improving. While the official -- CBP officials are becoming more and more professional. in that perspective. We have seen the hopes, but it's still not 100% smooth transactional, let's say, customer clearance yet, but we are hoping that could happen soon.

So regarding the question of the Southeast Asia factories of Jinko and our factory is as high utilization rates, not only because of U.S. market, I think mainly fact the other markets who are -- also have a strong demand for capacities or productions outside China. So our capacity is up and running almost in full speed even by end of last year. So we will -- we are hoping to allocate more capacity and the shipments to U.S. once all the customer clearance is back to a normal status, which we believe could happen soon.

Thanks, Gener. So when you say soon, are we talking about a couple of months? Or are we talking about maybe 6 to 9 months?

Well, my perspective, I hope it could happen tomorrow, but it's not something I can handle or I can decide. So we are working closely with CBP officers to make it happen as soon as possible.

Okay. And then you mentioned the -- your almost 100% utilization in your Southeast Asia facilities serving other countries. Can you share which countries those might be and how they might be impacted once the U.S. market opens up for you? Which markets would decline, if you will?

One of the important sorts is there are many names on the list, but one of the big market is India market. You know that the Indian market has strong demand as well while they have a high tariff against Chinese products or they have a strong appetite for the Southeast Asia products.

Got it. That makes sense. And then shifting to your comments that the order book visibility in '23 has already achieved over 50% in large part from international markets. Can you talk to us about what your current contracting activity looks like for the U.S.? Are you taking new orders yet? Or do you have to get through -- remind us how much backlog you have to get through before -- backlog created by the trade situation before you can maybe take new orders?

Based on what we have right now, we are not capable to take new orders because we have a lot of backlog, which is big enough for us to -- for the factory running under the current status of the CBP approval rates. However, we have a face that everything will get better because once the approval rate and efficiency is back to normal, I think we are hoping to allocate more capacities to U.S. market, which will help us to solve the backlog pipelines and the commitment to our clients and starting to pick up new orders. So that is, (inaudible) at question is really difficult to give an expectation of time line, but we are working hard on it.

Yes, that all makes sense. One last question on the U.S. As it relates to pricing in the U.S. Can you talk about how you expect panel pricing to trend through the -- not just this year, but also in the future years, I know you're not contracting fresh, but I know you guys probably are very much in touch with your customers. With the ramp-up of IRA manufacturing capacity in the U.S., how much do you think panel prices decline as we get through 2024, 2025, 2026, 2027, but you also have the other forces of UFLPA and other trade actions. So what's your view on module pricing in the coming years? -- in the U.S.

Well, Phil, you know that we are not picking new deals at the current stage in U.S. market. So I'm not in the right position to discuss fair market numbers. But I can confirm there are many rumors in the market that U.S. market price is big enough or, let's say, high enough for many, let's say, middle small-sized suppliers who has not suffered or experienced the USLPA inspections. So we believe there are big room to correct the right market price in the future. Given the USLPA inspection complexity of the UFLPA and also the IR rate bring additional returns to the both investor side and the manufacturer side.

(Operator Instructions) our next question will come from Rajiv Chaudhri with Sunsara Capital.

Yes. I have a few questions. The first question is on the cost of polysilicon. You mentioned that was the primary reason why gross margin went down from Q4 -- from Q3 to Q1. I'm wondering if you can give us an idea of what your polysilicon cost was -- the cost embedded in the Q4 earnings results versus Q3, either in renminbi or in terms of the percentage increase from Q3 to Q1? That's my first question -- sorry Q3 to Q4.

Rajiv, we are talking about the polysilicon appliance cost components, right?

Yes, yes. If you can give us more granularity on the -- on how much it went up from Q3 to Q4 and what the gross margin mice have been if the polysilicon costs had been flat, for example. That would give us an idea of how the cost numbers are playing out.

