Kandi Technologies Group Inc (KNDI) 2020 Q3 法說會逐字稿

Greetings, and welcome to the Kandi Technologies Third Quarter 2020 Financial Results Call. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kewa Luo, Investor Relations Manager. Please go ahead.

Thank you, operator. Hello, everyone. Welcome to Kandi Technologies Group Third Quarter of 2020 Earnings Conference Call. The company released the results earlier today. The press release is available on the Investor Relations sector of Kandi website at www.kandigroup.com. With us today are Mr. Hu Xiaoming, Kandi's Founder, Chairman and Chief Executive Officer; and Mr. Alan Lim, Chief Financial Officer.

Mr. Hu will deliver prepared remarks, followed by a question-and-answer session. Before we get started, please note that today's discussions 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, the company's results may be materially different from the expectations expressed today.

Further information regarding these and other risks and uncertainties is included in the company's past filings with the SEC. The company does not assume any obligation to update any forward-looking statements, except as reminded -- required under applicable law.

As a reminder, this conference call is being recorded. In addition, a audio webcasting of this conference will be available on Kandi's Investor Relations website.

I will now turn the call over to Kandi's Founder, Chairman and CEO, Mr. Hu Xiaoming.

(foreign language)

[Interpreted] Thank you, Kewa. Hello, everyone. Thank you for joining us on the call today. As you all know, the COVID crisis impacted business activities around the world, and has had sustained negative impact on many sectors with electric vehicles being one of them, Kandi's business, among others, are affected directly.

However, with great efforts, we were able to resume production by utilizing our specialized advantages, we were also able to transform battery swap technology and powertrain system research and development into production and lock-in partnerships and find opportunities to showcase our expertise and use cases in this field.

We were also able to discover a number of opportunities in the field of intelligent transportation and its annular products, which further proved our leadership position in the industry. We will explore more opportunities in smart EV, while we push forward our main products and gain market share.

(foreign language)

[Interpreted] However, with great efforts -- sorry, over the past few months, Kandi has been very productive. I would like to thank those who follow our news closely.

For others, let me give you a recap on recent developments and the major milestones we achieved.

In August, we delivered our first fully automated intelligent value exchange system to the right share of operator in Haikou Hainan in China.

Meanwhile, in America, Kandi America was able to hold a very successful virtual event to launch K23 and K27 EVs into the U.S. market. In September, we established a wholly owned subsidiary for our battery swap service.

We were able to register the name as China Battery Exchange Technology, which is like Sinopec Group and China Natural Petroleum Corporation. They are the leaders in the sector to provide petroleum. China Battery Exchange is going to be the leader to provide battery exchange in the sector and which is going to bring us a lot of potential.

And this enable us to monetize dozens of patents they have in the field of battery swap systems. In October, we were able to form a strategic agreement with the world's largest state-owned public service enterprise with State Grid of China to a downstate old electric vehicle service company to cooperate in our area of expertise battery exchange for pure electric vehicles.

We also launched 300,000 government accredited pure EV within 5-years rideshare program and have begun the gradual delivery of 1,000 EVs to the city of Haikou in Hainan province and 2,500 EVs to the City of Shaoxing in Zhejiang province.

Most recently, we announced that we plan to list Kandi, Smart Battery Swap Technology Company Limited on Shanghai Stock Exchange's STAR Board. This is after thorough consideration and extensive engagement with top-tier IPO advisers in China. Both we and our advisers are confident that our battery swap business is ready to grow more rapidly with the pro forma capital in China.

This is a very good news for Kandi shareholders as it will enable us or to realize the growing value of our smart battery swap business.

(foreign language)

[Interpreted] We are pleased with our strategy, our progress and our achievements. With the economy slowly reviving and increasing government support for the vehicle battery separation battery swap model, we continue to believe that the growth for electric vehicle with battery swap model is very positive.

