Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co., Ltd. Third Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question-and-answer session. As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to your host for today's call, Ms. Stella Wang, JinkoSolar's Investor Relations. Please proceed, Stella.

Thank you, operator. Thank you, everyone, for joining us today for JinkoSolar's third quarter 2024 earnings conference call. The company's results were released earlier today and available on our company's IR website at www.jinkosolar.com as well as on Newswire services. We have also provided a supplemental presentation for today's earnings call, which can also be found on the IR website. On the call today from JinkoSolar are Mr. Li Xiande, Chairman and CEO of JinkoSolar Holding Company Limited; Mr. Gener Miao, CMO of JinkoSolar Company Limited; Mr. Pan Li, CFO of JinkoSolar Holding Company Limited; and Mr. Charlie Cao, CFO of JinkoSolar Company Limited. Mr. Li will discuss JinkoSolar's business operations and company highlights followed by Mr. Miao, who will talk about sales and marketing. And then Mr. Pan Li, who will go through the financials. They will all be available to answer your questions during the Q&A session that follows. Please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding this and other risks is included in JinkoSolar's public filings with the Securities and Exchange Commission. JinkoSolar does not assume any obligation to update any forward-looking statements, except as required under the applicable law. It's now my pleasure to introduce Mr. Li Xiande, Chairman and CEO of JinkoSolar Holdings. Mr. Li will speak in Mandarin, and I will translate his comments into English. Please go ahead, Mr. Li.

While earnings were under pressure across the industry during the quarter, we achieved relatively outstanding results, leveraging our leading position in N-type TOPCon technology, competitive products, as well as global sales and manufacturing networks. The imbalance between supply and demand led to a continuous price decline in the end market, causing loss to almost the whole industrial chain. As we worked to balance utilization rates, shipments, and profitability, prices in the third quarter were stable sequentially, and shipments to the U.S. market increased significantly quarter-over-quarter. We also continued to optimize our integrated costs through technical advancements and supply chain management. Gross margin was 15.7% and net income was $3.2 million, significantly improved sequentially. In September, the newly added installation was 20.89 gigawatts in China, up 32.4% year-over-year and 26.9% sequentially, reversing the sequential declining trends of the previous two months. Due to certain demand volatility in some overseas markets, module exports in September decreased sequentially. Demand was slightly weak while clearing out of supply was accelerated. With profitability throughout the whole industrial chain under pressure, some companies with insufficient cash flow and poor risk resistance have gone bankrupt, reorganized, or been acquired from time to time. During this month, the CPIA held symposiums aimed at encouraging manufacturers to adopt self-discipline in their pricing strategies and production volume management. CPIA also released a report calling on manufacturers to participate in bidding in rational manners, avoiding selling or bidding with prices below cost, and also urging bid organizers to formulate reasonable bidding plans, shifting the focus to product and service quality as well as contract performance. We believe these matters may help eliminate uncompetitive capacity and accelerate industry consolidation. We believe that with enhanced supervision of the related departments, domestic prices will eventually return to reasonable levels. In the third quarter, we further consolidated our competitiveness. By the end of this quarter, the mass-produced efficiency for our N-type TOPCon cells improved to approximately 26.2%. As TOPCon is still in a stage of rapid technology and product upgrades, we have continued to invest in R&D and are gradually adopting certain new technologies into mass production based on market demand, investment, and payback periods to maintain a leading position in the industry. We continuously improved our smart production capabilities to lead the industry in digital transformation. Recently, at our Jiangxi base, we built the Jinko 360 Smart Platform in cooperation with leading partners, and it has been certified by TÜV Rheinland. By integrating MES and QMS systems with some cutting-edge technologies such as the Internet of Things, AI, and big data analysis, the platform can improve real-time equipment monitoring in the vast majority of our production processes and ensure full process management from warehousing of raw materials to warehousing of finished products. As one of the leading voices in the fight against climate change, JinkoSolar has always aligned its operations with global climate goals. Recently, we participated in the 2024 New York Climate Week, where we officially launched the English version of our first climate white paper. We have kept improving ESG management in our supply chain, and so far, we have completed third-party ESG audits for most of our key suppliers, and the majority of our suppliers have signed our Code of Conduct. As we navigate through cycles, the leading enterprises in our industry will emerge ahead thanks to their superior cost control, extensive sales networks, and effective cash flow management. In the long term, they will continue to benefit from continuous investment in R&D and the expansion of their global capabilities. We will focus more on balancing market structure and profits. We expect the module share to be between 90 gigawatts to 100 gigawatts for 2024 and 22.3 gigawatts to 32.3 gigawatts for the fourth quarter. We will also continue to optimize our assets, liability structure, and turnover efficiency, further strengthening our resilience to risk.