Yes. I think our trend is likely -- it's like the public the polysilicon appliance from the poly supplier like the PV Infolink or other poly supplier available online side. And if you look at the trend of the polysilicon, it's reached to the peak during -- from October to November. And in December because of destock and the China and Russia as poly is down dramatically. But because of the production shipments the positive impact is going to be reflected in the first quarter. So it's really -- the poly reached the peak from the cost perspective in Q4. And I think it's roughly I think, 10% to 15% quarter-by-quarter increase if we look at the change.

Okay. So you are saying that -- or you're implying that to ship product modules in November, December, you had to buy poly in October, November when the prices were very high. And so the benefit of the lower price of poly in December to the extent that you are going to get a benefit will be felt much more in Q1 because that's when the -- that product gets stripped out. So 10% to 15% increase in the cost of poly from Q3 to Q4 would mean that the gross margin would have gone up from Q3 to Q4 if the cost of poly had stayed flat?

You're right, you're right. The polysilicon price assumption is stable. And I think the gross margin is up in Q4 versus Q3. And poly is significant up and drive down the gross margin in Q4. I think the most important for the company business is we are doing investments in time, starting at the beginning of 2022, and we reached to 35 gigawatts N-type capacity by the end of last year and with more N-type shipments and polysilicon now the supply is sufficient on this downward trend and we have significant sales order pipeline in 2023, and we think we are in a good position to drive the company's growth including the revenue gross margin net profitability.

So would you say that from here onwards, if the price of polysilicon continues to come down, whether it comes down slowly or rapidly, we don't know. But if it keeps on coming down every quarter, that we should expect improvement in gross margin on a steady basis quarter-by-quarter?

Yes. It's a year basis, in this industry, we are optimistic on our profitability and it's not only the polysilicon. It's -- our competitor is improving a lot. We have good products. We have very strong R&D teams, and we have branding global sales and marketing, and we have a very solid supply chain teams and drive up the overall performance.

Can you also talk about the capacity that you had for wafer, cells and modules at the end of 2022?

It's -- I think we disclosed in the presentation side and the 65 gigawatts, 55 gigawatts by the end of last year and we continue to expand our untied capacity. And total capacity will reach to I think 75 gigawatts, 75 gigiawatts, 90 gigawatts by the end of this year.

Right. Can you also talk about the trends that we should expect in operating expenses in 2023, versus the fourth quarter of 2022. For example, you should incur less cost or no cost related to the product coming out of Xinjiang and you should also incur less shipping costs. So should we be expecting a 100 to 200 basis point improvement in operating expenses in 2023 versus the fourth quarter?

I think the operating expenses in the U.S. cap composed a lot of key components. One of the most important is the shipping cost, which is going to improve a lot. The global economy is -- the impact to the shipping logistics is not so significant. And we expect the shipment costs will improve a lot.

On top of that, our U.S. LPA improve step by step, and we have incurred significant unexpected storage costs for the shipments to the U.S. markets. And that will -- we expect a significant improvement as well as we -- even in our management teams, internal meetings, we are expecting our overall, let's say, the labor efficiencies will expect to increase 20% to 30% and -- so that's going to be, I think, with expanding 60 gigawatts to 70 gigawatts versus 45 gigawatts, roughly a 50% increase on the top line and shipment cost improvement and efficiency continue to improve, we expect the operating expenses will be in a downward trend quarter-over-quarter.

Also, can you talk a little bit about what trend do you see in the G&A in the general and administrative expenses? They went up a lot in 2022 compared to '21. What sort of growth do you see in those expenses going forward?

Well, we have some obsolete let's say, one-off items like we dispose of obsolete equipment and for the small size, the equipment to produce small size modules. And we granted stock options, we have one-off stock option based compensation changes. So that is the key reasons for the our G&A expenses increased year-over-year.

(Operator Instructions) Our next question will come from Alex Liu with Jefferies.

So I would like to ask again about on the 4Q results. Because the share results actually show a very strong quarter-over-quarter earnings growth almost doubled where is the U.S. level the net adjusted net income actually declined. So how should we reconcile the difference between these 2? And is there any further share-based expenses in there? Or just what is the difference between the 2 levels?