We are progressively proving its expertise and leadership position in the intelligent battery swap area. And we believe there will be more exciting news coming.

We remain optimistic about our market opportunities and potential market share for Kandi.

(foreign language)

[Interpreted] Now let me ask my CFO, Alan, answer your questions. To save the time, Alan is going to answer your question directly in English. If there is something Alan is not sure, I will take over.

Operator, please proceed.

(Operator Instructions) Your first question comes from the line of Marla Marin with Zacks.

So can you provide a little bit more color on the North American strategy as it pertains to production capacity closer to the end market and how you feel that will benefit the company?

So you're talking about your strategy to how to expand our capacity, especially for the electric vehicles, right? Just to clarify, I understand...

Yes.

Okay. So well, I will start with my answers, and we'll have Mr. Hu to further elaborate about this question to give you a more detailed answer.

So basically, we are now having our EVs primarily manufactured in our China, Hainan facilities in order to meet the need in our China and U.S. market.

So far, our capacity can meet the need for the time being, including our car hailing platform in China, and you said you can tell we can start-up the sales of the platform in Haikou and also in Zhejiang.

And we are taking up -- we are preparing for our sales in U.S. So, so far, I guess, we -- our capacity in China, Hainan facilities can meet the need. But I guess for the third strategy, what expansion I will delegate to Mr. Hu to give us a further explanation.

So allow me to speak to Mr. Hu, or at least I can translate the answer for you. (foreign language)

(foreign language)

[Interpreted] So Mara, as Mr. Hu confirmed, yes, the capacity for now, can meet the needs for the foreseeable feature. So, so far, I think we'll count on the facilities and the capacity of our Hainan facilities. And of course, we'll explore different options but for now, we expect with our facilities in Hainan.

Your next question comes from the line of Arthur Porcari with Corporate Strategies.

Congratulations, Mr. Hu on achieving some immense milestones we can since the last conference call. And of course, you've covered a few of those, but the 2 in particular that impressed me is the strategic partnership with the State Grid, which is China's massive electric utility, as you said. It's like, I guess, don't realize how big it is, 1.2 billion consumers, 90% of all the land mass in China and #2 on the Fortune Global 500, second only to Walmart, actually.

But just as impressive to me as a former investment banker, you attracted China's largest investment bank, CITIC, to lead an IPO syndicate to underwrite a spin-off IPO of Kandi's wholly owned battery subsidiary that we've been talking about to capitalize and monetize Kandi's exceptional expertise in all the facets of EV technology.

I assume this is thanks to Mr. Ho's 30-year experience is the pioneer of inventor Quick Battery Exchange technology. One of the hottest sectors in China today.

But a little background here, 10 years and 2 weeks ago, Mr. Hu may remember, I had the honor of joining him in Jinhua, China at the opening of China's first Quick Battery Exchange Station which saw Kandi selling a small 2-seat EV, actually powered by lead acid battery, that shows you how long ago this was, which was independent of the car.

NIO was not the first one to do this. The car owner would pay around $3 each time he change the battery. More than just the coincidence at that time, tiny Kandi, who is the first to make and commercially sell EVs in China had the same State Grid as its partner in this early trial.

Seemingly from the recent PR providing most all the same services in this new agreement. If I remember correctly, what attracted State Grid most to the Kandi QBEX at the time was the ability to charge the batteries overnight when grid demand was at its low point, which included excess batteries in the racks, which would allow State Grid to extract power from the excess batteries during times of peak use, usually midday.

At that time, this was called B2G or battery to grid. Most will remember at that time, midday brownouts in major cities globally. The Kandi trial was an early success and the China National government later officially recognized what they call the Hangzhou Kandi for a power mode Quick Battery Exchange as 1 of only 3 approved methods of charging nationwide.

Yes, they specifically use Kandi's name in the official title. With this background, I'm going to have a couple of questions. I don't know whether that was probably too much to overload Mr. Hu with, but maybe Alan can handle this. But do you want me just to go into the questions now? Or do you want to try to paraphrase what I said to Mr. Hu.

