JinkoSolar Holding Co., Ltd. Sponsored ADR Stock

Hello, ladies and gentlemen, and thank you for standing by for Jinko Holdings Third Quarter 2026 Earnings Conference Call. [Operator Instructions] 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. Stella Wang, Jinko Holdings Investor Relations Manager. Please proceed, Stella.

Thank you, operator. Hello, everyone, and thank you for joining us today for Jinko Holdings Third Quarter 2026 Earnings Conference Call. The company's results were released earlier today and are available on the company's IR website at ir.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 IR website.

Joining us today are Mr. Dimi Du, CEO of Jinko Holdings Limited; Mr. Craig Zhang, acting CFO of Jinko Holdings Limited; Mr. Charlie Cao, CEO of JinkoSolar Company Limited; and Mr. Gener Miao, CMO of JinkoSolar Company Limited. Mr. Du will discuss the group's business operations, company highlights and key product developments, followed by Mr. Zhang, who will go through the financials. Management will be all available to answer your questions during the Q&A session.

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 Jinko Holdings' public filings with the Securities and Exchange Commission. Jinko Holdings does not assume any obligation to update any forward-looking statements, except as required under the applicable law.

It's now my pleasure to turn the call over to Mr. Dimi Du, CEO of Jinko Holdings Limited. Please go ahead, Dimi.

Hello, everyone. This is Dimi Du, and thank you for joining Jinko Holdings Third Quarter 2026 Earnings Call. Last Friday, we announced the completion of our name change to Jinko Holdings Limited. And today is the first time we are speaking with you under the new name. For us, the change is not simply the adoption of a new name, it marks a new start point in our development.

Our recent Jinko 2026 Global Tech Day underscored how quickly energy and technology are converging from PV to energy storage and from energy supply to ever-growing demand for computing power in the AI era. Technological innovation continues to expand the boundaries of energy industry. We believe that truly valuable innovation lies not only in pushing the limits of technology, but in bringing that technology into application, embedding across in the industry and creating long-term value.

Going forward, we will continue to focus on our core solar and energy storage business while taking a more open approach to opportunities in AI, advanced materials, commercial space and other frontier technologies. We aim to connect our industry expertise with external sources of innovation to support technologies and companies with long-term potential through disciplined capital allocation and advance both industrial development and long-term shareholder value through ongoing portfolio management.

Let me begin by reviewing the operational performance of our solar and energy storage business and then update you on our strategic investments.

In the third quarter, we continued to deploy an operating strategy that balances sales volume and profitability, advancing the integration and upgrade of our high-efficiency products and the development of our energy storage business. Benefiting from higher shipments of high-efficiency products, the continued cost optimization of TOPCon 3 and improved profitability in our energy storage businesses, our operating performance improved significantly both year-over-year and sequentially. Gross margin was 12.3% in the third quarter, up approximately 8% points sequentially and 5% points year-over-year.

Net loss and adjusted net loss both narrowed significantly on both a year-over-year and sequential basis to USD 25.4 million and USD 1.2 million, respectively. Looking ahead, we will build on 3 core pillars, namely technical innovation, globalization and AI transformation to drive integrated solar plus storage development and to convert our technology, manufacturing capability and global network into a stronger and systematic solution.

Looking at the details, module shipments were 15 gigawatts in third quarter with a strong brand and product capabilities, we continue to expand our footprint in high-value overseas market. In the third quarter, overseas markets were the primary destination for shipments, accounting for around 70% of the total. We continue to optimize our product mix with the shipments of Tiger Neo 3 modules exceeding 5 gigawatts during the quarter and commanding a premium for approximately USD 0.01 per watt over conventional modules.

We also made progress with the capacity ramp-up with Tiger Neo 3, with production cost continuously improving. We are well aware that technological innovation with well long-term competitiveness should not pursue efficiency breakthrough alone. It must also meet customer needs across different application scenarios and deliver tangible economic benefits through scaled mass production.

Recently, we launched the next-generation Tiger Neo 5, all-black premium residential module based on the TAC tech technology platform, featuring power output of up to 510 watts and module efficiency of up to 25.52%. Leveraging our core TAC technology, we will focus on our global premium distributed market segment, particularly residential rooftop applications. We are planning to gradually ramp up production and shipments over the next 2 years, in line with the market demand and industry conditions. At the same time, we will continue to strengthen our network through relationships with installers and end customers and improve both product competitiveness and local service capability so that our technological advantages translates more effectively into a commercial value. We are pleased to see our energy storage business delivered growth in both sales volume and profit in third quarter. We recognized approximately 1.75 gigawatt-hour of energy storage shipments as revenue, matching the total recognized for the whole of last year with the business also generating positive quarterly operating profit for the first time. We are actively advancing the application of our proprietary BESS products and continuing to explore opportunities in emerging scenarios such as data centers.

Going forward, we will further optimize our geographic and order book mix and deepen the synergies between solar and storage across customer resources, sales channels and technical services in order to deliver more sustainable growth and profit contribution.

The PV industry is at a critical stage of supply and demand adjustment as the relevant national authorities continue to promote the orderly and well-regulated development of the industry through stricter standards and higher technical and energy efficiency requirements. We expect these measures to support the gradual phaseout of less efficient capacity and competition to focus more on technological innovation, product quality and customer value. We will maintain our operating strategy of balancing sales volume and profitability, continue to optimize our product and order book and exercise strict control over capital expenditure in order to make the improvement in our operating performance more sustainable. We expect module shipments of between 16 gigawatts and 18 gigawatts in fourth quarter.

For full year 2026, we expect energy storage system shipments POD of approximately 10 gigawatt hour. By the end of 2026, we expect to have approximately 40 gigawatts of high-efficiency capacity that meet level 1 national energy efficiency requirements. Alongside the progress in our core solar and energy storage business, we continue to invest in semiconductors, AI, energy storage and other frontier technologies in third quarter with total and follow-on investments of approximately RMB 330 million, of which approximately RMB 254 million came from the company's own capital.

This includes KiwiMoore, a product of full-stack AI networking products and solution specializing advanced chipsets and chip interconnection technologies. And TIGSTOR, a company focused on the development and application of super competitor technologies. We also saw continued progress across our strategic investment portfolio during the quarter.

SiliconFlow completed the second tranche of its Series B+ financing round and its Series C financing round in September 2026. StepFun launched its STEPX terminal brand and related AI terminal products in July, further expanding the application of its large language models in end-user devices. More recently, Adaspace Technology, another of our portfolio companies, passed the listing hearing of Hong Kong Stock Exchange.

In terms of the portfolio management and value realization at the end of third quarter of 2026, the fair value of our strategic investment portfolio was approximately RMB 2.05 billion.

