Earnings Call: Q2 2021

Sep 15, 2021

Ladies and gentlemen, thank you for standing by for JinkoSolar Holding Company Limited's Second Quarter 2021 Earnings Conference Call. At this time, all participants are in listen only mode. After the 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. Ripple Zhang, JinkoSolar's Investor Relations Manager. Please proceed, Ripple. Thank you, operator. Thank you, everyone, for joining us www.jinkosolar.com as well as our 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 Hsieh and De, Chairman of the Board of Directors and Chief Executive Officer of JinkoSolar Holding Company Limited Mr. Zhennan Miao, Chief Marketing Officer of JinkoSolar Company Limited Mr. Pan Li, Chief Financial Officer of JinkoSolar Holding Company Limited and Mr. Charlie Cao, Chief Financial Officer of JinkoSolar Company Limited. Mr. Li will discuss JinkoSolar's business operations and the company highlights, followed by Mr. Miao, who will talk about the 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 and 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 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. We are very pleased to have delivered revenue of US1.23 billion dollars and gross margin of 17.1 percent as well as a significant increase in non GAAP net profit quarter over quarter despite very challenging market conditions In response to the sharp polysilicon price increases in May June and there is a certain time gap in the transmission of price increases From upstream to downstream in the supply chain, we quickly increased the external sales of silicon wafers and proactively lowered the production volume of modules. Total shipments and revenues in the Q2 were approximately flat Compared with the Q1, while profits improved sequentially as prices along the supply chain remain high but relatively stable, We see overall acceptance of module price increases continuing well into the second half of the year. Demand for modules is gradually resuming, And our module production volume increased remarkably month over month in the 3rd quarter. As one of the first PV Enterprises to go global, we have accumulated rich experience and insights into the development Management of overseas supply chains. This has given us the know how and capability to mitigate risk. Since the beginning of the year, we have continued to optimize and improve our global supply chain management. So far, we have announced a few With annual capacity of 45,000 metric tons and investment in Inner Mongolia Shinto Silicom Material Company Limited, a wholly owned subsidiary of Shinto Energy Company Limited, And we have signed a strategic 5 year polysilicon supply agreement with Weker Chemie AG. Weker will supply polysilicon to JinkoSolar from its production sites in Germany and the United States, which contributes to the long term stability of our supply chain and business growth. Meanwhile, the overseas wafer manufacturing facility will start construction soon and will serve our production facilities In terms of integrated operations, Over 7 gigawatts of newly added capacity of large size sales has put into production during the Q2 to support the rapid growth in demand For large sized products, with the release of new capacity aided by the application of new technologies and the continuous optimization of our process, We are confident that optimizing the integrated capacity structure will gradually be reflected in cost reductions during the second half of the year. At the same time, SAIL Technology is at a transitional stage from P type to n type, and we are expanding the investment plan for n type SAIL capacity based on technical advantages and 2 years mass production experience. Leading technology, high quality Products and reliable services form the foundation of our success and the growth of our market share worldwide. Recently, the maximum laboratory conversion efficiency of our large area N type monocrystalline silicon solar cell reached 25.25 percent and the maximum laboratory conversion efficiency of our high efficiency module reached 23 point 53%, both making history with new world records. This year, the shortage of polysilicon highlighted the economics of large sized products. We expect the proportion of our large size product shipment to increase rapidly in the second half of twenty twenty one and the market penetration rate of large sized products to further increase next year. High module prices have also brought about changes in the market structure. The uptake of the distributed generation business achieved rapid development with more flexible business models and lower sensitivity to prices. In response to this trend, we have also raised the proportion of distributed business for the full year to around 40% of total shipments compared with 20 to 25 last year in order to meet the needs of customers facing different distributed application scenarios. The PV industry has largely completed its transition from relying on policy subsidies to policy strategic support And the continuous cost reduction and product upgrades brought about by technology innovations have continued to fuel solar demand. We expect the second half of twenty twenty one through 2022 to be a big moment for solar installations. Top tier enterprises are expected to grow even faster than the industry average and further increase market share with higher Proportions of large sized products