Thank you, Li. Our total shipments were 25.9 gigawatts in the third quarter, with module shipments accounting for 92%, nearly flat sequentially. We maintained our global leading position in module shipments during both the third quarter and the first three quarters. This achievement is a testament to the trust of our global clients in our reliable high-efficiency products and services. In the third quarter, around 60% of modules were shipped overseas, with Europe, North America, and emerging markets all doing well. The distribution business accounted for approximately 37% of total shipments compared to approximately 45% in the second quarter. Thanks to continuous improvement in the Tiger Neo's product strength, Tiger Neo's shipments accounted for nearly 90% of total shipments, a steady increase from 85% in the second quarter. In China, the ratio of Tiger Neo has grown to over 90%, while it increased to nearly 70% in North America. We once again topped the PV Tech 2024 Q3 module tech bankability report with a triple-A rating and also received the highest bankability score in this industry. This honor rewards our commitment to quality, innovation, and R&D as well as global clients' trust in our product quality, bankability, and reliability over the long term. Recently, we launched the next generation top-con technology solar panel named the Tiger Neo 3.0. The Tiger Neo 3.0 product will be manufactured on the production line of a zero-carbon factory certified by TÜV Rheinland, catering to the client's demand for high efficiency, reliability, and clean products. Also, in the latest BNEF Energy Storage Tier 1 list in Q4 2024 ranking, Jinko Energy has once again been recognized as a Tier 1 manufacturer by Bloomberg for its outstanding performance in the energy storage sector. By the end of the quarter, our accumulated global shipment exceeds 280 gigawatts, which helps our global clients achieve grid parity with green and economic renewable energy solutions. Short-term cyclic reliability in this industry, shifts in the macro environment, and disturbances from international trade policies bring PV companies not only challenges but also opportunities. We always proactively seize opportunities from challenges in market demand, balance market risk, and lead the industry development with more high-efficiency and reliable products and services while maintaining a reasonable market share.

Thank you, Gener. We are pleased to have achieved steadily improving financial results with our leading position in anti-top-con technology, competitive products, global marketing and manufacturing network, as well as our efforts to control costs and expenses. Key financial metrics such as total revenue, gross margin, operating income, and net income all increased sequentially. We will continue to improve the efficiency of our working capital, achieve sustainable growth in operating cash flow, and enhance our resilience to risks. Let me go into more details now. Total revenue was about $3.5 billion, up 2% sequentially and down 23% year-on-year. The sequential increase was mainly due to the increase in module shipments. The year-on-year decrease was mainly due to a decrease in the average selling price of solar modules. Gross margin was 5.7% compared with 11.1% in the second quarter and 19.3% in the third quarter last year. The sequential increase was mainly due to the increase in the average selling price of modules, and the year-on-year decrease was mainly due to the decrease in ASP of modules. Total operating expenses were $539 million, down about 1% sequentially and up 20% year-on-year. The year-on-year increase was mainly due to the increase in shipping costs as the shipment of the solar modules increased, and an increase in impairment of loan-leave assets. The operating expenses accounted for 15.4% of total revenues in the third quarter compared to 15.9% in the second quarter this year and about 10% in the third quarter last year. Net income attributable to our ordinary shareholders was $3.2 million in the third quarter excluding the impact of a change in fair value of the convertible note and long-term investment in solar supply chain companies, share-based compensation expenses, and impairment of capacity utilization which was strategically adjusted by the company. The adjusted net income attributable to our ordinary shareholders was $14.8 million. Moving to the balance sheet. At the end of the third quarter, our cash and cash equivalents were about $3.2 billion compared with about $2 billion in the second quarter. AR turnover days were 98 days compared with 89 days in the second quarter this year, and inventory turnover days were 66 days compared with 82 days in the second quarter this year as a result of improved operating efficiency. At the end of the third quarter, total debt was $5.23 billion compared to $3.86 billion in the second quarter this year. Net debt was $2.05 billion compared with $1.95 billion in the second quarter this year. This concludes our prepared remarks. We're now happy to take your questions. Operator, please proceed.