During the first 9 months of 2026, our portfolio generated gains of approximately RMB 327 million, comprising approximately RMB 82 million in realized gains and approximately RMB 244 million in unrealized fair value gains. Over the same period, portfolio exits generated approximately RMB 386 million in cash proceeds. Notably, having divested a substantial proportion of our equity interest in LAPLACE in the first half, we completed the exit from our remaining equity interest in third quarter, generating additional cash proceeds of approximately RMB 38.7 million. Our initial investment in LAPLACE was approximately RMB 65 million, and investment generated cumulative gains of approximately RMB 357 million.

Looking ahead, we will remain selective in pursuing investment opportunities, balancing new investments against exits based on operating performance and value realization path of each portfolio company and improving capital utilization efficiency. By improving the performance of our core solar and energy storage business and progressively realizing the value of our portfolio, we remain committed to creating sustainable long-term value for our shareholders.

This concludes my remarks, and I will turn the call over to Craig.

Thank you, Dimi. With our focus on high-efficiency products and high-value markets, the continued growth in revenue contribution from our energy storage business and unremitting cost control initiatives, we achieved a steady improvement in our financial performance.

Gross margin was 12.3% in the third quarter, up 8.1% sequentially and 5% year-over-year. Loss from operations and net loss narrowed significantly both sequentially and year-over-year. Operating cash flow was approximately $91 million for the first 9 months of year '26 as we continued to optimize our cash flow management. We will continue to balance sales volume and profitability and to control cash flow. And we expect full year operating cash flow to improve compared to last year.

Now let me walk you through our third quarter financial results in more detail. Please note that all year-over-year and sequential percentage changes in monetary figures are calculated based on an RMB basis and the corresponding U.S. dollar amounts are provided for reference only. Total revenue was $2.03 billion, up 10.2% sequentially and down 15.7% year-over-year. The sequential increase was mainly attributable to growth in revenue generated from our energy storage system and an increase in the average selling price of solar modules, while the year-over-year decrease was primarily due to a decrease in the shipment volume of solar modules.

Gross margin was 12.3% compared with 4.2% in the second quarter of year '26 and 7.3% in the third quarter of year '25. The sequential and year-over-year increase were mainly driven by continued cost optimization in our high-efficiency production lines and increased share of high-efficiency product shipments and a greater contribution from higher-margin energy storage system revenue.

Total operating expenses were $261.2 million, down 10.2% sequentially and 32.3% year-over-year. The sequential decrease was primarily due to lower expected credit loss in the third quarter of year '26, while the year-over-year decline was mainly due to a reduction in the impairment of long-lived assets and lower expected credit losses.

Operating expenses account for 12.9% of total revenue, compared to 15.8% in the second quarter of year '26 and 16.0% in the second quarter of '25. The recovery in gross margin and the decrease in operating expenses together narrowed our losses from operations to $11.9 million in the third quarter. Operating loss margin was 0.6% compared with 11.6% in the second quarter of '26 and 8.7% in the third quarter of year '25.

Net loss attributable to Jinko Holdings Limited ordinary shareholders was $25.4 million in the third quarter of year '26 compared with $103 million in the second quarter of year '26 and $105 million in the third quarter of year '25, improving both year-over-year and sequentially.

Excluding the impact of the change in fair value of long-term investments, gain from disposal of subsidiaries, impairment of long-life assets and share-based compensation expenses, adjusted net loss attributable to Jinko Holdings Limited ordinary shareholders was $1.2 million in the third quarter of year '26 compared with $134 million in the second quarter of year '26 and $57.5 million in the third quarter of '25, improving both year-over-year and sequentially.

Now moving to the balance sheet. At the end of the third quarter, our cash, cash equivalents and restricted cash was $2.32 billion in total compared with $2.1 billion at the end of the second quarter of year '26. Accounts receivable turnover days were 103 days compared with 113 days in the second quarter of year '26. Inventory turnover days were 133 days compared to 125 days in the second quarter of year '26. At the end of the second -- third quarter, total interest-bearing debt was $6.73 billion compared to $6.62 billion at the end of the second quarter of year '26. Net debt was $4.41 billion compared to $4.12 billion at the end of the second quarter of year '26.

This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed.

[Operator Instructions] Your first question comes from Philip Shen with ROTH Capital Partners.

This is Oscar Chim on for Philip Shen. The first question is on margin for your core business. Just want to know, do you see further opportunities to improve your margin by optimizing your product and geographic mix in 2027, even if that means -- even if that could mean lower shipment volume versus '26? And then what is your outlook for module ASP in Q4 '26 and 2027? And then I have follow-up questions.

This is Charlie speaking. Looking to next year, 2027, we did, I think, have the opportunity to optimize the product mix, different shipment to different regions and including the segment utilities and distributed generation segment. That will be the key driver for Jinko. And we are on track to have the mass production for Tiger Neo 3. This is the -- this year, the key products, and we believe next year, we are in a good product mix and the capacity mix. And the next key task will be to optimize the shipment -- mix of the shipment to different customers, regions and segments. So if we're talking about ASP, we believe it's already bottom up, and we expect it's going to be stabilized and with the capacity based on next year, we strongly believe the current profit margin and the price is not sustainable and we need to have kind of the recover -- recovery next year.

Okay. And then second question, could you quantify any impact of freight or elevated energy costs on your Q3 gross margins? And then do you think those impacts could proceed into 2027?

It did have because in the shipments, particularly, I think the most important significant impact is the shipment logistic cost in the Middle East conflict and a very high price for the oil and gas. And -- but we build the base case, it could be the high energy price will be -- last for a few quarters. But second half year or next year, we believe it's going to be -- get back to normal status.

Okay. That's helpful. And then last question for me. I'm interested in your strategic investment business. And then now with the strategic investment becoming an additional value driver, like how significant do you expect this platform to become relative to your solar -- core solar business over the next few years in terms of maybe capital deployment or earnings contribution? And then how is the management team allocating the time and resources between the core and investment business?

Before talking to details of strategic investment, and I'd like to highlight 2 parts. Jinko Holding is kind of holding company, one of the assets is 55% roughly equity of China-based A-share JinkoSolar, which -- whose business is integrated solar plus storage business. And that is one of the key assets. But from the JinkoSolar Holding company perspective, I believe from long term, there is just kind of the controlling shareholders and it's not kind of have the plan to make the additional allocation of capital to the JinkoSolar manufacturing business, okay? On top of that, because they have the sizable resources and cash resources in the last few years, they started to build a very strong investment teams starting from initially it's kind of the focus on the key equipment and the material and kind of start-up companies for the solar storage business. And gradually, they expand the investment group scope and to the AI kind of large model companies and a lot of chip companies, industries. So back to your question, they're not going to allocate additional capital to the manufacturing business and the focus will be the kind of strategic investment and including traditional solar storage related and to more broad high-tech sectors.

