Daqo New Energy Corp. (DQ) on Q1 2021 Results - Earnings Call Transcript
Operator: Good morning. Welcome to Daqo New Energy First Quarter 2021 Results Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Kevin He from Investor Relations. Please go ahead.
Kevin He: Hello, ladies and gentlemen. I’m Kevin He, the Investor Relations of Daqo New Energy. Thank you for joining our conference call today. Daqo New Energy just issued its financial results for the first quarter of 2021, which can be found on our website at www.dqsolar.com. To facilitate today’s conference call, we also have prepared a PPT presentation for your reference.
Longgen Zhang: Thank you, Kevin. Hello, everyone. Thank you for joining our conference call today. During the quarter, we continue to see strong momentum in customer demand for high-purity polysilicon, which led to a significant shortage of polysilicon and higher polysilicon ASPs. Our ASP in the first quarter of 2021 was $11.90 per kg, approximately 10% higher than Q4 2020. Due to the elapsed time from contract signing, product shipment to revenue recognition upon products’ arrival at customers’ sites, it takes time for market prices to be fully reflected to our ASPs during periods of rapid price change. Based on current customer contracts and product deliveries, we expect our ASP in the second quarter of 2021 to be in the range of $19 to $20 per kg, a significant improvement compared to Q1 that better reflects recent market pricing trends. As of today, current market pricing for high-purity mono-grade polysilicon has already reached the level of $23 to $25 per kg. With strong end market demand driven by global carbon neutrality commitments by all major economies, major mono-wafer manufacturers continue their capacity expansion and new entrants build new wafer capacity. As a result, we believe that supply in the polysilicon market will remain tight until the middle of 2022, when the market will finally see some additional supply of polysilicon.
Ming Yang: Thank you, Longgen, and hello everyone. Thank you for joining our conference call today. Now I will discuss our Company’s financial performance for the first quarter of 2021. Revenues were $256.1 million compared to $247.7 million in the fourth quarter of 2020, and $168.8 million in the first quarter of 2020. The increase in revenues was primarily due to higher ASPs partially offset by slightly lower polysilicon sales volume. As Longgen indicated earlier, based on our current customer contracts and product deliveries, we expect our ASP in the second quarter of 2021 to be in the range of $19 to $20 per kilogram, a significant improvement compared to the Q1 average selling pricing of $11.90, while we saw a rapid and significant rise in market ASP during the first quarter. Due to GAAP accounting revenue recognition policies, there is a significant time lag from customer order contracting based on market price to polysilicon production and scheduled shipments to products finally arrive at customer side for revenue recognition. Due to this impact, we believe our Q2 ASP will better reflect the recent market pricing trends. Gross profit in Q1 was $118.9 million compared to $109.5 million in the fourth quarter of 2020 and $56.6 million in the first quarter of 2020. Gross margin was 46.4% compared to 44.2% in the fourth quarter of 2020 and 33.5% in the first quarter of 2020. The increase in gross margin was primarily due to higher ASPs. Our polysilicon production cost in Q1 2021 was $6.29 per kilogram, an increase of 6.3% compared to $5.92 per kilogram in the fourth quarter of 2020. The sequential increase in cost was primarily due to an increase in the market price of metallurgical-grade silicon raw material and lower production volume in Q1 as compared to the previous quarter, as well as the exchange rate fluctuations, which had roughly 2% impact to cost in U.S. dollars. For the second quarter, we expect our production costs to be stable as compared to the first quarter.
Operator: Our first question is from Gary Zhou with Crédit Suisse. Go ahead.
Gary Zhou: Hello, Management. Thank you for taking our questions, first of all, congratulations on the recorded high with the earnings. So I have just two questions from my side. So first is, can management share with us latest polysilicon ASP outlook for the second half of this year and also possibly for next year? And the secondary, I want to ask for the latest progress of our Xinjiang Daqo’s IPO, and if possible what kind of evaluation or market cap we expect to get from the Asia markets? And certainly so given the very likely kind of a record high profits and cash flow we are going to catch this year. So how can we think about the further capacity expansion this volume into the next few years? Thank you.
