晶科能源 (JKS) 2020 Q1 法說會逐字稿

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and welcome to today's First Quarter 2020 JinkoSolar Earnings Conference Call.

(Operator Instructions)

Now I'm pleased to present Ms. Ripple Zhang.

Ms. Zhang, please begin.

Thank you, operator.

Thank you, everyone, for joining us today for JinkoSolar's First Quarter 2020 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 our 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. Charlie Cao, Chief Financial Officer; and Mr. Gener Miao, Chief Marketing Officer.

Mr. Chen 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. Cao, who 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 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 these 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. Chen Kangping, CEO of JinkoSolar.

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

Please go ahead, Mr. Chen.

(foreign language)

[Interpreted] Thank you, Ripple.

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

(foreign language)

[Interpreted] Total shipment of solar modules during the first quarter was 3,411 megawatt.

Excluding the impact of the disposal of overseas solar power plants, this quarter generated total revenues of USD 1.03 billion and a gross margin of 19.7%, all within our guidance range for the quarter.

The COVID-19 pandemic impacted the solar industry, creating numerous challenges from difficulties obtaining supplies of raw materials to logistic and transportation disruptions.

Despite all these challenges, we are still successfully achieving the highest historical shipments in the first quarter, which we believe demonstrate our strong ability to execute and incorporate flexibility to carefully navigate and adapt to a difficult global economic environment.

Thanks to containment efforts across the country, all our factories in China have reached full production in March.

(foreign language)

[Interpreted] The major challenge so far during the first -- second quarter has been overseas demand.

The pandemic has impacted logistics to varying degrees and caused project delays in most overseas markets.

In Malaysia, we immediately implemented measures to ensure the healthy and safety of our employees while at the same time complying with government containment measures.

This rapid response has brought our production back to normal safely by the end of April.

We replicated these healthy and safety measures for our employees in the U.S. and were able to keep production running smoothly throughout the pandemic.

With the global demand falling significantly and the price of raw materials declining as a result of the pandemic, we focused our attention on coordinating, production, logistics and sales to ensure we could fulfill new orders while carefully controlling inventory levels.

Shipments of epidemic prevention materials continue to be made from China to our Malaysia and the U.S. facilities.

We have been doing all we can to care for our employees, clients, suppliers and other business partners during this challenging time.

(foreign language)

[Interpreted] Recently, China's Ministry of Industry and Information Technology began seeking public opinion for its draft standard conditions of the PV manufacturing industry.

The draft consultation will be used to raise the standards for newbuild production facilities in order to promote the application of new clean technologies.

Under these new standards, all existing production facilities will be required to implement industrial integration and accelerate the replacement of outdated equipment and infrastructure.

This will help accelerate the industrial application of new technologies and will benefit and strengthen leading manufacturers as they expand to scale.

In addition, policies governing the construction of ultra-high-voltage projects and grid absorption capacities expansion will support the long-term development of the industry.

We believe government around the world will increasingly run their focus to energy security and localization, especially after the COVID-19 pandemic, due to the continued enhancement of the competitiveness of solar energy over traditional energy and the acceleration of global parity cost by the fall in the price of the industrial chain during the epidemic, which will result in more countries implementing policies to support solar energy and will drive its deeper penetration in the post-pandemic era.

In 2020, excess supply in the market will rapidly drive outdated production capacity out of the market and accelerate application of technologies that will better reduce levelized cost of energy.

Smaller manufacturers will find it harder to compete and will exit the market, which will create an opportunity for larger global players to expand their market share.

We expect global installation to fall by around 25% compared to estimation at the beginning of the year due to impact the -- due to impact the coronavirus pandemic is having.

Our order book for the year remains strong and shipments rolling out, allowing us to reaffirm our guidance on total solar module shipments for the full year 2020.

(foreign language)

[Interpreted] Faced with the COVID-19 pandemic, we made adjustment to our internal production and management process and facilitated the greater flow of information across our external network, which further improved the efficiency of our crisis management response and information sharing.

As outdated capacity is removed from the market and with the accelerated adoption of high-efficiency premium products by downstream partners, standards for PV modules and the components will enter the 500-watt ultra-high-efficiency era earlier than expected.

These ultra-high-efficiency products also set higher standards for wafer quality and cell technology that have been replicated across supply chains, all the way from R&D to the mass production of modules.

