Emeren Group Ltd (SOL) 2007 Q4 法說會逐字稿

Good evening and thank you for standing by for Renesola Limited Fourth Quarter and Full Year 2007 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference is being recorded. If you have any objections you may disconnect at this time.

I would now like to turn the meeting over to your host for today's conference, Mr. Derek Mitchell, Investor Relations Consultant of Ogilvy Financial. Please proceed, sir.

Thank you. Hello everyone and welcome to Renesola's Fourth Quarter and Full Year 2007 Earnings Conference Call. The company's fourth quarter and fiscal year 2007 earnings results were released earlier today and are available on the company's website, as well as on Newswire Services. You can follow along with today's call by downloading a short slide presentation, which should be available on Renesola's website.

With me today from Renesola are Mr. Xianshou Li, Chief Executive Officer; Mr. Charles Bai, Chief Financial Officer; Mr. Cheng-Hsien Yeh, Chief Operating Officer; and Dr. Paul Li, Vice President of Business Development. Charles will be discussing the business and financial results and all four company representatives will be available to answer your questions during the Q&A session that follows.

Before we continue, 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, the company's results may be materially different from the views expressed today.

Further information regarding these and other risks and uncertainties is included in the company's registration statement on Form F-1 and other documents filed with the U.S. Securities and Exchange Commission. Renesola does not assume any obligation to update any forward-looking statements, except as required under applicable law.

Before I turn the call over to Charles, please be reminded that unless otherwise noted, all figures mentioned during this conference call are in U.S. dollars. It's now my pleasure to introduce Charles Bai, CFO of Renesola. Charles?

Thank you Derek and thank you very much everyone for joining us on today's call. On behalf of Renesola, I'm pleased to announce Renesola enjoyed a strong fourth quarter and a full year 2007 results. We increased our fourth quarter total net revenue by 197% year-over-year to $96 million and our full year total net revenue increased more than 195% over 2006 to $249 million.

In addition to impressive top line performance, the past year was marked by significant accomplishments, including the successful ramp up of multicrystal coating wafer manufacturing, in-house wafer [blasting], expansion of our suppliers in our customer networks, as well as upstream integration into polysilicon manufacturing.

Recent reports have noted that the PV market generated over $17 billion in global revenues in 2007. And we have witnessed continued robust demand for our products with an increase in wafer ASPs, which is expected to continue in spite of a significant increase in raw material costs.

With the intense focus and (inaudible) and successful execution of our business plans, we achieved our target production capacity of 378 megawatts for the year and have exceeded our production output guideline with 125.6 megawatts.

As a leading provider of monocrystalline wafers, we recognize the benefits of adding multicrystalline wafers to our product mix. And at the end of 2007, we have added 160 megawatts of multicrystalline capacity. The successful implementation of multicrystalline production allows us to offer a more comprehensive product mix to help address diverse customer needs.

By utilizing scraps, we can, from our multicrystalline production, we are able to reduce silicon consumption rates. That helps reduce our production costs. During the year, we made strategic innovations to integration upstream into positive production. Our joint venture in Henan Province started total production in mid-January 2008 and the development of our state-of-the-art greenfield polysilicon project in Sichuan Province is smooth and on track.

Renesola is committed to maintaining environmental protection standards. The joint venture in Henan meets the standards, environmental standards, set by the government and also is equipped to recycle GCS. The polysilicon project in Sichuan Province will utilize proven work experience, with a fully closed loop resistance to recycle and convert [wet] into product that can be reused in the production process.

In 2007, we believe -- while we believe in low-cost reduction is vital to our business, in 2007, we're dedicated in mitigating the rising raw material costs through focusing on production, efficient cost reduction and innovation.

New equipment using our proprietary technologies and our state-of-the-art facilities, will include some of the most advanced furnaces and wire saws in the market. We are confident that our expansion efforts and our upstream transition into polysilic manufacturing, paired with a strong feedstock supply pipeline and a customer base of a leading industry players, put Renesola in a unique position to capitalize on the opportunities presented by our rapidly growing solar industry in 2008 and beyond.

Now I would like to walk through -- walk you through the contributors to our 2007 results and of some financial highlights. Net revenue. Net revenues for the fourth quarter of 2007 were, $96 million, an increase 32.4% sequentially and 197.6% year-over-year.