and faster penetration of distributed generation markets in order to secure the annual growth rate Our global shipments, we signed strategic cooperation agreements with both Costco Shipping and Mask. At the same time, in order to facilitate the rapid penetration of China's distributed generation business and the accelerated development Of the Energy Storage Business, we recently signed a strategic cooperation agreement with contemporary Amperex, Technology, Coating High-tech and other industry chain leaders, the partners will set up project teams to do joint research and development, share resources and leverage their respective advantages to jointly promote Before turning over to Gener, I would like to go over For the Q3 2021, we expect total shipments to be in the range of 5 to 5.5 gigawatt, Including module shipments to be in the range of 4.5 to 5 gigawatts for the Q3 of 2021. Total revenue for the Q3 is expected to be in the range of US1.24 billion dollars to US1.37 billion dollars Gross margin for the Q3 is expected to be in the range of 12% to 15%. The annual mono wafer, Solar sale and solar module production capacity is expected to be to reach 32.5, 24 and 45 gigawatts, respectively, by the end of 2021. The full year 2021 shipments guidance, including wafer, cell and modules, is still expected to be in the range of 25 to 30 gigawatts. Thank you, Ms. Li. In the Q2, total shipments reached 5.2 gigawatts, inclusive of over 1 gigawatt of wafer and sales shipped to China market. In terms of module shipment by region, Europe contributed the largest portion of the module shipment this quarter as module shipments increased by more than 40% year over year. Shipments to China and the United States remained stable sequentially. The rapid developing Chinese market has been given a boost by government policy and expected to contribute a large proportion of shipment in the second half of this year and Through continuously monitoring China's market demand and our customers' needs, We have allocated the utility projects in the distribution market with different personnel products and resources to support the coming strong growth. Overall, demand from overseas market remained strong in the 2nd quarter, benefiting Both increasing power consumption brought about by the gradual recovery of energy consumption level, Thanks to effective pandemic control measures and the effective implementation of carbon emission reduction goals in major In addition, the expected reduction in subsidies in some market has brought forward some demand. We believe that Europe and the United States and India will become even bigger driving The United States is one of our most important markets, Although the supplies have become more difficult of late due to challenges with shipping and the policies in short term, We have made strategic and long term commitment to adapt our resources and infrastructure to better serve the U. S. Market. Our teams have already been proactively deploying, researching and promoting Suitable long term solutions that will allow us to continuously grow and meet the needs of U. S. Market. We expect annual global installation in 2021 to be in the range between 150 to 160 gigawatt. Some projects scheduled for this year have been delayed to the following year due to higher cost in the supply chain. Along with the new project in 2022, installations in 2022 are expected to increase by over 30%. We reiterate our total shipment guidance of 25 to 30 gigawatt for the full year 2021. Looking forward, As we have a high degree of certainty on the future demand, we are striving to deliver faster shipment growth compared with industry average to increase our global market share as well as reaffirm our competitive position and leading position in this industry. In terms of product prices outside the United States, markets have generally maintained an upward trend. In terms of product structure, the proportion of our large size products have been rapidly increasing With 182 millimeter product accounting for approximately 50% of shipment in the second half of this year, We are bullish about the development prospects of distributed generation markets and expect up 40% of total shipments this year would be going to distributed generation market. We will continue to and proactively increase our presence in China, United States, Europe and explore other potential markets. With that, I will turn it over to Pat. Thank you, Gener. In the second quarter, We remained flexible and adjusted shipments for wafers, cells and solar modules according to the prevailing market conditions. As a result, we achieved a relatively balanced performance in terms of shipments and profitability. Sales revenue was basically flat with the Q1 of 2021, while gross margin exceeded our expectations. The changes we addressed on the management and control operating expenses and exchange Rate volatility have proven to be effective. Income from operations and net profit, excluding non Tariff items increased significantly compared with the Q1 of 2021. For second half of twenty twenty one, we expect raw material prices to further stabilize and production volume to gradually increase, which combined with cost reductions resulting from new production capacity could have a positive impact on profitability. Let me go into more details about this quarter now. Total revenue was RMB 1,230,000,000 sequentially flat. Gross margin