Ladies and gentlemen, thank you. And welcome to JinkoSolar Holding’s Third Quarter 2020 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 will now like to turn the meeting over to your host today Ms. Ripple Zhang, JinkoSolar’s Investor Relations Manager. Please proceed, Ripple.

Thank you, operator. Thanks everyone for joining us today for JinkoSolar’s third quarter 2020 earnings conference call. The Company's results were released earlier today and are available on the Company's IR website at www.jinkosolar.com as well as on Newswire Services. We have also provided a supplemental presentation for today's earnings call, which can also be found on IR website. On the call today from JinkoSolar are Mr. Chen Kangping, Chief Executive Officer; Mr. Charlie Cao, Chief Financial Officer; and Mr. Gener Miao, Chief Marketing Officer. Mr. Chen 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. Cao, who will go through the financials. They will all be available to answer your questions during the Q&A session that follows. Please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties as such our future results may be materially different from the views expressed today. Further information regarding this and other risks is included in JinkoSolar’s public filings with the Securities and Exchange Commission. JinkoSolar does not assume any obligation to update any forward-looking statements except as required under the applicable law. It's now my pleasure to introduce Mr. 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] During the third quarter, our total solar module shipments were 5,117 megawatts, total revenues were US$1.29 billion, and the gross margin was 17%. In the fourth quarter, the company’s profit faced certain pressures due to a few factors, supply shortage of raw materials increased production cost, coupled with the impact of fluctuations of the US dollar and higher logistics and transportation costs. With the turmoil of the global pandemic continuing to ease, PV has received wide support from most of the world's economies, and the bottleneck of raw materials is expected to gradually improve. We strongly believe that the PV industry has ushered in a golden age. However, we will continue to be vigilant about market conditions around the world and should not overestimate the economy - economic turmoil in the next one or two years and underestimate the changes to come over the next decade. [Foreign Language] Government policies have been very favorable. China outlined a strategic plan to hit peak emissions before 2030 and reach carbon neutrality by 2060, a significant step in the fight against climate change. The next announcement of the 14th Five-Year Energy Plan in March 2021 is expected to focus on non-fossil energy sources and outline new energy power generation targets and other parameters. Furthermore, the large scale construction of energy storage required by the power grid to achieve a higher proportion of renewable energy, investment in great transformation and the subsequent introduction of supporting policies, all can be very positive expectations after President Elect Joe Biden takes office. In January 2021 his administration is expected to promote the development of new energy beyond current expectations. In the next five years, US solar demand is expected to more than double. In September 2020, the EU officially released the 2030 climate target plan,…

Thank you, Ms. Zhang. In the third quarter of 2020, total shipment of solar modules reached to 5,117 megawatts in line with our guidance. During the quarter, while we faced the challenges from the pandemic and the changes in the market supply and demand, we primarily adjusted our geographic mix in response to any market volatilities. Overall, shipments to Europe increased significantly compared with the previous quarter. Shipments to the Asia Pacific region remained strong. While shipments to North America and China were consistent with the performance in the second quarter. In terms of market demand, since the beginning of the third quarter delays in the supply of some raw material and auxiliary materials together with increased downstream demand lead to price increase, along the entire supply. With the gradually recover in supply and strong demand brought by the installation rush in the fourth quarter we are seeing that price increases for some raw materials have been absorbed because of strong market demand. We expect the market pressure to gradually ease next year. The Chinese PV market will no longer enjoy subsidies starting in 2021 and will enter the era of great parity on a large scale. And there's a 2030 carbon emissions reduction target and the 2016 carbon neutrality goal, China will have to gradually replace the traditional thermal power, as a result, it is estimated that China's annual average installation capacity will reach 60 to 70 gigawatts over the next 5 years, delivering phenomenal growth to the renewable energy markets. The COVID-19 pandemic continues to intensify in the US, and the latest daily average number of confirmed diagnosis has exceeded 200,000, reaching a new peak. While the situation continues to evolve in the US, in the long term, the Biden administration is expected to support the development of…