Longgen Zhang: Okay, Gary, to answer your first question. The ASP, I think currently you see the polysilicon ASP, I think it go up very fast and as you can see that this week, our – I think a small order reached to even more than $20 per kg, we believe the month of June, I think the selling price also were higher. So that’s why we given, I think second quarter, the every ASP is around $19 to $20, and that should be compared our Q1 is $11.90 a bigger jump. And that will reflect our gross margin bottom line in second quarter. We’ve got a bigger improve. And the reason is because, for the second half of this year, the ASP what’s the trend basically the poly, it’s a very difficult to forecast, I think at the peak price, however, you see our wafer customers will continue to buy as they are operating cash flow remains positive.
Gary Zhou: Thank you, Mr. Zhang. This is very, very helpful. And I will pass on. Thank you.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Kevin for closing remarks. Oh, wait, we have one, we have two more. I’m sorry. The next question comes from . Go ahead.
Unidentified Analyst: I missed the, your price guidance for the second half of 2022. Would you mind repeat it again? And I have a second question…
Longgen Zhang: The price guidance for 2022, okay, basically I cannot give you the guidance, okay? But based on my personal knowledge and we talk to the industrial people, we believe even in the second half of next year, the reason is because wafer expansion – capacity continued expansion and also the industry, the final ending products, the module – I think the market is very prospectus. So we believe the ASP is still about RMB120 per kg.
Unidentified Analyst: Okay. In the second half of 2022?
Longgen Zhang: Yes.
Unidentified Analyst: Okay. My second question is, your realized price and the lag time between realized price and the market price. Given the fact that right now we’re seeing market prices at maybe RMB150, RMB160 per kg, and realize price for a second quarter you guided at maybe $19 to $20 U.S., which is probably like still below the current market price. Generally how your realized price for the quarter represents a lag time normally of how many months from the market price.
Longgen Zhang: Yes, Kim, I think first of all, if you look at the market price, okay, basically we have to – I think to clear to – you have two price, why is you call market price and then as ASP? When we’re talking about market price, okay, right now let’s say RMB190, RMB200 per kg. That’s a pop small, I think mono silicon grade. That’s the good at the price, okay? So when you’re selling that so bigger chunk of maybe it will be only like – let’s say RMB190 is a small, I think, import, good mono, I think, perfect, I think, silicon materials. So the second is a big chunk. The bigger chunk is you take RMB2 away. So is it like a RMB188. Then you talked about the sample for – TOPCon. The TOPCon maybe RMB4 per kg lower. So ASP, maybe around RMB6 per kg down, okay? First of all, to answer your question. So basically, what are we talking today? If we going to market, contract – I think June – next week, we’re going to contract. So basically their price is not ASP, okay? Their price is within tax is a top price. So for example, if June, the price is RMB190, so ASP only maybe is at RMB100, you take a $6 away. So it is RMB184 is the ASP, okay, the first one. Second, the price is one month lag behind. So usually, if you see the Q2, we give you guidance. First of all, the ASP is $19 to $20. That mean without tax it’s ASP okay, period to recognize the revenue. But the market control it, you see the price when you talk in second quarter, because in the – there one month delay. So that’s why – in April, the shipments, the price is determined to buy in March. Okay. So the March price is the April shipment of products. The revenue recognized also in April. So it’s a one month delay. So that’s why it’s a little delay. Okay? So did I answer your question? So always next month with the terminal right now, so next month, maybe jumping another $20, a RMB20 per kg because of the price change so quickly, it’s difficult for us to tell you, you see what the ASP what’s the price we have to, based on whatever, the actual contracts that we signed and that we deliver. But so far, I think a price is going to stable right now is around that you say RMB190 to RMB195. I think it RMB per kg.
Unidentified Analyst: To distinct RMB190 to RMB195 includes VAT, right?
Ming Yang: Yes, yes. Kim, please always be aware that in the industry, when we talk about the price in RMB terms, it’s always VAT included. When we say U.S. dollar terms, it’s always the VAT excluded. Yes. So it’s a little bit…
Unidentified Analyst: Okay. I’m just wondering when I look at PV info, the price that they closed there in RMB, they’re normally ex-VAT or with VAT.
Longgen Zhang: With the VAT, RMB always with VAT.
Unidentified Analyst: Okay. Okay. How much do you think cost would go up in the next quarter or two?
Longgen Zhang: Basically, if you look our Q2, our costs go up at 4%. The major reason is because the Q1 compare, I think a Q4 last year go up to 4%. The major, I think, is the raw material as silicon powder. Secondly is the steam price, which we increased, I think from our – the price increased in Q1 and we signed with the supplier. So we think in the future the price will be a stable because we didn’t see a further the silicon powder is continued to go up. Basically, as you see this year should be stable even go down. So basically, I think the cost of wherever – I think the same only you have to consider, the foreign exchange rate effect.