No, I think you can post the questions. And thank you for you long-term support, by the way.

Okay, sure. In the PR, Mr. Hu said the 2 parties will cooperate extensively across the whole supply chain and include about a dozen issues. Most of these were self-explanatory, but three, I'd like you to expand upon and then a final general observation. What's different or unique with this new Kandi subsidiaries, Quick Battery Exchange over competitors such as NIO? And is Kandi's battery technology patent or proprietary? If so, can you tell us more about this? That's part 1 of a 4-part question.

Okay. Well, so I guess -- first of all, for us, we have in the field of the battery swaps, we have dozens of the patents in terms of the invention and then the purposes. As for them, I'm sure as a well-established company we are supported by the State Grid. I'm sure they should have certain assets as well, although we have not really investigated in details about which ones they have and how many they have overall?

Okay. Is there anything unique about the company's battery recycling. This is a different subject battery recycling technology. This is a subject we've heard very little about till now. Historically, it's been well known that lithium batteries are very difficult to recycle.

Right. Yes, indeed -- well, so battery recycling of is a business of the battery swap company. In this respect, well, we have the -- we do have the technology to do the battery recycling in the process, such as our -- one of the technology can be reflected, I guess, in the separation, like the activation and the synthesis of those different the particles, as you may know, I think we will try to first break them into the positive and negative ends and in order to separate them, then we have pretty high effectively process to recover the composition.

So basically, these materials after they get separated, they can be reused. And to realize the internal circulation of the waste battery materials. So basically, that can maximize the economic value of the waste and make it pretty conservative process overall.

I remember here -- yes, excuse me, when we acquired Jinhua An Kao, that's a while back, that was also mentioned at that time, and I believe Mr. Hu said something to the extent of typically the normal lithium battery is maybe 15% or 20% recyclable, but Jinhua An Kao had a technology that could make it over 50% recyclable. I was just wondering if we could maybe find out if that was still correct in the same battery we have today and why such a big difference between what they have and what others were able to achieve?

Right. I guess for that, I will delegate the question to Mr. Hu. So allow me to speak in Chinese and I will do the translation afterward. (foreign language)

(foreign language)

(foreign language) [Interpreted] So as you may know An Kao is mostly -- primarily for the battery swap, right? So we are now a battery exchange recycled company. So as for that basically we're still working on the technology, but so far, the efficiency is roughly 50% to 60% of the recycling efficiency.

Right. Okay. Yes, good. That's a big number for lithium. Okay. In the PR mentioned and I quote flexible control of power load exchange. Is that similar to the B2G or battery to grid technology, attracted State Grid to us 10 years ago. Is that what he means? Is that's what's planned? Battery to grid where the back into the grid. It is.

Yes. Well, basically, I think that's similar in the technology similar systems that we use the battery of electric vehicles to basically maximize in around the -- from the B2G, and that's -- I think that's pretty similar technology. But then of course, we have more intense and more efficient rate to process, but that's basically similar, yes.

Okay. And finally, why you believe State Grid found Kandi's battery technology so attractive that it would partner up with so small a company as Kandi and its Quick Battery Exchange subsidiary for a second time?

Well, I guess, although Kandi is not as -- of course, not as big as the State Grid or the super large companies in the state in China. But then we are the advocates and then the petitioners of the technology called separation of vehicle and electricity power swap mode for the EVs in China.

So I mean we have a fully automatic swap -- smart battery swap system with over dozens of patents of invention in the utility model -- the model, right? So basically, as you may know, our ultimate way is to have a system that realize the one key, one-click automatic Quick Battery swap process.

And exactly, this is the technology being welcomed by and supported by the China government. And more than 10 years of -- or even more of the practice in the field of the battery swapping for the EVs as you may know, the company actually well has accumulated a pretty extensive experience.

