Emeren Group Ltd (SOL) 2009 Q4 法說會逐字稿

Hello, ladies and gentlemen. Thank you for standing by for the ReneSola Limited fourth quarter and full year 2009 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. As a reminder, today's conference is being recorded. I would now like to turn the meeting over to your host for today's call Ms. Julia Xu, ReneSola's Vice President of International Corporate Finance and Corporate Communications. Please proceed.

Thank you. Hello, everyone, and welcome to ReneSola's fourth quarter and full year 2009 earnings conference call. Our fourth quarter and full year 2009 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. While Mr. Li will discuss our business highlights and strategy, Charles will go through the financials and guidance. And both 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 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 20-F and other documents filed with the US Securities and Exchange Commission. ReneSola does not assume any obligation to update any forward-looking statements except as required under the applicable law.

Before I turn the call over to Mr. Li, 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 Mr. Li Xianshou, CEO of ReneSola. Mr. Li will give his remarks in Mandarin and I will translate into English. Please go ahead, Mr. Li.

(Interpreted). 2009 was an important year for ReneSola. Despite a challenging overall environment, we made considerable progress in the growth of the Company and transforming the Company to become one of the global most cost-competitive, leading wafer manufacturers with integrated solar module OEM capability.

We ended the year with a historical high in wafer shipment volume and lowest wafer conversion cost in Company's history. The shipment volumes in fourth quarter and full year 2009 that exceeded guidance demonstrates our worldwide market share gains through continued cost structure improvement in an improved industry demand environment.

We continued to execute our strategy to enhance our competitive platform, build on product quality, manufacturing capability, technology and brand recognition in our wafer business, supported by expanded downstream OEM service offerings. These integrated OEM services are allowing us to capitalize our increasing demand for our high quality products by leveraging and strengthening our core wafer customer relationships to further drive revenue growth. Our revenue and volume growth is a direct result of strong execution on our strategy to become one of the most cost-competitive leading wafer manufacturers in the world with integrated solar module OEM capability.

Our two recent solar module OEM contracts represent important milestones for ReneSola, and demonstrate our ability to capitalize on our solid relationships with existing wafer customers to win additional OEM business. Please turn to page four on your presentation.

We accomplished record shipment in Q4 2009. Our shipment of 202.9 megawatts doubled our product shipment of 101 megawatts in Q4 of 2008. Full year 2009 shipments also increased to 526.6 megawatts, up 50% over full year 2008 shipments of 350.1 megawatts. The growth reflects broader market demand improvement during the quarter and our market share gains. With customers spanning across America, Europe and Asia, we estimated that we held around 8% to 9% of global market share in solar wafer production in 2009 and we expect to increase our market share to between 11% to 12% in 2010.

We made significant progress to achieve the production cost targets provided in the last earnings call. During the quarter we continued to focus on our strategy to drive down our production costs, with average wafer conversion costs in the quarter of $0.34 per watt, down over 10% from the $0.38 per watt in Q3 of 2009, as a result of continuing implementation of various cost reduction initiatives.

We expect to further reduce our processing costs to $0.30 per watt in Q1 2010, of which we expect our multi PV crystalline wafer processing costs to be reduced to $0.25 per watt. Coupled with closer to spot price polysilicon costs and low silicon consumption rate, we aim to reduce overall wafer costs to $0.50 per watt by the end of 2010 in order to maintain profitability in a declining ASP environment in the future.

Wafer ASP reduction continued slowing compared to previous quarters, declining from $0.86 per watt in the third quarter in 2009 to $0.80 per watt in fourth quarter. We have witnessed a strong demand for wafer in first half 2010, and expect an increase in wafer ASP to a range between $0.80 per watt and $0.85 per watt. However we remain cautious in view of German feed-in tariff cuts in second half this year and expect wafer ASP to decrease by 10% to 15%, and module ASP to decrease by over 20%.

With high cost raw materials being completely worked through by Q4 of 2009 we expect polysilicon costs to be below $60 per kilogram in Q1 2010 and to be below $50 per kilogram by the end of this year.

We expect gross margin to be in the range of 16% to 18% for Q1 of 2010 and 17% to 20% for the full year 2010.

Let's turn to the next page for an outline of our business updates and strategy. First on polysilicon. Phase 1 of our 3,000 metric tonne polysilicon manufacturing facility started trial production in July 2009 with production outputs of approximately 194 metric tonnes in 2009, just below our previous estimates of 200 metric tonnes due to continuous system testing and trial runs. Production costs was higher than previously expected, attributable to continuous trial runs, system testing, outsourced TCS and minimal activated hydrogenation process.

