Earnings Call: Q4 2018

Mar 13, 2019

Good day, and welcome to the Daqo New Energy 4th quarter and fiscal year 2018 results conference call. I would now like to turn the conference over to Kevin He, Investor Relations. 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 fourth quarter and fiscal year of 2018, 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 fourth quarter and fiscal year of 2018. 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 of 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 to 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. Also, 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 Mr. Zhang, our CEO. Hello, everyone, and thank you for joining us today for our earnings call. I would like to thank our entire team for their hard work and dedication for delivering another outstanding quarter, in which we successfully completed the Phase 3B project and ramped production up to full capacity by the end of November 2018, three months ahead of schedule. During the quarter, we achieved a new record, both in production volume and sales volume, which were 7,301 metric tons and 7,030 metric tons respectively. With the successful ramp-up of our new Phase 3B facility and efforts of our operating team, both production volume and cost reduction targets were achieved with excellent results. During the fourth quarter of 2018, we successfully reduced our total production cost to $7.94 per kg, and our cash cost was lowered to $6.64 per kg, representing our lowest cost structure in history. With our Xinjiang production facilities now running at full capacity, we expect to produce approximately 8,500 to 8,700 metric tons of polysilicon during the first quarter of 2019. Furthermore, with the reduction in unit utility usage, operating leverage, and other cost savings, we expect to further reduce our total production cost approximately $7.50 per kg. In addition, we plan to conduct capacity debottlenecking projects to gradually upgrade several old CVD furnaces with improved technology, allowing us to increase production capacity by additional 5,000 metric tons. We plan to start this project in the middle March and completed by the end of June. The debottlenecking project will have limited impact on production volume. Therefore, we expect to produce 7,600 to 7,800 metric tons of polysilicon during the second quarter of this year. Subsequent to completion of the debottlenecking project, we anticipate the company will reach total annual production capacity of 35,000 metric tons. The Phase 3A capacity expansion project is progressing smoothly and will increase our production capacity to 70,000 metric tons by the end of the first quarter of 2020, with an even lower cost structure once fully ramped up. In February 2019, we received approval from Bank of China for a CNY 400 million, five-year fixed asset capital project loan and a CNY 50 million working capital loan. The company has obtained a total of CNY 830 million additional banking loans, including the loans from the Bank of China and the credit facilities from other domestic Chinese banks to support our capacity expansion and the working capital needs. These loans will support capital expenditure for our Phase 4A project and enable us to complete it on schedule. 2018 was a challenge but also promising year for solar PV industry. The policies issued by the Chinese government on May 31, 2018, immediately impacted the market and resulted in a significant price decline across the entire value chain. However, this fall in price significantly stimulated demand from markets outside of China, especially when grid parity has already been reached. The global solar PV market recovered rapidly in the following months and has since achieved equilibrium again, even with very limited conditions from China, the world's largest individual solar PV market. A draft of China's solar policy for 2019 has already been released, with the final vision yet to be confirmed. The draft indicates a new incentive program based on a fixed subsidy amount rather than a fixed quarter system as was previously done. The fixed subsidy amount is expected to be in the range of approximately RMB 3 billion and could cover approximately 30-35 GW of installations. Poverty alleviation projects will be subsidized and funded separately. In addition, the market anticipates some grid parity projects which will not require central government subsidies. Based on industry research, China's installation target for 2019 is anticipated to be approximately 40-45 GW, but there could be some variations in the final version of China's policy in 2019. Grid parity and cost reduction will continue to play a key role in driving global demand from developed markets such as Europe and the U.S. to developing markets like India, South Asia, Africa, South America. We expect global solar installations in 2019 to be approximately 120-140 GW. We believe demand for polysilicon, which is the key ultra-pure raw material for crystalline silicon solar PV