Thank you, Gener. In the third quarter, we reported strong operational and financial results with total shipments, total revenue and gross margins all in line with our guidance. Although the significant increase in silicon material costs and volatility of exchange rates brought some pressures on our performance during the quarter, the company benefited from our in-house production capabilities and some cost control which allowed us to maintain financial indicators such as revenue and gross margin stay stable levels. Let me go into more details about the quarter now. Total Revenue was US$1.29 billion, an increase of 3.8% sequentially and increase of 17.2% year-over-year. Gross margin was 17%, which remains stable quarter-over-quarter. Income from operations was US$80.4 million, an increase of 25.6% sequentially, excluding anti-dumping and countervailing duties, to reversal benefit. Income from operations increased 28% year-over-year. EBITDA was US$144 million compared to US$100 million in the same period last year. Non-GAAP net income was US$47 million, an increase of 7% year-over-year. This translates into non-GAAP diluted earnings per ADS of US$1.06. Taking into account the loss from the change in fair value of convertible senior notes and call option, due to the sharp increase in stock price of JinkoSolar, in the third quarter of 2020 GAAP net income was close to breakeven. Total operating expenses in third quarter accounted for 10.8% of total revenue, a decrease both sequentially and year-over-year. Moving to the balance sheet, by the end of the third quarter, our balance of cash and cash equivalents for US$943 million compared to US$969 million. At the end of the second quarter of 2020, AR turnover days were 61 days compared to 63 days in the third quarter of last year. Inventory turnover days were 97 days, compared to 93 days in the third quarter last year. Total debt was US$2.5 billion, in which US$128 million was related to international short term projects, compared to US$2.3 billion at the end of second quarter. Net debt was US$1.59 billion compared to US$1.37 billion at the end of second quarter 2020. By the end of October, we announced our principal operating subsidiary Jinko Solar Co., Ltd Jiangsu Jinko had completed equity financing of RMB3.1 billion US RMB, completing an important step towards our plan to go public in China's capital markets, this additional capital raised is helping to expand our capacity, further strengthen our leading positions in innovative R&D. Recently, we announced our plan to sell a 20% stake in Abu Dhabi Sweihan Power Stations to Jinko Power, which will help us focus our core business and continue to sustain our long term growth in the global PV industry. This concludes our prepared remarks. And we are now happy to take your questions. Operator, please open the call.

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] First we have Philip Shen from Roth Capital Partners. The floor is yours, Mr. Philip?

Hi, everyone. Thank you for taking my questions. The first one is on the margin outlook for Q4. I think for Q3, your cost per watt was roughly $0.203. And if we take your guidance into account for Q4, it's just the cost per watt, maybe closer to $0.20.7, $0.21. Can you help explain how can your cost per watt be flat in Q4 when polysilicon prices have gone up so much along with glass? I think glass alone is up $0.02 per watt? And then freight is up meaningfully. So where are you? How are you able to maintain that flat cost structure in spite of the rising input costs? Thanks.

Hey, Philip, this is Charlie. And, you know, the gross margin, 13% to 15% for the fourth quarter. And we are - firstly I want to just to sum up clarification as we believe, it's – gross margin is reaching to the lowest level. I mean, Q4 is lowest level. And if we look forward, so we expect the gross margin in the first half year, next year, we will gradually improve quarter-over-quarter. And back to glass. And it's you know, combination, in-house production cost quarter-over-quarter, that's fourth quarter versus third quarter, it did increase because of the polysilicon cost. You know, the glasses and a lot of materials is on the outside trend. On the other side, we - the ASP, the module price, at the same time increased a little bit. And as well as we have, I think we have good mix in terms of the shipments in US and versus you know, some relatively high ASP ratings, higher margin ratings. So which helps us to deliver a relatively, a slightly, let's say the margin, you know, decrease in the fourth quarter versus the third quarter.

Okay. Great. So, were you saying is the pricing is helping to offset, but from a cost standpoint, when you say the in-house production cost is helping, can you specifically highlight what area is helping you drive that cost structure lower and did you specifically find you know, for example, independent the ASP, are you able to - were you able to keep costs flat? And if so, where you're getting that specifically?

Philip, and I’d say, the in-house production cost is increased a little bit quarter-over-quarter. And - but the material cost is up dramatically, particularly for the silicon, the glasses. But we are hoping which is offset is by you know, and our production efficiencies and we have relatively more production volume and, you know, the production, the cost is relatively lower, but the material cost is higher. Second one is the most important is ASP is relatively higher quarter-over-quarter. And with you know, China thee ASPs has increased, because of the input costs increase, as well as we have higher mix in the US and other, you know, regions with relatively higher ASP.