Technology remains central to strengthening our competitive edge in the market.

We will continue to lead the industry in offering innovative products that will generate solid returns on investment for our clients by leveraging our high-skilled R&D team, industry-leading research platform and ability to rapidly mass-produce newly developed cutting-edge products.

(foreign language)

[Interpreted] Recently, we launched a new Tiger Pro service module with maximum power output of 580 watts.

This breakthrough will set new industry standards for power generation and efficiency and will support a wider array of installation scenario as the globe accelerates towards grid parity.

The pandemic is, in effect, risen technical standards for the industry.

The competitiveness of leading players' products will drive further innovation in clean energy technology.

As one of the world's largest solar module manufacturers, we are developing and adapting our products or project developers, engineering contractors and design institutes as well as downstream suppliers.

Their feedback has been keen to assisting and mitigating technical risks when building our market-oriented products, which strengthens our competitive positioning.

In short, the pandemic has adversely impacted the industry, but we are still on track to continue generating growth and expand our market share.

(foreign language)

[Interpreted] On capacity side, our in-house mono wafer production capacity reached 18 gigawatts in April.

Cell capacity reached 10.6 gigawatts by the end of the first quarter, including 800 megawatts of ultra-high-efficiency N-type sales that have the highest conversion efficiency currently on the market.

On the module side, module capacity was 16 gigawatts by the end of the first quarter, with an additional 9 gigawatts of the new high-efficiency capacity expected to gradually be put into production in the second quarter.

We will continue to make further refinements through managing cost and efficiency in 2020.

(foreign language)

[Interpreted] Before turning over to Gener, I will introduce our guidance.

Based on our current estimates, for the second quarter 2020, total solar module shipments will be in the range of 4.2 to 4.5 gigawatts.

Total revenues will be in the range of USD 1.1 billion to USD 1.18 billion, and gross margin will be in the range of 16% to 18%.

We maintain our guidance on the total solar module shipments for the full year 2020 to be between 18 to 20 gigawatts.

Thank you, Mr. Chen.

The total shipment of solar modules reached 3,411 megawatts, the historical high in Q1 despite the challenges COVID-19 created for our sales and production.

Over the past few months, we have been carefully monitoring industrial developments, real-time market trends and firsthand client feedback, which provided us with a detailed understanding of how the pandemic is impacting our clients and allow us to offer better support.

At the same time, we launched the emergency response mechanism developed from our experience facing previous challenging and unpredictable market turbulence, which provided us with a flexible and a pragmatic tool to navigate during the crisis.

The impact of the pandemic is expected to shrink global market demand by approximately 25% in 2020 to 110 to 120 gigawatts.

Nevertheless, our high-quality products remain in strong demand and reaffirm our guidance of annual shipments in the range of 18 to 20 gigawatts.

With our order book for the year growing and shipments rolling out, we continue to drive growth.

The China market was oversupplied in Q1.

Some of the delayed projects from 2019 are now under pressure to complete installation before the June 20 -- 30 deadline, which is helping to stabilize module prices lately.

New bidding rounds for utility plants in 2020 are expected to start construction in the third quarter, reaching peak installation in Q4.

In 2020, grid capacity for solar power connection will reach 48.45 gigawatts.

Ultra-high-voltage projects are being extensively promoted by the government as a strategic important source of energy integration and power transmission from China's west to the coastal regions over the long run.

According to the latest policy from China's NDRC, each province is required to set the lowest nonhydro renewable generation ratio, ranging from 5% to 25%.

In addition, reforming policies in electricity trading and distributed power trading plants will also improve solar power utilization efficiency, accelerating the diversification of China's energy mix.

The distribution market in the U.S. has slowed during the pandemic shutdown in March, while the construction of large-scale power plants still continued as planned.

Given the situation, the U.S. Department of Treasury announced that ITC for renewable investment would receive a 1-year extension.

Just a few weeks ago, government of Virginia signed a bill requiring the state to achieve 100% carbon-free power by 2045.

A number of large-scale renewable energy projects continue to be adequately funding from global financial institutions despite energy markets facing unpredictable turmoil.

Many European countries have begun easing travel restrictions since May.

Economies there are bouncing back and business are getting active again.

Portugal awarded a 1.15 gigawatt solar auction in 2019.

