Thank you for standing by and welcome to the first quarter 2016 JinkoSolar conference call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions]. I must advise you that this conference is being recorded today, May 27, 2016. I would now like to hand the conference over to your host for today, Mr. Sebastian Liu. Please go ahead, Mr. Liu.

Thank you operator. Thank you everyone for joining us today for JinkoSolar's first quarter 2016 earnings conference call. The company's results were released earlier today and available on the company's IR website at www.jinkosolar.com, as well as on the newswire services. We have also provided supplemental presentation for today's earnings call, which can also be found on IR's website. On the call today from JinkoSolar are Mr. Chen Kangping, Chief Executive Officer, Mr. Cao Haiyun, Chief Financial Officer and Mr. Gener Miao, VP of Global Sales and Marketing. Mr. Chen will discuss JinkoSolar's business operations and the company's highlights, followed by Mr. Gener Miao who will talk about the sales and marketing and then, Mr. Cao, will go through the financials. We will all be available to answer your questions during the Q&A session that follows. Please note that today's discussion will contain forward-looking statements made under 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 result may be materially different from the views expressed today. Further information regarding these and other risks is included in JinkoSolar's public filings with the Securities and Exchange Commission. JinkoSolar does not assume any obligation to update any forward-looking statements except as required under applicable law. It is now my pleasure to introduce Mr. Chen Kangping, CEO of JinkoSolar. Mr. Chen will speak in Mandarin and I will translate his comments into English. Please go ahead, Mr. Chen.

[FOREIGN LANGUAGE] Thank you Sebastian. Good morning and good evening to everyone and thank you for joining us today. [FOREIGN LANGUAGE] I am happy to the strong performance of this quarter. Total margin shipment during the quarter reached 1.6 gigawatts, as global demand continues to grow, particularly in a number of the emerging markets. Revenues during the first quarter reached $847.8 million representing an increase of 98.8% over the same period of last year. GAAP net income and non-GAAP net income for the quarter reached the $48.6 million and $64.3 million respectively. [FOREIGN LANGUAGE] This June marked our 10-year anniversary and I am proud of what we have achieved throughout the year in becoming a global leader of the solar industry. In the 10 years, we have shipped about 13 gigawatts of solar modules to more than 1,700 customers from 70 countries and regions. We delivered on average over 1 gigawatts of solar projects. We began our journey from humble beginnings and sustainably built our way into a globally recognized brand. In Q1, we became the biggest module supplier among our peers. We will continue to grow our business in a sustainable and conservative way and generate long-term return for our investors. [FOREIGN LANGUAGE] Our position as the market leader in China was solidified as large orders continue to come in before the FIT cut due as end of June. We expect this trend will continue in this quarter. In U.S., we continue to grow market share although the extension of ITC has resulted in some of the project being postponed, we are very confident to meet our shipment targets to the U.S. for the year. Our newly added overseas production capacity is ramping up very fast, which will give us more flexibility and generate larger margins. The increasing recognition…

Thank you Mr. Chen. I am happy to report another great quarter of sales result in which we shipped a total of 1.6 gigawatts of solar modules, making us the largest solar module supplier among our peers. With such a strong growth momentum to start the year, we are optimistic about our prospect for the next quarter and the rest of the year. During this quarter, we continued to balance our geographic distribution in 45 countries and the region. We shipped 1,434 megawatts of solar modules through the third parties, in which 37% went to China, 30% to North America, 7% to Asia-Pacific, 7% to Europe and 18% to emerging markets. We have devoted efforts to strengthen our relationship with our global partners. In the meanwhile, focused on increasing payment terms and the receivables management. I will now take a closer look at each of these important markets and provide a little bit more color. China continues to be our largest market where the Q1 s typically a slow quarter due to Chinese New Year. We still received a large number of orders and momentum will continue at least until the end of June cut of FIT. While demand may slide after that, we expect it could pick up in the fourth quarter, especially towards year end. We may see some price fluctuations, but in general it should stabilize. China market will remain the word's largest market this year and we are optimistic for this year's final results. The U.S. market will be our big growth driver this year and we are devoting much of our time and resources there proportionally. The extension of ITC has resulted in some of the projects this year to be postponed which will make the ASPs drop slightly. But it will not impact our…