Unidentified Analyst: Okay. Okay. Thank you very much.
Operator: Our next question is from Philip Shen from ROTH Capital. Go ahead.
Philip Shen: Thanks for taking my questions. The first one is on pricing, but from a different angle, with the substantial rise in pricing for polysilicon, are you starting to see demand slowdown anywhere in the value chain? Whether it’s wafers or further down or even for polysilicon, is there any talk at all that there’s a slowdown in demand? And what’s your latest outlook for China demand in 2021 in terms of gigawatts, what’s the range and perhaps how does that compare versus what you were thinking back on the Q4 call? Has that changed either lower or higher? Thanks.
Longgen Zhang: Okay. First of all, I think Philip, it’s difficult for me to give you the forecast on the price today, but that mechanism you have to know that. From now on to mid half next year, I think for the earning market, for this year, for example, maybe globally, I think the forecast is around it like a 165, 170 gigawatt. So the total demand for silicon is around, I think, 40,000 tons, 55,000 tons. Then you need to press some inventory. So right now, all supply where now is 50 – I’m sorry, 550,000 tons. But right now, all supply is 500,000 tons there. So the shortage is there. Second is the polysilicon price is driven by the capacity of the wafer. The wafer prices continue to go up. So that’s why silicon prices continue to go up. I think the peak should be wafer. I think gross margin go to breakeven. Then I think silicon price may be starting to turn around. So I can’t tell you when it will happen. The reason is because the wafer producer – the major wafer producer right now in the industry, they continue to increase price almost every month or several weeks. So you ask me, then you should ask with wafer continue to increase price can selling or not. But I think the market is still there because high efficiency, high output watts, the panel, I think you can sell in high price. So that’s why, today, China market is accepting the module, I think price RMB1.8, RMB1.9 per watt. So the polysilicon only account for maybe 13% to 15% of the module price. Only accounted for 7% to 8% right now, maybe 9% of total investments on the power – the solar power station installation. So basically, I think the market is continue – can drive these prices go up. So I cannot tell you when and how, but I can tell you is by the middle of next year, the poly, I think, supply is still – totally are still tight. So price still keep in the high, I think, range. That’s I can answer to you. Second question, you said about this year. China market, definitely, I think, right now, is starting too hot. So this year, I think China may be around 65 gigawatts, even to 70 gigawatts. And the global market, I’m not sure, maybe I think 120, 130. So I’m very optimism, I think globally, I think this year, maybe around 180, 190 gigawatts. Philip?
Philip Shen: Okay. Thank you, Longgen. My next question is on your outlook for 2021. I think you said you’re sold out. So actually, it’s more about 2022. Can you talk about how much of your expected production has been tied up with long-term customer agreements for 2022, 2023 and maybe even 2024? And then when do you think you’ll be able to lock up all of 2022 capacity? Do you think that might happen soon? Or do you think that you’ll keep some production or capacity available for the spot market?
Longgen Zhang: I think after we signed the long-term contract with Zhonghuan last week, I think we locked all our production output this year and next year. Basically, next year, based on – we can – starting 4B production – trial production November this year and can reach the full capacity around in Q1. So basically, based on next year is 120,000 tons. So basically, the long-term contracts right now, this year is already over 80,000 tons. Next year, I think around like 120,000 to 130,000 tons. So basically, right now, we stopped signing any long-term contracts for this year and next year. And for year 2023, we are right now locked, I think, 70,000 tons. For, I think, year 2024, 2025 and together is also around 80,000 tons. So that’s what we now locked our long-term contracts. So especially, I think, for the contracts that we signed originally, we’re collecting 6% based on market, I think, as deposits to guarantee, in the future, you see we can lock those amount.
Philip Shen: Okay. Thanks for that. And then back to the China listing. It seems like maybe the requirements for the listing have been tightened and there’s been a slight delay in the process. I know you answered the question earlier, but can you talk about the timing you think now for the actual listing? Do you think it becomes complete by the end of Q2 or is there a chance that it goes into Q3? And we’ve seen that there might be some challenges maybe due to something about increased pricing or increased R&D spending. So just curious if you might be able to comment on that as well. Thanks.