modules, will keep growing as solar PV becomes more and more competitive compared to other energy sources. We believe the current market challenges are temporary and should be resolved during the second half of 2019, especially when demand and installation from China recovers. Looking forward, we believe the solar PV industry has become much stronger and increasingly independent of policies and is expected to grow substantially, sustainably over the long term with a better stability. The pace of new capacity expansion within the polysilicon industry will smooth out going forward. As a leading polysilicon manufacturer, we believe Daqo New Energy is ideally positioned to benefit from this fast-growing market and will continue to outperform its peers with lower cost and better quality. Outlook and guidance for this year. The company expects to produce approximately 8,500 metric tons-8,700 metric tons of polysilicon and sell approximately 8,400 metric tons-8,600 metric tons of polysilicon to external customers during the first quarter of 2019. For the full year of 2019, the company expects to produce approximately 37,000 tons to 40,000 metric tons of polysilicon, inclusive of the impact of the company's annual facility maintenance. This outlook reflects Daqo New Energy's current and preliminary view as of the day of this press release and may be subject to change. The company's ability to achieve these projections subject to risks and uncertainties. With that, I will turn the call over to Min, our CFO, who will go over our financials for the quarter. Min, please go ahead. Thank you, Longgen, and good day, everyone. Thank you for joining our call today. Before I begin, I would like to remind everyone that since the company discontinued its Chongqing business subsidiary in the third quarter of 2018, the operational results of the Chongqing business have been excluded from the company's financial results from continuing operations and have been separately presented under discontinued operations. Retrospective adjustments to the historical statements have also been made to provide a consistent basis of comparison for the financial results. Going forward, the company will focus all of its resources and expertise on its core polysilicon manufacturing business. For the fourth quarter of 2018, revenues from continuing operations were CNY 75.6 million, compared to CNY 67.4 million in the third quarter of 2018. The sequential increase in revenue was primarily due to higher polysilicon sales volume, partially offset by lower ASPs. Gross profit was net $16.9 million, compared to $12.8 million in the third quarter of 2018. Gross margin was 22.4%, compared to 19.1% in the third quarter of 2018. The sequential increase was primarily due to lower average polysilicon production costs, partially offset by lower ASP. Selling, general and administrative expenses were $8.2 million for the quarter, compared to $7.6 million in the third quarter of 2018. R&D expenses were approximately $1 million for the quarter, compared to $1.4 million in the third quarter of 2018. R&D expenses could vary from period to period and reflect R&D activities that took place during the quarter. Other operating income was CNY 12.5 million for the quarter, compared to CNY 0.1 million in the third quarter of 2018. Other operating income was mainly composed of unrestricted cash incentives that the company received from local government authorities, the amount of which vary from period to period. During the fourth quarter of 2018, the company received national innovation and technology development grants related to PV silicon materials as well as other government subsidies and incentives. Income from operations was CNY 20.3 million, compared to CNY 4 million in the third quarter of 2018. Operating margin was 26.8%, compared to 5.9% in the third quarter of 2018. Interest expense was CNY 1.9 million, compared to CNY 2.1 million in the third quarter of 2018. EBITDA from continuing operations for the quarter was CNY 29.5 million, compared to CNY 14.8 million in the third quarter of 2018. EBITDA margin was 39.1%, compared to 22% in the third quarter of 2018. During the third quarter of 2018, the company decided to discontinue solar wafer manufacturing operation. Results of the discontinued operation of the previous quarter and comparative quarters were presented accordingly. Loss on discontinued operation was CNY 5.7 million in the fourth quarter of 2018, compared to CNY 22.4 million in the third quarter of 2018. Net income attributable to Daqo New Energy shareholders was CNY 11.4 million in the fourth quarter of 2018, compared to net loss attributable to Daqo New Energy shareholders of CNY 18.3 million in the third quarter of 2018. Earnings per basic ADS was $0.86 in the 4th quarter of 2018, compared to loss per basic ADS of $1.39 in the 3rd quarter of 2018. Now I will discuss the balance sheet. As of December 31st, 2018, the company had $94 million in cash and cash equivalents and restricted cash, compared to $113.2 