In early 2020, Portugal announced another solar auction for 700 to 800 megawatts to be carried out within the year.

The Netherlands launched a 10-year net metering program to support residential solar and lower annual electricity costs by 9% from 2023 to 2030.

According to the regulator, homeowners who are willing to install PV systems will benefit from a reasonable investment return.

Germany also lifted the 52-gigawatt cap for subsidies of small-scale solar projects.

The market is expected to recovery -- recover strongly in 2021.

The economics stimulus package, which includes renewable energy, will soon be having a significant positive effect across the whole Europe.

Turning to Asia.

The lockdown in India since March 21 travel restriction have greatly impacted the flow of personnel and materials.

The extension of the lockdown prolonged these restrictions, which have further impacted public transportation, project suspension, bidding and power plant operations.

Recently, customs, banks and other institutions began gradually returning to work.

Several large utility companies such as SECI and NTPC have extended the bidding deadline for PV power generation projects.

In April 2020, SECI extended the bidding deadline for solar projects and wind/solar hybrid projects totaling 8.7 gigawatts.

In Vietnam, the lockdown has been lifted, which resulted in PV projects getting back on track.

The Deputy Prime Minister of Vietnam issued a policy in April to encourage the development of solar power projects.

According to the decision, 13 new FITs for all 3 types of solar energy systems and projects, namely floating, ground mounted and rooftop, will be lowered.

The pandemic in Japan has gradually eased, and Japanese government terminated the statement of emergency on May 25.

PV installations still continue but at a much slower pace, with completion of large-scale projects delayed into 2021.

Market in Asia, such as Australia, Singapore, Malaysia, Philippines, have slowly kicked off.

The Brazilian market continued to be significantly impacted by the pandemic, which has affected approximately 70% of the installations.

The market downturn has forced many small installers and the distributors to halt operations and some large-scale projects to delay until 2021.

Middle East and Africa regions began opening up in June.

Some businesses are reopening, and construction activities are returning with limited labor mobility.

In conclusion, we are confident in long-term growth prospects of the PV industry despite all the short-term challenges.

Going forward, JinkoSolar will continue to adapt our products and services to the needs of customers who are increasingly demanding high-quality product, stable supply and a strong brand recognition.

The pandemic will accelerate the removal of outdated capacity and leave only the strongest standing.

We were recently recognized as a top performer of the sixth consecutive year in the PVEL/DNV PV Module Reliability Scorecard and was one of the only 2 global manufacturers to have been recognized as a top performer every year since 2014.

Being recognized as a top performer once again reflects our dedication and the commitment to the research and the development of high-quality PV products.

Speaking overall, the absolute capacity in solar industry is inevitable, but high-efficiency PV products remain shortly -- short in supply.

Competitive products underpin the marketing-added value and overall sustainable development.

As a leading market player, JinkoSolar has always been customer oriented, focusing on optimizing power plants design and reducing LCOE.

Recently, we launched our latest Tiger Pro series, reaching a maximum power output of 580-watt peak.

It took place with online live streaming with approximately 200,000 people from all over the world participating in the event.

Not only did the Tiger Pro series gain significant exposure from this, it also acted as a milestone for the PV industry.

As the industry turns a page, we will strengthen our position as the supplier of choice with the lowest LCOE, strongest system compatibility and overall economic value.

With that, I will turn it over to Charlie.

Thank you, Gener.

Results in the first quarter were in line with our guidance.

Key financial indicators, including total revenue, gross margin and net income, have increased significantly year-over-year.

This is due to the continued increase in the integration production level.

By the end of March, we closed the sale of the 2 solar power plants with a combined capacity of 155 megawatts in Mexico, which reduced the total debt by about USD 421 million.

Mono wafer capacity reached to 18 gigawatts in April, which will support our expected total shipments of 18 to 20 gigawatts for the full year.

Turning into the details.

Excluding the sale of overseas solar power plants, total revenues were USD 1.03 billion, an increase of 25% from the first quarter of 2019.

Gross margin improved to 19.7% compared to 16.6% in Q1 last year.

EBITDA was USD 100 million compared to USD 49 million in Q1 last year.

Non-GAAP net income was USD 32 million, significantly increased year-over-year.

This translate into non-GAAP diluted earnings per ADS of $0.65.

