Hello, welcome to the Daqo New Energy third quarter 2020 results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Kevin He, Investor Relations for Daqo New Energy. Please go ahead.
Hello, everyone. I'm Kevin He, the investor relations of Daqo New Energy. Thank you for joining our conference call today. Daqo New Energy just issued its financial results for the third quarter of 2020, which can be found on our website at www.dqsolar.com. To facilitate today's conference call, we have also prepared a PPT presentation for your reference. Today attending the conference call we have Mr. Longgen Zhang, our Chief Executive Officer, and Mr. Ming Yang, our Chief Financial Officer. The call today will feature an update from Mr. Zhang on market and operations, and then Mr. Yang will discuss the company's financial performance for the third quarter of 2020. After that, we will open the floor to Q&A from the audience.
Before we begin the formal remarks, I would like to remind you that certain statements on today's call, including expected future operational and financial performance and industry growth, are forward-looking statements that are made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those containing any forward-looking statement. Further information regarding these and other risks is included in the reports or documents we have filed with or furnished to, the Securities and Exchange Commission. These statements only reflect our current and preliminary view as of today and may be subject to change. Our ability to achieve these projections is subject to risks and uncertainties.
All information provided in today's call is as of today, and we undertake no duty to update such information except as required under applicable law. During the call, we will occasionally reference monetary amounts in U.S. dollar terms. Please keep in mind that our functional currency is the Chinese RMB. We offer these translations into U.S. dollars solely for the convenience of the audience. Without further ado, I now turn the call over to our CEO, Mr. Zhang. Please go ahead.
Thank you, Kevin. Hello, everyone. Thank you for joining our conference call today. During the third quarter of 2020, we successfully completed the annual maintenance and several technology improvement projects at our polysilicon manufacturing facilities. We resumed full production in August with excellent operational results. For the third quarter, we produced 18,406 metric tons of polysilicon, among which approximately 97.7% was mono-grade. We continued our relentless drive to lower production costs and reached a record lower cost in RMB terms. During the third quarter, we completed our digital transformation project with a fully digitized manufacturing system that allow us to continuously improve our process control and analyze our manufacturing data so as to achieve better results in system stability, manufacturing efficiencies, production cost, and product quality in the future.
As our facilities are now running with increased efficiency, we expected to achieve a higher production volume of approximately 19,500 to 20,500 metric tons in the fourth quarter, with a potential cost reduction by approximately 3% as compared to the third quarter. During the quarter, polysilicon ASPs increased rapidly due to the quick re-recovery in solar PV demand from both domestic and foreign markets. Our ASP was $9.13 per kg, a significant improvement from approximately $7.04 per kg in the second quarter. With robust market demand for mono-grade polysilicon, we expect our ASP to improve meaningfully in the fourth quarter as compared to the third quarter.
In recent weeks, because of strong solar module and installation demand, we began to see solar glass capacity shortage becoming a bottleneck for the solar industry and limiting module production. We expect the shortage of solar glass to ease over the coming months as additional solar glass capacity comes online. The temporary constraint on the industry's utilization rate will be removed, which eventually will increase demand for polysilicon. Solar is now becoming one of the most competitive sources for sources of energy, even compared to traditional power generation methods. Globally, we are seeing strong momentum around the world in adopting and implementing renewable energy policies that would strongly benefit the solar end market. Last month, Mr. Xi Jinping, the President of China, announced China's initiative to scale up the national contributions to peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060.
We believe favorable policies benefiting solar will be implemented during the upcoming 14th Five-Year Plan, driving a substantial increase in solar installations in China. A growing number of countries and regions, including the most important economies in the world, have announced goals and plans to reduce carbon emission and widely adopt renewable energies. We are starting to see the trend of utility-scale solar generation combined with power storage, providing base load e-energy and replacing and displacing coal power plants. We believe this is the beginning of a long solar displacing traditional fossil fuel-based generation, driven by both economics and renewable energy mandates. We are strongly committed to contributing our efforts as a raw material provider for mainstream solar PV modules and are fully confident we will benefit from this fast-growing market.
Now I will discuss outlook and guidance for our company. The company expects to produce approximately 19,500 to 20,500 metric tons of polysilicon and selling approximately 20,500 metric tons to 21,500 metric tons of polysilicon to external clients during the fourth quarter of 2020. For the full year of 2020, the company expects to produce approximately 75,800 metric tons to 76,800 metric tons of polysilicon, inclusive of the impact of the company's annual facility maintenance. Now, I will turn the call over to our CFO, Mr. Yang, who will discuss the company's financial performance for the third quarter of 2020.
