晶科能源 (JKS) 2025 Q2 法說會逐字稿

Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co Limited's second and third quarter 2025 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 Investor Relations. Please proceed, Stella.

Thank you, operator. Thank you, everyone, for joining us today for JinkoSolar's second and third quarter 2025 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 are Mr. Xiande, Chairman and CEO of JinkoSolar Company Limited; Mr. Gener Miao, CMO of JinkoSolar Company Limited; Mr. Pan Li, CFO of JinkoSolar Holding Company Limited; and Mr. Charlie Cao, CFO of JinkoSolar Company Limited.

Mr. Li will discuss JinkoSolar's business operations and the company highlights followed by Mr. Miao, who will talk about the sales and marketing, and then Mr. Pan Li will go through the financials. They will all be available to answer 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 statements except as required under the applicable law.

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

(spoken in foreign language)

(interpreted) In the first of three quarters of 2025, our global module shipments totaled 61.9 gigawatts once again ranking number one worldwide. Driven by our outstanding product performance and a strong presence in high-value overseas market, gross margin improved sequentially for two consecutive quarters to 2.9% in the second quarter and 7.3% in the third quarter. Net loss continue to narrow sequentially. We are pleased to see that our intensive efforts devoted to storage, R&D and products in the past two years started to bear fruit gradually.

In the first three quarters, our cumulative energy storage system, ESS shipments extend 3.3 gigawatts hour, increasing significantly for two consecutive quarters. This, combined with the rising share of overseas markets has helped the profitability of our energy storage business improved noticeably.

Considering that energy store products and the process of installation, positions and acceptance, there will be a lag in revenue recognition in our financial statements. We are confident that at economics of sale accelerate and the competitiveness continues to improve, our energy storage business will more than double next year as revenue distribution is expected to rise significantly and the third as a key driver of our overall gross margin expansion.

(spoken in foreign language)

(interpreted) In the second and third quarter, we continue to keep modeling to that utilization rates at a reasonable level. Since third quarter, prices of polysilicon wafers and the cells have all run and the module prices showed some upward trends. Given that bidding will see all provinces are still in implementation stage, centered on enterprises need some time to recalculate their IR returns and adjust their business model for end projects. It is expected that (inaudible) take some time to release. However, we have seen some positive signals in the raw materials segment supported by rising raw material prices, module prices in overseas markets have also increased.

(spoken in foreign language)

(interpreted) The upgrade to world's high power production capacity has become an important direction for evaluating industry high-quality development. This technical upgrade automates end customers' demand for high-power products to achieve more reliable investment return. As an industry pioneer to upgrade existing TOPCon capacity through technology enhancements, we made steady progress in high-power product upgrade in the third quarter.

We have already delivered some high power products, carrying a premium of USD0.01 to USD0.02 for work, compared to the conventional products. As upgrade of the first-generation Tiger Neo product service maximum power 670 watts is completed. We expect the shipment proportion of high-power products to increase quarter over quarter next year, accounting for 60% or above 2026.

(spoken in foreign language)

(interpreted) Since the market elasticity reform has removed the mandatory energy storage requirements, China's energy store industry is accelerating its market-oriented development with the increasing gap between peak and off-peak electricity prices and the implementation of policies by storage capacity pricing and capacity compensation, independent energy storage projects in multiple provinces that can achieve uneconomic returns.

Driven by both improving economics and global energization, demand is increasing in Europe, Asia Pacific, Middle East and Latin America. US, the rapid expansion of AI-based -- in the US, a rapid expansion of AI data centers have led to unprecedented surge in electricity demand, streaming domestic electricity supply, storage has therefore emerged as a safer and more easily deployed solution.

We expect global demand for energy storage to experience exploded growth driven by creating renewable energy penetration and declining storage on cost. This once again validates our strategic decision to invest in the energy storage business in line with other industry trends, and it has helped us to build a long-term competitive advantage.