[Operator Instructions] Your next question comes from Rajiv Chaudhri with Sunsara Capital.

First of all, congratulations on a very strong performance across the -- both storage and the basic module business. So that's the first thing. The question I want to ask first is about storage actually. I'm -- you're suggesting that the shipments in the fourth quarter will be around 5.5 gigawatts hours to get you to the 10 gigawatt hours for the year. But in terms of recognizing revenues, you have a lot of revenues from last year that probably still have not been recognized and your shipments this year have also been ahead of your revenue recognition. So when you combine all that with a very strong shipment quarter in the fourth quarter alone, what sort of revenue recognition should we be expecting? Is it going to be in the 6 or 7 or 8 gigawatt hours of revenue recognition, which would be 3 to 4x what you recognized in the third quarter? Can you give us a sense of that?

Okay. For the big picture, the storage business is kind of like the -- be like the solution turnkey business, so it's going to be go through a lot of procedures, shipment acceptance and commissioning. Typically, different regions, it takes about 6 months to 12 months to fulfill the obligations and recognize revenue on the financial statements. So it's a little bit late [ recognitions ] nature. And so back to your question and last year, 2025, we have 5 gigawatt hours shipments and 1 gigawatt hours revenue recognitions. So the gap delayed last year from last year's 4 gigawatt hours. For this year, the shipment is [ 10 ] gigawatt, but we roughly estimate the revenue recognition could be 6 to 7 gigawatts. So if you look at 2 years together, we have 5 plus 10, 15 gigawatt hours shipments in 2 years and revenue recognition is roughly 7 to 8. So there's roughly 7 gigawatt hours will be delayed to next year for commissioning and for revenue recognition.

Great. That also means that you will recognize about 3 to 4 gigawatt hours in the fourth quarter is what you're suggesting?

I think the first 9 quarters for the first 9 months and we have roughly, I think, 3 gigawatt hours, a little bit over than 3 gigawatt hours for the 3 quarters. But the fourth quarter should roughly be, I think, 3. 1 quarter is roughly equal to the last 3 quarters.

Okay. Next question I have is about the geographic distribution of module sales. Could you tell us about the sales that you had? I know you said 70% outside of China. But how much of it was in the U.S.?

For the third quarter, roughly, I think the [indiscernible] business is roughly. So 1 gigawatts [indiscernible] in the third quarter.

So third quarter was 1 gigawatt. And what do you expect the fourth quarter to be in the U.S.?

[indiscernible]

Okay. And also, can you comment on your shipments into India? What kind of shipment did you do in India in Q3? And what do you expect in Q4?

Okay. I think the number maybe [indiscernible] to China in China products. So our shipment -- module shipment to India is not so significant. But we look at the big region that is in -- Asia Pacific region is our very big market, but India is very small, not so big.

I see. Okay. And moving on to the -- previously, you used to break out the shipments of wafers and cells. You have not broken them out in the last 2 quarters. Is that because they are close to 0 or you have changed your reporting policy?

I think we didn't change the reporting policies. And -- but the majority of our, 90%, maybe 95% is module revenue. So I think we did emphasize the wafer sales revenue because it's typically, it's kind of [ low inflation ] products.

Right. Okay. And final question is on the gross margin. There was a nice improvement in gross margin in Q3. And I suspect that was -- even though the module margins were up very nicely, the gross margin in storage is still higher than the gross margin in modules right now?

Yes. The gross margin storage business roughly 15% to 20% which is the 10% of the module gross margin. And the revenue contribution is not significant, roughly 5% to 6%. So I think from margin perspective, combined together from the module storage business, maybe 1% to 2% impact.

I see. And my final question is on the gross margin expectation for the fourth quarter. You said that Tiger Neo 3.0 modules exceeded 5 gigawatts in Q3. What kind of shipment number are you thinking for Q4?

You mean gross margin or shipments?

Well, shipments first. And then related to that, I guess, would be the impact on the gross margin, right?

Yes, yes. We did have more the Tiger Neo 3 product shipments and the Q3 is roughly 30% and Q4 roughly 40%. So gradually increased 10%, that will have impact on the gross margin as well. But the Q4, the gross margin, we did see some pressure, particularly we expect more -- relatively more shipment to the China as well as we have some contracts, long-term contract we signed in the beginning of this year. We may need to deliver by the end of this year. So back to your question, but it's kind of one quarter impact, but we expect with the relatively higher mix percentage from high-margin products to help the gross margin. But from the country shipments with more shipments in China, typically, Q4 is the peak season for China, it have some kind of [indiscernible].

So when you net it all out and also you'll have more shipments of storage, we should still expect gross margin to improve sequentially?

It did have. It did have. But anyway, we think Q4, we did face some pressure on the gross margin overall, particularly more shipments to China.

I see. So the higher shipments to China will bring the gross margin overall down from the third quarter level?

It's dependent on...

Or you are not allowed to expand?

Yes, there's a lot of factors, particularly if you look at the commodity price, it looks like some material cost is up, some is down. So anyway, we think Q4, we tentatively be giving more shipment to China, we face some headwinds for the gross margin.

I see. And my final question is on shipping costs. Can you tell us what's been happening with shipping costs in Q3 and what we should expect in Q4?

It's stable, but it's on the high level, particularly for the shipment to the Middle East regions. It has kind of the ripple effect because the oil price is high. Now it's kind of $100, right? And it's going to have impact on the overall shipment to different regions. But the most impact countries and regions in the Middle East, the Red Sea regions.

[Operator Instructions] We are showing no further questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect.

Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co., Ltd. Second Quarter 2026 Earnings Conference Call. [Operator Instructions]

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. Stella Wang, JinkoSolar's Investor Relations Manager. Please proceed, Stella.

Thank you, operator. Hello, everyone, and thank you for joining us today for JinkoSolar's Second Quarter Earnings Conference Call. The company's results were released earlier today and available on the company's IR website at ir.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 IR website.

On the call today from JinkoSolar are Mr. Xiande Li, CEO of JinkoSolar Holding Company Limited; Mr. Gener Miao, CMO of JinkoSolar Company Limited; Mr. Pan Li CFO of JinkoSolar Holding Company Limited; and Mr. Charlie Cao, CEO of JinkoSolar Company Limited.

Mr. [ Zhu ] will discuss JinkoSolar's business operations and company highlights followed by Mr. Miao will provide an update on sales and marketing. And then Mr. Pan Li, who will go through financials. Management will be available to answer questions during the Q&A session.