Thank you, Longgen, and hello, everyone. Thank you for joining our call today. Now I will discuss our company's financial performance for the third quarter of 2020. Revenues were RMB 125.5 million compared to RMB 133.5 million in the second quarter of 2020 and RMB 83.9 million in the third quarter of 2019. The sequential decrease in revenue was primarily due to lower polysilicon sales volume, despite higher average selling prices. Gross profit was RMB 45.3 million compared to RMB 22.7 million in the second quarter of 2020 and RMB 18.1 million in the third quarter of 2019. Gross margin was 36% compared to 17% in the second quarter of 2020 and 21.5% in the third quarter of 2019.
The increase in gross margin was primarily due to improvements in production costs and higher ASP. Selling, general, and administrative expenses were RMB 9.2 million, compared to RMB 10.1 million in the second quarter of 2020 and RMB 8.2 million in the third quarter of 2019. SG&A expenses during the quarter included $4 million in non-cash share-based compensation costs related to the company's share incentive plans. Research and development expenses were RMB 1.7 million, compared to RMB 2 million in the second quarter of 2020 and RMB 1.2 million in the third quarter of 2019. R&D expenses can vary from period to period and reflect the R&D activities that took place during the quarter.
As a result of the foregoing, income from operations was RMB 33.3 million, compared to RMB 10.8 million in the second quarter of 2020 and RMB 8.8 million in the third quarter of 2019. Operating margin was 26.6%, compared to 8.1% in the second quarter of 2020 and 10.5% in the third quarter of 2019. Interest expense was RMB 5.4 million, compared to RMB 6.7 million in the second quarter of 2020 and RMB 2.6 million in the third quarter of 2019. EBITDA for the quarter was RMB 51.6 million, compared to RMB 26.8 million in the second quarter of 2020 and RMB 19.7 million in the third quarter of 2019.
EBITDA margin was 41.1% compared to 20% in the second quarter of 2020 and 23.5% in the third quarter of 2019. Net income attributable to Daqo New Energy shareholders was RMB 20.8 million in the third quarter of 2020, compared to RMB 2.4 million in the second quarter of 2020 and RMB 5 million in the third quarter of 2019. Earnings per basic ADS was $0.29 in the third quarter of 2020, compared to $0.03 in the second quarter of 2020 and $0.07 in the third quarter of 2019. Now for the company's financial condition. As of September 30, 2020, the company had RMB 109.8 million in cash and cash equivalents and restricted cash compared to RMB 115.8 million as of June 30, 2020.
As of September 30th, 2020, notes receivable balance was RMB 1.9 million compared to RMB 8.2 million as of June 30th, 2020. As of September 30th, 2020, total borrowings were RMB 271 million, of which RMB 140 million were long-term borrowings, compared to total borrowings of RMB 264.8 million, including RMB 116.9 million of long-term borrowings as of June 30th, 2020. For the nine months ended September 30th, 2020, net cash provided by operating activities was RMB 71.1 million compared to RMB 101.6 million in the same period of 2019.
For the nine months ended September 30th, 2020, net cash used in investing activities was RMB 80.3 million compared to RMB 202.3 million in the same period of 2019. Net cash used in investing activities in 2020 and 2019 was primarily related to capital expenditures on our Phase 3B and Phase 4A polysilicon projects. For the 9 months ended September 30th, 2020, net cash provided by financing activities was RMB 1.1 million compared to RMB 76.6 million in the same period of 2019. That concludes our prepared remarks. We will now open the call to questions from the audience. Operator, please begin.
We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Gary Zhou of Credit Suisse. Please go ahead.
Hello, management. Congratulations on the strong results. This is Gary Zhou from Credit Suisse. Basically, I have three questions. Firstly, on your cost reduction guidance, for the fourth quarter, down around 3% Q- on- Q. May I ask, is it production cost or cash cost? Is it based on RMB terms or USD terms? Secondly, I noticed that in the third quarter this year, basically there was, based on my calculation, around 4,700 inventory tie up, if I simply calculate the difference between your production cost and the sales volume.
If we look at the fourth quarter guidance, your sales volume is around only 1,000 tons higher than your production volume. May I ask if it is company strategy, you think it is reasonable to tie up some inventory, given the potentially very strong polysilicon demand in next year? Lastly, a quick question on the, do you expect to sign more kind of a long-term polysilicon contract in the future? 'Cause in recently we saw kind of some news from your peers. Basically people starting to secure their polysilicon supply for next year. Thank you.
