Ladies and gentlemen, thank you for standing by for JinkoSolar Holding's Co. Ltd. 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 today for JinkoSolar 's Second Quarter 2021 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 the IRR website. On the call today from JinkoSolar, are Mr. Xiande Li, Chairman of the Board of Directors, and Chief Executive Officer of JinkoSolar Holding Company Limited. Mr. Gener Miao, Chief Marketing Officer of JinkoSolar Holding Company Limited Mr. Pan Li, Chief Financial Officer of JinkoSolar Holding Company Limited. And Mr. Charlie Cao, Chief Financial Officer of JinkoSolar Holding 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&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 Security 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 these and other risks is included in JinkoSolar 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 laws. It's now my pleasure to introduce Mr. Li Xiande. Chairman and CEO of JinkoSolar Holding. Mr. Li, will speak in Mandarin and I will translate his comments into English. Please go ahead Mr. Li.

[Foreign]

We are very pleased to have delivered revenue of $1.3 billion and gross margin of 17.1%, as well as the significant increase in non-GAAP net profit quarter-over-quarter, despite very challenging market conditions. In response to a sharp polysilicon price increases in May and 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 Second Quarter were approximately flat compared with the First Quarter while profits improved sequentially. As prices along the supply chain remain high but relatively stable. We say 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 Third Quarter.

[Foreign]

As to all of the first PV Enterprises to go global. We have accumulated which experienced, and insight into the development and management of overseas supply chain. This has given us a 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 strategic co-operations such as the joint investment with Tongwei Company, Ltd. In our high purity crystalline Silicon project, with annual capacity of 45,000 metric tons, and investment in a Silicon Material Company Limited, a wholly-owned subsidiary of Xinte Energy Company Limited. And we have signed a strategic five-year polysilicon supply agreement with Wacker [Indiscernible] Wacker will supply Polysilicon to JinkoSolar from its production sites in Germany and the U.S., which contributes to a long-term stability of our supply chain the business growth. Meanwhile, the overseas way for manufacturing facility will start construction soon. And we'll serve our production facilities in Malaysia and the U.S. when production rumps up.

[Foreign]

In terms of integrated operations, over 7 gigawatts of newly added capacity of large-sized cells has put into production during the Second Quarter 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're 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, sale technology is at a transitional stage from P-type to N-type. And we are expanding the investment plans for N-type sale capacity based on technical advantages and two years mass production experience.

[Foreign]

Leading technology, high-quality products and reliable services form the foundation of our success and our growth of our market share worldwide. Recently, the maximum laboratory conversion efficiency of our large area N-type model crystalline silicon solar cell, reached 25.25% and maximum laboratory conversion efficiency of our high-efficiency modules, which 23.53%, 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 shipments to increase rapidly in the second half of 2021 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 at a lower sensitivity to practice. 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.

[Foreign]

The PV industry has largely completed its transitions 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 demands. We expect the second half of 2021 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 of our global shipments, we signed a strategic co-operation agreements with Bell's COSCO 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 strategic cooperation agreements with Contemporary Amperex Technology, [Indiscernible] Tech, and other industry gen leaders, the partners will set up project teams to do Joint research and development, share resources, and leverage their respective advantages to jointly promote further business development for solar plus energy solutions.

[Foreign]

Before turning over to Gener. I would like to go over our guidance for the Third Quarter 2021. We expect total shipments to be in the range of 5 - 5.5 gigawatts, including module shipment to be in the range of 4.5 to 5 gigawatts for the third quarter of 2021. Total revenue for the third quarter is expected to be in the range of 1.24 billion to $1.37 billion. Gross margin for the third quarter is expected to be in the range of 12% to 15%. The annual [Indiscernible] -wafer solar cell 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 second quarter, total shipments reached a 5.2 gigawatts. Inclusive of over 1 gigawatt of wafer and cell 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% a year-over-year. Shipments to China and the U.S. remains stable sequentially. The rapid developing Chinese market has been given a boost by government policy and are expected to contribute a large proportion of shipments in the second half of this year and 2022. Through continuously monitoring China's market demand and our customers needs, we have allocated the utility projects at the distribution market with different personnel, products, and the resources to support the coming strong growth. Overall, demand from overseas market remains strong in the Second Quarter. Benefiting from both increasing power consumption brought about by the gradual recover of energy consumption level, thanks to effective pandemic control measures and the effective implementation of carbon emission reduction goals in major economies like Europe and the U.S.. In addition the expected a reduction in subsidies in some market has brought forward some demand. We believe that Europe and the U.S., and India, will become even bigger driving forces for the new lay overseas installation. The U.S. is one of our most important markets. Although, the supplies have become more difficult of late due to challenges with shipping and policies in short term. We have made strategic and long-term commitment to adapt our resources and the 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 s in 2021 to…