With mechanical installation of TCS and hydrogenation equipment completed and to be integrated to the manufacturing system, trial production of integrated closed loop manufacturing for Phase One is expected in March 2010. Production costs are expected to reach $40 per kilogram by the end of 2010. Meanwhile Phase 2 has started partial test runs and should integrate with Phase 1 through a number of stages over the next few months. We expect the plant to produce a total output of 1,500 metric tonnes to 1,900 metric tonnes for the full year 2010.

Secondly, we have recently signed two OEM agreements. In the first agreement which commences in 2010, ReneSola will provide 600 megawatts of solar modules to a major global solar company over a period of three years. In our most recent agreement, ReneSola will provide 62 megawatts of solar modules to another major global solar company in 2010. We expect to ship 15 to 20 megawatts of modules in Q1 of 2010, 45 to 55 megawatts in Q2 of 2010 and over 150 megawatts in second half of 2010.

With the strong demand in Q4 trending into 2010, the solar industry has been seeing stabilizing pricing. We have witnessed a tight supply in wafers with customer orders far exceeding our manufacturing capability. The wafer segment has seen price rebound for the first time since the third quarter of 2008. In addition the anticipated German feed-in tariff cut, which is expected to commence on July 1, 2010, will continue to favor low cost Chinese producers such as ourselves to continue to gain market share as the OEM trend accelerates.

We have been operating at a full wafer manufacturing capacity of 825 megawatts since September of 2009. By Q2 of 2010 we intend to increase our wafer production capacity by an additional 220 megawatts to 1,045 megawatts of installed wafer capacity.

As of December 31, 2009 we had annual solar cell and module manufacturing capacity of 120 megawatts and 135 megawatts. Although we are confident of our industry demand in 2010 we have taken a prudent approach in capacity expansion. We target to increase module manufacturing capacity to 375 megawatts while reducing cell capacity expansion targets from the previously announced 360 megawatts to 240 megawatts.

Now I'd like to turn the call to Charles who will discuss the financial results for the quarter.

Thank you, Mr. Li. Hello to everyone on the call. Please turn to slides 11 through 13 of our presentation for a snapshot of our financial results.

Net revenue for the fourth quarter of 2009 exceeded revenue guidance and were $159.9m, (sic - see presentation) an increase of 20 -- 27.7% sequentially. The increase in net revenue from Q3 was primarily driven by shipment volume increases in both wafers and modules. Although total solar product shipments were in increase of 50.4% year-over-year, the full year 2009 net revenue were $510.4m, a decrease of 23.9% year-over-year. The decrease was attributable to the significant reduction in wafer ASP.

Operating loss for the fourth quarter was $20.5m. This compares to operating loss of $7.8m in the second quarter. The total operating expenses in the fourth quarter were $25.3m up from $12.5m in the third quarter. The increase was primarily attributable to a receivable provision of $14.6m against doubtful receivables from Linzhou Zhongsheng during the quarter.

Let me spend a minute to explain the provision. As previously announced, the Company sold its 49% equity interest in the joint venture between the Company and the Zhongsheng Steel Company Limited, and we call it the JV partner here. And we sold this equity interest to the JV partner in September 2008 at a total consideration of CNY200m under certain conditions. The agreement was amended in December 2008 stipulating that, of the total consideration payable to ReneSola, CNY40m would be paid in cash and remaining CNY160m would be paid either as a credit through a discount to spot market price against a future delivery of polysilicon from Linzhou Zhongsheng, or in cash, at the Company's discretion.

However, Linzhou Zhongsheng stopped delivery early 2009 after it had delivered some of the polysilicon and continued to fail its obligation since then. And the Company has decided to take action to collect the receivables in cash and to make provision against the doubtful receivables accordingly. As the provision is one time, we expect operating expenses in Q1 2010 should be around 8% to 9% of the net revenue.

Total operating expenses for the full year 2009 were $53.3m, up from $34.2m in 2008.

Full year 2009 operating loss was $90.6m compared to operating loss of $48.5m in 2008. Adjusted operating loss for the full year 2009 was $4.7m excluding inventory write-downs and the Q4 2009 doubtful receivable provision.

Fourth quarter operating margin was a negative 11.3% (sic - see press release) compared to operating margin of negative 5.5% in the third quarter of 2009. While full year 2009 operating margin was a negative 17.7% compared to negative 7.2% in 2008. Adjusted operating margin for the full year 2009 was a negative 0.9%.