As a leading enterprise in the PV sector, we possessed long-established advantages in channels, brand reputation and customer resources enabling us to provide a localized one-stop solar plus storage solutions. On the manufacturing side, we currently have 12 gigawatt hour of pack capacity and 5 gigawatts hour of battery cell capacity and continuously improve product performance through self-developed technology call breakthrough.

On the market side, we focus on high margin overseas markets, particularly utility scale and industry and commercial projects. Although delivery cycles are relatively long, demand remains strong, providing stable and sustainable growth momentum for the company's energy storage.

(spoken in foreign language)

(interpreted) In summary, the global supply chain is a recipe for the balance between slide and is gradually proven. As technological upgrades accelerated industry high development, the market share of high power and high-value products will continue to expand and become a dominant force in market pricing as market competition, particularly in project increasingly favors leading enterprises that demonstrates strong technology cost capabilities and the long-term reliability results such as bank financing are also concentrating to both leading enterprises, further strengthening their market share.

With strong technological capabilities, long-term reliability and global diversification of our energy storage business, we are well positioned to further strengthen our competitiveness and benefit from the industry's next upward cycle.

(spoken in foreign language)

(interpreted) The 15th fife year plan proposed accelerating the decarbonization of both the energy supply and the construction sectors, the National Development and Reform Commission, NDRC and the National Energy Administration, NEA, have all recently issued guidance on promoting renewable energy integration and power system regulation, further emphasizing the critical role of energy storage in the construction of a new energy. We expect these matters will further strengthen the competitiveness of China's renewable energy sector and steer the industry back on to a healthy and rational development path.

(spoken in foreign language)

(interpreted) Looking forward to fourth quarter and the full year, we will continue to actively respond to the industry's for rational development by mention with reasonable production levels and focusing on upgrading and transforming high efficiency capacity. At the same time, we will proactively adapted to changes in over displaces to ensure sustainable slide for our customers.

We will keep strengthening our competitive advantages in technology and global operations achieve a balance between scale and the profitability while consolidating our industry-leading position. We expect the total shipments, including solar modules, sales and wafers to be between 85 gigawatts to 500 gigawatts for the full year of 2025, and ESS shipments to be 6 gigawatts over for the full year 2025.

Thank you, Mr. Li. Total shipments were 25 gigawatts in the third quarter, with market shipments of 93%. By the end of the quarter, we paid the first module manufacturing in the industry to achieve but cumulative global model shipments of 370 gigawatts with total cumulative shipments of Tiger Neo series surpassing 200 gigawatts, the best-selling module series in history. In terms of a geographic mix in the third quarter, we focused on high-value overseas markets, with shipments account for over 55%, achieving strong growth in Asia Pacific, emerging markets and Europe.

Shipments to the US were near a 1.3 gigawatts in the third quarter of stable sequentially. Against the backdrop of the electricity market reform, customer demand for high-power products continues to rise. Our high-power Tiger Neo 3.0 series with this difficulty rate of 85% and excellent low-life performance can generate stable electricity during storms and the cloudy weather effectively extending power generation hours.

At the same time, in a market environment with increasing volatility in electricity spot prices, the outstanding power generation performance of Tiger Neo 3.0 enables more power generation during peak price superior in the morning and evening, creating higher yield and more reliable returns for clients. According to our field test data in Chengdu, China and in low lights conditions such as storm and dust, Tiger Neo achieved 7.2% gain compared to BC products. And in Kagoshima, Japan, Tiger Neo shows 10.79% gain over BC products in low-light conditions.

In the third quarter, we delivered some high-power products that carries USD1 to USD2 premium compared to conventional products. We expect our high power Tiger Neo 3.0 products with maximum power of up to 670 watts to be produced in large scale next year, further strengthening our competitiveness on the product side.