Thank you, Gener. I would like to walk you through our financial results for the first quarter 2016. Total solar module shipments were 1.6 gigawatts, up 103% year-over-year with shipments exceeded the high end of first quarter guidance. At the end of Q1, we had 1,007 megawatts solar power projects in operation. Total revenue was $847.8 million, up 99% year-over-year. Revenue generated from solar power projects $29 million, up 36% sequentially and up 82% year-over-year. Gross margin was 21.3% compared to 19.5% in the Q4 2015 and 20.3% in Q1 2015. The increase was due to a lower module manufacturing cost and the higher gross margins associated with electricity revenue. ASP was $0.55 per watt compared to $0.56 in Q4. We continued to cut our in-house manufacturing cost to $0.37 per watt from $0.39 in Q4. The blended cost, excluding the U.S. power cost, was $0.41 per watt compared to $0.42 in Q4. Our operating expense is presently 10.8% of total revenue, compared to 11.8% in the Q4 2015 and 11.9% in Q1 2015. Operating margin was 10.5%, compared to 7.7% in Q4 2015 and 8.4% in Q1 2015. Net interest expense was $20 million, up 30% sequentially and up 101% year-over-year. The increases was due to increase of loans used for solar power projects. At the end of Q1, we had two outstanding convertible bonds. After the purchase, the first one was $47 million due in May 2016 and second one was $137 million due in 2019 with put options in February of 2017. In May, we had convertible bonds of $47 million where the first one were fully repaid. EBITDA was $125 million compared to $119 million in Q4 2015 and $56 million in Q1 2015. EBITDA related to solar power projects was $15 million, compared to $9 million to Q4 2015 and $12 million in Q1 2015. Net income was $49 million which translates into basic and diluted earnings per ADS of $1.56 and $1.44 respectively. Non-GAAP net income was $64 million which translates into non-GAAP basic and diluted earnings per ADS of $2.04 and $1.72 respectively. Now let's move to the balance sheet. At the end of Q1, cash, cash equivalent and reserved cash were $523 million compared to $654 million at the end of Q4. Our accounts receivable was $611 million compared to $528 million at the end of Q4. Inventories were $482 compared to $495 million at the end of Q4. The total debt were $1.61 billion compared to $1.57 billion at the end of Q4 with debt related to solar power projects were $865 million compounds to $760 million at the end of Q4. Total CapEx plan to our model in 2016 is expected to be in the range or $150 million to $200 million. At this moment, we are happy to take your questions. Operator?

[Operator Instructions]. We will take our first question from Philip Shen from Roth Capital Partners. Please go ahead. Your line is open.

Hi everyone. This is Justin Clare. I am on for Phil today. So first off, I just wanted to ask about the mix in China for Q2. What is your expectation there? And then, could you tell us what percent of your Q3 bookings are for the China market?

So this is Gener. Thanks for the question. Approximately the first half, the China and the U.S. will take approximately 30% to 35% for each for the first half of shipment numbers expected. And for this Q3, since we are pretty fully booked for the first half, so we are expecting a loss of orders to go through Q3. So we are expecting around 20% to 25% of our shipment is coming from China during Q3.

Great. Thanks. And then I am wondering about pricing for Q2. Can you give us a sense for what the ASP might be? And then based on your bookings for Q3, what kind of sequential pricing decline could we see?

You mean China? Or you mean globally?

Maybe for China and globally, if you could talk about both?

So as we have talked about it, for this Q1 our ASP is $0.55. So we are expecting a similar level price, maybe a little bit lower in Q2 but relatively it could be stable. And for China, we are expecting a similar situation and for global ASP as well. In Q1, our China ASP is around $0.50 and we are expecting the price will be stable, may slightly decrease, but in general it could be stable for the first half.

Okay. And then one more from me. So you had reiterated your downstream development guidance, the 600 to 800 megawatts for the year. So we have heard that the Chinese government may be considering an extension in the feed-in tariff to the end of August instead of the end of June. Could you help us understand how likely this is and how this could impact, either your downstream plans or the market in China?