We recognized a tax benefit of $2.6m for the fourth quarter compared with $1.4m for the third quarter of 2009. For the full year 2009 a tax benefit of $36m was recognized, up from $2.4m in 2008.

Net loss attributable to the holders of ordinary shares for the fourth quarter of 2009 was $19.9m, compared to a net loss of $10.2m for the third quarter of 2009. This translates into losses of $0.12 per ordinary shares and $0.23 per ADS for the fourth quarter of 2009. Adjusted net loss was $5.3m translating into losses of $0.03 per ordinary shares and $0.06 per ADS for fourth quarter of 2009.

Net loss attributable to the holders of ordinary shares for the full year 2009 was $63.7m compared to a net loss of $54.9m for the full year of 2008. This translates into losses of $0.43 per ordinary shares and $0.86 per ADS for the full year 2009.

Adjusted net income was $22.2m translating into earnings of $0.15 per ordinary share and $0.30 per ADS for the full year 2009.

Let's turn to page 13 of the presentation to take a closer look at our balance sheet. As of December 31, 2009 the Company's bank debt comprised of approximately $344m in short term borrowings, a slight increase from $312.6m in Q3, and approximately $203.9m in long term borrowings, another slight increase from $170.7m in Q3. The total bank borrowings were increased by approximately $64.6m. At the end of Q4 we had $32.5m in convertible bonds down from $99.3m at the end of Q3 and a cash balance of approximately $106.8m on our book.

As of today we have approximately $668m in committed credit lines, of which approximately $548m is drawn and $120m is undrawn.

On the topic of CapEx let's turn to page 14. For the full year 2009 our capital expenditure cash spending totaled $239m. This was mainly due to investments made in capacity expansion at our Jiashan wafer manufacturing facility, Phase 1 and Phase 2 of our polysilicon manufacturing plant in Sichuan province, capacity expansion costs at JC Solar and acquisition costs of JC Solar.

With continuous improvement on processing technology and the technical modifications of our wafer manufacturing equipment by our technical department, we have been trying to increase our wafer manufacturing capacity without incurring significant additional CapEx. And we have seen the benefit of such effort. We will continue to do so in 2009 -- in 2010. As such, the incremental increase in wafer capacity from 825 megawatts to 1,045 megawatt is not expected to incur significant increase in CapEx.

Capital expenditure spending for 2010 is expected to be approximately $125m. Of course we will stay prudent and cautious on CapEx and we will closely monitor the market demand situation before CapEx is incurred.

Now please turn to our guidance on page 15. We are encouraged by the robust demand and stabilized upstream pricing witnessed at the beginning of 2010 and expect such resilience to continue throughout the first half of the year. I'm happy to announce that we expect total product shipment for the first quarter of 2010 to be in the range of 215 megawatts to 230 megawatts. And the revenue to be in the range of $195m to $205m.

While the ASP of solar products are expected to trend relatively stable in the first half of 2010, we expect wafer and module prices to drop by 10% to 15% in the first -- in the second half of 2010. For the full year 2010 we should be total shipment of 900 megawatts to 950 megawatts.

As Mr. Li pointed out earlier, we expect to return to profitability in the first quarter of 2010, with a gross profit margin in the range of 16% to 18% while achieving an average gross profit margin of 17% to 20% for the full year 2010. As Mr. Li pointed out earlier we also aim to reach capacities of 1,045 megawatts of wafer, 240 megawatts of cell and 375 megawatts of module manufacturing capacity by the end of 2010.

This concludes my remarks. And at this time we're happy to take your questions. Operator.

Thank you. (Operator Instructions). Stand by for questions. The first question comes from the line of Vishal Shah with Barclays Capital. Please proceed.

Yes. Thanks for taking my question. Charles, I wanted to just talk to you about your market share assumptions. You said that you want to be around 11% market share by the -- in 2010. What do you think the third party wafer market would look like in 2010? Do you think it's going to be -- it's going to grow at the same rate as the overall industry, because a lot of your -- a lot of the customers are in-sourcing wafer manufacturing as part of their vertical integration strategy.

Okay. Thanks, Vishal. And I'll refer this question to Mr. Li.

Your next question comes from the line of Lu Yeung with Merrill Lynch. Please proceed.

Sorry, Lu, Mr. Li has answer a question addressed and Julia is going to translate.

Sure.

