Emeren Group Ltd (SOL) 2008 Q4 法說會逐字稿

Good evening and thank you for standing by for ReneSola's Ltd fourth quarter and full year 2008 earnings conference call. At this time all participants are in a listen only mode. After the management's remarks there will be a question and answer session. As a reminder today's conference is being recorded.

Now I'd like to turn the meeting over to the host for today's conference, Ms. Julia Xu, ReneSola's Vice President, Investor Relations. You may proceed.

Hi everyone and welcome to ReneSola's fourth quarter and full year 2008 earnings conference call. My name is Julia Xu and I have recently joined ReneSola as VP of Investor Relations. It is a pleasure joining you all today and I look forward to speaking with all of you much more in the future.

Our fourth quarter 2008 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 presentation which can also be found on our website at www.renesola.com.

With me today are Mr. Li Xianshou, Chief Executive Officer and Mr. Charles Bai, Chief Financial Officer. Charles will be discussing the financial and business results and we will all be available to answer your questions during the Q&A session that follows.

Before we continue please note that today's discussions will contain forward looking statements made under Safe Harbor provisions of the US 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 Annual Report on Form 20F and other documents filed with the US SEC. ReneSola does not assume any obligation to update any forward looking statements except as required under applicable law.

Now, before I turn the call over to Charles, please be reminded that unless otherwise noted, all figures mentioned during this conference call are in US dollars.

It is now my pleasure to introduce Charles Bai, CFO of ReneSola. Charles, please go ahead.

Thanks Julia. Welcome on board. Thank you everyone for participating in today's earnings call. I also want to take this opportunity to thank you for your continuing support and confidence in the Company.

Let's jump into our fourth quarter and full year 2008 financial and business highlights. Following that, I will discuss current market conditions, add some brief color on our financials and provide our outlook for 2009 before addressing your questions during the Q&A session.

If you are following along with our presentation you can turn to page four for the financial and business highlights for the fourth quarter and the full year 2008.

Our fourth quarter and full year 2008 results were released earlier today and I am pleased to announce that despite many challenges in the market during the fourth quarter we were able to effectively adapt to changing market conditions and exceed our net revenue, production output and capacity expansion targets for the full year 2008.

Our full year 2008 net revenues increased nearly 170% year over year to $670m. We successfully executed on our production capacity expansion plan to exceed our target and reach 645 megawatts in ingot and wafer manufacturing capacity. And, we continued to diversify our customer base by increasing our total number of customers from 10 in 2007 to 15 in 2008. We expect the number of customers to reach 25 by mid 2009.

Looking at our fourth quarter business highlights, we continue to see downward pressure on wafer ASPs and gross margins as industry demand was negatively impacted by the broader repercussions of the financial crisis and the seasonality.

Total wafer shipments in the fourth quarter were 101 megawatts, consisting of 58 megawatts primarily from wafer sales and 43 megawatts from tolling arrangements.

Our wafer shipment for full year 2008 was 350 megawatts, of which approximately 228 megawatts was from wafer and ingot sales and 122 megawatts was from our tolling services.

Wafer ASPs decreased from $2.72 per watt in Q3 '08 to $2.16 per watt in Q4.

Full year 2008 wafer ASPs were $2.52 per watt. The decline was primarily due to a drop in demand across the industry value chain brought on by limited end market financing as well as decreasing raw material costs in Q4.

The lower ASPs, along with our $137m inventory write down, had a negative impact on our margins. However, our continued focus on product and process innovation offset some of the margin compression and we made solid progress in our cost cutting measures and capacity expansion during the fourth quarter which resulted in an increase of operating efficiencies.

We reduced our silicon consumption rate to 6.05 grams per watt in Q4 from 6.1 grams per watt in Q3 by reducing crop and kerf losses and minimizing scrap yield during our production process. Based on publicly available information, we believe that ReneSola has one of the lowest silicon consumption rates in the industry.

While we have been continuing in our commercial production of mono wafers with 180 microns in thickness, we started commercial production of multi wafer products with 180 micron thickness during the fourth quarter.

As a result of the higher production efficiency achieved through continual R&D efforts in processing technology innovations, we are now able to more efficiently use many of our consumable materials and spare parts and lower the cost of these items through our aggressive supply contract renegotiation.

Our processing cost decreased to $0.39 per watt during the quarter compared to $0.43 in Q3.

Now please turn to slide number six for a look at our production update.