I heard in the news today but it's not confirmed with relevant authorities. And so our downstream projects guidance, 600 megawatts to 800 megawatts, we are very confident and we are on the track to achieve the goal. And by the end of the firs quarter, we had along 600 megawatts projects under construction and we target to connect 400 megawatts to 500 megawatts before the June 2016. So I think even if the deadline delays to August, there is no significant impact on us for our construction trend.

Okay. Great. Thanks That's it for me.

Thank you. We will now take our next question from Patrick Jobin from Credit Suisse. Please go ahead.

Hi guys. This is Maheep on behalf of Patrick and congratulations on the quarter. Just to follow up on the previous questions, are you seeing any signs on NEA's next subsidy approval list, assuming the current one comes out in Q3, when do you expect the next one to come out and how many megawatts would have that?

Actually no substantial updates for the catalog approval, but we believe it's on the track for the approval process. The government configures the preliminary review for the six renewable catalog and they requested more documents for some projects in China. And for Jinko, [indiscernible] the government has passed the preliminary review [indiscernible]. Our expectation is we will advance to the cash payment in the second half of the year.

Got that. And just on curtailment, you said it was high in this quarter as well. Could you just tell us how much it was? And what gives you more confidence that it would decline in the next quarter?

[Indiscernible] in the first quarter [indiscernible] for the rest of the regions, including the Zhejiang and Jiangxi provinces and it's included in the second quarter, particularly in Zhejiang province and some visibility for the second quarter [indiscernible] reviews and including the second quarter. In Zhejiang province, the curtailment due to winter season local grids want to use a coal plant to generate the heating for the people living in that area. So we are very confident before the second quarter, we expect significant jump for the electricity revenues. It's going to be around I think 40% to 50% revenue generated [indiscernible] in electricity revenues. [Indiscernible] I think the recent policies are very positive. NDRC issued the regulations, the guaranteed purchase minimum for energy to protect [indiscernible] and NDRC has sought for the approval of new projects for some areas. And for Jinko, the impact of curtailment, it's more all the projects we developed in 2016 is in the East and South China and our exposure to the projects in the West regions were dropped to below 7% in middle of this year.

Thanks. That's helpful color. And the last question from me. The guidance kind of implies a decline in shipments in the second half. Can you help us understand whether this is primarily from the decline in shipments to Chinese markets? Or are you seeing any demand deceleration in other markets? Thanks for taking my question.

Firstly, I just want to say, okay, we have more and more visibility for the second half of the year and now around 50% capacity was blocked. And for the guidance of 2016, I think we plan we may alter the guidance in the second quarter. And if you look at our second half of the year, I think first half of the year we total shipped around 50% of total shipments. And based on the current guidance and for the second half of the year, it's based on the programs and we may adjust in the second quarter.

Yes. So this is Gener. So in general, we are keeping our cost management for the whole year's demand for the South side. However, Jinko is always conservative and more responsible for the guidance we release. So we would prefer to update it when we have more, I would say, confidence and visibility.

Thanks for taking the question.

Thanks.

Thank you Maheep.

We will now take our next question from Sheng Zhong from Morgan Stanley. Please go ahead. Your line is open.

Thank you for taking my question. And congratulations on the strong results. My first question is about, as we extend our module capacity significantly in the first quarter, so wondering is there any capacity expansion in our Malaysia plant?

You mean the capacity expansion in Malaysia, right?

Yes. Capacity in Malaysia, yes.

I think we build the guidance of capacity expansion, wafer is around 500 megawatts, cell is one gigawatt and module is two gigawatts. And for the cell capacity expansion, the majority of the capacity expansion for cell is going to be in overseas factories. And for the module capacity, around 50% is in oversea factories. And for the oversea factory, the expansion is still on track and it's in final by our production level and we intend to complete the capacity expansion in the middle of this year.

Yes. The capacity in Malaysia will ramp up in full capacity since second half.

And for the total 2016, we plan to ship around one gigawatt to the U.S. market from oversea factories.

So this is Sebastian. So that means in the second half of the year, a big portion of our shipments to U.S. will be coming from our Malaysia factory. That will help increase our markets.