Great. Thank you for the clarification, Charlie. As we look to next year, you talked about margins improving in Q1 and Q2, I know you haven't provided official guidance, but can you share how much improvement you see and also what kind of bookings do you see for Q1 and 2? And is the pricing also higher in those quarters, relative to Q4?

Phil, this is Gener. Let me take this booking question first. So for - I think in our last quarterly call, we established our strategy that Jinko as a tradition, we always target to achieve 50% level of the book - field before the year began. So I think that is still our strategy, we are on the right track to close that. The marketing side, you know, on the first side, we expect, you know, the material costs will down a little bit and including the polysilicon and we are seeing the polysilicon prices decreasing, to RMB25 [ph] now, and the glasses supply side will be you know, relatively - the supplies, the volume is stable, but the total Q1 and Q2, this global demand, you know, it's relatively lower, so we expected the material cost will have the contributions. On top of that, we are promoting the large size 182, the Tiger Pro, and the large size of the products and the production costs is lower. And we can charge the volume and we are expecting the 182 next year, as combined together next year, we'll get you know, 40%, 50%, you know, 182 in our shipments. And this part, you know, will help gradually quarter-by-quarter and improve our gross margin as well.

Great. Yes, that larger format [ph] should be helpful. So thank you very much for the questions, guys. I'll pass it on.

Thank you.

Thank you very much. Next we have Mr. Gary Zhou from Credit Suisse. The floor is yours.

Hello, management. Thank you for taking my questions. It is Gary from CS. So basically three question from my side. So firstly, can management share with us the latest update on your subsidiary stock market listing? And do you expect the timing of the Asia listing would have any impact on our capacity expansion decisions into the next one to two years? And the second question is on something about the solar glass. So given the currently relatively high solar glass price, are we kind of holding back our motor [ph] production plant a little bit. So in other words, if there's not such kind of high raw material cost, would our fourth quarter module be otherwise higher? And lastly, on the bifacial [ph] solar module, so just one small question, have we tried any ultra-wide floating glass as the backsheet eat of the solar class instead of solar glass and, if possible, can management share with us the economics comparison between two pieces of solar glass or using the backsheet as floating glass or even compared with transparent backsheet solution? Thank you.

A couple of questions and the first one is, you know, our subsidiaries, Jiangxi Jinko, we closed the equity financing, financial financing just by the end of October and we started the preparation for IPO in China immediately and the process is smooth and we will keep the market informed if we reach significant milestone. And the second one is capacity, the funding for the capacity. And is that going to be depend, you know on the IPO process? If not, and we closed the 3.1 – RMB3.1 [ph] and we think, you know, we have sufficient funding. And for the capacity expansion next year, and we will focus on the solar cell capacity, as well as some mono wafer capacity. And in the prepared remarks our CEO and we target to return you know, stable, slightly increasing on the integration levels and maintain returns 75%, 80% and to have good control of our you know, capabilities. And on top of that, you talk about, I think the bifacial glasses and transparent…

I think we have two more question both regarding the glasses, right. I think, firstly, the beauty of our Jinko strategy is we have the certain flexibilities based on the market turbulence, that's why we have the geographic mix, and together with the product, different product portfolio mix. So, to conclude our conclusion, we are keeping the flexibility to adjust our capacities and also the factory output based on the market turbulence, we are keeping such kind of flexibility. And the second question about the glass bifacial side. So, we have foreseen the, you know, the bottleneck of the glass supply, I think back a year ago, or even 1.5 years ago, that's why only promote the bifacial product, we do not offer only double glass, but also we offered transparent backsheet solution as well. So, both solutions are well accepted across industry and from our customer base, our customer feedback is neutrally well accepted. Meanwhile, for the ultra wide floating glass you just mentioned, I think the whole industry is trying to impose or trying to introduce such a glass to ease the short term supply from the solid glass manufacturing capabilities right now. And Jinko has done some progress on that way together with our peers. I think we are on that way, but its still, you know, the total volume available versus the demand that we are facing right now is still short of supply in terms of the glass. Hope that answer your question, Gary.