Hello, Gary. Thank you for your question. This is Ming, I'm the CFO. Regarding your question about the 3% cost reduction quarter-over-quarter, that would be a U.S. dollar cost reduction. I think if you look at, for this particular quarter for Q4 relative to Q3, there are actually two headwinds. One is the U.S. dollar exchange rate. That moved significantly during the quarter. Also, there's some increase in silicon metallurgical grade silicon cost. Even with these two increases, I think because of our increased manufacturing efficiency and especially reduction in our energy usage, we still expect about 3% reduction in cost on U.S. dollar terms. Okay.
For the 3rd quarter, in terms of inventory, I think your numbers are fairly close to our actual numbers. In every quarter, we use about 500-600 metric tons of our own polysilicon for manufacturing of silicon seed rods, which then we reuse in our production of polysilicon. That's how we also keep our costs low. I think that needs to be factored in. I think if we include that impact, I think for Q4 overall, we expect to draw down approximately 1,500 to maybe north of 2,000 tons of inventory. I think that's what we're seeing. I think the overall demand for mono-grade poly is strong from our customers.
I think there is some impact from the glass shortage, which is impacting the overall industry utilization and then the module volume shipments. I think if there's no glass orders, then I think it there's gonna be even better demand for polysilicon. I think the overall transaction volume is very healthy for the industry currently. I think for a long-term contract, Longgen will take this question.
Gary, I think, for your second question about inventory, I think, you know, basically we think right now, I think, even downstream we've, exact, you know, capacity, expansion so quickly and we see the sign, you know, continue to demand in Q4. We've given guidance a little conservative because we believe we can by the, you know, end of Q3, our inventory actually, yeah, closely figure, maybe about, you know, more than 5,565 tons, you know, metric tons. Basically what I wanna say is we will sell, I think more than our production. It's possible move some capacity to next year. You know, for high ASP and also for stock market value is evaluation. Secondly, for long-term, you know, contract.
Far we have long-term contract with three clients, and one is LONGi, one is Shangji, and one is Jinko. All three we collect, you know, the deposits from 3.5% to 6%. I think we will continue sign one or two long-term contracts and cover three years, I think, supply. We know that a lot of clients right now want to sign long-term contract with us, especially because from now on to end of next year, no more additional adding capacity is on, but the demand is continue increase.
Basically, we have two conditions. One is if you want to sign long-term contract at least three years, and you know, the quantity may be starting lower in next year than higher, you know, maybe 2023 or 2022. Secondly, we have to collect at least right now, I think a 4% deposits from long-term contracts. Otherwise, we're not signing those contracts because, you know, we want to lock the quantity, so we have to collect, you know, the deposits. Yeah. Answer your question, Gary?
Yeah. Thank you very much management. Maybe if I may, I just very quickly follow up on the first question. If I wanna calculate the exchange rate, I think that in the fourth quarter, the RMB may appreciate versus U.S. dollar or by roughly, you know, roughly around the 3% to 4%. Is it fair to say that in RMB terms, we are expecting around almost 7%, Q- on- Q cost reduction in fourth quarter? What is our kind of expectation for our further cost reduction into next year? Thank you.
I figure, Gary, you know, if you look at our Q3, basically right now, because renminbi continued to appreciation, our, you know, I think cash cost is $4.88. Compare Q2, I think it is $4.87, $0.01 adding. For dollar, yes, it go up. But for the renminbi, actually our cash cost is RMB 33.75 per kg. Compare Q2 is RMB 34.53 per kg. The production cost of goods sold, I think renminbi is RMB 40.3 per kg. Compare Q2 is RMB 41.04 per kg. Basically, yes, what I want to say is 3% continue to go down, maybe combined with our renminbi, I think cost continue to go down. With, you know, maybe possible, foreign exchange, I think renminbi appreciation. Ming, do you have any-
Yeah, Gary, you're right. I think for Q4, if you look at, our expectation is that just in terms of, in RMB terms, we expect roughly a 7% reduction in cost. That's correct.
Okay. Yeah. Thank you much. Yeah, that's all my questions. Thank you for listening management and, we'll pass on.
Great. Thank you.
The next question comes from Alan Hon of JPMorgan. Please go ahead.