We once again started the PVEL 2025 Q3 volume track, ability reported with (inaudible) thanks to our solid operational capabilities, outstanding not innovation and a strong recognition from global customers. As once the few interest prices to continuously maintain top-tier credit worthiness and technological strength in the global PV industry. In the last -- latest, the release of BN energy storage Tier 1 list of 4Q 2025, we were recognized as Tier 1 energy storage provider for the seventh consecutive quarter.

Our continuous efforts in sustainable development have also earned the international recognition reps. In the recent MSCI ESG, we were upgraded to an A rating, maintaining our position in the top tier of ESG performers in the global PV industry. Additionally, our S&P score continues to improve from 2024 rising significantly to 78, far ahead of the industry.

On the demand side, we expect global PV demand to slightly contract in 2026. In China, due to the implementation of policy reform 136, the pace of carry out 15th five year plan as well as industry self-discipline and anti-evolution measures, demand is expected to slightly increase year over year in 2026.

Markets outside China are generally expected to remain healthy. In the mid to long term, the urgent power demand from AI data center, combined with most countries commitments to reduce coverage emissions will jointly drive growth in the global deployment of clean energy and a new grid infrastructure over the next three to five years.

The information office of state council recently released the white paper of China's action on carbon picking and carbon neutrality, which emphasizes that energy storage is a key support for building a new type of power system and actively developing the renewable energy plus energy storage solutions.

In the United States, we are already seeing some tech giants deploying co-located or nearby solar plus storage at their data centers to meet rapidly growing electricity needs. We believe renewable energy club energy storage has become an invisible and accelerate interest. We remain optimistic about the long-term prospects of the US market, although trade policies impose certain constraints on the manufacturing side, we have taken proactive matters and make early strategic deployments adjusting our manufacturing and supply chain in response to quality changes to provide US customers with long-term, stable and reliable solutions.

We are confident that leveraging our advantage in technology innovation, high power products and global network, we can continue to satisfy our global client demand for clean, safe, high-efficiency and a reliable integrated solar and storage solutions. We will also continue to improve our competitiveness in global markets.

Thank you, Gener. We are pleased that our focus on high-performance products and high-value markets as well as our efforts in cost expenses control have delivered steadily improved financial results.

Gross profit margin turned positive in the second quarter and continued to improve by 4.4 percentage-points in the third quarter. Net loss and adjusted net loss narrowed sequentially for two consecutive quarters. Operating cash flow was $340 million in the third quarter, improving significantly quarter over quarter. Operating cash flow is expected to be positive for the full year '25.

Moving to the details in the third quarter. Total revenue was $2.27 billion, down 10% sequentially and 34% year over year. The sequential decrease was mainly due to a decrease in the total module shipment and the year over year decrease was primarily due to a decrease in average selling price of solar modules. Gross margin was 7.3%. The sequential improvement was mainly due to a lower unit cost product sold and year on year decrease was mainly due to a decrease in ASP of solar modules.

Total operating expenses was $363 million up 36% sequentially and down 32% over year. The sequential decrease -- increase was primarily due to an increase in the impairment of long lead assets. For the year on year decrease was mainly due to a decrease in shipping costs, our solar module shipment decreased and an average freight rate decline during the third quarter this year.

Total operating expenses accounted for 16% of total revenues compared to 10.6% in the second quarter and 15.4% in the third quarter last year. Operating loss margin was 8.7% compared with operating loss margin of 10.7% in the second quarter this year and operating profit margin of 0.3% in the second quarter last year.

Moving to the balance sheet. At the end of the third quarter, our cash and cash equivalents was $3.3 billion compared with $3.4 billion at the end of the second quarter of '25 and $3.2 billion at the end of the third quarter of '24.

AR turnover days, were 105 days compared with 97 days in the second quarter, inventory turnover days were 90 days compared with 66 days in the second quarter this year. At the end of the third quarter, total debt was $6.4 billion compared to $6.7 billion at the end of second quarter. Net debt was $3.1 billion compared with $3.3 billion at the end of second quarter this year. Debt conditions improved sequentially.