were 17.1 percentage sequentially flat. Disposal and impairment loss on property, plant and equipment Total operating expenses in the Q2 were RMB 155,300,000, which accounted for 12.6 percentage of total revenues. In terms of absolute amount and proportion, Both improved significantly compared with the Q1 of 2021. Excluding shipping costs, We expect operating expenses as a percentage of total revenues to remain stable. The effective management and control operating expenses increased income from operations to RMB 55,200,000 up to 139 percentage sequentially. Operating margin increased to 4.5 percentage from 1.9 percentage in the Q1 of 2021. EBITDA was RMB143,000,000 compared with RMB 123,000,000 in the Q1 Of 2021, net income was $10,300,000 and non GAAP net income was $42,500,000 up significantly sequentially. Non GAAP diluted earnings per ADS increased to 0.89. We continue to optimize our hedging against foreign exchange risks I recorded a net exchange loss of $700,000 a significant reduction from a loss of RMB 4,100,000 in the Q1 of 2021. Moving to the balance sheet. At the end of the Q2, our balance sheet of cash and cash equivalents was RMB 1,010,000,000, Approximately flat with the Q1 of 2021, accounts receivables due from third parties improved significantly sequentially, and we will continue to work on improving liquidity. AR turnover days were 62 days compared with 68 days in the Q1 of 2021. Inventory turnover days were 138 days compared with 126 days in the Q1 of 2021. Total debt was RMB 3,120,000,000 at the end of 2nd quarter compared to RMB 2,67,000,000 1,000,000 was related to international solar projects. Net debt was RMB 2,100,000,000 compared with RMB 1,590,000,000 at the end of Q1 of 2021. This concludes our prepared remarks. We are happy to take your questions. Operator, please proceed. We will now begin the question and answer session. And you will be placed in the queue. Our first question is from Mr. Philip Shen from ROTH Capital Partners. Please go ahead, sir. Hi, everybody. Thank you for taking my questions. I'd like to ask about your view of the Anti circumvention Southeast Asia ADCV tariffs that could come around. So If the Department of Commerce takes on the case in the coming weeks, what would you expect to do? Would you Continue to ship into the U. S? And if so, how would you mitigate that risk of retroactive tariffs or is there a possibility that you might stop shipping into the U. S? Philip, this is Hari speaking. And To mitigate the risk, not only the risk you are talking about, let's say, the U. S, China, right, on this Solar Industries, and we have accelerated the process to build up more strong Supply chain and integrated production line out of China. And I think we signed the silicon arrangement with Walker, And we have begun to build up around 7 gigawatts wafer capacities In both NAND and to match our capacity in existing capacities in Malaysia and the U. S. So from the, let's say, the medium term, we are optimistic and we will continue to serve our U. S. It's appeared for U. S. Customers. And for the circumvention, you are talking about the risk, and it's still in the early stage, And it did have some uncertainties, but we are following up The event and closely keep in touch with our customers. Okay. Thanks, Charlie. I know it's a tough situation. And I think you brought up the silicon arrangement with Bakker, in your 7 gigawatts of wafer capacity in Vietnam, I think in the anti circumvention case, the Jinko Vietnam facility is mentioned in that case. So if they do take the case on, does the wafer facility in Vietnam, would you continue to expand that Build that facility out? Or is there a chance that you might slow things down there? We don't have any further plan to expand capacity on the wafer out of China, the first step, we want to have a relatively competitiveness to build up the integrated, including the silicon, right, out of China to make sure to mitigate the risk to 0. And we think we are in a good position to mitigate this risk. Okay, great. And then how much with the WRO enforcement, how much product has not made it How much of your product from Malaysia has not made it to the U. S. Shores thus far? And what is the impact of that On Q3 results, because I think in your prepared remarks, you talked about OpEx should be flat ahead except or excluding shipping costs. And so To what degree how much product has been not able to get to the U. S. Shores? And then how much is it costing you to store that product? Because my understanding is, it can be quite expensive. And have you been able to find other markets For that product or do you expect to wait for that product to make it to the U. S? Thanks. So yes, we did have some modules stopped by the U. S. CBP and to request additional documentations. And we're still in the process in the preparations of relevant documentations. And at this stage, we are cautiously optimistic for the results. And it did have because it's going to take time, so it did have some impact on our shipments So the U. S. Market. And in terms of the storage, we did have additional we're expecting To enter additional storage for the inventories and waiting for the preparation of relevant documentations. And back to your question now is the solar demand is pretty strong. And I think it's not the demand issues. It's just globally, it's just the Supply chain, higher supply chain cost and production