Hi, this is Alan from JPMorgan. I have, like, two minor questions on the ASP side of things. Because like on the third quarter of this year, your average like ASP, selling price was around like $9.13 per kilogram, but that's slightly lower than what we have been seeing on the spot market. I'd like to understand why. A small follow-up questions on this one is what is the price outlook for price to be realized for Daqo, in the fourth quarter? I guess like, also along the prices, like what is the pricing outlook for 2021? That's my questions.
Okay. I think basically, if maybe Ming can continue adding on. If you look at our Q3 ASP actually is $ 9.13 per kg. Of which I think, you know, because the mono-grade, I think we're selling is 13,278 tons. So it account 97%. It's $ 9.23. You know, rest of them is I think 3% is the around 360 metric tons, I think is the selling price is around like $ 5.60. Basically, if you compare, the reason is because this is ASP, okay? If you look at the renminbi cost, the selling price is RMB 71.42.
The reason why, because in Q3, if you look at July and August, your selling price is not immediately come back match, you know, the, you know, the industry, you know, guidance. The reason is because most July and August, you already signed the contract, you know, before you deliver on, you know, those months. Actually Q3, you enjoy the high price maybe only in September, and a partial is August. That's why in Q4, our ASP will dramatically increase higher than Q3. Meantime, the cost went down, continued down 3%. The gross margin in Q4, you can imagine, I think at least, around a 10% improve.
Yeah. Alan , thanks for your question. Because of our order contracting, so the time from when we sign the orders and to when the products are then shipped and then delivered to the customer recognize as revenue. There could be 2-3 weeks lag. For example, most of our revenue that was recognized for the month of July, actually these contracts or pricing were determined around the end of June when pricing was still.
Lower.
-fairly low. Yeah. Really, the price normalization really happened for the month of August and then for the month of September. When you average out the prices, you know, then it is a little bit lower than what the industry market, spot market pricing is. There is that lag. I think by Q4, this will have normalized.
I got you. The last follow-up is on the pricing outlook in 2021.
Basically right now, just like you mentioned, you know, we only in mono-grade silicon right now, we just, you know, I think the highest price is a small partial of what do you call it, John? Re-import, you know. The price, the highest. Basically right now, I think is around the industry guidance right now is around RMB 85-RMB 86. We believe because of the shortage of glass, the module right now production is limited. We believe by the end of this month, this quarter, maybe the selling price, mono-grade is around like RMB 84-RMB 86, the range, even RMB 82-RMB 86.
RMB per-.
All is RMB. For the next year, we believe, okay, in Q1, maybe even China is maybe, you know, Chinese New Year. We think, you know, the out of China, the market is coming back. We still believe, I think Q1, the selling price around, you know, RMB 82 -RMB 85 and even higher. In the second quarter, because the, I think glass, you know, increased, I think maybe 40%, the capacity. It's no way to limit, you know, the market for the demand for the module. We believe the polysilicon, because polysilicon supply is limited. It is there, stable. I think the demand is continuing to increase as the wafer capacity continue to increase.
We believe in the second quarter, third quarter, the silicon price will above RMB 90, even above RMB 100. Basically for 2021, we believe the ASP were between RMB 90-RMB 100 per kg.
Got it. I guess like on the technology front, I guess just get one more last follow-up questions on the technology front. Some of your competitors talking about like FBR technology. Just want to get your sense on the threat of FBR technology.
I think FBR, only one of the company in China right now, still stick on that. It's they use the MEMC technology. Basically, I think FBR, you know, due to the quality still contains the high percentage of hydrogen and carbon. determining the, you know, the product still is lower quality, is classified as, you know, the polysilicon. the selling price also is lower. we don't believe, I think, you know, maybe it's a supplementary to high-quality polysilicon, you know, made with the modified the Siemens process. I don't think they will Maybe only, you know, maybe supplementary 5% in the future. right now, because the cash cost is still higher, around the RMB 47.50 and, you know, but the selling price is lower.
Secondly is we believe, I think, one of the company right now is use, I think, take advantage of the local subsidized, you know, continue to expansion their capacity. There's no way from cost effective, you know, FBR will replace, I think, Siemens process, the polysilicon.
Got it. I guess I'll pass from here, and thank you very much for your answer.
Thank you.
Thank you, Alan.
The next question comes from Philip Shen of Roth Capital Partners. Please go ahead.
Hey, guys. Thank you for taking my questions. The first one is on the outlook for 2021 volume. I know you're not providing official guidance, but, you know, the run rate you're looking at, or we're looking at for Q4 is about 20,000 metric tons per quarter. You know, factoring out maybe two weeks of maintenance, you know, do you think you can get to 80,000 as a baseline for next year? Do you think there's possibly some upside to that?