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.

Let's now site to turn the call over to Mr. Xiande Li do CEO of JinkoSolar. Please go ahead, Xiande.

Hello, everyone. This is Xiande Li do, and thank you for joining JinkoSolar's Second Quarter 2026 Earnings Call. It is honored to take the role of CEO I appreciate the trust the Board of Directors and the management team have pleasing me.

Sharing this milestone of our 20th anniversary as we embark on the next stage of the development. I look forward to working closely together to further enhance our operating performance and strategic execution to drive sustainable, high-quality growth. I will begin by reviewing our operational performance in the second quarter and then outline our key priorities going forward. In the second quarter, module shipments increased sequentially to approximately 16 gigawatts.

Supply and demand imbalances across the PV industry remain dynamic. These pressures were further compounded by shift in domestic and overseas policies. With prices across the supply chain and industry profitability remaining under pressure. As the cost of ramping up, our high-efficiency products remained evaluated during the quarter. together with impact by delivering certain low-value orders, gross margin decreased sequentially during the quarter, while our net loss expanded.

Facing this operating pressure we optimized our order book and geographic mix, rationally manage utilization rates and continue to expand the proportion of high-efficiency products within shipments while introducing technologies that lower cost. These measures are driving a gradual recovery in profitability. The underlying pattern of TV industry competition is gradually shifting from capacity and shipment scale to effective supply product value and earnings quality.

The mandatory new national standard on energy efficiency for modules and inverters released in July will take effect in January 2027. The new standards and level free energy efficiency as a minimum [indiscernible] for market access. Products that [indiscernible] to meet these minimum threat holes will not be permitted for production or sell. Placing high-efficiency products in a stronger position for large-scale renewable energy project tenders.

Meanwhile, the implementation of market-based pricing for renewable power is pushing customers to increasingly focusing on energy yield reliability and lifetime value of modules. These changes are beneficiary to industry leaders with advanced manufacturing capacity, technological expertise, global delivery and long-term service capabilities. which will accelerate the fit-out of inefficient production capacity.

By the end of 2026, we expect to have 140 gigawatts of TOPCon 3.0 production capacity. Based on the new standard threshold, these products are expected to meet Level 1 energy efficiency requirements and strengthen our analyzed production capacity for high-efficiency products to lead the industry. We continue to advance our product portfolio and build a solid base for next-generation technologies based on our TOPCon technology road map.

In June, we unveiled our newest next-generation TOPCon Tiger Neo 5.0 modules. By optimizing multiple core technologies, the Tiger Neo 5.0 achieved mass produced efficiency of 25.91%, and power output of over 700 watts, setting a new benchmark for TOPCon product performance once again. ESS shipments in the first half of the year were 3.1 gigawatt hour, increased significantly year-over-year. Benefiting from our presence in high-value market, gross margin improved year-over-year in the first half of 2026. Due to uncertainties in timing of project delivery and other factors, recognized revenue remains in ramp-up stage.

Approximately 1.5 gigawatt hour were recognized revenue in first half, including more than 1 gigawatt hour in the second quarter as project deliveries increased alongside ongoing enhancement of our in-house PCS, EMS and other capabilities, we will continue to boost efficiency of both revenue recognition and profit realization. Driving high-quality growth for our ESS business.

Now I will move on to our guidance for the third quarter and full year of 2026. We expect our annual integrated production capacity to reach approximately 100 gigawatts by year-end 2026, including approximately 14 gigawatts from overdue facilities. Considering demand dynamics in certain markets, we will place greater emphasis on balancing shipment volume, profitability, cash flow and order quality going forward. and adjusting guidance for full year 2026, module shipments to between 60 gigawatts and 70 gigawatts and high-efficiency products accounting for over 60%.

We expect module shipments to between 15 gigawatts and 17 gigawatts in third quarter of 2026. For full year 2026, we expect our energy storage system shipments to more than double year-over-year. As we continue to strengthen the competitiveness of our core solar and energy storage businesses, we are also building an investment sample through disciplined capital allocation and professional investment management that will act as a complementary driver for long-term value creation.

Over the past several years, leveraging our deep industry expertise and long-term perspective on technological trends we have made selected investments directly or through fund platforms, focusing on strategic synergies, technological innovation and long-term value creation. Our early investment primary focus on solar and storage value chain.

In recent years, as AI drives demand for computing power and electricity demand, we have selectively expanded our investment scope to the AI ecosystem and other frontier technologies. To date, we have invested in more than 40 companies in total. As of June 30, 2026, we have invested an aggregate of approximately RMB 1.86 billion in cash, the original cash cost of the investment remaining in our portfolio is approximately RMB 1.5 billion with a fair value of approximately RMB 1.99 billion as of the same date. Our investment portfolio has generated cumulative value appreciation of approximately RMB 880 million comprising of approximately RMB 410 million in realized gains from exit and approximately RMB 470 million in unrealized fair value from remaining investments in the portfolio.

During the first half of 2026, our portfolio generated gains of approximately RMB 490 million, comprising approximately RMB 10 million in realized gains and approximately RMB 380 million in unrealized fair value gains. In the first half of 2026, we divested a substantial portion of our equity interest in LAPLACE Renewable Energy Technology Company Limited, receiving over RMB 300 million in cash proceeds since our initial investment in LAPLACE the cumulative realized gain on visible disposal exceeded RMB 250 million.

This gain was recognized of multiple carriers through fair value adjustments following its IPO in late 2024. With over RMB 100 million recorded in change in fair value of long-term investment upon settlement in the first half of 2026. In addition, Hangzhou Gold Electronic Equipment Company Limited successfully completed its listing on ChiNext Market of Shenzhen Stock Exchange during the second quarter, creating an additional pathway for future value realization.

Looking ahead, we will continue to maintain a disciplined approach to capital allocation, supporting the long-term development of our cross solar and energy storage business will remain our top priority. At the same time, we will continue to evaluate our existing strategic investments based on the operating performance strategic synergies and the long-term value creation potential of each portfolio company while remaining disciplined and selective in pursuing new opportunities. Through strengthening our core businesses, realizing porfolio value and improving capital utilization efficiency, we remain committed to creating sustainable long-term value for our shareholders.

This concludes my remarks. I will now turn the call over to Gener.

Thanks, Xiande. Total shipments were 32.9 gigawatts in the first half, which showed a market shift in accounting for over 90% leveraging sales network covering nearly 200 countries and regions and 35 service centers globally. We continue to optimize our geographic mix and the customer structure overseas. .