capacity bottleneck. Okay. Charlie, sorry to ask the question again, but can you quantify how much product has not been Able to make it to the U. S. And what the cost might be to store that? Well, in the process evaluation at additional costs, it did have, as I said, Have negative impact on the shipments to the U. S. As well as the gross margin, even net profitabilities in the short term, but We are not in a position to disclose the detailed number. Okay. I really appreciate you taking the questions. I know there are some tough With that, I'll pass it on. Sure. Thank you. Thank you. Our next question is from Credit Suisse, Mr. Jerry Zhao, please go ahead, sir. Hello. Thank you for taking my questions. This is Gary from CS. I have three questions. So firstly, can management share with us what is your module price outlook into the Q4 this year, So especially after the recent upstream cost hikes and what do we think is the maximum kind of module price can the developers in China accept? Sure. Thank you, Gary, for your question. This is General. Regarding market price, we have seen the latest Changes are from the upper stream supply chain side like the polysilicon price change and the EBA price Change and even sometimes glass price changes upwards as well. So we are anticipating the modules price will Not to be able to accept all the upwards because there are certain bottleneck and the ceilings for the down Players and the customers to adopt all these numbers. So in our observation, the latest, I think tenders by some of Chinese SOEs number are just released today and yesterday. We have observed all these Tier 1 players are above RMB1.80 per watt peak. So if we make it more specific, I think the range is Somewhere between $1,82,000,000 to $1,86,000,000 That should be our flagship price for the Rest of 2021. Yes. Okay. Thank you. So my second question is, can management share with us A little bit more information on our cooperation with CATL. So just wondering if there's any Yes. Thank you for the question again. So for the corporations with all these Storage battery companies, including CATL, Guoxi and others, I think that's a very strategic move. In our prepared remarks, we emphasized that that is our long term strategy prepared for the future because with Great parity ongoing. We are anticipating a massive installation in renewable sector, especially In PV Industry to be happen in the next coming years and because the nature of the PV solar Power generation system and the storage is a must for the whole industry's further growth. That's why we have established the partnership with the key players in the storage sectors to make sure that we're Well prepared for that. And to make it more specifically, we joined research and development Together with some of the resources sharing and leverage each other's respective advantage To jointly promote future business development for the solar plus energy solutions. And the next question, I think Charlie will take that. The IPO process is still on the track and We submitted the application to Shanghai Stock Exchange by the end of June. And as of today, it's still in the review process by the regulators. Yes, okay. Thank you for taking my questions and I will pass on. Thank you. Thank you. Thank you. Our next question is from Sarah Capital, Mr. Rajeev. Please go ahead, sir. Yes. Good morning. Good evening. I had a few questions. The first question is about Gross income, you guys did a very good job improving the gross income number from the 2nd from the first quarter And balancing the mix of wafers and modules to get there, is it reasonable to think that Obviously, there's a lot of dynamics that gross income will continue to grow in the 3rd quarter, even as you are Increasing sharply the amount of modules that you will ship relative to wafers and cells. I'm not talking about the gross margin number, but the gross income itself. Is it reasonable to think that, that will continue to increase in the Q3? So you have two questions. 1 is the gross income and gross margins. And gross margin, Q2, we did have relatively good compared to our expectations. The major part is the waiver third party sales contributions. And towards your 3rd quarter, We expect the gross income will continue to increase while the gross margin is under pressure Because we shift we are trying to have more solar module shipments. At the same time, the upstream, the material costs are on the upwards. And but we are trying to continue to increase our module price and but It's still facing the high polysilicon, the EVA glasses and the price upwards. So in general, we expect the gross income will increase, while the gross margin is in a downward trend. I understand. I understand. But the important thing is that gross income will continue to grow. The second question is that you maintained your guidance of 25 to 30 gigawatts for full year shipments, which suggests that you're expecting shipments of about 9 gigawatts in the Q4. Can you elaborate? Can you give us Some insights into what the reasons are to expect such a big ramp from 3rd quarter shipments? And then I have one more question. Yes. So I think we are I think as a strong Q4 is within the plan. I think it's part of the nature of the solar industry because if you're looking Look back in the last 2, even 3 years' time, Q4 is always the peak season as of the whole year, mainly because they People are