So I mean disregard of our size, but then our technology, our skill set are pretty extended and seasoned compared to other companies in China. And I think that those are basically the reasons why the State Grid and this related company are willing to cooperate with us.

But -- and -- but then I want to explain is that it's not just our battery technology that is extracted, but also our -- the swap -- the smart battery swap technology is really -- that's the key point and that is crossed against -- traded with us.

Yes. Okay. Well, what impressed me the most is that State Grid came back the second time, 10 years later to the same little company, so to speak.

And so it must really been something that they saw back 10 years ago, I guess, just way before its time, again, used by the acid batteries. That was just a comment. Just one other -- something you just said a moment ago, I wanted get refreshed over here. Is the capacity still 100,000 cars a year in the Hainan facility where Kandi can make that many? You mentioned...

Yes. I mean we can -- yes, I mean as you know, we have -- the Hainan facilities started to work in production in -- since early last year.

So right now, we're still refining our capacity. But I guess, ongoing at the capacity will be more and more and that should be sufficient to meet the need for our upcoming sales in China and U.S.

Okay. It looks like a great quarter coming up for quarter 4 and next year should be getting back.

Your next question comes from the line of Joel Kramer, Private Investor.

Yes. It seems that Kandi both in China and the U.S. is starting to pick up real positive momentum. However, we have heard little, if anything, about Geely's Holdings running of fencing, which Kandi is carried an interest in. Can you update us on what is happening there? And are you still bullish on Kandi, you probably still have close to $1 billion invested being able to make this deal a major player in the China EV market?

Right. Thank you. Well, first of all, currently, Geely has still been actively involved and participating in the market competition of the new electric vehicles has that, but that's new trend of the automobile.

But then however, we do -- and we are aware of the development of the Fosun, which is a subsidiary under the Geely Technology is rather lower than expected.

And so far, and we are exploring with Geely Technology to see how to refine the developed plan and make it up to speed as we expect.

But again, I mean, we ensure that Geely Technology, they are actively actually and fully involved in the market of the EV market, of course.

Your next question comes from the line of Walter Hill with Carty & Company.

Two weeks ago, Kandi put out a PR establishing the Beijing Rising Technology company, 3-way company owned 80% by Rubio, 10% by Kandi, 10% by Jinpeng to be the operating company for the 5-year, 300,000 EV government-accredited ride-hailing program.

That PR did cause some confusion to new investors thinking that Kandi is 10% was the primary way and makes its money off the deal. Could you clarify the following points, and I've got 4 points, and I'm -- I'll read them -- I'm just going to read them all because I said a couple of them are fairly short.

A, what specifically is the difference between a government-accredited program and a ride-hailing program; b, in some detail, what is partners required responsibility to earn its share of the company. Part C. This PR speaks of 2 initial programs that appear to be kicking off this month, and I believe Mr. Hu mentioned this. 1,000 fees for Hainan Province and 2,500 for Shaoxing, Zhejiang program.

Do you expect all 3,500 will be delivered by Kandi before this year-end? And if so, what types of revenue should be expected. In the last part, the PR does not give an idea of how many of the 300,000 EVs will ultimately be from Kandi's stable. However, the State Grid PR, the week prior so Kandi intents to supply 300,000 vehicles to various ride-sharing programs, which seems to say that Kandi will be providing all of the 300,000.

If so, can we assume that the new Kandi EV models will be shortly on the way.

Thank you. Okay. So I believe that the first question you asked is, let me confirm is about the difference between the accredited program like auto regular auto-ride hailing program, right?

Well, as you may know, actually, in order to operate the online ride hailing platform in China, it requires the approval of relevant departments and different government agencies.

And only we kept fully approval and approved and other credit or certifications being issued or released by the government agencies is considered as a compliant online car platform.