For the full year 2007, Renesola reported net revenues of $249 million, representing a 195.1% increase year-over-year from $84.4 million in 2006. The rise in the fourth quarter and the full year 2007 revenues was primarily attributable to an increase in output from expanded production capacity and increasing wafer ASPs.

On gross profit, fourth quarter gross profit was $19.6 million, a 24.4% increase sequentially and a 121% year-over-year. The gross margin for the fourth quarter was 24 -- 20.4% compared to 21.7% in the third quarter of 2007. Full year 2007 gross profit was $53.5 million, a 116.4% increase year-over-year from $24.7 million in 2006. The gross margin for the full year 2007 was 21.5% compared to 29.3% for the full year 2006. The change in the gross margin was primarily attributable to increases in the average feedstock costs of 19.7% sequentially and a 42.1% year-over-year.

Increase in feedstock costs were mitigated by a reduction in silicon consumption through a combination of in-house, closed-loop wet recycling, productivity gains from improvements in wafer slicing, a reduction in non-raw material related production costs and an increase -- and increases in wafer ASPs. We have proven our strong ability to mitigate negative impact from a rise in the raw material costs and we will continue to do so in the future.

Operating profits in the fourth quarter of 2007 was $15 million and increase of 17 -- 11.7% sequentially and 86.8% for the year. Operating margin was 15.6% in the fourth quarter compared to 18.5% in the third quarter of 2007. Total operating expenses in the fourth quarter of 2007 were $4.5 million -- $4.6 million, up from $2.3 million in the first quarter of 2007. Of the total operating expenses in the fourth quarter, $700,000 was attributable to share-based compensation expenses.

Operating profit for the full year 2007 was $43.4 million, a 95.3% increase year-over-year from $22.2 million in 2006. Operating margin was 17.4% for the full year 2007 compared to 26.4% the previous year, due to the lower gross margin attributable to the significant increase in raw material costs. The operating expenses increased to $10.1 million for the full year 2007 from $2.5 million for the full year 2006.

This was primarily due to the increase in general and administrative expenses and R&D costs, reflecting higher salary and a benefit payment as a result of the need for a greater number of employees to meet our fast-growing business, as well as an increase in professional fees and compliance expenses.

Profit before tax in the fourth quarter was close to $12.4 million, a 3.6% increase sequentially and a 49.3% increase year-over-year. Finance costs increased by 13.9% sequentially, reflecting increased bank borrowings and interest rate. Finance costs as a percentage of the net revenue decreased from 2% in the third quarter of 2007 to 1.8% in the fourth quarter of 2007. The fourth quarter foreign exchange loss increased to $1.2 million from $600,000 in the first quarter as a result of appreciation of RMB against the U.S. dollar during the quarter.

Profit before tax for the full year 2007 was $36.8 million and an increase of 63% year-over-year from $22.6 million in 2006. Finance costs in 2007 increased to $4.5 million from $300,000 in 2006, reflecting interest debt borrowings and a convertible bond issued in March 2007. The full year 2007 foreign exchange loss was $4 million from a gain of $400,000 in the previous year due to appreciation of RMB against the U.S. dollar.

On taxation, Renesola's subsidiary, Zhejiang Yuhui Solar Energy Source Company Limited recognized a tax benefit of U.S. dollar, of $5.2 million in the fourth quarter of 2007, significantly up from $800,000 in the third quarter of 2007.

For the full year 2007 Zhejiang Yuhui recognized a tax benefit of $6.2 million, up from $2.7 million in 2006, due to an increase in domestic premium purchases. In accordance with the PRC tax regulations, Zhejiang Yuhui received 40% of the amount arising from the purchase of domestic -- domestically made equipment as an investment tax credit. The tax credit can be carried forward for seven years to offset future corporate income taxes.

On net profits, fourth quarter 2007 net profit increased 36.8% sequentially and 87.8% year-over-year to $17.5 million. Full year 2007 net profit increased 69.7% year-over-year to $42.9 million due to an increase in production output and an improved productivity.

2008 guidance, in the first quarter of 2008, we expected our gross margin to remain stable and expected production output to be 62 megawatts, as compared to 51.3 megawatts in the fourth quarter of 2007 and a 15.3 megawatts in the first quarter of 2007. We maintain our annualized [in-line] production capacity target of 645 megawatts at the end of 2008.