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 first quarter of 2021 while gross margin exceeding our expectations. The changes we addressed on the management and control operating expenses and exchange rates for the [Indiscernible] have proven to be effective. Income from operations are net profit, excluding non -[Indiscernible] items, increased significantly compared with the First Quarter of 2021. For second half of 2021, we expect raw material prices to further stabilize and production volumes to gradually increase, which combined with cost reduction s 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 1.23 billion, sequentially flat. Gross margin was 17.1%, sequentially flat. Disposal, and impairment loss on property, plant, and equipment in the second quarter decreased significantly compared with the first quarter of 2021. Total operating expenses in the second quarter were 155.3 million, which accounted for 12.6% of total revenues. In terms of absolute amount and proportion, both improved significantly compared with the first quarter 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 55.2 million up to 139% sequentially. Operating margin increased to 4.5% from 1.9% in the first quarter of 2021. EBITDA was 143 million compared with 123 million in the first quarter of 2021. Net income was 10.3 million and non-GAAP net income was 42.5 million [Indiscernible] significantly sequentially. Non-GAAP diluted earnings per ADS increased to 0.89. We continue to optimize our heading against foreign exchange risks are recorded a net exchange loss of 0.7 million. A significant reduction from a loss of 4.1 billion in the First Quarter of 2021. Moving to the Balance Sheet. At the end of Second Quarter, our Balance Sheet of cash and cash equivalents was 1.01 billion, approximately flat with the First Quarter 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 first quarter of 2021. Inventory turnover days were 138 days compared with 126 days in the first quarter of 2021, Total debt was 3.12 billion at the end of second quarter. Compared to 2.687 billion at the end of first quarter. Out of total debt, 67.6 million was related to international solar projects. Net debt, was 2.11 billion compared with 1.59 billion at the end of the first quarter 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. [Operator Instructions] [Operator Instruction] 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 the -- your view of anti-circumvention in Southeast Asia [Indiscernible] 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 Charlie speaking and to mitigate the risk, no, not [Indiscernible] risky you are talking about. Let's say you're in China, right? In these solar industries. And that 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 Wacker. And we have begun to build up the around 7 gigawatts wafer capacities in Vietnam and to match our existing capacity is in Malaysia and the U.S. From the media term, we are optimistic and we will continue to serve our U.S. customers. And for the conversion, you are talking about the risks. And I am still in the early stage, and I did have some uncertainties. But we are following up on 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 Wacker 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. And so if they do take the case on, does the wafer facility in Vietnam, would you continue to expand that -- or build that facility out, or is there a chance that you might slow things down there?

No, we don't have any further plans to expand capacity on the Wafer out of China. And the first step, we want to have a -- a relatively [Indiscernible] to build up the integrated, including 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 would the WRO enforcements -- 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 for excluding shipping costs, and so how much product has been not able to get to the US 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.

We did have some modules stopped by the U.S. CPP and to request additional documentation and we're still in the preparation of relevant documentation. And at this stage, we are cautiously optimistic about the results. And it did have -- because it's going to take time, so it did have some impact on our shipments to the U.S. market. And in terms of the storage, we did have additional. We are expecting to incur additional storage for the inventories and waiting for the preparation of the relevant documentation. And back to the 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 a supply chain and higher supply chain costs and production capacity bottleneck.

Okay. 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 -- to store that?

Well in the process of evaluating additional costs, it did have a negative impact on the shipments to the U.S. as well as the gross margin, even net profitabilities, short-term but we're not in a position to disclose the digital number.

Okay. I really appreciate you taking my questions. I know they were some tough questions. With that, I'll pass it on.

Sure. Thank you.

Thank you. Our next question is from Credit Suisse, Mr. Jerry Zhou, please go ahead, sir.

Hello. Thank you for taking my questions. This is Jerry from Suisse. I wanted to ask three questions. So firstly, can management share with us what is your module price outlook for the fourth quarter this year. So especially after the recent upstream plus hikes? And what do we think is the maximum kind of module price [Indiscernible] in China [Indiscernible]

Sure. Thank you, Gary, for your question. This is Gener. Regarding market price, we have seen the latest changes from the upper stream supply chain side like the polysilicon price change, and as the EVA price change, and even sometimes the gross price changes upwards as well. So we are anticipating the module's price will not be able to accept all other upwards because there are certain bottlenecks and ceilings for the downstream players and for -- and the customers to adopt all these numbers. In our observation, the latest I think, tenders by some of the Chinese set. So these numbers are just released today and yesterday. We have observed orders of Tier-1 players, about 1.80 RMB per watt gig. Sorry, if we make it more specific. I think the range is somewhere between 1.82 to 1.86. That should be our -- our flagship price for the rest of '21.