million as of September 30th, 2018. As of December 31st, 2018, the accounts receivable balance was $1.2 million, compared to $1,000 as of September 30th, 2018. Most of our polysilicon sales were made with customer payments prior to product delivery and without payment terms. We continue to manage our accounts receivables prudently. As of December 31st, 2018, the notes receivable balance was CNY 8.1 million, compared to CNY 22.5 million as of September 30th, 2018. As of December 31st, 2018, total bank borrowings were CNY 171.5 million, of which CNY 133.3 million were long-term borrowings, compared to total borrowings of CNY 165.3 million, including CNY 119.4 million of long-term borrowings as of September 30th, 2018. Our bank loan to asset ratio stood at a low of 0.20. For the 12 months ended December 31st, 2018, net cash provided by operating activities was CNY 95.6 million, compared to CNY 142.7 million in the same period of 2017. For the 12 months ended December 31, 2018, net cash used in investing activities was CNY 164.7 million, compared to CNY 67.9 million in the same period of 2017. The net cash used in investing activities in 2018 and 2017 was primarily related to the capital expenditure on our Xinjiang Phase 3B and Phase 4A polysilicon expansion projects. For the 12 months ended December 31, 2018, net cash provided by financing activities was CNY 86.7 million, compared to net cash used by financing activities of CNY 37.4 million the same period in 2017. The company completed a follow-on offering of over CNY 110 million in April 2018. I will discuss full year 2018 results. For the year of 2018, revenue from continuing operations was CNY 301.6 million, compared to CNY 323.2 million in 2017. The decrease in revenue was primarily due to lower average selling prices, partially offset by higher polysilicon sales volume. Gross profit for the full year of 2018 was CNY 98.1 million, compared to CNY 144 million in 2017. Gross margin was 32.5% in 2018, compared to 44.6% in 2017. The decrease in gross profit and gross margin was primarily due to lower polysilicon ASPs. SG&A expenses were CNY 27.1 million in 2018, compared to CNY 16 million in 2017. The increase in SG&A expenses was primarily due to an increase of non-cash share-based compensation costs related to the company's 2018 share incentive plan. R&D expenses were CNY 2.7 million in 2018, compared to CNY 0.7 million in 2017. R&D expenses vary from period to period to reflect the R&D activities that took place during such period. Operating income was CNY 13.2 million in 2018, compared to CNY 3.8 million in 2017, which mainly consisted of unrestricted cash incentives that the company receives from local government authorities, which vary from period to period at the discretion of the government. Income from operations was CNY 81.5 million in 2018, compared to CNY 131.1 million in 2017. Operating margin was 27% in 2018, compared to 40.6% in 2017. Interest expense was CNY 10.8 million in 2018, compared to CNY 16.3 million in 2017. Net income attributable to Daqo New Energy shareholders were $31.1 million in 2018, compared to $92.8 million in 2017. Earnings per basic ADS were $3.06 in 2018, compared to $8.76 in 2017. Adjusted net income non-GAAP attributable to Daqo New Energy shareholders was $71.6 million in 2018, compared to $99.5 million in 2017. Adjusted earnings per basic ADS non-GAAP were $5.74 in 2018, compared to $9.38 in 2017. This concludes our prepared remarks. We would now like to turn the call over to the operator to begin the Q&A session. Operator, please begin. The first question comes from Philip Shen of ROTH Capital. Please go ahead. Hi, everyone. Thanks for taking my questions. The first one I'd like to explore is, for Q4, you reported $75.6 million in revenue. If you take the volume of shipments, times the average ASP for the quarter, I think we get to $68 million. Can you help us understand the difference in that revenue? I think wafer you guys recognized, it's a discontinued operation now. The wafer revenue, I'm guessing, is not a part of that revenue number. Hi, Phil. good to hear from you, and thanks for joining our call. As we said before, in the third quarter, we discontinued our Chongqing subsidiary, and then the operational results of Chongqing is now excluded. Some of the revenue that we recognized in Q4 has to do with revenue and financial adjustments related to the continuing and discontinuing operations, and including some of the profit, revenue recognition and profit allocation. For example, when we shut down our Chongqing subsidiary, still had, for example, polysilicon ingots and polysilicon blocks. You know, these were sold in terms of internal transfer, but without revenue recognized. Most of the profit and revenue should have gone to Xinjiang. Now, after the wind down and we sold some of these ingots and blocks, you know, then the revenue and the profitability would go to the Xinjiang. That happened in the fourth quarter. That's where you start seeing the difference between the sales volume and the ASP, primarily. Okay. It's not- Yeah. That's the allocation. Yeah, the difference around the CNY 7 million. Yes. Right. Okay. Thanks for that. That's helpful. On a go-forward basis, we probably will not see that. Is that a fair thing to say? Yeah. cleared out that inventory. Yeah, we would not expect that starting in 2019. Okay. What kind of margin did you get on that ingot, on the ingots and blocks? I don't have the. If we go with that, you know, 7 million, you can use it to calculating the gross margin is around like, 17%, right? Our extra gross margin. 