We anticipate production output of a minimum 300 megawatts in 2008 with a minimum annual net revenue of $480 million. This represents a year-over-year revenue growth of at least 93%. At this time, we're happy to take your questions.

(OPERATOR INSTRUCTIONS). Your first question comes from the line of Sanjay Shrestha of Lazard Capital Markets. Please proceed.

Great. Thank you. First of all, good quarter guys. Just a quick question here. Can you give us a breakdown of how much was tolling in the quarter and then I have a question that relates to your guidance for 2008.

Okay. I'll refer this question to Mr. Yeh.

Sure.

Okay. We will have -- as our estimate, we will have a 29%. Our fourth quarter in 2007 is 20.6% for tolling.

Okay. That's very helpful. Thank you. So for 2008, you guys are talking about 300 megawatt a shipment and you were talking about $480 million in revenue, which either implies that your tolling is going up, which would be fine, it's a better margin business, or implies that you are now being conservative with your wafer pricing assumptions. So can you give us more visibility on how much do you think it's going to be tolling and what's the mix between your wafer shipments versus tolling for the 2008 revenue projection?

Okay. I refer this question to Dr. Li.

Our tolling percentage will remain around the 30%.

Okay.

And the sale and the contract will be contributed to 45% and the rest, 25% we will sell to the spot market.

Got it. And so in terms of revenue then for 2008, are you guys sort of modeling a price decline in the second half of the year versus maybe -- in other words, your thought process here?

Well, we -- I answered this question. We actually are -- from the demand we have seen in the past that you see that the wafer SPs have been increasing. Actually this trend has not been reversed.

Okay.

And the wafer ASPs have been increasing and I think that it will continue to increase throughout this -- the remaining of this year.

Got it. Well one more question then, guys. So when we think about your margin profile, you said that Q1 margin expects to be similar to Q4, but given your visibility on the silicon supply and existing relationship traction with virgin poly and all that, I got to imagine it goes up, your cost of raw material goes down in the second half of the year. So when we just do the back-of-the-envelope calculation, it looks like you should be in a position to have operating margin somewhere around 15% for the full year 2008, suggesting earnings per ADS was north of $1.

Yes, well I think that the -- in terms of the margin, as we said earlier, that the third quarter of margin is expected to be stable. And whereas the operating expenses in the fourth quarter obviously we had increased the operating expenses as a result of the -- for example, the -- a number of things. The first thing is, for example, the option related expenses, which will be continuing. And there's also the one-time charge or one-time expenses, which is essentially related to audit costs, which is one time to us.

When you look at the numbers, 4% in the fourth quarter and we expect that the percentage should decline somewhat, with the increased revenue.

Okay. That's great. That's very helpful. Thanks a lot guys.

Your next question comes from the line of Angelo Chan with Credit Suisse. Please proceed.

Thank you. Charles, Mr. Li, congratulations on the results. Charles, the first question is about your tax benefit. Is that going to recur in the first quarter in '08 and beyond?

No, I -- no, the -- I don't think so.

Okay. Great. And in terms of the raw material purity for 2008 and prices, can you give us some trend outlook into what you might expect in the first quarter and going beyond?

Sure. I refer this question to Dr. Li.

As the demand for the solar wafer continues to be very strong, the spot ASP has increased by 10% from the December last year. So the spot silicon purchase price also continues to rise.

Okay. Great. Thank you. I'll jump back in the queue. Thank you.

Okay. Thanks, Angelo.

Your next question comes from the line of Barnaby Gray with Hanson Westhouse. Please proceed.

Oh, hi Charles.

Yes, hi Barney.

Hi. How are you? I just have a couple of quick questions. Just to follow-up on the tax benefit, will you likely to be taking any tax in the current year? And also a quick question on capital expenditure. What -- have you got approximate capital spend budget or plans for the current year?

The -- based on the tax credit we have for this year available still to us, the tax eventually we're going to pay is, I think, is pretty minimal. That is the answer to your first question.

Okay.

In terms of a CapEx for 2008, actually we budgeted to $240 million, okay? Which includes $140 million for the Sichuan project, and the remaining for CapEx for -- to increase our production capacity in both ingots and wafer facilities here in (inaudible). And so this is the $240 million, out of which about $25 million already paid for this year. So there's remaining about $215 million, remaining.

Great. Thank you very much.

And also I just want to add that to the -- the --- we have sufficient cash and cash sources available for us to fund the CapEx for this.