And although, I mean in the market, we do know that they are still quite seasonable amount of the platform that are not fully complying with the requirements. So we can call them the so-called noncompliant, the car hailing platform. So I mean, how we -- what differentiate us from those platform is, we are the government accreditor and also you may see the legal online car hailing platform that will not get shut down because we are fully support and authorized by the government.

Is that answering your question about the first question about how we differentiate?

Yes.

Yes. Okay. Great. Great. And I think second question about the roles or the responsibilities of the partners, right? Yes. So I mean they are basically 3 partners. They are Kandi, they are Jinpeng and Rubio. Kandi, we basically sell that battery swap equipment and of course, the EVs, K23 to the alliance We also will provide a later the maintenance, the technology maintenance and rather from like a technical perspective.

And the second part of Jinpeng, basically, they're utilizing the large distribution network to promote the program. I mean they have a great network and then they can bring up more customers to us.

And the last one is the Rubio. I mean the other season operator of this similar service of the car hailing other cities. So they have a great experience, extensive management skill set to operate.

And so the role is primarily operate this platform. So that's how we share our responsibility and how we can earn our share to the platform of the alliance.

Okay. So I guess, let me move to the next question. The next question you're talking about -- you're kind of referring to what started in the beginning of the progress of how we deliver the EVs to Hainan and then Haikou City and also to the Zhejiang provinces right? And what do we expect that can be delivered by the end.

Well, fairly, we are working on the delivery currently. But as for the actual numbers by the year-end, since it's still ongoing. So we were not be 100% sure that how much can we actually deliver completely. And -- but I guess the time line of the delivery would depend on the progress of the project.

So I guess you can build the EN complaint, then you can have the numbers disclosed on the financial statement. I think that's the best way was to have actual figures by then.

And I think you also mentioned the last question should be about the village and how we can supply our EVs to the program, right? Well, I mean, the so-called 30,000 EVs in 5 years program is rather like an idea of the program, but not entirely or necessarily means that they will for sure infrastructure 30 -- 300,000 EVs to the market.

So I mean, so how many cars will be -- or how many EVs will be supplied to the market at the end of the program, we are not 100% sure. But I mean -- so all the 300,000 is like, we may say, like a slogan or idea.

So -- but the bottom line is we will try to supply one of the major share of the EVs to the platform, and that's our goal. And of course, I mean, either we may even try to invent and launch different new models in the deal cost with the demand on going?

Right. So hopefully, these answers in response to your -- answers your questions.

Your next question comes from the line of Michael Fearnow with Focus Tech Investments.

I would like to refer to the joint venture with Geely Holdings, which is named Fengsheng. When the recently Kandi transferred an additional 28% of their holdings to the joint venture. And when that transfer was made, they made an announcement that they could purchase equity-backed funded joint venture through March 31, 2021.

I've got kind of a 3-part questions. Is there an expectation that deadline will be extended? And when will Kandi decide to exercise that option? Or have they made any thoughts on that exercise of the option?

And finally, if they do exercise their option, can you give me an indication of what percentage of the joint venture Kandi would ultimately own?

As for this question, as far as we are concerned, the company, I think we're still in the process of negotiating with the counterparty, the Geely Technology at the moment. So at time -- at present there is not really a very concrete answer for each of the questions because we're still working on them and resolve, and we are still exploring our options.

So at the moment, there's no really concrete progress for each of -- regarding the deadline would that be expanded or how we can exercise the option. We still try to explore and negotiate.

So I guess, hopefully, by early next year, we'll have a better idea or and the progress, then we'll keep all the investors updated when the time is right or when the time we conclude with our conclusion.

Just as a kind of clarification. My understanding is that if they exercise their option, they can do it with Kandi common shares. Is that correct?

Yes, one moment, let me direct the question to Mr. Hu. (foreign language)

(foreign language)

(foreign language) [Interpreted] So Mr. Hu's answer, yes, I mean to exchange the shares between Fengsheng and Kandi that's one of the options. And we try to explore this possibility, but we have not come up with a very concrete conclusion yet, but that's possible.