Longgen Zhang: I think it’s not – I think the issue is not the – what you mentioned, R&D or other stuff. I think we have to – I think first we have to update right now the – I think Q1 financial data. I think actually we updated last week. So we need waiting for Shanghai Exchange to review those figure, then public maybe within one week or soon. So basically right now, so far, I think, we believe, based on our knowledge, I think we can start registration definitely by end of this month, we can start to do that. So we believe, I think we can listing – finish the listing – registration and listing by the end of July. So yes, some uncertainty because we are the first U.S. listing company to listing the subsidiaries in China. So we also face questions and concerns. So, so far, we consider everything. So I think we believe we can finish, I think, early third quarter.
Philip Shen: Okay. That’s really helpful. Thank you. And best of luck obviously with that process. As it relates to CapEx, with the rising input costs not only in solar, but just globally. Do you expect that to impact your CapEx for Phase 2B? And what is your current expectation for CapEx for 2021 and 2022?
Longgen Zhang: Okay. I think our regular CapEx, I think, maintenance, I think, maybe Ming can tell you. But for 4B, total right now this year, we almost finished, I think total investment is around RMB3.6 billion. So we almost finished everything in the contract. I think excluding, I think, around RMB300 million, didn’t sign the contract. So basically, I think we’re pretty sure it’s around RMB3.6 billion, off which I think we will pay this year may be around RMB2.8 billion to RMB2.9 billion will paid by end of this year. So leave around a RMB600 million to RMB700 million will pay next year or even the year after next year. That’s 10% is a guarantee is one year after our – small around their production. So basically, I think I just said, without the STAR Market IPO, our inside cash can support 4B. So basically if we can raise more money from IPO, basically the RPO money, we can continue to future expansion capacity. So the annual maintenance maybe Ming can tell you, how much CapEx, the regular.
Ming Yang: Regular maintenance CapEx is only about $30 million or so per year.
Philip Shen: Okay. Great. Thanks. And I may have missed it, but what’s your expected quarter for maintenance this year is a Q3 or four? What’s your latest view? Thanks.
Longgen Zhang: I think that we already finished, I think at one production line, so rest of Singapore production line were starting in June, July, August, and September, so major will happened – will occur in Q3.
Philip Shen: Okay, great. Thanks for the question.
Ming Yang: Thanks, Philip.
Operator: Our next question is from Dora Liu from JPMorgan. Go ahead.
Dora Liu: Hi. This is Dora. I have two questions, the first is regarding the inventory level. So could you share with us the current inventory level of Daqo and how about industry average level? And the second question is regarding the N-type polysilicon. I think Mr. Zhang just mentioned that Daqo started the commercial shipments of N-type polysilicon to major customers. So I’m just wondering what is the current mix percentage of N-type product of our polysilicon? Thank you.
Longgen Zhang: Okay. First of all, I think maybe – I’ll just answer, Ming maybe you can add in more, okay? By the end of Q1, our inventory is around 1,295 tons and compare the Q4 is 2,491 tons. Actually, we dropped down 1,196 tons. So that’s why we recognize revenue, the quantity is higher than our production. So basically, in the industry – we don’t know other people. Basically, we always keep our inventory as low as possible, okay? So if you look at our history, our inventory usually is below, I think, 3,000 metric tons, never higher than that because we are chemical industry, continued production. We don’t want to keep any inventory. So basically, we’re also not going to go ahead to speculate the ASP, the selling price. So that’s why whatever we produce, I think, we’re going to sell, okay? That’s first question. Second question about N-type. Today, we have four major clients right now who use our N-type products. And the major customers may be taking around like 200 tons per month. So right now, I think every month, we’re selling N-type, maybe less than 1,000 tons. So the Q1, the total quarter is, I think, around 2,000 tons is N-type. But the ASP of N-type actually is not higher, only RMB2 higher than the regular, I think, P-type products. The reason is because right now, the use is still lower. We don’t want to differentiate the price difference. So we just want to stimulate the clients to use our N-type products. But for the future, as you can see that, our downstream clients, for example, like LONGi, like Jinko, they already, I think – the N-type sale production line is already starting to commercial lining. So we think the N-type silicon, the demand will be more and more. Basically, besides Wacker, OCI, then I think domestic producer, I think, we are one of the, I think, the biggest one right now who provide N-type silicon today. Dora, back to you.
Dora Liu: Thank you so much. Yes. That’s quite helpful. Thank you. I’ll pass it.
Ming Yang: Great. Thank you.
Operator: Our next question is from Tony Fei from Bank of China International.