Great. Thanks.

Your next question is from the line of Paul Fleming with Soleil Securities. Please proceed.

Good evening. I was wondering if you could give us any detail on how the joint venture polysilicon plant is actually operating at the current time? What kind of production volumes you're achieving on a monthly basis? And how that's been trending over the last few months?

Okay. I refer this question to Mr. Li.

(interpreted). As of March the 12th, Henan JV, has successfully produced three tons of polysilicon. Out of the three tons, around 1.7 tons has been delivered to our wafer factory and we started panel production of wafers using this silicon material. Alright. And based on using these materials, we produce ingots -- produce wafers that is equivalent to the highest standards that we deliver to our key customers. In terms of corporate content, the PPN ratio is about 1.7 and that is in line with our normal standards.

Any -- can you help us understand at all what the likely output from that plant is going to be in the second quarter and then the third quarter? Just -- I'm just trying to understand at what rate production will actually ramp up over the next several quarters?

(interpreted) Right. We are still smoothly ramping up the production scale in Henan. As you know we have just completed the trial production process, so it's really difficult to accurately assess how much we will be delivering in the coming two quarters or so. But we're pretty much on track and believe we should make our committed production from the Henan (inaudible) plant for this year.

And what was that amount for the full year that you had expected?

(interpreted) Yes, we were originally looking at around 200 tons of production from Henan JV this year.

Thank you very much.

Sure.

Your next question is from the line of [Ari Cole] with Eaton Vance. Please proceed.

Good evening, gentlemen. I missed the first few minutes of the phone call, so I apologize if this is a repetitive question. But since most of your March quarter has already passed, can you just clarify what you expect to be your production in megawatts and the expected gross margin, please?

Well, I -- we actually, in our press release, we said it. That for the outlook for the first quarter is expected to be 62 megawatts. Where the gross margin in the first quarter is expected to be stable.

Stable meaning a little over 20%?

Well, stable meaning in line with what we achieved in Q4.

Right. And Q4, the gross margin was 20.4%, so you're saying it should be very similar?

Well I think that to be stable itself really defines what it means.

No, I understand, but we're not agreeing on what stable means.

What -- you are native speaker, you know what the statement means. But to us, meaning that the gross margin is expected to be in line with what we achieved in the fourth quarter and there may be some minor fluctuations here or there, but overall we feel this is stable. We feel it is stable.

Okay. And as you look at your polysilicon costs, how do you -- to what degree do you expect them to increase or decrease as 2008 progresses, based on your contracts? Versus the level it was at in the fourth quarter?

Yes, I refer this question to Dr. Li.

As long as we continue to write, we would see that the spot silicon purchase price will continue to increase.

Okay. Let me ask the question again. In your press release you say that I think it's 80% or 90% -- yes, 90% of your polysilicon requirements for 2008 production are under contract. What I'm trying to understand is that number, 90%, are the price pump -- what percent of your prices that you're paying for the year are fixed for your polysilicon needs?

Yes. For the 2008, 40% --64% of feedstocks will be reserved at fixed pricing and 36 (inaudible) will come from the spot market.

Okay. So let me just repeat that to see if I heard it correctly. You -- you're stating that for the polysilicon contracts you have, 64% are at prices that have already been agreed upon and the other 36% you will be getting the polysilicon, but the prices will fluctuate depending on the spot prices in 2008.

Let me explain a little bit more to this -- to you that some of our contracts, currently long-term contracts are also with adjustable mechanisms. That's also linked to the market price. So the answer to your question is, yes, that is a 35% -- 36% is related to the spot price.

Okay. But the link to the spot price, are there limits to how much the price can go up or down, based on what the spot price does?

That is a 13% discount. Yes.

Yes.

It's a certain level of discount, percentage discount, due to market price.

Okay. Thank you.

Your next question comes from the line of Marianne Dolan with Moon Capital. Please proceed.

Yes, I'm wondering with the revenue guidance that you gave for the year, what type of assumptions are you making for your end-markets? Will it be Spain or Germany or wherever, what you mix will be and what some of these feed-in tariffs might end up becoming?

Hi, Marianne. To answer your question, you know that our wafer sales have primarily made to the Chinese market to the Chinese -- the downstream players. So for 2008, we do not expect that we're going to export in a big time. Obviously that we think is the exception of the tolling arrangement where we deliver wafers to our customers abroad.