18%. Yeah. We can calculate. Yep, we're using your numbers. Thanks. You can calculate. Also on Q4, you guys had other income of about CNY twelve and a half million, which is bigger than I think you guys have had in the past. Can you talk to us about, you know, how did you guys get that for the quarter? I know you said in your prepared remarks that that can vary, but do you expect to get that kind of benefit in Q, you know, anytime in 2019? Is that something we should actually factor into our models, or was this more of a one-time CNY twelve and a half million benefit for Q4? Philip, let me answer that question. Basically, if you look at the history, every, I think, Q4, we got some, you know, the subsidy, I think a payback, the government payback some tax refund, okay. Basically, in October, we received around $11 million from local governments, which is we paid the tax, income tax, value-add tax in 2017. That tax is belongs to local governments and is supposed to back to us. That we have contract signed with the local government in 2015. Basically, that will occur every year until 2020. Okay. Is that clear? I think so, yeah. I think this is the biggest, I'm looking through the Q4s for the past since 2016. This definitely is the biggest one. Yeah, 2017, we paid a, you know, I think a big amount of tax value, you know, VAT and all those. Refund in 2018. This year, we will get a refund from 2018 figure. The figure is not, you know, decided. Let me follow up on one line here, Cecil. Because of the local government budget and fiscal year and planning, so most likely, most of the government incentives that we receive from government will generally occur in Q4. Will generally occur in Q4. Then we also apply for example, technology grants and technology incentives. For example, this time we happen to receive a pretty significant amount related to R&D for PV silicon materials, you know, from a national technology innovation grant. You know, we continue to apply for these projects from time to time. When these awards are given to us, then we recognize those as well. Okay, great. Both of those responses are very helpful. Thanks. Shifting gears to kind of some more big picture perspective, can you talk about how you guys see the polysilicon capacity ramping up on a from for the industry and competitors in Q1, Q2? We believe that it could be capacity in Q1 or production in Q1 could be up 40% year-over-year relative to last year given all the expansions that we're seeing. Can you comment on kind of that expansion that you see ahead? Also, how much at this current pricing level capacity could possibly exit the landscape? After that, maybe we'll shift to demand. Thanks. Okay, Philip, I think, you know, it's a good question. I think, it's a lot of information data you see slides. If you look the new capacity, I think, we are the first one, I think the 3B ramp up the, you know, the production for production. Other people, most, I think, starting production like Tongwei, I'm not going specific, okay? They're going to ramping up maybe on the Q2 of this year. Others may be ramping up, you know, in Q3. First of all, it's not all capacity will, you know, fully expected running this year. Definitely, I think for next year, yes, a lot of new capacity will come in. Total altogether, if you can see that, I think, even this year, I think, the good quality, the better quality and the lower cost maybe is around like 270,000 tons, you know, for this year. Basically, you know, I'm not saying amount of size, just saying production size. I think, the domestic high, you know, good quality product is not too much there. For example, I can say example. In Q4, our mono silicon supply is around 61%. If you look our gross margin, our mono silicon price SP is around like CNY 10 and the multi is around CNY 6.30 or whatever. Our SP is around like, you know, renminbi is around like US dollar maybe around like $9.50. We see Q1, we will get, you know, more improved on gross margin. The reason because, first of all, the mono silicon percentage will increase to around 70%, 78%. We didn't see the mono silicon price, you know, go down because we think it's already lower right now, CNY 10. A lot of people, actually the cost is probably about that, even the foreign producer. Another side, yes, I think on the multi-silicon side, oversupply situation is coming. Okay? We got a pressure, but we still can, because of the quality