Regarding our capacity expansion, we completed and commissioned 50 megawatts of multi ingot and wafer capacity on schedule. As mentioned earlier, we now have annualized ingot and wafer production capacity of 645 megawatts, consisting of 325 megawatts annualized mono wafer capacity and 320 megawatts annualized multi wafer production capacity.

We expect an additional 180 megawatts of multi wafer production equipment to be delivered in the first half of 2009, which will bring us to our full year capacity expansion target of 825 megawatts.

We believe that the ramping up of the multi wafer capacity will allow us to realize additional cost synergies and cement our position as the leading low cost wafer producer.

The 825 megawatts full year target represents a strategic slowdown from our previous target of 1 gigawatt. We will look to add to our supply if customer demand increases.

Through our carefully managed expansion plan we will be able to balance our growth and cash preservation over the near term, while giving conditions within the solar industry and the financial markets time to improve.

In conclusion, we want to navigate our path through the storm in a way that does not compromise our long term objectives.

In terms of polysilicon supply we have been phasing out the use of scrap silicon material as primary feedstock and will rely on virgin polysilicon going forward. Virgin polysilicon is currently primarily supplied under various supply contracts, for which the pricing terms are primarily set based on spot prices.

We will have an even more diversified feedstock supply once our Sichuan polysilicon project is operational starting from the middle of this year.

The first phase of our in-house Sichuan polysilicon production facility is progressing smoothly, with mechanical completion expected at the end of the second quarter of 2009, followed by the mechanical completion of the second phase at the end of the third quarter of this year. Each phase of the development represents polysilicon production capacity of 1,500 metric tons.

For a look at the current market conditions please turn to page nine of our presentation. As we mentioned during our Q3 earnings call, during November and December last year, some of our customers were having difficulties fulfilling their contractual obligations for scheduled wafer purchases while they dealt with weaker demand from their own customers, along with the falling module prices and excessive inventories.

From our observations at this time, the trend seems to be continuing. However, demand for our quality wafer product remains strong given the circumstances. Our agreement with BP Solar for 125 -- 120 megawatts of solar wafers in 2009 combined with other wafer contracts provides us with contracted sales of 550 megawatts in 2009 out of our projected wafer shipment of 620 megawatts to 670 megawatts.

As part of our strategy to deal with the negative impact from weakened customer demand, we have strengthened our efforts to increase sales to international market by further diversifying our customer base in these markets. We are concurrently in negotiations with several cells and module manufacturers across key markets, and we hope to increase our sales backlog to at least 650 megawatts, the mid-point of our guidance range in the next couple of months, with 40% of sales for the first half and the remaining 60% for the second half of the year.

For the full year 2009 our total CapEx is expected to be around $210m, of which approximately $160m is earmarked for the Sichuan polysilicon project and the remaining $50m will be used to expand our wafer capacity. The CapEx is largely front loaded with approximately $180m allocated for the first half of the year.

Our cash position is healthy with $112.3m in cash and cash equivalents carried forward from 2008.

Our new credit line combined with the existing credit facilities provide us with approximately $450m in aggregate of which approximately $292m have been drawn. We believe liquidity preservation is a top priority in this environment. For this reason we have been in discussion with commercial banks for additional mid to long term financing facilities to increase flexibility in our liquidity management.

Moving to page 10 of our presentation and some of our thoughts on 2009.

We remain confident in the mid to long term prospects of the industry and believe that ReneSola is well positioned to ride out the storm through our continuous focus on cost reduction, strong R&D initiatives, prudent expansion in line with market demand, solid cash position and a significant pre-sold output for the year.

For example, one of our R&D initiatives is to produce high efficiency mono wafer with conversion rate of over 17.5% which is expected to be commercially ready in the second quarter of this year.

On cost reduction, we will continue innovating to find new ways to utilize raw materials and consumables more efficiently and to drive down processing costs through improvements in recharging system, reduction in kerf loss and further increasing yield from wafer slicing, together with technology innovations to reuse some of the consumables.

On efficient use of our raw materials, we have set a target of reducing 2% to 3% of the silicon consumption rate from our current level by the end of this year. Likewise, for the processing costs, we aim to drive this down by up to 20% from the current level of $0.36 to $0.37 per watt. We will obviously continue to control OpEx through expense control measures.

On the mid to long term demand outlook, aside from key solar markets such as Germany, we are also excited by the increasing popularity of solar in markets such as Japan and the United States. With the central and local governments of Japan planning to offer subsidies and the power utilities projected to start buying excess power from customers in 2010, demand for solar in Japan is expected to rise.