Excluding the sale of overseas solar power plants, total operating expenses accounted for 12.6% of total revenues compared to 11.9% in the fourth quarter of 2019 and 12.5% in the first quarter of 2019.

The sequential increase was primarily due to an increase in shipping costs as a percentage of total revenue associated with a higher percentage of shipments to the overseas markets in the first quarter of 2020.

Moving to the balance sheet.

Our balance of cash and cash equivalents were USD 670 million compared to USD 895 million at the end of last year.

Accounts receivable turnover days were 66 days compared to 94 days in Q1 last year.

Inventory turnover days were 110 days compared to 120 days in Q1 last year.

Total debt was USD 1.8 billion compared to USD 1.9 billion last year, in which USD 162 million was related to international solar projects.

Net debt was USD 1.1 billion compared to USD 1 billion at the end of Q4 2019.

Total CapEx for 2020 is expected to be around USD 350 million, which is used for the 5 gigawatt certain phase of mono wafer capacity and additional new 9 gigawatt mono module capacity.

This concludes our prepared remarks, and we are happy to take your questions.

Operator?

(Operator Instructions) Our first question is from Philip Shen and ROTH Capital Partners.

The first one is on pricing.

So we calculate an implied module ASP of about $0.30 per watt in Q1 on a blended basis for you.

And I think based on your guidance, then pricing might be closer to $0.262 for Q2.

So this is just maybe a 13% sequential decline.

So are we accurate with these numbers?

And perhaps you can comment on what we might be missing.

Specifically, how much in Q1 did you have from module-only revenue, for example?

Yes.

So it's Gener.

Thanks for the question.

Yes, for the Q1, the ASPs, compared with Q1 and Q2, we are seeing, because of market turbulence and also the pandemic impact, the market price dropped by around, let's say, 10%.

So if we look into our Q2 pricing, so I -- yes, I think we are around that range as well.

So compared with the Q1 ASPs, Q2 ASP, we are expected to drop by approximately high single-digit range.

Okay.

And then how do you expect that blended pricing to trend in Q3?

Do you expect another drop as well?

Or -- and then do you see the stability more in Q4?

How -- what do you see ahead?

Yes.

So for the -- our strategy is always to follow the market.

So we are not against the market.

So our -- when we see the market price is dropping, definitely, our pricing will drop.

That's our strategy.

I think everyone will follow that, not only Jinko.

So number-wise, it's hard to define right now what's the exact numbers for Q3.

It's still too early for -- to talk about the Q3 final pricing.

But from the observation of the market price side, we did feel the expectation from all the customer and that they expect the market price continue to drop compared with Q2.

But actually, when we look into the whole year pricing, I still believe there will be some bounce back at late Q3 or even early Q4 because expected strong demand in China rush by the year-end.

There will be kind of shortened supply by that time.

Okay.

And then from a housekeeping standpoint, can you share what the CapEx and depreciation was in Q1?

Yes.

Philip, the depreciation, the cost roughly -- per quarter, roughly USD 40 million, and the CapEx is roughly USD 100 million for the first quarter.

Great.

Okay.

And then one bigger-picture question.

In your prepared remarks, you commented that the dropped IIT policy should drive capacity lower.

Can you comment a little bit more on how you expect this policy to work?

And how do you expect this to impact the industry?

I can see marginal capacity expansion going away, but I was wondering if you could just comment more on what you see as the impact in this policy and when you expect it to be beneficial.

So you're talking about ITC, right?

No.

I'm talking about the Ministry of Industry policy to force the industry to have higher efficiencies in the capacity expansion.

You mean the China manufacturer, let's say, industry standards thing, right?

That's right.

Yes.

Yes.

Phil, I think this is a national standard and which is continue encourage the latest technology adoption.

And there's a lot of threshold and which is the minimum threshold and if the industry participants want to expand the capacity.

And I think all in all, I think it's very positive for the industry consolidations, and particularly the Tier 1 companies given their technology advantage and will lead the capacity expansion to meet the anticipated sustainable growth in the near future.

And for the Tier 2, Tier 3 companies, and it's under pressure.

And it's not only from the customer perspective, right?

A lot of Tier 1 companies is leading the product, and we are promoting over 500-watt modules.

And Tier 2, Tier 3 companies, and they are under pressure.