Okay. Thank you. So my second question is, can management share with us a little bit more information on our operation with CATL? So just wondering if there are any numerical targets on the energy storage business and other operations? And my last question is if the Company can share with us some updates on the subsidiary operations. Thank you.

Thank you for your question again. For the corporations with all these storage battery companies, including CATL [Indiscernible], and others, I think that's a very strategic move. In our pre-prepared remarks, we emphasize that that is our long-term strategy prepared for the future because, with the great parity ongoing, we are anticipating a massive circulation in the renewable sector, especially in the PV industry, to happen in the next coming years. And because the nature of the PV solar power generation system and storage is a must for the whole industry's further growth. That's why we have established partnerships with the key players in the storage sectors to make sure that, we are well prepared for that and make it more specifically. And we joined the research and development because some of the resources, sharing, and the leverage each other's respective advantage to jointly promote future business development for the solar plus energy solution. And the next question I think, Charlie will take that.

The IPO process is still on track and we submitted the application to the Shanghai Stock Exchange by end of June. And as of today, it's still in the review process by the regulators.

Thank you for taking my questions and I will pass them on. Thank you.

Thank you.

Thank you. Our next question, from Senzar Capital, Mr. Rajiv, 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 second -- 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 Third Quarter, even as you are increasing sharply the number of modules that you will ship relative to the wafers and cells? I'm not talking about the gross margin number, but the gross income itself should -- is it reasonable to think that that will continue to increase in the Third Quarter?

So you have two questions. One is the gross income and gross margins. Gross margin, second quarter we did have relatively good compared to our expectations. The major parties -- the wafer surprise sales contributing and towards the third quarter, we expect the gross income will continue to increase while the gross margin is under pressure. Because we shift the way we are targeting to have more solar module shipments, at the same time, the upstream, the material costs on the upwards. And the -- but we're trying to continue to increase our module price. And that it's still freezing. The high polysilicon. The EVA glasses and the price upwards. In general, we expect 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 fourth quarter. Can you elaborate? Can you give us some insights into the reason that you expect that's a big ramp from third-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. Is I think is part of the nature of the solar industry requires that if you look back in the last 2 even 3 years’ time, Q4 is always picked season as of the whole year, mainly because people are expecting very strong demand from China. I think each Company or the whole industry as a whole, everyone will expect a stronger Q4, that's the one part of the nature of the industry demand, and another part is we are steadily ramping up our in-house capacity as well. Naturally, our capacity will grow by time flying, and also as well as preparing for 2022 as well. Okay. So obviously you are expecting a very substantial increase in module shipments as well in the Fourth Quarter? So the way you'll get to the 9 gigawatts will be a substantial increase in module shipments? Right? Well, that part -- in general, yes. That's the direction, but we still have the flexibility to expose our cells -- break our cells into wafer cells or modules as we did in the Q2 or 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 the module then we are now talking about 45 gigawatts for next year. And that's a very significant increase, and this is despite the fact that you're modules shipment this year, are not growing as rapidly as they have grown in past years. So can you give us some insights into why you think that modified gigawatts for modules in 2022 are the right number, especially given that you'll have shipped about 21 or 22 gigawatts this year?

Strategic preparations for next year and this year the market is strange by the polysilicon and asset bottleneck is the top deposits from polysilicon. And we're expecting next year the market will be, accelerates the demands. And on top of that, we are planning the N-type cell capacities and know its 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 under your -- based on your calculations in the fourth quarter. And the module is still, we're faced some supply shortage, particularly we are building the large-sized 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 the 3Q guidance, as well as -- since you're maintaining the full-year, there's an implicit mixed year, [Indiscernible] in fourth. Can you give us a sense of module versus non-module shipments in 3Q and 4Q?

Fourth quarter, we gave the guidance total shipments 5 to 5.5, including module 4.5-5. The gap -- the difference is the majority of parties of wafer [Indiscernible] sales of taking to the fourth quarter. We were still flexible, but the majority of part of where at this stage we -- we are expecting it's -- it's from the module shipments.

Okay. Fair enough. And then, just on the earlier question about gross margin, 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?

Third quarter, we give the guidance 12% to 15% and the majority of price [Indiscernible] the gross margin is very same with module gross margin. And for the Fourth Quarter, we still -- it's still some uncertainties. The material cost is upward very quickly. And at the same time, we are shifting our module shipments to China. The majority part. And we were trying to get a relatively high module price, and hopefully, we are able to offset the costs upward pressures.