In the first half shipment to the overseas markets accounted for over 70%, mainly across Asia Pacific, Europe and emerging markets. In the second quarter, the proportion of high-efficiency product shipments improved sequentially. Our TOPCon 3.0 series continued to command a premium of approximately [ USD 1 ] per watt over conventional products. We also began to ship a small number of scenario-based product in the second quarter and gradually expand to increase deliveries in the second half.

Those products already command a premium of approximately USD 0.5 to USD 1 per watt over commercial products. Following the launch of IDC and other scenario-based module products in the first quarter, we recently released the Sunny 365 smart solar story system. This comprehensive series of integrated PV storage solutions cover several scenarios such as retail supermarkets, AEC and the manufacturing sector. Especially the AIDC solution execute around our Tiger Neo 3.0 module platform technology and the [ Sontara ] energy storage system capable meeting the demand from data center for power supply reliability, energy economics and a sustainable low carbon development through the coordinated control of energy storage system.

PCS, EMS and smart operations and maintenance. We recently received the highest AA bankability rating in the Q2 2026 bankability rating report for module manufacturers released by [indiscernible]. Since first participation in the evaluation in 2014, we have maintained a grade rating for 12 consecutive years. Also, we were recognized as a Tier 1 energy storage provider by BNEF for the tenth consecutive quarter. This rating reinforced our bankability project implementation capabilities and long-term delivery capabilities for the international market. impacted by the market-based pricing mechanism for renewable energy and the pace of project investment, domestic installation demand has slowed.

Yes, we observed the positive signs of shifting structural demand with national level large-scale renewable energy-based projects led by the central and state-owned enterprises maintaining a steady pace of progress. The share of tenders for high-efficiency modules has increased significantly in the centralized procurement and the criteria has shifted from simply pursuing lowest bidding price to greater emphasis on module efficiency, life cycle power generation performance, reliability and long-term delivery capability.

High-efficiency modules have already commanded a reasonable premium in tenders. At the same time, the distributed generation market is transitioning from scale-driven growth towards a focus on scenarios and operational value. Brand reputation, channel, local services and the scenario adaptabilities are becoming increasingly critical. This trend benefits enterprises with global channel established brands and differentiated products which enable conversion of technology and product power into more stable price relationship and product value.

Looking to work forward to 2027, as the electricity pricing marketization policies are gradually absorbed and the mechanism based of pricing and project ROI models become clear. several projects that were delayed due to insufficient returns are expected to gradually resume large-scale renewable energy-based product direct in power connection and the distributed scenario-based application will continue to drive domestic demand.

The overseas market is expected to maintain some growth resilience benefiting from energy security, growing power demand and improved the solar plus storage economics. Leveraging our global sales network, leading high-efficiency products and continuously expanding solar plus storage solutions. We will capitalize on the opportunities arising from a change in demand structure and expanding application scenarios. We will continue to optimize our market and product mix and leverage our technological advantages to strengthen our presence in high-value markets enhance product value and improve the quality of our operations.

With that, I will turn the call over to Pan.

Thank you, Gener. Leveraging our leading position and the high-efficiency products, we optimized our sales mix during the quarter. resulting gross margin reaching 4.2%, up 1.3 percentage points year-over-year. We also continued to optimize our capital structure and cash flow management and generated positive operating cash flow during the period, a significant improvement compared to last quarter.

Our asset to liability ratio declined by approximately 1.5 percentage points from the beginning of the year. For the remainder of the year, our focus will be on balancing scale and earnings quality while carefully controlling cash flow. We expect full year operating cash flow to improve compared to '25. Looking at our second quarter financials in more detail. Total revenue was $1.82 billion, up 0.9% sequentially and down 31% year-over-year. The sequential and year-over-year changes were mainly due to the fluctuation in the shipment volume of modules. Gross margin was 4.2% compared with 8.3% in the first quarter and 2.9% in the second quarter last year.

The sequential decrease was mainly due to lower average selling price of solar modules by the year-over-year increase was primarily due to the higher ASP. Total operating expenses were $287 million, up 21% sequentially and 2% year-over-year. The sequential and year-over-year increases were mainly due to higher expected credit losses in the second quarter this year.

Operating expenses accounted for 15.8% of total revenues compared to 13.1% in the first quarter this year and 10.6% in the second quarter last year. Operating loss margin was 11.6% compared with in the first quarter this year and 7.7% in the second quarter last year. Moving to the balance sheet. At end of the second quarter, our cash and cash equivalents were about $2.5 billion compared with about $3.3 billion at the end of the first quarter this year.

[indiscernible] was [ 113 days ] compared with [ 1 to 8 days ] in the first quarter of '26. Inventory turnover was 1 to 5 days compared to won for 2 days in the first quarter this year. At the end of the second quarter, total debt was about $6.6 billion compared to about $6.8 billion at the end of the first quarter of '26. Net debt was $4.1 billion compared to $3.5 billion at the end of the first quarter of '26 million.

This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed.

[Operator Instructions] Your first question comes from Brian Lee with Goldman Sachs & Company.

This is Tyler Bisset on for Brian. ASPs declined pretty meaningfully sequentially. So curious how you're viewing ASP so far in Q3. And how much of an impact you could see from greater shipments of Tiger Neo 3.0 modules?

So yes, for the ASP side, we expect, firstly, apple-to-apple, we are expecting the price goes up a little bit in Q3. And if we look into the average prices, it will go up as well. Firstly, the first reason is to be course from the current market situation as the price is going up because of different reasons, but ball market goes up.

So most of the DG prices are following the spot market. So we are expecting the price of Q2 goes up. The second reason is because the mix of different products. Our 3.0 product, which is a premium product ratio in Q3 will be definitely higher than Q2, which will be helpful to lease up the ASP in Q3 as well.

Super helpful. And we have seen pricing for wafers and cells increased pretty meaningfully over the past month. We've also seen futures prices for poly also increasing following some industry self-regulation. So I wanted to see how you're thinking about your input costs over the near term and whether you're expecting any impacts from some of these recent moves and input costs?

So you are talking about the increased cost [indiscernible]. We believe it's a kind of healthy rebound, including polysilicon, glasses and a couple of materials. And that is why I think we the industrial player and increased module price. We don't believe this is going to have a next impact on the customer side.

And if you look at the landscape and the solar is the cheapest energy sources. And now these are huge demand for storage and solar plus storage will be the nominator of the energy diversification for most of the ratings.

Okay. And just one more from us. Can you provide any more details on how you're balancing shipment volumes and profitability and how that weighed on your shipment volume guidance for the year? Like are there certain markets that you are prioritizing or deemphasizing?