Okay. Great. Thank you. I appreciate that. Also just to go back to that last question, of the 64% which you say is fixed, does that have an adjustable component in it or is that an absolute fixed number?

Well, I probably can give you some breakdown here as to what constitutes of that 64%. Okay?

Okay.

We expect that the -- first of all, that we have inventory of approximately 300 tons, which is paid for and we've passed, for sure. And the -- we for example -- one of the long-term contracts we signed, which is with the [Dicho], we signed it late last year, which has the fixed priced component there. The price is fixed for 2008.

And also in addition to that, we have a joint venture in Henan, which we know the roughly what production costs will be because that -- and the production costs will be consolidated into our financials. And (inaudible) is tolling arrangements where we do not exclude into competition. So that arrives at the number of 64%, to be conservative. If we -- if you want to take out that -- the tolling arrangement from the equation and the fixed price contract, the ratio will fall to 36%.

I'm sorry. You cut out on the last part. You said to be conservative, the fixed price, something about 36%?

Yes, well, what I was saying is that if you want to be conservative, and you can check out the component of that, the tolling arrangements, were [roughly 120] arrangements.

I see.

Away from the question. And then the fixed price contract falls to 36% in terms of percentage.

Okay. Got it. Thank you, appreciate that. And have you made any comments about what capital raising plans you may have this year?

No, we don't. We don't currently. We don't have a plan to raise capital in the equity markets and we have existing credit facilities from the Chinese banks. And we also have a healthy operating cash flow from our operations.

Okay. Great. And then I just have one last question. On the gross margin, which you said will be pretty stable in Q1, as the year goes on, how much will that change as you get into the second half of the year, Q3, Q4?

We actually expect that the gross margin in the latter part of the year, particularly expect to be improved as the result of a few factors, which we discussed before.

Okay. Great. Thank you.

Thank you, Marianne.

Your next question is from the line of [Tell Stenzel] with Hazel Capital. Please proceed.

Yes. Thank you for taking my question. I was interested, do you have a breakdown in the amount of mono and multicrystalline wafers you expect to produce in the total of 800 megawatts in 2008?

I think that the split should be roughly the same in terms of percentage.

Okay. Can you just remind me what that spread was there?

I'm sorry? You're breaking up. I'm sorry.

Sorry. Could you just remind me what that split was between mono and multi wafers?

For mono, we look at the, probably around -- for example, in the fourth quarter, we had a 55 -- sorry. 74% in mono.

Okay.

About -- around 25% in multi.

Okay.

Yes.

Thank you.

But we expect on the multi, in the percentage of the multi in our output will steadily increase as the ramp up of our multicrystalline production line.

Sure. Sure. Can you explain is there a cost difference in producing mono and multi wafers and if that's reflected in your sort of margin assumptions?

Okay. Let answer the question and -- in our Q4, Q4, the mono wafer costs is $0.42 per watt. And multi wafer is $0.46 per watt. We are just in a trial run in our multi wafer. But as our estimates in our Q1 of 2008, our mono wafer costs were reduced to $0.42 per watt and the multi-wafer were reduced to $0.365 per watt.

Okay. Great. That's excellent.

Your next question is a follow-up from the line of Angelo Chan with Credit Suisse. Please proceed.

No, actually, my question has been answered. Thank you very much.

Your next question is from the line of Paul Fleming with Soleil Securities. Please proceed.

Yes. Just a quick follow-up question. Could you tell us what the share count of the outstanding shares will be for the first quarter? Just trying to clarify what the number is following the IPO in the U.S.?

Okay. We had the share of spending prior to IPO was, hold on a second, let me get the numbers here. For the [further] IPO we have 100 million and 32 shares at the end of 2000 -- at the end of 2007 and the -- we issued ADS in -- through the IPO in sales where we issued 9.2 million ADS. One ADS represents two shares.

So the share count for --

The total outstanding is about -- is roughly, approximately, 118.4 million shares.

Okay. Thank you very much.

Thank you.

(OPERATOR INSTRUCTIONS). And your next question is from the line of Ari Cole with Eaton Vance. Please proceed.

A quick question about your cash levels. If you include the cash you raised in the offering in the United States, what was your cash, I guess, at the end of February for the company?

We had approximately $50 million.

Can you repeat that please?

We had approximately $50 million.

50 -- 15?

50.

50?

That's right.