We were also happy to hear President Obama online during his speech to Congress, that as a part of the recovery plan, the US will double the amount of renewable energy available over the next three years.

I will now spend a few minutes going through our financial results in more detail before moving on to our 2009 guidance. Please turn to slide 13 of our presentation.

Net revenues for the Q4 '08 were $158.6m, a decrease of 36.1% sequentially and an increase of 65.2% year over year. The sequential decrease in the fourth quarter revenues was due to the increased tolling services from 32% of the total shipment in the third quarter to 42% in the fourth quarter and a decrease in ASPs in the quarter.

Full year 2008 net revenues were $670.4m, an increase of 169.3% year over year. The rise in full year 2008 revenues was primarily attributable to an increase in output from our expanded production capacity which grew from 378 megawatts at the end of 2007 to 645 megawatts at the end of 2008, and an increase in wafer ASPs during most of the year.

Gross loss for the Q4 '08 was $130.1m compared to Q3 '08 gross profit of $45.8m and Q4 '07 gross profit of $19.6m. Excluding the inventory write downs, the gross profit for the fourth quarter of 2008 was $6.9m.

Full year 2008 gross loss was $14.3m, compared to gross profit of $53.5m for full year 2007. Excluding the inventory write down, the full year gross profit was $124.1m.

The gross margin for the Q4 '08 was a negative 82% compared to positive 21.2% in Q3 '08 and a 20.4% in Q4 '07. Excluding the inventory write down, Q4 '08 gross margin was positive 4.4%. The decrease in gross margin was mainly attributable to the rapidly falling price of wafer ASPs during Q4 '08.

Full year 2008 gross margin was negative 2.1% compared to positive 21.5% for the full year 2007. Excluding the inventory write down, gross margin for the full year 2008 was positive 18.5%.

Q4 '08 operating loss was $140.1m compared to operating profit of $36.9m in Q3 '08 and $15m in Q4 '07. Excluding the inventory write down, Q4 '08 operating loss was $4.1m.

Full year 2008 operating loss was $46.5m compared to operating profit of $43.4m for 2007. Excluding the inventory write down, the full year 2008 operating profit was $91.9m.

Q4 '08 operating margin was negative 89% compared to positive 17.1% in Q3 '08 and 15.6% in Q4 '07. Excluding the inventory write down, Q4 '08 operating margin was negative 2.6%.

Total operating expenses in Q4 '08 increased to $11m up from $8.9m in Q3 '07 -- I'm sorry in Q3 '08.

Full year 2008 operating margin was a negative 6.9% compared to a positive 17.1% for full year 2007. Excluding the inventory write down, full year 2008 operating margin was positive 13.7%.

We recognized a tax benefit of $17.9m in Q4 '08. For the full year 2008 we recognized a tax benefit of $2.1m down from $6.2m in 2007. The tax benefit was lower in 2008 due to a new tax law which stopped providing tax credits for the purchase of domestic equipment after January 1, 2008.

Net loss during the fourth quarter of 2008 was $126.6m compared to net profit of $32.4m in Q3 '08 and $17.5m in Q4 '07. Excluding the inventory write down, Q4 '08 net loss was $6.8m.

Full year 2008 net loss was $53.3m compared to $42.9m for 2007. Excluding the inventory write down, full year 2008 net profit was $67.9m.

That brings us to our guidance for 2009 on page 16 of our presentation.

For the full year 2009 we estimate net revenues to be in the range of $650m to $700m and a full wafer shipment of between 620 megawatts to 670 megawatts. We expect to achieve wafer manufacturing capacity of 825 megawatts by July 2009.

We expect gross profit margin for 2009 to be in the low to mid teens given the mixed market conditions. On a positive front, further reductions in raw material costs due to lower in-house polysilicon production costs and expected downward spot polysilicon prices in 2009 and the second, below spot long term polysilicon purchasing contracts and supplementary spot polysilicon purchases.

However, wafer ASPs are expected to move in the short run to mirror spot prices due to recent market volatilities even though our long term existing sales contracts have net -- have fixed pricing terms.

At this time we are happy to take your questions. Operator.

(Operator Instructions). And our first question comes from Sanjay Shrestha from Lazard Capital Markets. Sanjay, you may proceed.

Hello, this is Jenny calling for Sanjay. I have two questions.

First of all can you give us more color on the 550 megawatts sales contract in '09, for example the breakdown of geographics? And also can you -- have you included the possible delay of some customers?