Let me go into more details of the second quarter. Total revenue was $2.51 billion, up 30% sequentially and down 25% year over year. The sequential increase was primarily due to increase in solar module shipments, while year over year decrease was mainly due to a decrease in ASP of solar modules. Gross margin was 2.9%. The sequential improvement was mainly due to lower unit cost of products sold, while year on year decrease was mainly due to the decrease in ASP of modules.

Total operating expenses were $266 million, down 24% sequentially and 15% year over year. The sequential decrease was mainly due to the reduced expected credit loss expense in the same quarter, while the year over year decrease were mainly due to 3 points, a decrease in the impairment of loan assets reduced expected credit loss expenses and decreased shrink cost as the average rate declined during the second quarter this year.

Total operating expenses accounted for 10.6% of total revenues compared to 18.1% in the first quarter of '25 and 16.9% in the second quarter of '24. Operating loss margin was 7.7% compared to 20.7% in the first quarter this year and 4.7% in the second quarter last year.

Moving to the balance sheet. At end of the second quarter, our cash and cash equivalent was $3.4 billion compared with $3.77 billion at the end of the first quarter this year and $1.9 billion at the end of second quarter last year. AR turnover days were 97 days compared with 111 days in the first quarter this year. Inventory turnover days was 66 days compared to 84 days in the first quarter, our operating efficiency is improving.

At the end of the second quarter, total debt was $6.7 billion compared to $6.4 billion at the end of the first quarter. Net debt was $3.3 billion compared to $2.6 billion at the end of the first quarter this year.

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

(Operator Instructions)

Philip Shen, ROTH Capital Partners.

First one is on your gross margins. Can you share some color on what you see as the difference between your's and Canadian Solar's, they reported recently 15% you guys have Q3 gross margins at about 7%. And what was the main driver you think for that underperformance? And then can you provide some color on the storage and solar gross margin difference? And then finally, what do you think margins look like for Q4?

Thanks, Philip. And I think compared to our peers, particularly the Chinese order, the gross margin difference is different revenue contribution from the energy storage business. And -- but if you look at the Jinko quarter by quarter, we did improve gross margin dramatically, it's coming from majority of the module business. But for the energy storage sectors, we did want to have a very, very positive update, I think, in the prepared remarks, so Chairman Li, and we think we -- our energy storage business is really for the dramatically growth in next year 2026 and we are expecting significant revenue contributions and gross margin expansions.

And the story is really in supply shortage. And this year, we shipped around 6 gigawatt hours shipments. And next year, we expect to double -- at least double. And in terms of the revenue recognition, it different because the revenue is recognized for the Siemens with the final acceptance. It's a little bit delayed one quarter to two quarters. And therefore, the energy storage business, the gross margin is at a decent level. We expect at least 15%, 20% gross margin.

And looking forward, particularly for the ESS business out of China, and we target 70%, 80% in the ESS business next year. And in terms of revenue contribution from the energy storage business, we expect 10% to 15%. I mean, the revenue from ESS business compared to the total revenues of Jinko next year. So it's -- we are actually -- we think our business is shifting from surely module business to module plus ESS next year.

Great, Charlie. Thank you very much for the color. And can you share also a little bit more color on your view. You've given us some color on the storage market. You shared that next year could be 6 gigawatt hours, what might be geographic even mix be for 2026? And how much to the US, how much to China and then maybe Europe and others?

Yeah. This year, it's 6 gigawatts hours and next year is double, okay? That is the total volume in terms of geographical distribution and non-China roughly we think 70%, 80%, including United States. And United States, we are discussing with a lot of potential customers and is developing, and we believe step-by-step, we are gaining more and more orders from the US, but we are gaining a lot -- we have a strong pipeline, particularly I think from Europe, Latin America and Asia Pacific.

Got it. Okay. Great. Shifting over to -- one more question here, on the foreign entity of concern for the US Peak. Can you help us understand, you plan to -- you have a big business shipping US -- sorry, shipping solar modules to the US. Now you plan to ship batteries also to the US. Can you help us understand how you plan to comply with foreign entity of concern requirements for the US market?