Your next question comes from the line of Mark Miller, Private Investor.

Just one question here. If I remember correctly, one of the main features of Kandi's original Quick Battery Exchange was the ability to have a mobile battery exchange unit available for an emergency battery swap in just a few minutes on locations due to the battery side by positioning between the rocker panels and the wheel. Will this feature be available for all of Kandi's EVs?

Yes. Basically, it works for our EVs like K23 and mostly it was for the K23 at the time being.

Will they be able to make custom side slides for other companies at some point in time?

Oh, yes. I mean, basically, the idea is the equipment can fit those the size like electric vehicles. And of course, for other brands, the equipment can still work out with them as long as there are some adjustments of some data exchange or some other fine tune, but yes, that's visible after some adjustments.

Where is Kandi's place or compare to their competitors' on this? Can you tell us about that.

You mean how we...

Your technology that you've created. I mean how the other people stack up against this?

I guess for the -- so I mean for that question, let me delegate to Mr. Hu and see if he can...

It appears when I looked at the video, it seems that yours is much more quicker. I saw a version of NIO while back. And it seemed like there's was much more time consuming and yours is more similar. So I mean, is there anybody else? Where is everybody else on? Or is anybody pursuing this that you know of.

Yes, I'm sure they are pursuing that. I mean that's one of the, as you may know, the battery swap system now is fully supported and encouraged by the government in China.

So I'm sure other companies they will try to go into trend and proceed. Then for us, we are one of the kind in the market and our 90 second, 1 click automated swap system is one of the -- one of the best in the country.

So I guess that's how differentiates from other competitors. But I'm sure other competitors they were still working on the technology. And I guess you referred to some other research report of how they're doing.

But at least for us, we have all the patents to do this so that's, I guess, one of the -- I think the timing the 90 second is how differentiates us from other competitors.

Your next question comes from the line of Richard Goldstein with National Securities.

My question has to do with the spin-off. The IPO announced last Monday for Kandi's Battery Swap subsidiary. Mr. Hu, you may not remember, but we met at the San Francisco Shareholders Meeting Day in 2014. I am with a major U.S. brokerage firm and as an investment adviser and also have close business contacts in Hangzhou, my clients represent a significant holding in Kandi shares from even before we met.

I must admit it was a summing revelation that today, China's largest and third-largest global brokerage well known to Wall Street had signed on to lead the Kandi Battery Swap IPO syndicate in China on the new Shanghai Tech-Orientated STAR Stock Exchange.

As the word gets out, as the word gets out on this in the U.S., this should create a lot of respect on Wall Street, but I have a couple of few questions here.

First, what was it that attracted China's top firm to take the lead on the Kandi IPO? And would you envision they would also have potential research coverage to follow?

Second part of the question would be, how large would you expect the IPO to be in both dollar and percentage issued of the battery subsidiary.

Nextly, originally, Kandi announced it would include Yongkang Scrou I don't know if I'm pronouncing it right, with the Battery Swap Company. Is that still the case? Or is it just the battery company? And lastly, is it possible for U.S. investors to participate in the IPO or buy and sell aftermarket shares on the STAR exchange, either individual or institutions.

So first of all, when you talk about what try to see to be taking the lead of IPO project. I think in a nutshell that, that should be our technology of the smart battery swap, we have built 90 billion swap system that is one of the pioneer in the market. And as you may know, Kandi -- we are and advocating the petition of the technology called the separation of vehicle and electricity that we swap more for quite a while.

And that's how we can develop such a sophisticated system with dozens of the patents of inventions and then for utility models. So I mean, it's really our technology that attract the CITIC to take the lead of this IPO project, of course, because of our expanded experience and sophisticated technology.