We guided on the shipments, right, to 60 to 70. That's where clear methods and we don't believe it's the right time to focus on the scale and the profitabilities and the operating cash flow is a key. So we do a lot of optimization of the structures, not only the markets as well as the products and pace even our employee resources and particularly if you look at in the demand in China is 30% to 40% lower than last year.

So definitely, we have less and less exposure in China, and China is still relatively competitive and pricing is one of the lowest of the markets. But what we are doing is not only the country by country as well as the customer by customer. And on top of that, we -- because we are slowing out the tiers, and that is one of the key markets and residential markets and particularly for the premium markets in United, including Europe. So that is one of the area we like to penetrate more market share. and to get relatively good profitabilities.

Yes. So I'd just like to take it out to I think we invested in our call and this kind of quarter meaning earnings is relatively different and the loans and the U.S. companies, we like the repositioning the companies on strategies. And firstly, JKS is kind of a cantonal China with the company, which is the focus on integration of the solar plus storage. But now JKS has more capabilities in the last 5 years. We built up a very, very strong strategic investment teams and invest dozens of investments, a lot of investment we were successful and in the last 5 years, we focus on solar storage-related upstream, downstream turn out very high growth potential companies to make the financial investment and to get investment returns and as well as get some synergies for Jinko China.

On top of that, because China is more kind of more competitive on the new technology like the AI content and computing, robotics and the team is shifting the focus to more kind of strategic board industries, particularly the next generation. So we think the decade is kind of shifting to both on the console of the Jinko China and focus on range. And on top of that, the JKS U.S. companies who are shifting more capabilities to invest on the higher growth opportunities. China is the second most powerful countries, there's a lot of massive opportunities and we are able to -- our teams are able to take the advantage.

So we would like to the investor gradually to have communication with our IR teams and 1 what is the progress, particularly for the strategic investment we are planning and we have made, which we believe will be a very strong return for the JKS in the next 2 or 3 years. And Again, we think it's good for the valuation of takes. If you look at purely the China versus U.S. due to a very big valuation gap that the U.S. is just 20% to 30% of regulations.

And plus, we have a lot of portfolio investments and unique investment which we are able to monetize. And so I'd like to take it out to bring this key topic and have the investor understand, okay, what we're going to do in the future. Thank you.

Your next question comes from Phil Shen with ROTH Capital Partners.

[ Xiande ], Nice to meet you. Congratulations on the new position. I wanted to check in with you guys on the Section 232 specifically, given your recent transition and sale of your U.S. assets to FH Capital, can you talk about the impacts of the 232 on that JV, what kind of -- how do you expect module pricing to be impacted? And then ultimately, do you expect the landscape of manufacturers to shift as a result of the Section 232?

In general, we believe it's kind of very good for Jinko strategy to divest our manufacturing shifting to from entities in the United States. And specifically, I think JVs because we are the financial minority investors were not in a position to discuss the platform joint ventures because the majority shareholder takes the leadership, and we are not involved in any operations.

But for the 232 in general, we believe that is consistent with [indiscernible] to bring manufacturing back to the United States, not only the module capacity as well as wafer polysilicon and solar sales capabilities. And we have expectation anticipation the 232 will be coming in the early year has come a little bit late, but we have some kind of diversified the potential supply chain to minimize the impact.

But anyway, we believe that is going to be increased the cost of the solar modules. That is going to have the impact to solar development cost we believe because of it's a little bit a significant increase for the potential solar module price, but it not have a significant impact for the solar farm investment returns, given the U.S. PPA prices in recent years, gradually increased relatively compare but a little bit higher level.

So back to your question, and we think it's anticipated, but it's a little bit exceeding expectations because the input price tax rate is a little bit higher, but it's not is not so high to make the industry demand to actually go down. We still believe U.S. is a good market next few years. And [indiscernible] minority interest and the joint venture will panic the U.S. market to take the opportunity in the U.S. market.

Okay. Charlie. So would you expect pricing to kind of go to $0.42, $0.44 in the U.S. You guys are a JV minority owner now, but I got to imagine you have some views on pricing. So what's your sense of where module pricing goes in the U.S.?

If I look at the minimum plant [ 38 ], right? 15% tariff. It's -- I think the market is evaluating the potential impact and customers evaluating how they are going to raise proceed their project plan.

And I think we don't have a definitive answer from customers, but the initial feedback is most projects will continue even under the kind of 232 policy disruptions. That is my initial preliminary information.

Okay. Great. That's very helpful. And then as it relates to -- you just mentioned 2 elements of the 232, the minimum import price and then the 15% adds alarm tariffs. There's also a third part, which is the tariff rebate program that is based on U.S. CapEx would you expect your JV to qualify for that tariff rebate program?

It's still the JV question. I'm not in position, but based on interpretation of policy, my understanding is first is the kind of new capacity expansion. Secondly, it should include wafer sale and maybe polysilicon, right? It's a new capacity addition. It's not included in the solar module is not included. And it looks like it's targeting for the wafer sale and as well as product silicon.

Right. That's true. It's based on new capacity, but it can support manufacturers to expand capacity. So okay, I'll pass it on.

Your next question comes from Rajiv Chaudhri with Sunsara Capital.

I have a few questions starting with -- can you calibrate for us the size of the market that you expect globally this year in 2026. And then break it down between the total size in China and international?

So you mean the total demand, right?

Yes.

Yes. So I think 2026, we are expecting a low year because of the sharp drop of the China domestic demand. If you are looking number-wise, we are thinking around module it will be roughly 600 gigawatts or slightly below that. That will be our expectations.

And if you break them into different categories, you will find out. For example, in China, you will find out is mainly demand to disappear from the utility market. But the distribution markets are still strong or robust during the first half. And if you look at the non-China market demand, you will find out the European market has some up and downs during the first half.

But if you -- we look into the total numbers because of the first quarter rush of the VAT policy change in China. Most of the non-China demand is almost in line with the expectations, even higher than last year. So that's what we had for the first half and our expectation for this year.

And for next year, we believe there will be some recovery in the utility market in China. So we are expecting a better 2027 demand than 2026. So if you want to quantify that, we will look at roughly 600-something between 600 to 650 gigawatts in 2027 versus around 600 gigawatt or slightly below 600 gigawatt in 2026.

Okay. So if the 2026 is around 600 that means that you're now looking at your market share globally going down from last year because your market share would be about 11%, right?

Yes, there are some reasons behind it, right? First one is we call a classical market is reducing, right? So there are certain sizable market is introducing more and more strict barriers, trade barriers or policy barriers, which is not easy to access, right?

So the second reason is because the competition across the manufacturers, where some of the Tier 3, Tier 2 players, they are playing low-price strategy, sacrificing the quality asset to attack the market or even protect their own cash flow. Which is not what Jinko can do. So Jinko is still taking care of the long-term reputation and the quality. So that's why we have to give up some of the low-priced deal and protect our own interest.