Tony Fei: Hi, management, thanks for your time. This is Tony from BOCI. I just have a one follow-up question on the competition landscape. So last week we all noticed that East Hub announced that they will build a 250,000 ton project in Ningxia province that’s quite huge. So of course, we don’t know when or even whether they will finish it, but let’s assume for the time being that the project gets materialized. Then how would affect Daqo’s future expansion plans, I mean, beyond Phase 4B? Thanks a lot.
Longgen Zhang: Tony, first of all, we’re not going to comment our competitors because competitors are also friends, okay? And yes, we also see the news. And basically, we very respect our competitors. New hopes, I think, they see in Xinyang, they’re already starting, I think, silicon produce. They take five years and ramping up. So – and I don’t know how much they produced and what’s the quality. Basically – and our competitors definitely, I think the total, the market supply will affect our – in the future, you see our continued expansion, we need it based on the market supply and demand. And the future, I think the market ending and the market – the future, especially, I think, the module in the future, the selling situation. So we see the market is so big. So some of our competitors, even some new, I think, comer maybe will invest money in this industry. But because silicon industry, the chemical industry is long-term investments, security and also the quality, technology and priority for selling technology, all these, I think, experience, and together, you see the quality is most important. Safety also is most important. So we are focused on our quality and try to reduce our cost. And we try to make ourselves to differentiate ourselves from other people, I think, to make, I think, high gross margin than the industry average, I think, to survive. I think that’s our, I think, competitive edge. So I cannot comment on other. But yes, I think currently right now, the expansion capacity maybe polysilicon is around 400,000 tons underway. But we don’t know when they go to put into production and whether they can successful or not. So that’s why we are focused on 4B. I think we want 4B, I think, to start full production by November of this year to full capacity running by Q1 next year to, I think, make sure next year, we can produce more than 20,000 tons. Tony?
Tony Fei: Okay. Thank you, Longgen. That’s very helpful.
Operator: Our next question is from John Segrich from Clear Sky. Go ahead.
John Segrich: Hey, guys. I wanted to see if we could talk a little bit about some of the issues that people are looking at in the Xinjiang province in terms of forced labor. I know that you guys recently did a tour, and the feedback has been positive. Unfortunately, there have been examples in the past of tours like Sino-Forest that frankly have gone wrong. So in terms of what you’re going to do to independently certify that there is no forced labor at Daqo or even in the entire supply chain? There’s been a couple of reports in broad daylight citing that your raw material suppliers have direct ties to XPCC, that you buy your power from companies that are tied to XPCC. So how do we get through this? And how do you guys not get subjected to a potential ban of your products in the U.S. or the EU? What steps are you going to take?
Longgen Zhang: Okay. I think, John, first of all, we will not let politicals in the way, and we are continuing to focus on our own business to continue to expansion and produce high-quality polysilicon to support the global, I think, the green energy solar industry. We did our, I think, the best – the efforts. So we hosted a site tour with many Americans and the investors, also media from home and abroad from May 11 to May 13. We also posted – I think, put the video on the Internet to let other investors to see that. I think it’s just like you, gentlemen. So we have reiterated many times of our zero tolerance gains from the forced labor. So basically, we want to take this opportunity to show our investors what is advanced polysilicon plant looks like and how we operate and manage it. So in the future, we don’t know because we cannot involve any political issues. So even in the future, maybe we need a high third-party do the audit. So we can answer that question, okay? That’s it.
John Segrich: But can you – are your two main suppliers of silicon Hoshine and
Longgen Zhang: Excuse me.
John Segrich: Who are your two main suppliers of raw silicon and Hoshine?
Longgen Zhang: You mean the silicon powder, right?
John Segrich: Yes.
Longgen Zhang: The silicon powder is from – mainly from, I think, another is from Hoshine.
John Segrich: Yes. Okay. And so if both of those were tied to XPCC, would you stop buying?
Longgen Zhang: Listen, John. Those providers only provide us the silicon powder, but they also buy silicon metals from all around the world, okay? They mix together. They’re going to produce powder – silicon powder. For Hoshine, they do not only supply the silicon powder to us. They also supply silicon powder to Wacker, OCI. So that’s the question answer to you.
John Segrich: So that doesn’t change whether or not if they use forced labor, you would buy from them? I mean just because everyone buys doesn’t mean that’s okay.