First, the accounting is under the PRC GAAP and the under U.S. GAAP and the consolidation base is different. The U.S. entity holds only 58% of the equity of the Asia under that, under U.S. GAAP, and we have -- for the 2022, we have significant difference on the income tax expenses relating to deferred tax assets. Because of the USFL and PPA, we have significant loss on the oversea capacity overseas entities. And on the U.S. can, we did not recognize the cumulative losses under the deferred tax assets and under the PRC GAAP from the beginning, we did not recognize. So there is a significant difference on the income tax expenses.

Additionally, we have some difference on the accounting for the welfare benefits for the employees and it's based on the different accounting policies. And under U.S. GAAP, we have separate items like the change value or fair value of convertible bonds and for the long-term equity investment, we both for the ecosystem investment, we recorded under the fair value gains and the adjusted net income, excluding that (inaudible) as well.

So back to your question, I think that it's a one-off income tax accounting difference for the Q4 as well as some employee benefit welfare accounted.

Understood. So there's quite a significant increase in the CapEx. And also, I would like to ask another relative detailed question on FX gain because the company has made significant FX gain in 3Q and actually RMB has depreciated in 4Q, but it seems there's an FX loss. So is it because of the hedging issue? Or why is that?

So why are talking about or which line items on the...

Foreign exchange loss.

For the 2022, overall, I think we did very good on foreign exchange heads. We -- on a net basis, we repriced, I think the net gain and there are some saturations quarter by quarter. And I think Q4, the net gains is relatively smaller versus the Q3 because RMB depreciated a lot in Q3 last year.

Understood. And switching the topic to the technology. So what would you expect the unit net profit or the ASP premium of TOPCon versus PERC coming into first Q because the shipment percentage is higher at the N-type shipments should have even higher contribution to the net profit. So can you share with that?

The premium is roughly [$0.015] and our efficiency is pretty good, leading the industries and the products provide additional value to the customers. We think it's the USD 0.01 to USD 0.015 premium is (inaudible), the price and mechanism.

Understood. So is it fair to say the accounting issues will be -- will not exist going forward, and we have decline in freight cost, living cost and also the ASP premium is also high, then we should expect a strong first quarter in terms of the gross margin?

We expect the gross margin expansion in the first quarter. And we have more integrated levels and then the percentage are expected to reach to 50% and the polysilicon is downward trends. And so, it's -- you're right, we expect it in the first half year, the gross margin is in the expansion stage.

And then my last question is what is JinkoSolar's plan in the U.S. because it has 400-megawatt already and some of the Chinese peers have already started construction for expansion in poly capacity. So what are the plans for JinkoSolar for now in the U.S.?

We're doing very solid analysis evaluation for expansion in the U.S. and we're optimistic because the IRA is going to be -- I think it's a very attractive scheme. And as well as the U.S. market is expected strong demand, so we are in the final evaluation stage. But we have already 400 megawatts capacity. And we reexpand -- and we will expand very quickly.

The next question will come from Irma with Citigroup.

Thank you management for taking up my call. So I have 2 follow-up questions regarding on the product capacity. So my first question is about the current -- what is the current unit product cost level of your N-type TOPCon modules compared to the PERC ones? And what is the target level by end of this year?

And my second question is about the capacity. So how many new N-type capacity that you would like to build this year? And so adding in addition to the 35 gigawatts by end of 2022.

Thanks. In terms of the N-type modules integrated PERC which is P-type, and we have reached the parity, let's say, the same cost for the N-type versus C-type by the end of last year. And this year, because the polysilicon is in a downward trend, which will have some negative impacts, but we continue to improve the efficiencies and implement new process materials, and we expect we will maintain the same cost structure and by the end of this year for the entire (inaudible) versus the (inaudible) time. Well, the N-type but in the last year, we have 35 N-type right, the sale capacity. And by the end of this year, and we will have, I think, 55 gigawatts N-type top capacity. So expenses is roughly.....

This concludes our question-and-answer session as well as our conference call for today. Thank you for your participation. You may now disconnect.