So first half of the year, it's around 30% to 35% and the second half of the year, it's around 60%, 65%.

So you mean, can you clarify the first half overseas

Yes. I am saying, in terms of the one gigawatt shipment around 35% is going to first half of the year. The main part is in the second half of the year. So Sebastian is saying, we expect more and more shipments to the U.S. market from the oversea factories in the second half of the year.

Okay. I understand. So among over 400 megawatt shipment to U.S. in the first quarter, how much shipment is from the Malaysia plant?

It's around 150 megawatts.

Thank you. And my second question is, you mentioned that the reason why we don't have project connection in the first quarter is because of the longer connection period in the East China. So normally how long is the project connection period?

It's depending on the project, case-by-case. In the East and South China, the key hurdle is land acquisition. So it's taken us more time to acquire the land for some projects. But most of the projects are in the final stage now. And so we are confident that we can achieve our targets for the second quarter.

Understand. And another one is about your operating cash flow. Why it's negative in the first quarter?

Operating cash flow is up. I think it's around negative $15 million. The major reason is, we have more shipments in China. And in China the payment term is relatively slower than the payment terms in the second half of the year or last year. But it back to the standard payment terms and you can see that we have the increase in accounts receivable and we expect we will generate positive operating cash flows in the second quarter.

And this cost our shipment to non-China region will improve? Or do we expect China's payment term will be better?

No, the shipments will be more balanced and if you look at the Q4 and Q1 shipments, we have very big exposures in China. And also you know we are now seeing the payment terms in China is also relatively improving quarter-over-quarter.

I see. And my last question is about the technology. As Mr. Chen mentioned that we will have enough generation difference in cell technology. Can you maybe give more color on this?

Sure. Sheng, this is Sebastian. In fact, we are working on boosting our resource in cells, which traditionally is higher efficiency and stability. But we cannot discuss too much details about the features and other numbers of those technology. But we will review them, especially integrate those technology into our module products and you will see when we review our new series of module products.

Okay. Also actually we expand our capacity significantly already. So will the new technology require, if new technology can be well integrated to our capacity?

Yes. Of course.

Okay. Thanks very much. And congratulations on the 10 years anniversary.

Thank you Sheng.

[Operator Instructions]. We will now take our next question from Taylor Frank from Baird. Please go ahead. Your line is open.

Hi guys. Thanks for taking the question. It's for Tyler Frank from Baird. Can you discuss what you are seeing overall in the U.S. marketplace for utility scale project demand? Do you believe that demand will increase throughout the year? And how do you see 2017 shaping up?

Hi. This is Gener. Good question. Actually, for the market in most part, it really depends on which number you compare with, right. If you compare with market demand and expect a number before ITC extension, for sure, the demand this year of U.S. demand for utility size demand has decreased quite a little bit. But if you compare with long-term, let's see between 2016 to 2019, even up to 2020, the average annual demand or total demand, the five year demand from U.S. has increased significantly compared to what is expected before ITC extension. So from our point of view, we have build out pretty mature partnership with our local U.S. customers and while we see some of the projects being delayed to late 2016, even 2017, but generally speaking we feel happy that the market will be more sustainable in U.S and we believe that demand locally are still very strong from U.S. So we are confident to reach our shipment target to U.S. in long run and we are more optimistic for the U.S. utility scale projects.

Great. Thank you. And then can you comment a little bit about the feed-in tariffs in China? Is FIT payment still being delayed? Or is that on a location specific basis at this point? And do you expect any headwinds with the payment tariffs to be resolved in the near-term? Thank you.

No, the feed-in tariff is a national issue and it's a key agenda for the government to resolve. As I just said, we believe the approval process for the next ones in subsidy catalog is on track and we can get the cash payment in the second half of the year.

Perfect. Thank you very much.

Thank you.

[Operator Instructions]. There are no further questions at this time. Mr. A - Sebastian Liu, please continue.

Thank you operator. On behalf of the entire JinkoSolar's management team, I want to thank you for your interest and participation on this. If you have any further questions or concerns, please feel free to contact us. Have a good day and good evening. Thank you and goodbye everybody.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.