expecting a very strong demand from China. I think each company or the whole industry as a whole, Everyone will expect a stronger Q4. That's one part of the nature of the industry demand. And another part is we are steadily ramping up our in house capacity as well. So naturally, our capacity will grow By time flying and also as well as preparing for the 2022 as well. Okay. So obviously, you are expecting a very substantial increase in module shipments as well in the Q4. The way you'll get to the 9 gigawatts will be a substantial increase in module shipments? Well, that will part in general, yes, that's the direction, but we still have the flexibility to expose our sales breakout cells into wafer cells or modules as we did in the Q2 Even Q3, so we have the flexibility, but in general, the total shipment will grow for sure. Okay. And my final question is on your capacity. You have substantially increased your capacity For modules, and you're now talking about 45 gigawatts for next year. That's a very significant increase. And this is despite the fact that your module shipments this year are not growing As they have grown in past years. So can you give us some insights into why you think that 45 gigawatts for Modules in 2022 is the right number, especially given that you'll have shipped about 21 or 22 gigawatts this year? It's strategic preparations for next year. And this year, the market is constrained by the polysilicon and after bottleneck is departed From Polysilicon, we expect next year, the market will be accelerating the demands. And on top of that, we are planning the N type cell capacities and it's next generations and capacities And the module, it's the capacity is relatively small, and we want to build up module As quickly as possible and for the preparation on next year. And if you look at our shipment, let's say, 9 gigawatts And based on your calculations in Q4 and the module is still we face some Supply shortage, particularly we are building the large size module capacities for the next generations. Okay. Thank you very much. Thank you. Thank you. Our next question is from Goldman Sachs Mr. Brian Lee. Please go ahead, sir. Hey, guys. Thanks for squeezing me in for some questions. I had a couple of housekeeping ones. First one, you guys gave us the breakout for modules and wafers. Can you do anything similar for what is embedded in 3Q guidance as well as since you're maintaining the full year, there's an implicit Mix, you're assuming in 4Q. Can you give us a sense of module versus non module shipments in 3Q and 4Q? 3rd quarter, we gave the guidance total shipments 5 to 5.5, including module 4.525. So the gap, the difference is the majority of the part is wafer 3rd party sales. Taking to the Q4, yes, we are still Flexible, but majority part of it we are at this stage, we are expecting it's from the module shipments. Okay, fair enough. And then just on the earlier question about gross margins, it sounds like you're seeing some margin pressure on both Product types, can you give us a rough sense of where gross margins are for Modules versus non module shipments in your guidance? 3rd quarter, we gave the guidance 12% to 15%, and the majority part is more so The gross margin is it's very same with module gross margin. And For the Q4, we still it's still some uncertainties. The mature cost is upward very quickly. And at the same time, we are shifting our module shipments To China, the majority part, and we are trying to get relatively high the module price. And hopefully, we are able to offset the cost upward pressures. Okay, fair enough. And then maybe 2 more from me. I know you can't quantify or you don't want to quantify the shipments that have been Held up at the border here with the WRO in the U. S. Can you give us a sense, I guess, what sort of mix impact or mix are you assuming in terms of shipments for the U. S. In Q3 and Q4, are you actually embedding U. S. Shipments, module shipments into the forecast here for either quarter? And then maybe related to that, you have the 400 Megawatt facility in Florida. Are you able to get cells, I guess non Jinko or Jinko cells into the country to run that module facility? Right. I think the mix is something difficult to disclose at the current stage because We are even we are cautiously optimistic about our documentations, which has been well prepared, But it's still it's not 100% Jinko's call to decide what to do next. That's why we are cautiously monitoring the situation and And right now, like Charlie just said just now, I think we are very confident about the demand. It's not Right now, it's not the problem of the demand, it's the problem of the supply. So shipment wise, we have multiple And even we have a full commitment to our U. S. Customers and our U. S. Market and we are preparing for it, but it's difficult to I guess maybe to ask it another way, if you don't have clarity that you can move Product into the U. S, ship product into the U. S, are you still planning to Bring product to the border at risk of having it being seized for months until it gets released and you can maybe Ship it to another alternative location as you mentioned. I guess what's the strategy around taking that risk of having shipments which Get delayed and then ultimately you do have to reroute them elsewhere versus waiting out the Process to see what you should do with future shipments over the next couple of quarters. I think