So, $50 million after you raised the money for the offering in the United States? I'm --

Yes, well, we -- well actually taking that into account, we had -- currently we have about $70 million.

Okay. Can you just kind of clarify, you sold 18.4 million shares at, I think it was like $13 about?

That's correct. That's correct.

So you raised $239 million? I'm approximating? And what did you do with that money?

We have -- we raised the -- well actually total offering size of $130 million and all of that actually we paid out expenses and also of that, the part of that proceeds is for certain shareholders. So net proceeds to the Company are approximately $110 million.

So $110 million went to the Company?

That's right.

Okay. And then after deducting any debt you had, the cash that remains is about $50 million?

That's correct.

Okay. Great. Thank you.

Thank you.

(OPERATOR INSTRUCTIONS). And your next question is from the line of [Philip Gerotomy] with Evolution. Please proceed.

Hi, Charles. Good evening.

Hi, Philip.

I'm a bit puzzled by that $480 million revenue guidance that you're giving for 2008. If I understand correctly, you were expecting about 300 megawatts in output for the year, two-thirds of which would be wafers and a third, which would be done under toll gate. Is that correct?

That's right.

Okay. So I mean --

Well actually, I'm sorry, let me jump on the line here. When we do the calculation, we look at the -- what will be a maximum that we can take from the toll production for example. And then we work out a minimum kind of revenue range. And we feel that for the $400 million would be something that we can achieve comfortably.

Okay. But, I mean at the moment, correct me if I'm wrong, but we're looking at about $2.4 per watt. Is that correct -- for wafers?

Our current -- well we had $2.37 per watt ASP in the fourth quarter and ASPs have been increasing. And the -- we expect that the ASP will continue to increase over the course of this year.

Okay. All right. So we're roughly at $2.4 per watt. So if we said that you produced 200 megawatts of wafers in '08, we're already at $480 million. On top of that, we have to add revenues for 100 megawatt then in toll gate? Is that what I should understand?

Well, Philip, actually as I said that, we made this projection based on the very conservative assumptions and estimates in ourselves.

Right. Okay. Alright. Thank you.

Thank you, Philip.

Your next question is from the line of Edwin Chen with Credit Suisse. Please proceed.

Hey Charles.

Hey. Hi, Edwin.

Yes. Could you remind us what your share-based compensation was in first quarter '07? And what will it be in 2008?

Well we actually have a different number of options we have granted. And the share compensation charge is around $700,000 on a per quarter. Without further increase of the share -- number of share options to be granted obviously and the number will remain. So we do not have a plan to issue additional shares at this moment.

It could be changed. It could change in due course because we are hiring top talents to add to our management team. On the senior level as well as on the mid-management level. So there may be some increase in the future that the share compensation charges will likely increase somewhat.

Thank you. So what was it in first quarter?

First quarter was $700,000.

$700,000?

That's right.

Okay. Thank you.

Your next question comes from the line of Marianne Dolan with Moon Capital. Please proceed.

Hi. Yes. I just want to clarify that 200 megawatt output and the $480 million in revenue. You said that was a conservative assumption, the $480 million. But does that mean that you're feeling differently about your tolling revenue? That something's changing there? Or could you just discuss what's competitively maybe happening or something? Are you more conservative about the tolling revenue?

I'll refer this question to Dr. Li.

We see there's a strong demand for the tolling facility. So we make this conservative estimate for the revenue to reflect the demands for the tolling service. So also we would see -- to us this is important, the key factor here is to determine the tolling service is a target for what makes [a bias] during the tolling facilities.

So in other words, the $480 million, it doesn't have much tolling in it and you'll just be very careful about the margin on the tolling? Is that what you're saying?

Mr. Li has a response.

I think what Mr. Li means is that the absolute product generated per watt in the tolling business will be similar to that generated from wafer business, right? And that's what the company is implying and Mr. Li is implying.

Okay. Great. Thank you.

As there are no further questions in the queue, I would like to turn the call back over to Mr. Charles Bai for closing remarks. Mr. Bai, please proceed.

Yes. Thank you. Again, thank you for joining us today and if you have any further questions, please do not hesitate to contact me or any of our investor relations representatives. Thank you. Bye bye.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.

Portions of this transcript that are noted "interpreted" were interpreted on the conference call by an interpreter present on the live call. The interpreter was provided by the Company sponsoring the event.