Thank you. Your first question comes from Philip Shen with ROTH Capital Partners. Please go ahead.

Hi, everyone. Thank you for taking my questions. My first question is about the volume of modules shipped to the U.S. in Q3. Can you confirm what that was? Also, could you provide the megawatts you expect to ship to the U.S. in Q4? Thank you.

Yeah. Our Q3 shipment to the U.S. is roughly 15% to 18% of total shipment. So I think you can figure out the detailed numbers. Q4, we forecast that the number will be lower because of seasonality issues and market turbulence. However, when we look into the whole year, it should fit in or fall into our expectations, which is roughly 5% to 10% of the total shipment. So the total number should be within the expectation.

Great. Thanks, Gener. Can you share what the expectations are for 2025? Additionally, considering the volume in the U.S. and the ADCBD decision coming up, how confident are you that it will not be retroactive and that the number won’t be high? How are you managing that risk? Thanks.

Yes, so from our perspective, we still take the U.S. market as a long-term market. So no matter how the policy or tariff changes, we're always trying to figure out the solutions to survive and compete in the U.S. market. So regarding 2025, we still have not decided the final number yet because of the upcoming election and also there will be the numbers of ADCBD announced pretty soon. So we think we will figure out the numbers after that when we see more certainties. So we will talk maybe soon regarding that topic. Regarding the retroactive risk, we still believe we heard about the petitioners' request on this, I think it's CBD. So we are still evaluating the risk and waiting for the final decision. Regarding the ADS, since we are on the sample list, we are cooperating with our lawyers to try to not trigger the retroactive risk. So we are doing our best to avoid the unnecessary risk.

Your next question comes from Rajiv Chaudhri with Sunsara Capital. Please go ahead.

Yes. Good morning and congratulations on a good quarter. I have a few questions. The first question is on your average selling prices in the third quarter were obviously higher than they were in the second quarter and the reason was the increased shipment to the United States. If the shipments to the U.S. are going to go down in Q4 as a percentage, should we expect a pretty significant decline in ASPs quarter-over-quarter in the double-digit range?

The third quarter the ASP quarter by quarter is quite flat given we have more shipments in the U.S. and looking to the fourth quarter, the market price in the last three months is in a downward trend. So we think it's kind of moderate and downward in terms of the prices in the fourth quarter versus the third quarter.

So I guess another way of asking the question is what is your expectation for ASPs in China in the fourth quarter relative to the third quarter and also in Europe again Q4 versus Q3?

Yes, if you look at the index Infolink a lot of independent published prices the trend is quite similar. But now the CPIA, China Photovoltaic Industry Association is leading the policy studies and trying to mitigate the oversupply versus pricing problems in the industries. We think the price has already reached the bottom and hopefully, we think the price will stabilize and help the industry to adopt a relatively disciplined approach.

So I guess the question is if prices stay stable from here in China and Europe for the rest of the year are they still down relative to the third quarter?

Oh, I get your question. Because the mix of different readings, we have lower shipments in the U.S. versus our readings in the fourth quarter. So the blended ASPs should be a little bit lower.