And from the supply perspective, the government want to build policies and which is a positive for the leading companies but negative for the Tier 2, Tier 3 companies.

Our first -- our next question is from Tony Fei at BOCI.

It's Tony from BOCI.

I have 2 questions.

First is regarding on the order book front.

So among the 4.2 to 4.5 gigawatt shipment target for Q2, could you give us some color regarding how much of that will come from domestic orders and how much from overseas?

And how about that mix movement in the second half maybe?

Yes.

So you're not talking about Q2 number, right?

So I will assume your question is mainly about the China mix during the Q2 and also the rest of year shipment plan, right?

From my observation, so Q2 -- yes, Q2 number for the shipment mix, China will be -- China will occupy not a significant number.

What we are -- the number range we are looking at is around, let's say, 10% to 15%.

So -- however, it will rapidly going up, especially when the China market start to boom.

By the second half, we expect the ratio will be higher.

Even by the peak time of the Q4, we are expecting the number could be even 30% or even plus.

For the total year, our -- yes, our target -- China market will still taking a pretty, let's say, a fair ratio compared with all the other regions we are having.

So approximately -- sorry, 1/4 of our total shipment is expected to ship in China.

Okay.

Great.

And my second question is regarding the financials.

So looking at your results in the Q1, actually, all the revenue and gross profit were quite in line with your previous guidance, but the net profit was dragged by the changes in fair value of some alternative products.

So in the second quarter, actually, we are seeing the RMB still weaker year-on-year.

So should we expect more kind of losses of fair value change in the quarter?

Okay.

The change of fair value include 2 parts.

One part is linked to the -- our international projects, the interest swap.

And that is a significant negative impact in the first quarter because of the order low, even close to 0 the U.S. treasury rate.

And it's -- I think it's a one time.

And it's -- the long-term U.S. treasury rate is rebounding to the standard level.

And for the currency, the currency [forward] currency to lock our sales orders.

And because the RMB, it's unexpected to be depreciated in the first quarter, particularly given the recent tensions around -- between -- and the U.S. and China.

And now it's -- and the RMB is stabilized and relatively appreciated.

So we don't expect significant impact in the second quarter.

And for the financial instruments I mentioned with the 2 items, and we don't expect significant impact in the second quarter.

(Operator Instructions) Our next question is from Brian Lee at Goldman Sachs.

Maybe just to follow up a little bit on an earlier question, just on the gross margins.

You're guiding down about 250 basis points at the midpoint for the second quarter versus the first quarter.

Pricing really started falling in late March and April.

So we've heard from other companies that a lot of that volume could flow through more in 3Q as opposed to real time in 2Q.

So is it fair to assume gross margin is down again sequentially in 3Q?

And then how should we think about the cadence from there?

The decline on gross margin second quarter reflected the slowing -- the wage demand, particular from the international market in second quarter.

And the factory, we discussed that ASP is a downward trend.

And given the market situation, special market situation, the ASP is continuing downward.

And the -- but however, from the cost perspective, we are improving at the same time.

So given the third quarter, I think the second half year, the gross margin and continue to be under pressure.

But we are trying to achieve relatively stable gross margin and compare to the second quarter.

And because -- particular from the -- and we rapidly expand our capacity on mono wafer, and we are expecting to improve our integrated production costs and throughout the challenge period, and which will offset the net negative impact of the ASP downward in the second half year.

Okay.

That's helpful.

And then, Charlie, just a question around the inventory.

I know in past years, you typically have a pretty big move up in inventories from 4Q to 1Q.

It seemed a little bit bigger this year and at the same time, accounts receivable was pretty flattish.

So if this was just a shipment timing issue, I would have thought they kind of move together.

So are you seeing some cancellations on modules?

Are you having to kind of remarket those?

Or can give us some sense of what's happening between the AR and inventory balances here to start off the year?

Because we have -- we target 18 to 20 gigawatts, right?

Each quarter, on average, we are planning 4 gigawatts to 5 gigawatts.

So the inventory levels will be in nature -- by nature, the inventory levels will increase and slightly quarter-by-quarter.

And the first quarter, the inventory level is relatively higher because last time we disclosed, because the China, the supply is challenged, and we have 400 megawatts, 500 megawatts shipped to the second quarter.

And throughout the second quarter, given the challenge of international demand, we proactively manage our operation and, including control the inventory levels.