today, we're still selling, you know, about CNY 9 per kg. Basically, you know, from all sides, we're still very optimistic. The reason is because, you know, we see the Chinese, I think a new policy is going to installation in more detail. In the second half of this year, we see the good picture there. Second is the global market is there. Right now, the downstream, if you look the module price right now, renminbi, the foreign currency may be around like a US dollar, about $0.25-$0.26. On the mono, you see it's very lower. Actually, grid parity is there. Basically, you know, I'm not worried about that because basically right now, the ASP is already a lot of produce in China is consolidation. Even in foreign producer, you know, as their price, today's price, we may be making gross margin 20%. Our competitors right now I think is bleeding. Yeah. On that point, Longgen Zhang, how much capacity do you think could go offline at current pricing in the industry? I already told you that. About twenty nine- I think around 20 In China, maybe around 250,000 tons, 270,000 tons. Okay. I just wanna clarify. You think 250,000 tons could go away? Okay, great. In terms of ASPs looking ahead, our checks suggest that there could be some upside to pricing near term, you know, let's say, by 5%-10%. Do you think that could be true? If so, why? How do you expect poly ASPs to trend by quarter through 2019? Basically, you know, we right now is 2 forecasts. One is, you know, for the monocrystalline silicon, to forecast the quality. To increase the monocrystalline silicon percentage go up. Q1, we around 77%-78%. We see right now the monocrystalline silicon price is around RMB 81-83. In March, it's already increased RMB 1 per kg. Then for the multicrystalline silicon right now, we're selling around 70-72. Yes, we got a pressure because in too much you supply, especially some new capacity right now. A majority of their new products is the tri-product is multicrystalline silicon. In Q2, we don't think, you know, the price will go up, you know, dramatically. Maybe mono-silicon is go up a little slightly, but not like you said, 10% or 5%, I don't think so. We hopefully, Q2 can continue keep, you know, the price stable, and then all percentage continue, mono-silicon percentage continue go up, so we can keep the ASP stable or slightly go up. Definitely, we think a second half of this year, the ASP will go up. I'm not sure because I cannot project whether 5% or 10%. It all depend on demand and supply. Okay. A lot of that, I think is, the demand part of the picture is something I think is not well understood. You know, you mentioned in your prepared remarks that global demand is very strong, and that a number of countries are seeing that grid parity, and that China demand, you know, should support that. Can you talk to us about which specific countries, perhaps your customers are highlighting as sources of strength, you know, certain countries in Europe or Latin America, Southeast Asia? Which countries in particular are you guys seeing as places of surprise, if you will, of that upside of demand? First of all, Philip, I'm not selling module, okay? I'm selling silicon. Only I can tell you is very strong demand from all clients, you know, downstream. Today is every, I think, you know, see that LONGi, Zhonghuan, Jinko, Canadian Solar, all these company right now. To answer your question, I think in the script, I already say right now globally, almost everywhere you see from developed country to developing country, especially developing country like India, South Africa, you know. I think, you know, even North America, we see that. The developed country, especially in Europe, you know, and we see strong demand is there. I think, you maybe can see Canadian Solar, I think in Jinko Solar, they are earning release. I think, they may be around even later. I think, the market is there. The only thing I can tell you is right now, LONGi, Jinko, as I know, I think Canadian Solar, they were in full capacity running right now. Okay. Thank you, Longgen. Thank you, Ming. I'll pass it on. Great. Thank you, Philip. The next question comes from Gary Zhou of Credit Suisse. Please go ahead. Hello. Thank you man-management for taking my questions. It's Gary Zhou from Credit Suisse. Three questions. Firstly, on the policy side, the man-management mentioned that you expect around 40-45 gigawatt China solar demand this year. Does management has a rough estimate? How much of this demand may come out in this first half, and how much in the second half? Secondly, given the likely stronger demand into the second half of this year, does the management can give us some color on the what kind of polysilicon price can show up into the second half this year? Lastly, just after the company's electricity tariff cut at the end of last year, what is the company's latest cash cost currently? Thank you. Okay, Gary, I think, first of all, to answer your question, I think, China right now, you know, we estimated around 