(Interpreted). At the current moment the domestic sales for ReneSola is around 40% whereas export market is about 60%. We have dramatically increased our export sales. Yes, we do expect some delayed shipment. However this is counterbalanced by our increase of our customer base. We have increased our customers from 15 to 25 at the moment.

Also this quarter the OEM percentage has increased. Do we expect a similar break out between OEM and wafer sales in the future?

I will take this question. If we look at -- last year our wafer OEM business was -- has higher percentage whereas in this year we're looking at around 25% of our total shipment in the form of wafer services, tolling fees services.

And lastly, just the -- can you give a sense of the average polysilicon cost in the fourth quarter and also your estimate for the first quarter?

(Interpreted). In Q1, the polysilicon price continued to drop. And all I can say is at the moment it's around $110 to $120.

And what's the -- for the fourth quarter?

(Interpreted). In Q4 the price was $150 to $180. That's the retail spot market.

Okay, thank you.

And our question comes from the line of Lu Yeung from Bank of America. Lu, you may proceed.

Hi Charles. Hi Xianshou Li. Can you remind us what is the mono and multi split in the fourth quarter and what it is going to be in the first quarter?

We have pretty much an equal split of mono and multi in the fourth quarter last year.

Okay.

For -- we expect to continue that equal split in Q1 this year although we see there's a slight increase of multi versus mono in the mix.

I see. Also on the tolling fees, obviously the wafer prices have been coming down. Can you comment on the tolling fees? Is that more resilient or it is similar fashion as the wafer prices?

(Interpreted). Yes, the tolling gross margins should be higher.

Obviously, Lu, may I just add one point here. I think that going forward we obviously expect, or budget a declining tolling fee income for the remainder of this year. You know steady or minor due to potentially increased competition.

I see. Also on the -- you said you'd been adding new customers and also your split to the export market is increasing. Can you tell us whether these are the tolling business that's mostly shipped to overseas customers or wafers?

(Interpreted). Most of the tolling business is for export market.

I see. That's all the questions I have. Thank you.

And our next question comes from the line of Arch Pei from JL McGregor. Arch you may proceed.

Thank you for taking my questions. First, I want to know whether you could tell us how much -- how many of your customers are bigger or Tier 1 cell and module players? And how many of your customers are Tier 2, Tier 3 or smaller cell and module players?

And among your guidelines -- guidance of 2009, 620 megawatts to 670 megawatts how much of this will be from tolling business?

(Interpreted). Okay. It is quite difficult for me to differentiate Tier 1, 2 and 3 accounts because they are actually fairly close in terms of sales. However, I can tell you that top five customers represent less than 50% of our total sales. And in terms of tolling we expect about 25% of the 620 megawatts to 670 megawatts belongs to tolling business.

And my next question we have seen a strange -- a strange scenario is that in the Chinese market and as well as in the world market mono crystalline wafers prices are lower than that of multi crystalline wafer prices. And maybe the mono wafers are 20% or 10% lower than the prices of multi wafers. Do you think it is sustainable and why is it lower?

(Interpreted). One of the reasons yes, you have cited that mono is cheaper than multi. However it's not, the magnitude is not as big as you have described. And the reason for that is the mono wafer is actually slightly thinner, also uses less polysilicon.

And regarding your inventories, can you give me some color about how much of your -- how many of your inventories are raw material, how many of them are in progress and how many of your inventories are finished goods?

(Interpreted). The raw material is around 50% of the total inventory.

Arch, let me just add some color here. Out of Q4, end of Q4 we have -- primarily we have around 70% of our inventory is in raw material. And we had about 10%, around 10% is in finished goods and remaining, probably 15% is work in progress.

And I have a last question that your accounts receivable increased a lot from around $3m in Q3 to around $43m in Q4. And do you feel comfortable with that number of receivables, and is it necessary to take a receivable provision sooner or later do you think?

Just give a sec. I'm looking at the numbers.

(Interpreted). Yes actually this phenomenon is mainly attributable to the fact that in Q4 market conditions was less than optimal. Therefore, some of the payments were delayed and we got most of these payments in Q1 of 2009.

Thank you. Thank you very much. Thank you for taking my questions.

Thank you Arch.

And our next question comes from the line of Jesse Pichel from Piper Jaffray. Jesse you may proceed.

Hi. This is Judy for Jesse. For the 550 megawatts pre-sold, what is the pricing look like. Also, where do you see the ASP heading to the end of this year? And then I have a quick follow up.