So breaking it down, when you said about some markets becoming less easy to access, I assume you're talking primarily about the United States. Can you give us a sense of what you expect out of that 65 million that gigawatts that you expect this year, roughly, what percentage will be the U.S. And what you think going forward, longer term, your U.S. sales will be as a percent of...

Yes. Sorry to jump in, but not only U.S. for example, Europe, they have this kind of rule for all the EU funded projects or financed projects cannot use China-based or Chinese actor factories. So for India, it's a kind of technical barrier. But for China-based manufacturing is not accessible at all as well. together with some other need more side of the market as well, like Turkey, like other markets.

So I won't name all of them, but definitely, U.S. is 1 of them or 1 of the big ones. But it's not the only one. There's many more because of different reasons, geopolitical or security is.

I see. Okay. Moving on to another question about credit losses. Can you elaborate on what you mean by that and what happened actually in the second quarter.

[indiscernible] about [indiscernible] for accounts receivable are by that?

Yes. Can you just give us more details on that?

So you mean kind of provision impairment or whatever you're looking at, right?

Yes. You mentioned in your comments that one of the reasons for higher operating expenses in the second quarter was that you experienced some credit losses, and I was just looking for some elaboration. Was it some particular customers who -- when delinquent? .

So Rajiv, [indiscernible]. But based on my understanding, it's the kind of we didn't have any kind of deteriorated credit from customers and it's kind of accounting prospective based on the agents. And actually, if you look at the operating cash flow, we delivered positive RMB 600 million in the first half of the year. And the healthy operating cash flow is one of the key focus from a management perspective. And we don't see any significant bad debts or whatever from a customer perspective.

Okay. Another question is on -- you mentioned that the cost of production of the newer product line that remained elevated. Can you explain some of the reasons why? Because we were expecting actually the cost to start to come down as you ramp up? What happened?

The second quarter, we ramped up the new facility, the Tiger Neo 3 and the ramping up typically, the cost is relatively higher. On top of that, the second quarter, because the first quarter, the raw material cost, the ship cost is relatively higher.

So cover forward to the second quarter, the cost is relatively higher. But is a kind of a combination of 2 factors together to result relatively higher costs. But we expect the cost will be lower in the third quarter with the capacity reaching to 4 operational status as well as the input cost is relatively lower compared to the second quarter.

So and given that you're expecting the ASPs also to be up in the third quarter, are you suggesting that gross margin could bounce up quite nicely in the third quarter?

Yes, we did expect gross margin moderate improvement in the third quarter.

Okay. And can you also talk a little bit about the -- Mr. Xiande Li stepping down from the CEO's position, this is obviously a tough time for the company. Can you just elaborate on why he's chosen to do it at this time?

I think Xiande Li, even our Chairman is the founder is always focused on the strategic long-term visions. And I don't believe there's any change because of the change of the Chief Executive Officer. Because JKS its controlling shareholder JinkoChina. And so the key business on top of the controlling shareholder in JinkoChina.

That is the primary entities to operate the business and Chairman believes that this is the right time JKS on top of the controlling shareholder business and doing the strategic investment because our Chairman build up the teams when the strategic investment teams and 5 years ago, there is a strong track record in the last 5 years. and it is the right time to catch up the massive opportunities in China, not only in the last 5 years, there's a solar storage investment opportunity as well as the AI [indiscernible] content computing, a lot of investment opportunities. So that is why I just like -- I talked about in the beginning of the conference call, and we like to investments who have taken the time to understand, okay, what we have done in the last 5 years for a strategic investment over term investment cash out of maybe 60%.

And there is a very new good investment opportunity. The team have invested, including the recent large model. The AI model, [ Temi ], maybe you heard from the news, and we believe there is will be a good opportunity to take the -- to make investment return to the strategic investment and the team platform.

Okay. Moving on to capital spending. Can you tell us what the capital spending plan is for this year and how you're thinking about 2027. Obviously, you are running well below the 100 gigawatt capacity that you have, should we expect basically very little capital spending in the next 3 years?

Yes, correct. There will be very, very small, minimum and minor upgrades, and we don't expect any significant investment. Even if we want to do some in the future, we do local manufacturing in the key countries out of China for the local market, we will do through the joint venture structures that will be minimized our expense CapEx as well. But that is depending on if the market is getting rebound -- and so back to your question, I don't believe it's significant. And worth be very, very small and the maintenance CapEx in the next 2 years.

So is the 5 billion number of maintenance CapEx or even less than that?

It should be significantly lower, maybe 500 million or maybe 1 million, and that should be very, very small.

I see. Okay. And how much CapEx is required in the storage business?

Storage, we don't have capacity plan. Currently, we have roughly 5 gigawatts battery sale gave us a battery pack. We don't have plan to do the capacity expansion, and we would like to take the line approach and the partner with different suppliers -- and the key element -- key part is the solution for AIDC for solution for different cases, different projects and the technical branding and market capability and the technical services that will be a key investment, but the investment is on the -- I think the teams will start requirement.

I see. Okay. So your business model in storage is basically an asset-light model.

Yes, yes.

5 Yes. Now going back to module market share, do you think that in the second quarter, also you were #1 in the world?

Yes, in the first half year, and we -- I think we are still of the #1 that is now our target and -- the key is we need to get through the cycles and we taken-off our capabilities and the volume does not show any capability shows we are able to have more good planning. And we have made sure our -- we have more capabilities to select different customers, different markets and branding and marketing activities, and they start. We don't believe the on see something .

Okay. So at what level do you think your -- given that some markets are becoming more difficult, as Gener mentioned, at what level do you think your market share globally bottoms out? At the peak, it was around 15% roughly the last couple of years ago. And now you're heading towards 11 to 12. Where do you think that number bottoms out?

Panama, Frankly, I don't have a target number, but fair think 10% is a resale number for current state the market pick up, we think we have good -- we should be ready to get more market share.

The next question comes from Alan Lau with Jefferies.

Also, congratulations, [indiscernible] to become the CEO of the company. So I would like to follow up on a couple of stuff. First of all, the Section 232 heard there are already quite significant inventory in the U.S., like BNEF is quoting close to 100 gigawatts. I'm not sure if you are aware of it. And I would like to know how much inventory we have to get prepared for the policy change.

We did have preparations and -- but it's based on the short-term sales contract in the next 2 or 3 months. And typically, we will doing some kind of a purchase agreement and -- but because there's still a facing time, right, 2 or 3 months, and we will purchase on a regular basis.