And we faced some order cancellations or delays, but we swiftly shift the -- shift to the -- our production, particular to the customers or new customers and reading with less impact from the virus.

So we -- in general, I think the inventory levels will be very healthy level.

But given our -- the target, 18 gigawatts, 20 gigawatts, and we are expecting the inventory level will increase a little bit throughout the next 2 quarters.

(Operator Instructions) Our next question is from Karl Liu and CICC.

I have 2 questions.

The first, could you please give us some color on the order visibility in the 3 quarter and the fourth quarter?

And so how would we see if we can see further -- like if the projects which delay or something canceled in the second quarter due to the coronavirus, will it move through the, like second half or maybe first half in the next year?

So how we look at this thing?

And the second question is that we are seeing some strong demand in Mainland, in China that's coming from the dual-glasses modules and maybe other way of high efficiency.

So could you give us some more color on maybe about the product mix, what will have in maybe the second quarter?

How was the -- our mix coming from the high-efficiency modules?

And how is from maybe the remaining, the normal efficiency modules?

Can we have a percentage on that?

Okay.

So this is Gener.

Thanks for the question.

Firstly, about your question about the order visibility.

I think we have built up a very strong order book.

Over -- compared with -- I think over, let's say, 3 quarters, order book has been fulfilled.

So we are very confident to achieve our target in 2020.

I think that's part of the reason why we keep our guidance in 2020 as the 18 to 20 gigawatt as a -- without any change.

For the market -- for the possible market delay, we have seen some of the -- some region or some countries that has showed the tolerance to delay part of the projects still into, let's say, 2 quarters, even 3 quarters, especially for some regions like -- or countries like, especially like India, which, I think, was expected to have an installation of over 10 gigawatts in 2020.

But with the current lockdown law, we believe that the market size will be less than 10, even somewhere around 5 to 6.

For sure, those projects have not been canceled.

A majority of those projects will get delayed into 2021.

And that's why I think in our previous, let's say, especially our previous speaking, we also show our confidence about the strong demand in 2021.

That's also part of our reason why we continue to expand our high-efficiency capacity.

So your second question about the China demand, especially the double-glass demand.

We see double-glass or dual-glass product has a certain, let's say, advantage, especially in some environment.

But we do not -- personally, I do not see such product become a universal standard or industry standard product yet.

When I look into our Q1 book, we see less than 5% of our total shipment is double glass and -- which is, let's say, a very few number compared with total shipment.

With China demand picking up by the second half, we believe the ratio will be higher.

But honest speaking, I do not believe such product will become, let's say, a standard product in short term.

But in the long run, with more technology challenges resolved, and I believe such product has a promising future.

Hope that answers your questions.

Yes, yes.

I have 2 follow-up question.

The first is that like, for example, the order from the India is delayed for like 2 or 3 quarters.

So will that be renegotiating on our module's price?

Or we will order this or ship this on a previous setting price?

That's my first follow-up question.

And the second is that -- maybe I should have to rephrase my question.

So I would just make an example on the dual-glasses modules in China have high demand.

But actually, what I want to ask is that we kind of see a kind of structural demand increase in high-efficient modules.

Maybe in China, it is the double glasses; maybe in the overseas, it's like a other kind of product.

Though we also have like this one, right?

It's not double-glasses, but it's more lighter.

So in generally, how will we see in the low -- high-efficiency modules?

Will we see much more higher demand growth than the normal-efficiency modules?

So how we see that?

And the percentage change in the first quarter and maybe second quarter, yes.

Thank you for your follow-up question about a project signed, a contract signed.

So I think from what I see, 95 -- over 95% of the contract signed has been honored.

And we -- both parties respect the contractual obligations.

And we continue with the execution of the contract, even we have some pandemic impact on it.

And for sure, very few contract has to be renegotiated or even canceled because of this, we call the force majeure.

But we still believe it's not because a customer want arbitrage on the market price chain.

It's really because of the -- what is happening for their project and/or from their homeland.

Your second follow-up question about double glass, we believe the demand in China for the double-glass product is increasing.

That's very obvious.

Sorry to say, I don't have that percentage number on my head.

We can give you some feedback after our call, right?

Thank you.

That's all for today's conference call.

Thank you all for your participation.

You can disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]