(Interpreted). Let me answer this question from two angles. Number one is we do expect our shipment to about 950 megawatts. And we expect the global demand to be in the range of 800 to -- between 8 gigawatts and 9 gigawatts. This puts us to about 11% to 12% global market share. And secondly, we have also witnessed many of the vertical integrated companies are starting to reduce its wafer manufacturing capabilities. They are not targeting for a fully balanced vertical integrated model.

That's helpful. Now, I want to just follow up on two other things. One is your assumptions for gross margins. It seems like, based on what you're saying for your non-silicon costs and ASPs, margins should be above 20%. So can you maybe give us what your poly assumptions are and why do you think margins are going to be less than 20%?

(Interpreted). That is due to we do expect about $4m of losses coming out of Sichuan plant.

$4m negative impact from the poly plant?

From the poly plant, correct.

Okay. And what are your ASPs for the OEM modules in Q1 and Q2?

(Interpreted). Due to customer sensitivities, sorry, we can't really disclose ASPs on our OEM contracts. One guideline we can give is the gross profit dollar amount per watt is between $0.10 to $0.15 per watt.

Thank you so much.

And now your next question comes from the line of Lu Yeung. Please proceed.

Hi. I have a question on ASP. You talked about the module ASP probably dropped faster than wafers. And you talked about the capacity by other players in wafer is probably slower than the cell modules. If that's the case, can you help us understand why the cell modules pricing is going to drop faster? Is this mainly due to the euro exposure? Can you help us understand that?

(Interpreted). Last year, the upstream players didn't fare very well. That was largely due to a supply and demand imbalance. However, as we enter into 2010, we have clearly experienced a tight supply in the wafer segment. We do expect that to continue probably until October of this year.

And many of the wafer companies, the smaller companies are having very difficult times in making a profit. Even at today's environment, the wafer segment profitability is still relatively low. However, if you look at the module segment, it recovered first in 2009 and it still has relatively high profitability. So in an increased competitive environment we do expect that profitability to decline faster than the wafer segment.

How many megawatts of cell module shipments do you expect to ship in 2010? And what kind of margins -- do you think the margins of the OEM agreements to be higher or lower than your wafer margins? And whether your OEM customers actually command an ASP premium in their margins? And then can you quantify their premium?

(Interpreted). When we do -- when we contract the OEM business, obviously our end customers are finding our pricing more competitive as compared to if they were to manufacture themselves. In terms of the -- also for the OEM business, the margin is relatively stable, less affected due to the market volatility.

However, I must stress that OEM services is not our core business. Our core business still remains in the wafer segment. We wanted to leverage our OEM platform in order to increase our wafer sales and increase our market share in the wafer segment. So therefore for 2010 we still believe and expect the majority, the bulk of our profitability will come from our wafer segment. For the full year, we expect shipment in the modules of over 200 megawatts.

And how much do you guide for your wafer shipment in 2010?

200. Over 200 megawatts.

For wafers?

Sorry.

(Interpreted). Our full year shipment is about 900 to 950 megawatts. So if you were to subtract the 200 megawatts that we expect in modules, the remaining is our third party wafer sales.

Okay, all right. Thank you.

The next question comes from the line of Sanjay Shrestha with Lazard Capital. Please proceed.

Great, thank you. First of all, congratulations, Charles and congratulations, Julia, on the promotion here. A couple of quick questions, guys.

So out of that 200 megawatt module sales, so 62 megawatt of that I guess in 2010 is going to be the OEM type sales. My question to you guys is I know wafer is a core business and OEM is more strategic. But over time given what's going on in the world and everybody especially the European players having to reduce their cost, how do you guys see that OEM business expanding for you?

(Interpreted). As a matter of fact, if you look at our customer demand in first half, we actually have seen over 300 megawatts in the module demand coming from our customers. But we are bound by our capacity constraints, therefore we cannot satisfy all our customers' demands. And also we wanted to be prudent in view of the -- a little bit of lack of visibility in the second half of 2010.

Having said that, I firmly believe OEM offers tremendous market potential. Many -- as you all know, the solar industry investment is still a high capital intensive industry. Many of the European and US companies are willing and beginning to shift their manufacturing requirements into low cost regions such as China. And even many of the branded companies in China are also wanting to focus more on the system and branding and gradually giving up on the manufacturing aspect of the supply chain.