Okay, fair enough. And then maybe two 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 megawatts 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 discuss at the current stage because we are even, we are cautiously optimistic about our documentations, which has been well-prepared. But still, it's not 100%. JinkoSolar to decide what to do next. That's why we are cautious in monitoring the situation and doing our best. And right now, like Charlie just said just now, I think we are very confident about the demand. Right now, is not the problem of the demand it's a problem of supplies or shipment-wise, we have multiple alternatives and even we have a full commitment to our U.S. customers and our U.S. market, and we are prepared for it. But it's difficult to disclose any detailed number for Q3 or Q4 in U.S. shipment, yes.

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 the product to the border at risk of having it being seized for months until it gets released then 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 that 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 I think we still continue to stick to our plan for the shipments. Even we have some challenges because of the COVID control in the local Southeast Asia countries. But we're still doing our best to find solutions to reach our customers, right now. For detailed number wise, again, we cannot quantify it yet because we don't have any number which we can close, but disclosed, but still, we're doing our best and we have the confidence to continue to have our business ongoing. Not only in the U.S. but in the other markets as well. We are working on different alternatives in parallel, so we have no concerns about that.

Last housekeeping one for me. What was the CAPEX here for the first half of the year? And then, is there an updated view on CAPEX guidance for 2021? Thank you, guys.

For the first half of 2021, the CapEx number is approximately 580.

[Indiscernible]

Many U.S stocks.

And we increased the plan to build up more module capacities to reach 45 gigawatts. So we increased our CAPEX target this year and it's for the full year are roughly around $1.1 billion.

Okay. Thanks, guys.

Thank you.

[Operator Instructions] [Operator Instructions] Our next question is from UBS, Mr. William Grippin, 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 fourth quarter for shipments to reach the total guidance. I'm curious, going into the quarter, are you -- 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 selling wafer sales end up being?

So first thing, let me comment in general, I think my colleague 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 facing big headaches right now. I think it's not only for the solar industry but for all the industries. So it's difficult to get a ship on time and on schedule. So that's why we have a lot -- we have some -- sometimes we have to face accounting points. We have some inventories on hand, but actually, we have all the contract cover for those inventories.

Okay. And then just one more for me. The guidance obviously implies cost pressures accelerating here in the Third Quarter, despite polysilicon prices being pretty stable over the time period, glass obviously coming down. Just wondering if you could provide a little more color on why are we seeing, or expected to see margin compression in the Third Quarter relative to the Second Quarter. And what level of confidence do you have here that you may actually meet or exceed the high end of the range again?

The major part is how we calculate the costs in Second Quarter and Third Quarter. It's based on the weighted average. And the polysilicon reaches a high price starting from May this year. So in the second quarter, based on -- we're already average the polysilicon prices not so high, it's not. let's say, 2 -- 200 RMB [Indiscernible]. It's not based on that costs in the calculation of your second quarter. It's fairly low, and no. But with the time collapse to the third quarter and the polysilicon, the average cost is reached to a relatively high level that is a major part. And hopefully, understand that this is very average and the polysilicon price and it accelerates the pace starting from May. And so from the calculation perspective, pretty average. More impact will -- will be reflected in the third quarter. So it's -- I think it's one of the key impacts on the cost side.

Got it. Thanks very much.

Thank you.

Our next question is from [Indiscernible]; please go ahead, sir.

I would like you to give us a little bit more clarification on the revenue number that you have guided for the Third Quarter. Because using different combinations of wafers and the modules shipments in the Third Quarter, and assuming that there are some price increases from Q2 to Q3, the revenue numbers that I'm coming up with are higher than 1.4 billion, which is obviously higher than your guidance. So I -- can you help us understand why your revenue guidance at the high end is 1.35 when using the 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 1.4 billion.

That's a mixed issue and I mean thew shipment to the U.S. versus other regions. In the U.S. the SP is relatively stable by region. But we have more shipments in the third quarter versus the second quarter. And the --

Trend.

And yeah, and in your, the Third Quarter, and the U.S. shipments are relatively lower than the Second Quarter, and the percentage of [Indiscernible] -- of U.S. shipments taking this percentage of the total shipment. And the U.S., because of the trade issues and the [Indiscernible] is dramatically higher than in our regions. So it's a mixed issue.

So what you're saying is that you can increase your gross income from Second Quarter to Third Quarter even if at the aggregate level the wafer -- the module price that you will realize from the -- will go down from Second Quarter to Third Quarter because you have fewer shipments to the U.S. where the module price is inflated?

Yes, you're right. And with the cost -- production cost is higher and in the U.S. we need to pay additional tier-1 tariff costs. The gross margin, gross income from U.S. shipments actually they're not so the significant difference with our regions and we have more shipments in our regions under which has no impact on the gross income of the [Indiscernible] shipments.

Great. Thank you very much.

Thank you.

Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.