So especially now the technology and the mode is really encouraged and supported by the state, I mean, by the government, by the China government. And it also coupled with the strong market demand for such automatic swap battery system. So I guess those are the reasons that really attract them, involve and the lead of this IPO project.

And as far as about the details of the IPO, like the dollar amount and like the percentage to be issued? Well, at the moment, there is not really a concrete conclusion yet. Well, as you may know, we're still working even like the brokerage firms and the other professional introductions to evaluate this whole project.

But then I guess, long story short, we are confident that the project will turn out to be a success but as for the details, I guess, we will have the PL to disclose later on when we come -- when we come up to the conclusion.

So -- and at present, there's no too much detail to we can comment.

And I guess in this IPO project, mostly it includes the Kandi swap -- battery swap system, which formally called the Ankao, and it also includes the Yongkang Scrou, which technology certificate in the electric system and motors.

And finally, about how the U.S. investors can participate in the IPO and -- or maybe how they can involved for the secondary market, right? So basically, I mean, there's no difference from other deals to be listed in the STAR Board. I guess, first of all, the common way or the standardized way is for the -- I guess, for the institutional investors to -- or the qualified investors to join or participate in some online -- offline insurance or participate in some strategic placements that will take place under the STAR Board.

So I mean, again, those are rather the standardized way that we do or no difference from other company to get list in the STAR Board. And after that, the investors of China, those foreign investors can also purchase some shares in the STAR Board under the secondary market through the pathway called the Shanghai Hong Kong Stock Connect. So that's how you can get some shares through this pathway.

So hopefully, these 2 questions can -- I mean this answers can address your question.

Great. Just one follow-up. Is there a time frame that you have provided for this battery exchange listing to be completed?

Again, I mean, just like we are still exploring the options and then the timing of the project. So at the moment, we don't have a very -- a concrete time line yet. I guess what we want is to make it a success and brings the best and -- the maximum benefit to our investors.

Your next question comes from the line of Mike Pfeffer with Oppenheimer.

It was good to see Kandi written up after the last conference call by a true stock research analyst with the Zacks Research, particularly encouraging to see the analysts give Kandi initial valuation of $12 a share and call it very conservative at that price, which is only around half its competitors trading multiple on 2021 revenue estimates.

Yet for 2020, she's only estimating around $80 million revs and $135 million in 2021, about the same as last year's revenues. Can you comment on the analyst revenue estimate for both years? And might you hope to exceed either the 2 estimates.

Right. Well, regarding the sales forecast from the Zacks Research, fairly prestigious from the analysts or for the analysis of the company. We respect their estimate, but then we don't have a great detailed comment on that.

What we can do is we do the best and try to achieve the most for investors. But then as for the results, I think we will let our investors to stay tuned to our upcoming releases of the financial statements of the year and the next coming year after period.

Okay. Since we've not seen any update notes from this analyst despite a lot of big news, do you -- or would you expect we'll get something soon now that the Q3 '20 numbers are out?

Yes. I mean, again, all the disclosures will be included in our Q3 and then also the upcoming 2020 year-end financial statement. So I mean for other updates figure, we well disclose thoroughly in the financial statements report.

And I also noticed that you now have a very attractive new website with a lot of good info on the company. However, I couldn't find a link to this analyst research report on the Kandi site. I think that would be very helpful for new investors wanting to do due diligence on the company. So maybe it's something you can do, put a link on there.

Right, right. I mean -- well, thank you for your follow-up questions, and we will seriously consider that and then -- that export option.

And then I think the last question. So you've got the Zacks Research report and now CITIC, they're going to be, I assume, following the public battery swaps up. Would it be reasonable to expect some additional legitimate research coming out on Kandi? That's my last question.

No problem. Thank you for your support. Well, as for the questions about different other analytic boards, we have been communicating with the analysts as well. So I guess, please stay tuned for any upcoming research reports to be released. Then you can find out what they say about us.

Your next question comes from the line of Frank Laderman with -- Private Investor.