Yes. Thank you very much. That's very clear. Thank you, management. And I’ll pass on.

Thank you.

Thank you very much. Next we have Mr. Tony Fei from BOCI. The floor is yours.

Hi, management. Thanks for the questions. I have three from my side. The first one is regarding your operating margin. So in the third quarter, we see actually your operating margin has increased Q-on-Q despite your gross margin declined a little bit. So can you explain the reason behind it because we see you have quite a bit of savings in your sales and marketing expenses, despite the fact that shipping costs actually increased quite a bit in recent month. And if possible can you provide your guidance on the shipping costs in Q4? And second question is regarding your integration plan. So I think for 2021 your priority will be increasing your sales capacity in-house, but there has been quite a lot of debate regarding the economics of PERC and HJT on the cell technology route. So have you made a decision on how much of a new cell capacity will be PERC and how much from that will be in HJT? So the third question regarding exchange rate. So because of the RMB appreciation recently, do you see any impact on your order intakes, especially in overseas markets and if possible, do you have a plan on how much of your China order will increase in your sales mix in 2021? And do you expect to have increase in hedging costs for the currency side in next year? Thank you.

And, you know, for first question is, I think, you know, the operating expenses, right, and, we expect relatively stable, operating expenses against revenues, roughly 11% quarter-over-quarter, including the fourth quarter. And the question is the cell capacity, capacity, and we have not finalized the decision expecting we will expand basically the PERC capacity, but have the flexibility to upgrade to, you know, the entire TOPCon technology. And back to the TOPCon technology and we had 800 megawatts and – tracing back to one year ago, and the efficiency is reaching to very good level. And we think that technology now is in relatively maturity stage. And so we - when we build the new capacities, of course, it's a big size and the big size PERC capacity, and we have the flexibility to upgrade to the TOPCon very quickly. Exchange rate is – it did have pressure, and we did had roughly 50%, the RMB against US dollars. And for the pricing, and we don't believe the 5% to 7%, you know, the exchange rates will have an impact on the demand side, and from international markets. And the customer are able to absorb the potential impact. So, we don't believe we have significant adjustment though for the mix, and China versus international markets because of the exchange rates.

Great. Thanks for the color. I'll pass on.

Thank you.

Thank you very much. Next, we have Mr. Brian Lee from Goldman Sachs. Mr. Brian Lee, you may ask your question.

Yeah. Hi, guys. Thanks for taking the questions. Charlie, could I go back to the previous question on OpEx? So I didn't capture, but why was SG&A so much lower this quarter? And what's the expectation for Q4 in terms of either absolute dollars or percentage of?

In the third quarter, firstly, I think you know, the total, let's say the total revenue is increasing, right. And I think the total revenue there is some contribution. Second one is the - we have lowered marketing expenses, activities, and as well as you know, because of the relatively lower ASP, and when we calculate the warranty costs, the warranty costs relatively will be a little bit lower. So it's a combination of some one-off operating expenses, savings and revenue increase, as well as the decrease of warranty costs.

Okay. And expectation for Q4?

Q4 is roughly - because Q4 has roughly be the same, I think 11%.

11% of sales for just the SG&A line, is that the guidance?

Yes. I mean, the operating expenses accounted for the total revenue is 11%, roughly, in the fourth quarter.

Okay. So OpEx in total, including R&D, not just SG&A? Okay, fair enough. I think you mentioned earlier, at one of the questions, I think it was maybe Phil at the beginning of the call. The ASP for 3Q, I think, if we just do the calculation, it was about $0.03, $0.04 per watt. The guidance for 4Q is down about sequentially. So maybe I misheard you, but it sounded like you were expecting 4Q, or is that just part of the mix. And the overall, I think blended, I think is still going to be down in 4Q?

I mean, the ASP when you calculating is a little bit down, right?

Yeah, correct, by 3%, I think.

Yes. Its not correct and I know the calculation. We use the total revenue with the P&L – total shipments. And for the fourth - the third quarter, we have other revenues, some low efficiency solar cell and modules roughly. So the module revenue account for 95% and 5% is our revenue. So, when you do the ASP calculation in Q3, it will be relatively lower. Second one is when you do Q4, the guidance revenue, we don't consider our revenues, we just use the module revenues as a reference.