40-45. Basically, you know, the new policy is a fixed, specific amount. I think a CNY 3 billion, as you know that, right? Instead of, you know, the old system is fixed quarter. We believe that will support, you know, around 30 gigawatts. I think, you know, pioneer projects or whatever. I think that those, I think the majority will do second half of this year. Plus, I think a policy alleviation, we believe should be around like 5-8 gigawatts. Plus, grid parity, I think around maybe, I think another 5-8 gigawatts. Basically, to answer your question, you know, we are based on that, I think, you know, basis we projection that. To answer your question, I think, first half of the year, maybe around 10-15 gigawatts. Majority, I think it will second half of this year. I think second half maybe go to 30-35, even 40, because first half this year is not too much there. You know, only last year's, you know, projects going to finish. That's for your first question. To answer your second question is how about the polysilicon price? As I just said, you see, because as long as the, I think the monocrystalline silicon, especially I think the module, mono module, PERC high, you know, high efficiency module demand is hot. We believe this year the mono module will account for around 60%-70% even. The monosilicon demand is hot. Basically, you know, in the history, you know, there's not too much Chinese producer, you know, can provide the monosilicon. Majority is import, as you can see that. Last year, the total consumption in polysilicon is around 41 metric tons, of which 147 tons is import. Last year, 400,000 tons, okay? This year, I think import should be below 1,000 tons. But the monosilicon total demand, I think it should be around like, you know, 250,000 tons-300,000 tons. Basically, I think monosilicon price should go up. I think when they come, it's around CNY 80 to CNY 82. I think a reasonable second half of this year, maybe go to about CNY 85 to CNY 90. I don't think, you know, go beyond too much because it's not good for the whole industry. For the multicrystalline silicon, because of the supply and demand situation, and still a lot of small producer in China, you know, especially state-owned company, they're still running. Even they're bleeding, they're still running, you know, the money from governments. I think they are suffer right now from last year Q4, Q1, Q2. Hopefully, some company should stop, should shut down, you know. Hopefully, we can finish that. I don't think the monocrystalline silicon price will improve in Q2. Maybe in second half of this year, the price maybe will come back, I think back to CNY 75, you know, around CNY 75. I think to answer your second question. The third question, all we can answer is Daqo. Last year, we successfully ramping up the, you know, Phase 3B projects. Our electricity cost right now, last year since the November 20th, our electricity cost is around CNY 0.24 per kWh. Right now, Q1, we think our cost will continue to go down because of the, I think, the electricity cost, you know, continue to come down. The cash cost per kg, we will control maybe below CNY 41 per kg. By, you know, the October 15th, if the 4A, we're starting production, if we can ramp up, then we can enjoy electricity cost around CNY 0.20 per kWh. I think, by the end of this year, if we can successfully reach, you know, or even ramping up the first quarter of next year, 70,000 capacity. Our cost will dramatically go down. You can see our cash cost is around like CNY 6.50, even CNY 6. Yeah. Did I answer your question, Gary? Yes. Thank you very much. yeah, just a very quick follow-on question. Can management share with us the latest progress of your Phase 4A expansion? Also, is there any kind of guidance on when we can have an estimate on when the Phase 4B, the possible Phase 4B expansion will start? Thank you. For Phase A, I think basically right now, because Xinjiang is in a better weather. Our construction right now almost finished 18%. For the all the design, you know, approvals, license, we all finished. I think for the equipment procurement, the contract we signed, total today we signed around CNY 2.6 billion. The total project cost is around below CNY 2.9 billion. Basically, you know, our schedule starting to try production is October 15th. Up to today, we're still thinking, you know, we are on a schedule. Ramping production in the Q1 2020. For the 4B, we need to depend on the market, you know, to see what's going on and also, you know, to see our future cash flow. Basically, we're not, you know, determine when or whether we go to, you know, starting the 4B. Okay. Yeah. That's helpful. Thank you. Great. Thank you, Gary. This concludes our question and answer session. I would like to turn the conference back over to Kevin He for any closing remarks. Thank you everyone again for participating in today's conference call. Should you have any query, please don't hesitate to contact us. Thank you very much. Bye-bye. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.