I got that. So one point of clarification. I just want to make sure that I'm reading this slide correctly, that's slide eight here, where you guys talk about 2010 OEM contracts, 600 megawatts of solar module '10 to '12, 62 megawatts in '10, 15 to 20 megawatts in Q1, 45 to 55 megawatts in Q2, over 150 megawatts in the second half. Is that 150 -- what is that 150 megawatts in the second half? So then if that's the case, it sounds like all of your module business is really going out as an OEM not a direct sale from ReneSola. I just want to make sure that I'm understanding that right.

(Interpreted). Yes, you are right, Sanjay.

Okay. That's -- I wanted to make sure. And one quick -- two follow-up questions. So in terms of your wafer sales, can you give us a sense of your customer mix from the -- how much of that is going, where is that going from the geographic concentration standpoint?

And the second part of the question, what else can you guys give us as an update as to how, what have you seen in the second round of bidding in China and what is the next step we have to see before we can really start to think and talk about the national level feed-in tariff?

(Interpreted). In terms of our customer mix in Asia, we sell to Taiwan, Korea and India. And of the three, India is actually a very fast-growing company -- very fast-growing region, I'm sorry. And we also ship to Europe and US and the rest of China. At the moment our mix is 60% China and 40% exports.

Okay, perfect. And the policy update in China?

(Interpreted). With regards to China's nationwide feed-in tariff, there is nationwide consultative meetings that are going in Beijing and new alternative energy is obviously one of the very hot topics that is being discussed. And we feel that last year, in the beginning of last year, when the solar industry was experiencing a very difficult time, many of the solar industry experts lobbied the government for more active support. Since second half of last year, the industry slowly recovered so the effort for such lobbying has also slowed. So we do not expect in the short term to see a nationwide feed-in tariff scheme.

Got it, great. Thanks a lot, guys.

The next question comes from the line of Satya Kumar with Credit Suisse. Please proceed.

Satya, your line is open.

My questions have been answered. I'll get back in the queue later, thanks.

Your next question comes from the line of Jesse Pichel with Piper Jaffray. Please proceed.

Hi, this is Min Xu for Jesse Pichel. Thanks for taking our questions. Can you help us understand what is leading to the processing cost improvement from $0.34 to $0.30 in Q1? Is using a JYT furnace contributing to the cost reduction?

(Interpreted). That is mainly attributable to our R&D efforts especially in terms of operational process improvements. We have reduced the usage of slurry by 25% and we also reduced the energy consumption by 20%. And it's the overall improvement in the operational efficiency that led to the decline in our processing costs.

Okay. A follow-up is that after you write down the $14.6m receivable, is there any remaining receivable from the same entity?

No. $14m. $14.5m is all the receivables that's due from Linzhou Zhongsheng.

Okay, great. Congratulations for your OEM contract wins.

Thank you, Min.

Your next question is from the line of Vishal Shah with Barclays Capital.

Yes, thanks for taking my follow-up. Charles, can you maybe give us some update on or guidance on how we should think about operating expenses for the rest of the year? You said 9% to 10% in the first quarter, is that right?

8% to 9%. Our run rate in the last couple of quarters, we've seen it at about $11m, $12m. And we expect that the first quarter will be similar in that range and representing approximately 8% to 9% of our net revenue.

Okay. And what is your current short term debt level as of early March. Have you been borrowing more in the first quarter?

In fact, our short term borrowing remained fairly stable from the end of the last year up to now.

Okay. And how is your CapEx spend going to look like for the rest of the year?

Sorry?

What's your CapEx going to look like? You said $125m, right? So will it -- is it going to be spread equally throughout the year or is it going to be front-end loaded or back-end loaded?

It's more like, out of this $125m, we're looking at approximately $38m to $40m in the first half and the remaining is going to be in the second half.

Okay. And just one other question. You said that your cost, the wafer cost will be at $0.50 by Q4 of this year. And you're targeting about $0.70 wafer price. So do you think you can really sustain a $0.20 per watt gross profit margin in the back half of the year when there's so much supply coming on line and when even some of the module manufacturers are not really making that much money right now?

I'll probably just refer this question to Mr. Li.

Vishal, just one correction. We said by the end of this year, the wafer total cost is $0.55 not $0.50. But I'll translate the rest of the question.

(Interpreted). Yes, because when we are at $0.55 per watt for our processing cost, and we believe not many other industry peers can reach that level. People will probably be at $0.65 per watt. And we believe that we are far -- we are leading in terms of our processing cost. And coupled with our brand recognition in our wafers I think that we can command that sort of a margin.