Yeah. And looking for the next year, we don't believe there's a lot of kind of impact -- negative impact from the FERC, let's say, BBB compliance, we think a lot of safe harbor projects, particularly for the solar plus some storage projects, and we committed to -- from long term, and we -- I think we reshaped our supply chain globally and including, and we're exploring options for our solar module facilities in Florida. And we think from the long term and there is going to be demand for both FERC and non-FERC. And we are in the -- if there is some kind of development, particularly for transforming our solar module facilities in the United States to the non-FERC entities, and we will let investors know. But we have been in the positive discussion with potential investors.

Alan Lau, Jefferies.

Alan from Jefferies. So my first question is about the ESS business. I would like to know if there's any discussion with any of the AI data centers or hyperscaler clients? And what type of demand are they requiring? Like are they more like 2 to 4 hours of good capability, compatible demand? Or it's more like even longer our storage required?

We think the AI-driven data center, it's going to put a lot of demand for the global electricities from long term. And we're -- our ESS team is in discussion with potential pipeline for the data center, including your US, Europe and including China. But it's still is in progress, and we believe we are able to reach a significant milestone early next year.

Okay, clear. So in relation to the geographic group breakdown, I would like to know if the gross margin of ESS is similar across the regions? Or it should be higher in Europe or US? Like how do you see the margins in different regions that you operate?

You mean, ESS margin different regions, right? Yes. It's depending on different markets, and China is still a little bit low, but I think it's recovering a little bit. ESS is very competitive in China. But Europe and the US is still, we think that there is a decent gross margin. So -- and the Middle East is a little bit low. And I think China and Middle East is, yes, is the pricing, the competitiveness and the margin is relatively low to 100 regions, but we think it's still a very healthy and business and the next two years.

Yeah. I would like to know on the cost side of ESS because I've noticed that the upstream raw materials or the cost of raw materials are increasing or surging. Any plans to lock in any raw materials or your view on different raw materials like batteries or like even more upstream battery materials like within carbon, et cetera?

Yeah. And we -- because the strong demand is materially in upward, firstly, we have 5 gigawatts and batteries capacities and which put us a relative advantage. And the second one, we partner with key materials and suppliers, and the second one, when we negotiate contracts, we did anticipate some kind of material cost upwards. So as a combination, I think it's a little bit challenged, but we think we can manage and how to minimize the impact of the material, the pricing.

I see. I think my next question is about the demand on the solar module market. So how do you see the demand growth in next year for maybe both solar and like what is the growth rate you see?

Yeah. For the demand side, definitely, we should looking separately for both for PV and BEVs, right? So for PV side, I think we are -- in a conservative way, we are expecting more or less a flat year in 2026 versus 2025. The main reason is because China demand, we believe to have a drop compared with 2025 which because the weight of trend demand is so high in the global demand, which drives even with the other markets booming or other markets growth, we still expect the demand of the globe in the PV industry for next year will be more or less flat year.

However, when we look into the best, it is in a different scenario, right? So with more and more renewable installed, there needs more security for the best contribution. Certainly, we are seeing a sharp increase for the BEV side. That's why from the BEV, we are still keeping optimistic opinion or expectation for next year's installation. If we need to quantize that, we think it will be at least 25% increase for the BEVs year over year.

I see I would like to know what type of installation in China are you looking at, like, because there are different numbers flowing around. Like are you looking at low 200s or even below 200 gigawatts in China?

I'm not that that conservative for China because recently, I visited a lot of our distributors and even installers in China in all the different processes, I think most of them are still keeping an optimistic view for next year. So that having said all those, I believe that it will be around let's say, module-wise, it will be around mid 200 -- let's say, around 250 about. And if we look into the grid connection number, it should be somewhere around low 200.