we are still COVID control in the local Southeast Asia countries, but we're still doing our best to find solutions with our customers right now. So for detailed number wise, again, we cannot quantify it yet because we don't have any number, which We can close, but disclose, but still we are doing our best and we have the confidence to continue to have our business Ongoing, not only U. S, but in the other markets as well. So we are working in different alternatives in parallel. So we have no concerns on that. Okay. Last housekeeping one for me. What was the CapEx here for the first half of the year? And then is there Updated view on CapEx guidance for 2021. Thank you guys. Okay. For the first half of 2021 with CapEx number is approximately USD 5.80 We increased the plan to build up more module capacities and to reach to 45 gigawatts. So we increased Our CapEx target this year and it's for the full year, it's roughly around US1.1 billion dollars Okay. Thanks guys. Thank you. Thank you. The Q and A session is still open. Our next question is from UBS, Mr. William Griffin. Please go ahead, sir. Great. Thank you very much for fitting me in here. Just another one on the shipments. Obviously, the guidance implies a pretty substantial ramp in the Q4 for shipments to reach the total guidance. I'm curious, going into the quarter, are you expecting to hold more module inventory? Or do you have the ability to ramp Production that quickly depending on what the final mix of module and component, cell and wafer sales end up being. So firstly, let me comment in general. I think my colleagues will give you a breakdown detail later. So in general, I think the market demand is quite strong. And we are holding some of the inventory really because of the accounting Issues and we have the contract to fulfill, but right now the global international logistics shipping lines are Facing a big headache right now. I think it's not only for solar industry, but for all the industries. So it's difficult to get the Ship on time and on schedule. So that's why we have lost we have sometimes we have to face accounting Point, we have some inventories on hand, but actually we have all the contract covered for those inventories. Okay. And then just one more for me. The guidance obviously implies cost pressures accelerating here in the Q3. Despite Polysilicon prices being pretty stable over the time period, glass obviously coming down. Just wondering if you could provide a little more color Why are we seeing or expected to see margin compression in the Q3 relative to the Q2? And what level of confidence do you have here that you may actually meet or exceed the high end of the range again? The majority part is, I think, how we calculate the cost in Q2 and Q3 It's based on the weighted average and the polysilicon reached to the high price Starting from May this year. So in the Q2, based on the weighted average, The polysilicon price is not so high. It's not, let's say, RMB 200 kilo, it's not based on that cost in the calculation in the second quarter. It's fairly low. But with the time collapse To the Q3 and the polysilicon, the average cost is reached to relatively high level. That is a major part. And hopefully, you understand that this is really average and the polysilicon price And it's accelerated the pace starting from May. And so from a calculation perspective, really on average, more impact will be reflected in the Q3. So it's, I think, one of the key impact On the cost side. Got it. Thanks very much. Thank you. Thank you. Our next question is a follow-up from Mr. Rajiv from Sansara Capital. Please go ahead, sir. Yes. I would like you to give us a little bit more clarification on the revenue number that you have guided The Q3, because using different combinations of wafers and modules Shipments in the Q3 and assuming that there is some price increases from Q2 to Q3, The revenue numbers that I'm coming up with are higher than $1,400,000,000 which is obviously higher than your guidance. So can you help us understand why your revenue guidance at the high end is 1.35 when using your low end Of your shipment guidance, combined with assuming that prices are stable or up for both modules and wafers, The revenue number that we come up with is higher than $1,400,000,000 It's a mixed issue. And I mean the shipment to U. S. Versus our regions. The U. S, The ASP is relatively stable by regions, but we have more shipments In the Q3 versus Q2. And in the Q3, And the U. S. Shipments is relatively lower than the Q2 and the percentage wise, the U. S. Shipments taking less percentage Of the total shipments. And the U. S, because of the trade issues and the ASPs is Dramatically higher than the other regions. So it's a mix issues. So what you're saying is that you can increase your gross income from Q2 to Q3 Even if at the aggregate level, the wafer the module price that you will realize From the will go down from Q2 to Q3 because you have less shipments to the U. S. Where the module price is inflated. Yes, you're right. And with cost production cost is higher. And in the U. S, we need to pay additional So the gross margin gross income from U. S. Shipments actually is not so significant difference With our regions, and we have more shipments in our regions and which has No impact on the gross income contribution. Great. Thank you very much. Thank you. Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.