Okay. I think I captured that. I'm, you know, netting out the volume that's not related to modules and still getting to $0.24 for 3Q. But I could take that offline. But maybe can you just answer the question? What percentage increase in pricing are you expecting across the module mix for Q4 versus Q3?

You mean the percentage ASP quarter-over-quarter, right?

Yes.

Yes. It's slightly increase, you know, the Q4 versus Q3. But I just talked about, you know, because we'll have higher mix in US and in China, the ASP has increased in the fourth quarter. So it's a combination which contributed to the increase of ASP in the fourth quarter.

Okay. Fair enough. Maybe two more if I could squeeze them in. Just one housekeeping one first, the third quarter, did you have the CapEx, depreciation and free cash flow numbers for the quarter?

Okay, I can give you the – let me check, I can give you the first quarter, third quarter, the nine month numbers, you know, the total CapEx for the nine month is roughly US$ 350 million. And operating cash flow is roughly negative US$200 million, which is because of the inventory now with a significant increase in inventory levels. And so depreciation each quarter is roughly let’s say US$40 million.

Okay, great. And then last one, I'll pass it on after this, is the Abu Dhabi sale, the 20% stake. I know that was outside of the quarter, but can you provide impact that you're expecting from that in 4Q. I thought you had been carrying it on the balance sheet of $50 million of value, and I think you sold it for $20 million? So first question is, is that the correct math? And if so, why are you booked at your last year? And then last, I'm not sure if this is related, but why did the non-controlling interest [ph] on the balance sheet go down this quarter so much?

Abu Dhabi project, we are currently in the long-term investment because it's investment on equity, 20%. And we signed you know, the sale purchase agreement with Jinko Power and the valuation is based on the independent third party valuation firms. And - but the closing are expected to be taking a longer time, maybe six months because it's subject to a lot of regulatory and including the government approvals. And in terms of economics, and we don't expect significant impact and after the closing, but it’s a very small, you know, depending on the closing date.

Okay. But it will be booked at a loss. And is there any impact this quarter from…

No, not but because the closing is taking a longer time. So before the closing the economics of the Abu Dhabi project, we will enjoy the economics before the closing. So that is why I'm saying, you know, after the closing and depending on the timing and but, for sure, it's not loss situations, and it's a profit situation.

Okay. What was the carrying value in the long term investment?

I need to check, but it's -- on the balance sheet, we have separate items carrying the investment, and we can get back to you after the call.

Yeah, you reported $25.5 million in the quarter, but I suppose some of that is not Abu Dhabi?

Yeah. I need to check…

Yeah, I can take that off line. This last one, the non-controlling interest, it was down $100 million or close $200 million quarter-on-quarter? Any read into that?

You mean the rationale, right? The non-controlling interest on the balance sheet?

Yeah, on the balance sheet, just wondering what's prompted the big move there?

So, you know, it's because we - by the end of October we did the equity financing for the Jiangxi Jinko, the major subsidiaries. So before that, we - in some of our subsidiaries, we have arrangement with the energy fund being supported by the government. And because we have equity financing, we launched $3.1 billion and some more investors, they think it's good. We pick up some minority interest to the subsidiary levels. So organized the arrangement with government's funded energy funds and some of the funds we plan to redeem in our near future, which is, you know, it's a purely equity investment from the government equity funds.

Okay. Thanks a lot, guys. I’ll pass it on.

Thank you.

Thank you, Mr. Brian. Yes, in absence of time, we will take the last question from the participants. Next we have Mr. William Graben from UBS. The floor is yours. Mr. Williams, please ask your question.

Great, thank you. I just have one quick, quick one here. Just wondering if you could clarify if there is any AD CVD true-ups that are impacting the fourth quarter guidance?

It could be up a little bit, but it's not significant impact. So when we give the margins - when we give the margin guidance, we did not consider the positive impact.

Okay. Very good. Thank you.

Thank you.

Thank you very much. Ladies and gentlemen, with that we have come to the end of the conference call. Thank you for your participation and have a pleasant evening ahead. You may now disconnect from this call. Thank you.