Okay. That's very clear. I think my last question is on the buyback. I would like to know if the company will start buyback after the blackout period which basically this result? And how is the pace of the buyback will look like?

We monetized 3% shares. And I think end of October, and we're in a process to get money out of China and after regulatory approval, and we have paid withholding tax, and we expect to get the money by the end of this month -- very soon.

And for the shareholder returns, and we commit at least USD100 million a year and we had deferred dividend early this year. And we bought some shares, certain shares. And I think in last quarter, middle of this year. And after the window after the earnings release and we plan to purchase the share through out of the end of the year.

Is there like how much shares have been purchased or like will the company looking to basically buy all the remaining amount in the buyback program in the remaining one month?

Yeah. And I think we we plan to use the proceed right monetization issues as the key funding and which is available and the around USD170 million, USD180 million. So I think we -- depending how the market moves, but we -- definitely, we will repurchase shares by the end of this year. And roughly, I think this year, USD100 million, and we had declared dividend, I think $50 million, $60 million. So that's our -- the base plan. It's a year over year trend and next year, it's roughly the same trend.

(Operator Instructions)

Rajiv Chaudhri, Sunsara Capital.

My first question is regarding your guidance for module shipments for the fourth quarter. It's a very big range, 18 to 33 gigawatts, and you have essentially kept to the same range that you gave for the full year back in the early part of the year. But now we are halfway through the fourth quarter. Could you help us narrow down what the range would be for Q4 for module shipments?

Yeah. I think we were close to the lower end of the range. I think because of the regulatory requirement, we have to keep that range as before. But from the operational level, we believe the lower end of the range is more, let's say, realistic.

I see. So related to that, what do you think the global shipments of modules would be for the industry as a whole in 2025?

Well, we -- technically, we believe from the production wise, we are looking at roughly 700 gigawatts that's the the high-level numbers we are estimating for the whole industry. And do you believe that 700 gigawatts would actually have been shipped out by the industry as well? Or that was just the production?

Well, I think it's more realized to a production closer to the production side, but because every company has a slightly different ways to calculate or announce their shipment numbers. So that's why it's difficult to figure out what the real shipment number. But production-wise, I think the number is more realistic.

I see. Okay. So moving on to another question relating to CapEx. Could you give us the CapEx target for 2025 and also for 2026?

It's roughly RMB5 billion this year and next year. And next -- we didn't have any plan to expand capacity and it's kind of upgraded in next-generation top count technology, and it's going to have significant high-end, high-power output solar modules we are able to provide to our customers next year roughly 60%. With price premium and a relatively good margin contributions next year quarter over quarter, the capacity was a high-end upgraded, high-end module capacity will be released quarter by quarter.

So Charlie, just to be clear, this year, the CapEx is RMB5 billion. And next year, it will be flat at RMB5 billion.

Yeah, roughly, roughly. But next year -- I talked about it. This year, it's roughly payment of outstanding amount, RMB5 billion next year. we are doing the upgrade. We are doing an upgrade existing capacity and to the next high-level top-down capacity, and we foresee a lot of strong demand and with higher motor price and higher gross margin contributions.

So you made a very interesting point that operating cash flow will be positive in 2025. It looks like you will be generating operating cash flow positive in 2026 as well. And may be substantially higher than 2025 because gross margin will be higher. Is that a correct assessment?

Yeah. That's right. That's right. And we talk about, firstly, I think the catalyst is first one is ESS storage business next year. We are looking to 10% to 15% revenue contributing from ESS with decent gross margin and net profitabilities.

And second one is the module business. We have, I think, the most on the top on upgrade capacities in the industries and developed by ourselves, our technology and which will roughly have 60% shipments of the modules coming from the next generation Jinko-developed top capacities with higher gross margins.

And second one, we're thinking from the high-level centers industry anti involuting taking -- take the effect step by step and the capacity will accelerate phase out and leading by the -- on top of that industry-leading self-disciplined control production volume and the renewable pricing based on the cost will take further, I think, enforcement.