(Interpreted). Yes, although most of our 550 watt presold megawatts were of a fixed price. However there is a pretty big discrepancy between the market price and the contract price. So a lot of contracts are being renegotiated.

Okay.

(Interpreted). Okay. In Q1 our ASP was $1.3 per watt, and we expect that to further decrease by 20% by the end of 2009.

Great, thanks. So for the Sichuan polysilicon plant, what do you think the cost per kilo will be this year and what will be the production for this year?

(Interpreted). The initial cost for our Sichuan poly plant is around $60 per kilogram. And we expect to produce 600 to 800 metric tonnes by the end of this year.

Lastly, have you been contacted by the government as part of the government's plan to consolidate the industry, because we've heard that from some of the companies in our industry contacts in China?

(Interpreted). No, we have not got that guidance from the government.

Great, thank you. That's all my questions.

And our next question comes from the line of Vishal Shah from Barclay Capital. Vishal you may proceed.

Yes. Thanks for taking my question. On the receivables, how should we think about receivables in the first quarter? You're already close to the end of the first quarter, so are receivables going to remain this high, or are they going to come back down to where they were?

Vishal, actually we have seen the receivable level have come down dramatically. We have put in different measures in terms of many of the terms with the customers and we do not extend credit terms unless we are 100% sure that we get paid. And we, as I said earlier, that we have seen the level has come down drastically. But it maybe higher than what we had in Q3, but the level should be pretty low.

Okay. And based on your outlook for silicon prices for the rest of the quarter, do you expect to take another write down in the first quarter?

(Interpreted). Okay. We have taken our inventory per kilogram price down to $140 to $150 although the market spot price is around $120 per kilogram. But as we move into Q2 we believe that our purchasing is around $120 to $130. So we are comfortable with our margins, therefore we're not going to write further down due to the net realizable values.

Okay, great. Now you said you're going to spend most of your CapEx or a large majority of your CapEx in the first half. I know you've got some cash and credit lines, but do you have any other plans to pay for the CapEx? It is what, $180m you said in the first half?

Yes Vishal. I'll give you some light here. The total facility we have here from banks is about $450m and of which we have drawn $292m, which I described earlier. So remaining credit facility available for us is about $158m. And our total CapEx for the whole year, as I said, is about $210m and actually the bulk of that is about $180m is going to be in the first half.

In fact out of this $180m we have spent some of it. And so the CapEx for the remainder of the year is about $144m. So this $144m against a credit available of $158m and so we still -- net-net we still have got $14m from the banks.

And we have been -- we do realize that the credit management is critical. And we have been working very hard with local banks to increase -- there are two things. One is to increase credibility and the second is to restructure the short term money into a longer term money. And most of our credit facility available today is in the short term. And so we're in the process of restructuring it to have the tenure longer than two years.

And what are some of the things that the banks are looking at to restructure some of these facilities to longer term? Are they looking at the balance sheets or looking at income statement or some other metrics?

Well they're looking at different things. They're looking at, essentially, operating performance of a particular company. And obviously their decision is also probably made on the macroeconomic situation. So we have been working through different ways with them in the last few months. So there is a likelihood that we can extend the tenure from a short term of one year to a tenure beyond two years money.

Okay. And on your balance sheet your advances from customers also went down quite a bit. Anything particular over there, or are they just taking deliveries and not paying cash right now?

No. They're still paying cash and -- or in the form of bank draft and different form of payment instruments. What happened here is that you know Vishal, it's very unlikely and it's very difficult for us to collect or demand a prepayment from customers given the circumstances. And so we do expect that our prepayments will be gradually reduced over time along with the stage of delivery. So typically it is a percentage of the total delivery to be credited against the delivered value.

Okay. And can you comment on what your Q1 shipments and gross margins are going to look like?

(Interpreted). We expect shipment in Q1 to be between 100 and 105 megawatts. And we expect our gross margins to be between 12% to 15%.

12% to 15% gross margins?

(Interpreted). Yes.

Vishal let me add one point on the prepayments. Actually the prepayments we split into two parts. You see these around the current liability advances from customers. Obviously there is a drop, from $152m in Q3 to $50m approximately in Q4. Whereas however, when you see these advances from customers under long term liability, you see it is about $105m which is categorized in the long term liability. Obviously, as I said, the number is expected to go down gradually over time.

Okay. Okay, great. Very good. Thank you very much.

Thank you Vishal.