Longgen Zhang: First of all, as I said, we are zero tolerance for the forced labor, okay? I’m not commenting that. But also, I can tell you, they’re also selling polysilicon powder to overseas. For example, OCI, Wacker also bought the silicon powder from them.
John Segrich: I understand that. That doesn’t mean that they don’t use forced labor. I’m just curious, you’ve seen Apple cutoff suppliers. Will you cut off suppliers that are prudent?
Ming Yang: We don’t see any clear evidence of our suppliers be involved into the forced labor issue, okay? So if we see any clear evidence, we definitely take the stance of zero tolerance.
John Segrich: So you would drop them as a supplier? Perfect. Okay. Look, it’s an important issue that needs to be addressed.
Longgen Zhang: Yes.
Operator: Our next question is from Colin Yang from Daiwa Securities. Go ahead.
Colin Yang: Hi, management. This is Colin. Just a one quick question about our future capacity expansion after 4B? Is the location has been decided? Whether it is in Xinjiang or Mongolia and another process? And I’m curious about our future financing plans for our future expansion? from the STAR Market IPO, if you continue for the future expansion. But what if it’s not enough that we can say here now around equity financing? Thank you.
Longgen Zhang: Okay. Mr. Yang. I think basically, right now, if you look at Q1 financial statements, and we have enough, I think, inside the cash flow to continue to support our 4B to finish our 4B. Even by the end of this year without STAR Market IPO proceeds, we can run very well by the end of this year, the cash flow. So basically, if we can successfully run the IPO and the IPO planning, I think, right now, the prospectus, I think will raise RMB5 billion and maybe more, okay. We don’t know, may be less. I think basically, after we finish the IPO, yes, we will throw the board and to – basically, we have to evaluate the market situation, demand and supply in the future. I think other competitive expansion. And we will look in some place. Yes, definitely, I think, besides Xinjiang, in China, other places, we have looked at four places, for example, like Mongolia, Inland, Guizhou, even Shanxi province. So even abroad. So yes, definitely, at that time, we will make decision, we will let you know.
Colin Yang: Thanks. Great to hear.
Operator: Our next question is from Chao Ji from Goldman Sachs. Go ahead.
Chao Ji: Hi. Thank you for taking my question. I hope to ask about – regarding the N-type polysilicon that you mentioned that you released are commercial shipment, can you maybe share your production cost level for the N-type? And also, how much is our – what is our kind of effective supply capacity for the N-type kind of poly? If the demand – downstream demand pick up quickly, how much – how can we kind of reshuffle our kind of supply mix? Do we need to do a little bit upgrade to our existing kind of facility in order to increase the mix of the N-type poly? Thank you.
Longgen Zhang: Okay. I think that’s a good question. So far, right now, I think in China, the bigger major, I think, wafer producer, they’re all starting, I think, maybe one production line, N-type production line. As you see, the announcements like LONGi, Jinko and also Zhonghuan and other player. So basically, right now, the quantity, I think, is lower. Their producer also is lower. So that’s why they can use, I think, an import silicon poly, for example, from Wacker, OCI and also like the high-quality produced domestic like us. So I mentioned that in Q1, we sold, I think, around less than 2,000 tons N-type polysilicon. But we can actually, I think, produce right now, around 20% to 30% of our poly is N-type. So it’s no problem to us. Based on right now, the equipment and the technology, we even can increase N-type quickly, I think, to even 40%, 50%. So based on the market right now, we think in the future, the N-type will become more and more. But it’s the transition period, it takes time. We still think it will take three to five years, maybe N-type will reach to 60%. But definitely, I think P-type still there. The reason is because of cost-effective, and also, I think, other coordination, I think. So basically, I think the market will see the N-type in the future, they can increase the efficiency, and the sales efficiency, they can reach about 25% compared to right now 20% to 23%. Definitely, I think the bigger – I think a jump also on the module side and to increase the output watts per panel, to reduce the total light cost per watt. So that’s most important. I think that’s the future. I think one of the future, I think the next revolution – technology revolution. We are really, I think, prepared for it. So the cost, I think, today, it’s not – we just selected the N-type actually basically classical N-type from the P-type. So it’s cost us even the same, so not big difference.
Chao Ji: Understood. Super clear. Thank you.
Ming Yang: Thank you.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Kevin He for closing remarks?
Kevin He: Thank you, everyone, again, for participating in today’s conference call. Should you have any further questions, please don’t hesitate to contact us. Thank you, and bye-bye.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