So combined together, I think the industry is reaching the low point is recovering step-by-step, and Jinko, we are ready for the -- from the market and product perspective and the plus, we are setting solar plus ESS story and the business. So the basic plan next year, we are -- we are trying -- no, we are confident that we are able to navigate the cycles and turn to positive earnings. That's kind of the business plan next year.

So should we -- you talked about the premium products and the fact that they've got premium pricing. But on the cost side, will your cost for these premium products will still be lower than the cost for the standard products this year? In other words, do the costs keep going down even as the price goes up?

Yeah. Initially, by design, the cost is a little bit higher, but a very, very small incremental costs. And -- but we -- our R&D team continue to dive into the details and to try to further improve the cost. But back to your question, I think the high-end product costs -- it's a very, very small incremental cost increase at the beginning. But we believe over time, our R&D team with our operational teams will continue to improve the cost.

Final question, Charlie, on market share. In the past, in 2023 and '24, your global market share had gone up to somewhere between 15% and 16% of the global market. This year, it is down a little bit, I guess, partly because you have restrained production because of the pricing. Should we expect that our market share next year will go up again and maybe go up a lot more than 16% because the industry itself is consolidating? So -- and what do you think the range for next year module shipments?

The consolidated market share after consolidation of the industry consolidation and phase out the capacity, the industry turn into the kind of normal situation is, for sure, it's very good for Tier 1 companies. If you look at the long term, we are confident that we will continue to penetrate the market share. And next year is still, I think, from the top town port and I think China will continue to implement the anti involution policies, we don't expect significant shipments increase for the module brands. But yes, it's different stories.

Philip Shen, ROTH Capital Partners.

I wanted to check-in was take back with you in terms of Q4 margin outlook, what kind of solar mindful ASP could you see in Q4? And then what kind of margin for the overall quarter we see?

We expect a relatively stable Q4 versus Q3. And -- but the ESS business is contributing more revenues and we estimate our ESS business in fourth quarter is going to reach a positive profitability levels. And -- but the contribution is not significant, but next year is a different story that we have talked about. And for the module business, we expect relatively stable.

Okay. Got it. And then can you talk about module ASPs for Q1 and Q2 of next year? And then also the trajectory for margins as you blend in more battery?

Yeah. So I think it's difficult to share those numbers or estimations right now because you know what is happening is like some of the key markets, they are still -- there are some key or some important policy is upcoming. For example, the US, the guidance of the FERC or material systems, or even upcoming to 32, which will significantly impact the market prices, like in China, there's anti-evolution policies and there's even more rumors coming out regarding the polysilicon even to the other part of the manufacturing value chain as well. So those changes could significantly change the market price overnight. That's why we believe it is still too early to share our estimation on the prices for next year.

Okay, Gener. That makes sense. You talked about the rumors on poly. Can you give us a little bit more color on that?

I don't have too much more to share based on there's a lot of rumors on the market or on the Internet. So I don't know what you're referring to.

Yeah. I was just -- you mentioned it. So I thought I would try to see if there's more color.

We are not part of the game, so I don't have too much to share with everyone. But thank you for your question.

Brian Lee, Goldman Sachs.

This is Tyler Bisset on for Brian. Just a quick housekeeping question. Can you share what was D&A and CapEx in 2Q and 3Q?

You mean the absolute percentage, right? Hello?

Yeah, like the actual number.

I think in the financial statement, you've got to check out the financial statements, the R&D and the operating expenses and we have disclosed quarter by quarter. So what would be key questing your and expo.

Sorry, D&A and CapEx in 2Q and 3Q, like the absolute numbers.

You mean the depreciation or CapEx?

Depreciation and CapEx.

Okay. Differentiation by quarter, I think, is roughly and I think USD300 million a quarter. And the CapEx, I think in the first half year, we spent roughly RMB2 billion.

That is our last question, and that does conclude our conference for today. Thank you for participating. You may now disconnect.

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.