My questions involve the fact Hainan Island and the battery swap station that was delivered there. How many employees are presently working on the assembly line? And what is the average output per week? What model vehicles are presently being made there? And are these vehicles being manufactured to fulfill present purchase orders or they being manufactured for expected demand?

And then the question involving the battery exchange station that was delivered there. Is it an operation at this time and how many battery swaps made on an average stay? Was the station that was delivered there part of a trial operation or was it purchased? And how many battery exchange states are presently in operation?

So as for the question, I guess, as for the battery swap system, I guess the question is that we have so far I mean -- first of all, as you may know, we have shipped one of the -- our first station to the Haikou, which is located in Hainan provenience as one of the trial and kickoff of the whole project. And so far, that's the one that's being trial and use over there. And in the quarter 4, we expect to deliver more the battery swap systems to both the Haikou City and also the Shaoxing City.

Those are the 2 spots that will run our project program to kick off the whole -- the car hailing platform. So along with the catering fleet that we're going to deliver, we also deliver the battery swap system to these 2 locations. But as for how many it will deliver the EN, it depends on the progress.

So I mean, again, stay tuned to our financials and we'll disclose that accordingly in upcoming financial statements.

Well, you used the word delivery. Was it purchased? Or is it -- has it been delivered as part of a trial?

Right. I mean, we have delivered one, as you may know, we disclosed in the past that that's one already being used and tested in Haikou. So in the upcoming quarter, we're going to deliver more stations of the battery swap to cities to kick off our -- the pilot project?

Okay. If I may be permitted to make another question. Are there personally any travel restriction to mandatory quarantine required to travel to the Island of Hainan from Mainland China and residents of other Southeast Asia countries travel without restrictions of mandated quarantines. If you don't know, that's okay.

Yes. For that question, I'm not sure.

Okay. Do you know how many employees are presently working on the assembly line of Hainan, and the average output per week?

Sorry. You means how many employees working at what facilities? I'm sorry. Can I catch it again?

Hainan Island.

Kewa, can you help me to say that to Mr. Hu can give the response?

(foreign language)

(foreign language)

[Interpreted] About 300 employees.

Okay. And what model vehicle is making?

(foreign language)

(foreign language)

[Interpreted] K23. K23 for rideshare market.

Okay. Are these vehicles being manufactured for present purchase orders or for expected demand?

(foreign language)

(foreign language)

[Interpreted] Right now, the manufacturing -- the production is based on the orders from the rideshare market?

Okay. Okay. Now I wasn't able to get a proper answer to one of my other questions. You stated or would say you had either shipped or delivered one battery exchange station. Was that actually purchased or was that delivered as part of the trial operation?

(foreign language)

(foreign language)

[Interpreted] Yes, it's purchased by the service provider and as part of the trial operation.

Okay. Do you have to tell how many battery swaps are being made on a fiscal day?

(foreign language)

(foreign language)

[Interpreted] Right now, still in a high operation per day, probably about 20, 30 cars will be swapping the battery there?

Okay. So 20, 30 swaps per day...

(foreign language)

(foreign language)

[Interpreted] On -- the numbers varies. Sometimes 10, 15, 20 can be more. They are still in the process of getting more operating approvals from the local government agency.

Ladies and gentlemen, we have reached the end of the question-and-answer session, and I'd like to turn the call back to management for closing remarks.

(foreign language)

[Interpreted] Thank you, ladies and gentlemen, for attending today's call. On behalf of the Board of Directors and management team at Kandi Technologies Group, I would like to reaffirm our commitment. We will continue to work diligently to maximize shareholder value by growing our main EV business and expecting applications of our expertise in battery swap systems. We look forward to delivering strong operating and financial results in the coming quarters. Thank you very much for your support.

We look forward to taking -- talking with you in the next call. If you have any additional questions, please do not hesitate to contact our Investor Relations department. Goodbye.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

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