Basically, it's not the time, you know, for us to giving guidance for, I think, 2021. We will giving guidance in next, I think, earning call. You, I think projection is correct because, you know, basically we were not adding more capacity to our line, but we continue, we improve, and I think, digitized, you know, the manufacturing system will reach that figure you mentioned. Yes.
Okay. Thank you, Longgen Zhang. You know, as it relates to capacity expansion, you know, I can imagine the China listing is important for that. Just wanted to check in on how you're thinking about capacity expansion with pricing, as you mentioned, possibly in that RMB 90-RMB 100 per kilogram. What do you think the timing could be on a decision and for capacity expansion? Remind us, you know, what that next amount of capacity could be.
Thank you, Philip. I think it's a good question. I think, first of all, I think, we are, you know, actually, you know, make efforts, you know, try to speed up, accelerate our processing of, you know, listing in stock market. I think, so far, I think, we can, you know, we cannot give, given the timetable, but we believe, we can listing in stock market before the end of the Q1 2020. I think IPO proceeds will given us, you know, the opportunity to continue to expansion Phase 4B in Xinjiang. The Phase 4B, I think, is 40,000 tons, metric tons. We believe because we're already starting our design and the main key equipments, I think, contracts and the bidding system.
We are planning, I think, you know, maybe to starting trial production by, before the end of next year. Definitely we were, I think, starting, I think, full capacity running the Phase 4B in Q1 2022. I think 2022, there we're adding, you know, more, I think, you know, the capacity, given as the output to meet the market. Considering Renewable, the, I think downstream, especially the wafer capacity, expansion as you see that. By the end of this year, China may be around 160 gigawatts, I think, wafer capacity. By the end of next year is around more than 300, I think, gigawatts capacity. That's, you know, mean, need, I think, silicon around 100 metric tons.
So far didn't have too much renewable player, or, you know, competitor to declare, I think, capacity expansion. On the silicon side, the only is Tongwei, two plants, I think 80,000 tons. We are, I think, in the stock market processing, we also declare we will use the proceeds to invest in our 4B expansion. That's 40,000 tons. Plus Asia Silicon also declare is around maybe 30,000 tons. Basically, you know, next year is no more silicon capacity is adding. For the year 2022, only around 150,000 tons capacity adding on. The demand side is very hot.
That's why we're thinking if the market continue, drive, you know, at a, you know, compound, maybe, you know, 30% to 40% growth by the end of the product module installation, we believe, you know, even, year 2022, polysilicon price can continue, it can keep a little higher price level.
Great. Thank you for that detailed answer. Wanted to just ask about a comment you made on metallurgical grade silicon. I think Ming may have made that comment, that it's a little bit higher now. Can you talk about why it's higher? How much higher it is versus maybe a quarter ago? What is the trajectory ahead? Do you expect some relief or do you think that there might be tightness in that raw material as well for some time ahead? Thanks.
Yeah.
Okay, Philip Shen, a couple factors are impacting the metallurgical grade silicon pricing. One is supply and demand. I think because now we're pretty much in overall economic recovery, particularly for China. You know, demand for example, for silicones is improving and for other products that use metallurgical grade silicones also improving as well. Overall demand is rising. In terms of supply, because winter is usually the season where the production is a little bit seasonal. We are seeing some increasing in the price. Right now, it's roughly 5%-7% higher than the previous quarter-over-quarter increase. I think we can absorb that into our cost, and we're still forecasting a cost reduction for next quarter because of improved manufacturing efficiencies.
Right. Thanks, Ming. Do you expect this to be relieved starting in Q2, the pressure there from metallurgical grade silicon, or do you think it's, like, Q1 is still winter for most of it, so if it's seasonal, I'm guessing it's due to, you know, lower water levels?
Yeah
as a result of,
Exactly.
Needing hydro for the production. Yeah, go ahead. Sorry.
That's absolutely right. Yeah. We think probably Q1 will maintain the current level of cost in Q4, and then price would come down in Q2.
Okay. Okay, good. Okay, I think that's it for me. I'll pass it on. Thanks.
Great.
Thank you.
Thank you, Phil.