Okay, that's very helpful. And just one other last question. You seem to have achieved a $0.10 per watt processing cost improvement in two quarters. And I know you've mentioned some of these operational improvements. But can you maybe go into further detail as to exactly what you've changed because it seems like the R&D spending has really not gone up that much and is it just a change of materials or suppliers or you said lower usage? Why all of a sudden in two quarters and why not a much more gradual change?

Sorry, Vishal, just let me rephrase your question. You're saying how come we have a -- more of a steep drop in our processing cost in the wafer, right?

Yes, in two quarters. It seems a little --

From Q3 last year to where we are in Q1, is that what you're asking?

Yes, you said $0.38 to $0.30, right?

Yes. Okay, sure.

(Interpreted). It is still primarily attributable to the R&D and also through the continued improvement in our operations and coupled with our supply chain management. In terms of our multi PV crystalline cost, we are now at about $0.25 per watt. And with 6 grams per watt of conversion costs, we are probably one of the very leading wafer manufacturers in the world.

Great. Thank you so much.

Your next question comes from the line of Mark Davis with Panmure Gordon. Please proceed.

Hi, everyone. A couple of questions here, some points of clarity. Just on the OEM module contracts can you just confirm that -- you were saying, Julia, that you've got sort of $0.10 to $0.15 per watt absolute margin on these contracts. Is that actually stipulated in the contracts in terms of a minimum $0.10 per watt regardless of where pricing goes?

And then just clarity on the previous question. Are we talking about -- on wafers was it a 20% gross margin, or is it at $0.20 absolute gross margin? Thanks.

(Interpreted). In terms of our OEM contracts, it's more of a cost plus model. So it's less affected due to the volatility in the market ASP. And the $0.10, $0.15 per watt margins that we're making is actually quite a bit less than some of the other module makers who's currently making probably $0.30, $0.40 per watt in absolute dollar.

In terms of the wafer profitability, in Q1 we are actually making about $0.18, $0.20 per watt.

Okay, thanks. And then a couple of other questions. Just in terms of the old joint venture, Linzhou Zhongsheng, what's the situation with the company at the moment? Is it -- it sounds like the writing's on the wall, it's closing down. Is that the situation? I'm just wondering about the likelihood of recovering any of these receivables.

Let me answer that question. We have been pushing and in discussion with them in relation to the collection of receivables. And our understanding of the plant is that their operation is not stable due to the high cost of production. And they did deliver some of the polysilicon to us according to the contract but it stopped because we did not agree on the pricing terms that they demanded.

Okay, that's -- sorry, is there anything else to add?

Because we have difficulty to get the polysilicon from them, so we have decided to take actions, including legal actions to get money back.

Okay. Do you know what their financing situation is like?

I'm sorry.

Do you know what their financial situation is like at the moment?

Frankly, I don't know because we are no longer a part of that JV. We sold our interest in 2008. But I wouldn't be surprised if their financial situation is in a distressed situation, giving their production cost is high and where the spot polysilicon price is today. But we're trying whatever we can to recover the receivables. And that's why because their financial situation is not in a great shape and that's why we provide the provision.

Okay, thanks. And just finally two quick questions.

Firstly, Charles, can you tell me what your cash position is like today?

Our cash position today obviously is somewhat reduced from what we had in the beginning of the year. But our cash, operating cash has been healthy and we're not worried about liquidity.

Okay.

In fact, we still have $120m undrawn credit lines available to us. So this is what we're looking at.

Okay, thanks. And then just finally, just post the termination of the Dynamic Green acquisition at the start of the year, I'm just wondering what the strategic focus is for the Company? Is it very much focus on what you've got, developing the OEM module business or should we expect other acquisitions to come through this year?

I'll refer this to Mr. Li.

(Interpreted). At the moment we don't have any acquisition plans. We will focus on developing our OEM business via our JC Solar platform.

Okay, that's great. Thanks very much.

Thank you.

We are now approaching the end of the conference call. I will now turn the call over to ReneSola's Chief Financial Officer, Mr. Charles Bai.

In conclusion, we expect to return to profitability in the [third] quarter and a profitable 2010, as we have several drivers in place to take advantage of the rising demand in solar products. In particular, now that we have consumed all of our high-cost inventory we believe our cost efficient wafer production and the new OEM contracts will contribute heavily to an increase in revenues for 2010.

This concludes the Q&A session. Again, thank you for joining us today and I thank you for your continued support. If you have any questions please do not hesitate to contact us.

Thank you. Bye-bye.

Thank you.

Thank you for your participation in today's conference. This concludes our presentation. You may now disconnect. Have a 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.