Right. Moving on to the EBITDA number for the third quarter. Can you tell me what the depreciation number was in Q3 and also can you confirm if EBITDA in Q3 was in excess of $400 million?

No, EBITDA we have discussed. EBITDA numbers and depreciation per quarter is roughly $70 million. So you can do the calculations.

Sorry, Charlie, can you repeat the depreciation in the third quarter?

It's $70 million a quarter.

$78 million?

$70.

$70?

Yes.

Okay. And next question is on storage. Can you give us an update on the storage business and are you likely to hit $100 million in revenues this year or is it still smaller than that?

Rajiv, I don't think it's the right time to disclose the detailed numbers. We are still trying our best to grow the storage business into an ambitious goal. We think we will share the positive or good news with all the investors once it's ready, but for us, it's still an early-stage business. We think it's not the right timing to disclose the numbers.

Okay. And finally, on shipping costs, can you give us an idea of what the trend line in shipping costs was in the third quarter and what you expect in Q4 and beyond? I'm talking about shipping costs per unit.

Yes. In the first half of the year, the logistic costs were higher, particularly due to political tensions in the Middle East and the impact on all regions, including U.S. logistic costs. Now we're expecting the logistic costs will be lower starting in the fourth quarter and from the supply side, there's sufficient containers to meet the demands. We're expecting the logistic costs will be relatively lower quarter by quarter.

Also, a final question is on the G&A expenses. Last year, in the fourth quarter, the G&A expenses were over $200 million, and we saw a sharp increase from the third quarter. Should we expect a similar trend in the fourth quarter this year?

Throughout this year, we continue to train the operating expenses, including G&A expenses. Looking to Q4 versus Q3, we are expecting the operating expenses will be lower in Q4 versus Q3.

Thank you.

Your next question comes from Brian Lee with Goldman Sachs & Co. Please go ahead.

Hey, everyone. Thanks for taking the questions. Just a couple of housekeeping ones. Did you give us the free cash flow number in the quarter and also the CapEx number in the quarter? And I had a follow-up.

For the full year, we estimate, I don't have the exact numbers for the third quarter, but full-year 2024, the CapEx will be around RMB9 billion. Operating cash flow is roughly 5 billion, so net operating cash flow, the free cash flow is negative at RMB4 billion.

Okay. That's helpful. Can you give us an update on the latest status of your Frankfurt listing efforts? Also, maybe a little bit of color around your net proceeds expected and what we should be modeling in terms of cash impact on the balance sheet plus dilution? Thanks.

The GDR we just announced is roughly total is RMB4.5 billion and roughly the dilution will be 5% or 6% depending on the issuer's price. The timetable is still in the early stages of preparation and we expect the GDR will be roughly completed in the second quarter next year. The use of proceeds, and we have disclosed the majority for the existing factory's second phase, we have roughly the construction to be completed by the end of this year. And the main part will be for working capital purposes as well as a small amount for the U.S. existing module capacity further expansions.

Alright. Thanks a lot. Best of luck with it. Appreciate it.

Your next question comes from Muhammad Ahmad with Emirates Development Bank. Please go ahead.

Yes. So my question is how much of your business is from the utility segment and from the rooftop solar segment? And another question is that your diluted EPS is $0.57 per ADS. How is it calculated? Because the number of shares is 53.4 million and basic shares are 52 million but the difference in basic and diluted EPS is 1.45 versus 0.57.

For the detailed EPS, we can share the detailed calculation, and I think it's very simple, so after the call, we can share the detailed calculation with you. And in terms of the percentage of utility versus rooftop solar...

Yes. I think we talked about it during the prepared remarks that the DG ratio is roughly in the high 30 range. So if you want to know the detailed numbers, we can share with you. Hold on a second. It's roughly 37%. That means 63% is utility.

Okay. Thank you.

There are no further questions at this time. That concludes our conference for today. Thank you for participating. You may now disconnect.