(Operator Instructions). And our next question comes from the line of Mark Davis from Panmure Gordon. Mark you may proceed.

Hi everyone. Thanks for taking my questions. The first one is going back to the tolling and wafer split. Can you tell me how you perceive the BP Solar contract to be? Is that a wafer contract or is that OEM?

BP contract is an OEM contract.

Okay. So that, based on your forecast for next year that seems to be taking up almost 20% of your wafer sales if we look at your 645 megawatts of shipment. That's almost 20% of those shipments. So I'm just wondering, you've only got another 5% room in terms of tolling revenues and that's --

(Multiple Speakers).

Yes, we do. We have a couple of customers also are requesting and we have been doing tolling with them. So we don't feel 25% of that mid-point of the 650 megawatts is a challenge frankly.

Okay. I understand that. I'm just trying to reconcile something which is that your tolling revenues as a proportion of the whole was 40% in Q4. And it's going to go down significantly for the year ahead, when your strategy of increasing international sales is fairly clear, but that's going to be skewed towards tolling contracts. So I'm just trying to square the circle here. And it seems to be something that -- I just can't quite get it. So you're going to be getting a lot of wafer contracts coming through this year which are going to offset any decline in your tolling contracts. That's what you're saying?

(Interpreted). Yes you're right actually, with regards to our international strategy as well as our tolling business. Our tolling business is going to be about 25% of our total sales. However, there is a slight shift in the tolling model. And at this very difficult time what we are doing is we are working together with our customers. We are supporting our customers. At the same time contracts -- in addition to doing the tolling business we are also adding additional wafer business.

In other words also some of our export business is -- we use -- is more of a custom terms for -- in China. It is basically we import the materials and then we do the processing work and we re-export. So this is part of our export work. And that is different from the tolling business you are thinking. So some of that is our export work yet not characterized as the tolling business. Is that clear to you?

And does that get the same sort of pricing as your wafer model?

What we're saying is export business is more than the tolling business, because that's inclusive of some of the customers giving us the raw materials. We process it and we re-export.

Okay, fine.

And that is not the additional tolling business that we are talking about, which is 25% of our total sales.

Okay, thanks. I've got two further questions. One is, Charles, could you just give us an update on the interest coupons that are on your various debt and credit facilities.

Okay. On the convertible bonds, the bonds carry 1% coupon annual rate. And on the project loan which recently borrowed from Construction Bank, China Construction Bank, currently has the rate of 6.3%. On the short term money we're looking at 5% on an annual basis.

Okay, great. And then just finally, did I hear correctly earlier that the ASP -- I can't remember what time it was, whether it was in the last couple of months or around about now -- was $1.3 per watt and was going to go down by a further 20% this year. Or was it meant to be $2.3 per watt.

You're right, $1.30 per watt at the current price and go down another 20%.

Right, okay. Thanks very much.

And our next question comes form the line of Pam Li from Noble. Pam, you may proceed.

Yes hi Charles. I've just got two questions. Going forward what kind of value would you assign to inventory. I realize you have about $140 to $150 right now. So would this be the value you'd be expecting going forwards?

Could you repeat your question? Sorry.

Sorry. Going forwards at what value would you be valuing your inventory?

Well the inventory, we have actually, Mr. Li pointed out earlier that up to right now our poly cost are right now is about $140 to $150 per kilo.

Right. So should we assume that it will be valued at around $145 per kilo going forward?

Well actually Mr. Li also went further saying that the poly cost is expected to go down further.

Yes.

In the remainder of the year.

Okay. And my second question was about the $450m of facility you have talked about. As I understand that, that doesn't include the $117m facility you -- I mean the five year loan facility you just got right?

That's right.

Okay. In addition to the $450m of short term facilities you have a five year facility of $117m?

Well the $450m includes the $117m five year project loan from Construction Bank.

Okay. Okay, thank you. That's my questions basically. That's all. Thank you.

Thank you.

At this time we are showing no further question available. We are now approaching the end of the conference call. I would now turn the call over to ReneSola's Chief Financial Officer Mr. Charles Bai for his closing remarks.

In summary we believe that many of the challenges within the industry will be short lived. And while we will continue to prudently manage our business to ensure our long term competitiveness, are excited about the opportunities that will come out in 2009 as ReneSola makes its contribution towards achieving great parity.

Again, thank you for joining us today. If you have any further questions please do not hesitate to contact me or any of our Investor Relations representatives. Thank you.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good 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 this Event.