The next question comes from Tony Fei of BOCI Research
Hi, management. This is Tony Fei from BOCI. I have three questions. First one regarding your long-term contract. We know that your long-term contract typically only lock in the volume, not the price. In the last September, we do notice that you can't re on the pricing with one of your wafer customer. Are there any financial consequences of this kind of delayed procurement? Do you think it will happen again in the future? This is the first question. Second is on the product mix. This year we noticed that some of the cell manufacturers, they announced new plans to ramp up the HJT capacity in 2021. When that comes true, there will be new demand for the N-type polysilicon.
I just wondering if you can give an update on your certification process for the N-type polysilicon with the wafer manufacturers. Third is a housekeeping question. I see you have paid down some of your debt in this third quarter. Will you continue to do that given your strong operating cash flow? Thank you.
Okay. First of all, for your first question about long-term contracts. Most long-term contracts right now today China is not, the price is not locked, only the quantity. Even our competitors, you know, even have to collect, I think, deposits, lower deposits. To us, I think you can see we already signed three long-term contracts. We collect deposits from 3% to 3.5% to 6%. The reason why we continue to stick on that, because we think, you know, with certain, high, little higher % of deposits can guarantee the quantity is, the contract can be stick on that, can deliverable. That's I think, our purpose.
Even though I think, one of our long-term contracts you see, you know, in the history in this year and some months may be delayed and sign contracts, they still, I think, you know, come back. For example, one of our clients didn't sign in September, so that's why our inventory jump up. They still, I think, come back, you know, book additional one month in fourth quarter. Basically, I think it's a long-term relationship. Yes, from contract, you know, side, we have the right to, if they not book, you know, take the contract, the quantity of, you know, silicon, we can, you know, I think forfeit their deposits. You know, all these clients is long-term, you know, we not do that.
Basically, I think, for us, I think, we, if we collect, you know, enough deposits, we think we can still stick on the contracts. The contracts, I think basically the price is determined by, I think, the industry guidance. The sign each month, even right now, two weeks, we sign, maybe sign contracts with clients. Second question about, you know, the HJT. HJT, I think, is the, I think the cell production for N-type cell. Basically, right now the import HJT equipments is almost four times cost than the PERC technology, so it's not cost-effective. Basically right now, China today, everyone right now try to domestic manufacturing N-type, or you call HJT, cell production.
For example, I think, you know, one of our clients, I'm not mentioning this in U.S., they call HBT. The HBT, they also still produce N-type cell. I think the efficiency maybe only increase, you know, 0.5 point or 0.7% is not to compare with HJT increase almost, you know, 1.5%-2%.
HJT right now, I think they cost like 1.5 times, you know, the cost of, I think, PERC. That's why right now is workable. They not specifically buy N-type, you know, silicon from us. They just select AC because we supply, all right now P-type. They just select, you know, from all raw material to, you know, some N-type to manufacturing right now, 800, I think, megawatts, I think, you know, the HBT N-type cell. For the future, yes, definitely. I think if HJT, the equipments can domestic manufacture, the cost to continue to go down, the cost effective is sure, then N-type silicon will be, demand will be more.
Today, actually our silicon production, I think of which almost 30% to 40% is N-type, but we cannot selling N-type in a separately. Only one client is SunPower, I think, you know, designated one of Chinese company right now. I think every month, two ships, two carton, I think N-type. Today, N-type, the ASP, compare the P-type, only RMB 2 per kg difference. In the future, hopefully, I think, you know, as the HJT equipments continue to, I think installed and adding, N-type silicon will continue to demand, you know, can increase then the price, the differentiate between N-type and P-type silicon where, you know, where difference, where it can become large.
For the third question about the debt, I think so far, I think if you look our EBITDA, I think, you know, for the third quarter, even for the fourth quarter, which dramatically, you know, increased. Basically from now on, our target is to continue to reduce our leverage ratio. I think to pay off some Phase 4B expansion payments, then also to reduce the banking loans. Basically, you know, I think as I mentioned, the stock market value, I think today in China, valuation is higher than the U.S. market, basically. We are making efforts to listing in stock market.
We believe, I think, you know, we can raise enough money to, you know, to expansion for Phase 4B, even more money to expansion for another, you know, new 40,000 tons, I think, facilities somewhere. We're looking outside of Xinjiang. So Tony-
Okay, great.
Did I answer your question?
Thank you for this. Yeah. Thank you for the comment . Appreciate it.
Okay. Thank you.
This concludes our question and answer session. I would like to turn the conference back over to Kevin He for any closing remarks.
Yeah. Thank you everyone again for participating in today's conference call. Should you have any further questions, please don't hesitate to contact us. Thank you and bye-bye.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.