And we believe because the cost structure is a little bit higher. We believe the market are able to observe of the potential cost increase.

Understood. So how much inventory in the market do you see?

We don't have the information. You mean margin, right?

Yes, yes, yes.

I think you can track the customer data maybe 2, 3 months later, you will see the U.S. customer data. So it will have a better understanding about how many or how much megawatt has been imported.

Understood. Understood. So also heard some feedbacks on the Section 337 investigation regarding to the TOPCon patent. I wonder if -- how do you see it? And is it affecting any of the TOPCon sales in the U.S.?

Is that the first solar [indiscernible].

Yes. Patenting case and also the Section 337 investigation. And yes, there's some feedback suggesting that yes, this might impact or migrate some problems for selling to on into the U.S. market?

I didn't hear the informing any update, but again, based on our internal external teams, and we are quite confident in our patent capabilities, and we don't see any disruption for Jinko so far.

Understood. So -- and regarding the strategic cooperation with one of the U.S. major players. Wonder if you might share the progress on that front, like is there update or because there's a recent announcement of a $10 billion of investment into building solar capacities by that largest player in ESS.

So I wonder if -- what the progress of our discussion with that player?

We didn't have any progress so far if any significant improvement, we were and in progress where I think we may take the least of the news. And -- but globalization in our strategies, cooperation with different partners, not only in the United States, in different countries is what are the key area we would like to explore the different opportunities.

And if we reach the significant progress, we definitely are share the news.

Understood. So my last question is on the ESS business. So I think in the last quarter, in the PowerPoint, it showed around 1.42 gigawatt hour of ESS shipment POD, while in this quarter, since the number is revised or I'm not sure if the way of calculating these shipments is different, but it seems that Q1 has a lower number of shipments where is Q2.

There's 1 hour plus shipment and it seems the company is reiterating its annual target. So does it mean that in second half, there will be close to 8 gigawatt hour of shipment?

It's certain half year loaded. And because a lot of projects we shipped, but we need to go through different stages in contesting commissioning and particularly for the large scale project. And we have the confidence that we are able to achieve our guidance by the end of the year. And if you're looking to next year and second, third quarter, it could be we are able to recognize maybe 3 to 4 gigawatt hours a quarter next quarter.

Understood. So how much was shipped in the first quarter because it seems there's a change in the method of calculation or what?

First half, we shipped in 3 gigawatt hours. And again, last year, we shipped, I think, over 5 gigawatt hours last year, we or just 1 gigawatt hours. So there's gap 4 gigawatts to forward into this year. Anyway [indiscernible].

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

Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Company Limited's First Quarter 2026 Earnings Conference Call. [Operator Instructions]

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 to Ms. Stella Wang, JinkoSolar's Investor Relations.

Please proceed, Stella.

Thank you, operator. Thank you, everyone, for joining us today for JinkoSolar's First Quarter 2026 Earnings Conference Call. The company's results were released earlier today and available on the company's IR website at www.jinkosolar.com as well as on Newswire services. We have also provided a supplemental presentation for today's earnings call, which can also be found on the IR website.

On the call today from JinkoSolar are Mr. Xiande Li, Chairman and CEO of JinkoSolar Holding Company Limited; Mr. Gener Miao, CMO of JinkoSolar Company Limited; Mr. Pan Li, CFO of JinkoSolar Holding Company Limited; and Mr. Charlie Cao, CEO of JinkoSolar Company Limited.

Mr. Li will discuss JinkoSolar's business operations and company highlights, followed by Mr. Miao, who will talk about the sales and marketing; and then Mr. Pan Li 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. Xiande Li, Chairman and CEO of JinkoSolar Holdings. Mr. Li will speak in Mandarin, and I will translate his comments into English. Please go ahead, Mr. Li.

[Foreign Language]

[Interpreted] In the first quarter, total module shipments reached 13.7 gigawatts, ranking first in the industry with over 80% shifted to overseas market. We closed the quarter as the world's first model manufacturer to surpass 400 gigawatts in cumulative deliveries and also became the industry leader with our Tiger Neo series, contributing to approximately 240 gigawatts to that total.

Module prices rebounded sequentially, driven by stronger supply and demand dynamics, especially from overseas. This improved our operating performance sequentially with our gross margin increasing to 8.3% and our net loss narrowed.

[Foreign Language]

[Interpreted] Recent geopolitical disruptions have impacted key logistics lines, adding temporary pressure on our shipping costs and delivery schedules. At the same time, these directions have increased the importance of energy security globally.

We are seeing growing momentum among industrial, commercial, residential and utility customers to adopt solar plus storage solutions.

In addition, regulators in China outlined further policy guidance on April 17, strengthening regulations on competition across the solar industry to support its high-quality development. We believe these measures will help improve supply and demand dynamics and support a more rational competitive environment.

In response to market dynamics, we continue to optimize our production pipeline and the geographic mix and remain in close communication and negotiations with our customers.

With the industry competition gradually normalizing as we scale up our high-efficiency Tiger Neo series, we expect the module prices to remain relatively stable. We continue to grow our footprint in the distributed solar market and are further expanding into diverse niche application scenarios that align with rising power demand globally and a shift towards cleaner and more distributed energy systems.

This trend, combined with our deep technological expertise and brand strength will allow us to continue enhancing our competitiveness in the global market.

[Foreign Language]

[Interpreted] By the end of the first quarter, average power output for our Tiger Neo, the first-generation Tiger Neo series reached 655 watts to 660 watts peak and we continue to ramp up our capacity.

We expect the production capacity for this high-efficiency products with power output above 650 watts to exceed 40 gigawatts by the end of this year. As capacity gradually ramps up and generate economies of scale in the second half of this year, we expect the cost structure to continue to improve.

[Foreign Language]

[Interpreted] In the first quarter, high-efficiency products above 640 watts increased sequentially and accounted for nearly 25% of the total shipments. This product also command a premium, reflecting the differentiated advantages built through our continued technical iteration and product upgrades.

Separately, we continue to make solid progress in the mass production of silver-coated copper technology, where our pace and scale are leading the industry.

[Foreign Language]

[Interpreted] In terms of our ESS business, first quarter ESS shipments on a POD basis reached approximately 1.42 gigawatt hours with around 520 megawatt hours recognized as revenue.

A higher contribution from high-value overseas markets such as Europe and the United States supported a more optimized market mix and drove a sequential improvement in our gross margin. Because of the time lag in revenue recognition of some projects, profit contribution has yet to be fully realized.

In 2026, we will continue to optimize our ESS capacity and supply chain footprint and focus on high-value markets to drive improvements in both scale and profitability. We expect the ESS shipments to be -- to more than double year-over-year in 2026, enhancing our profitability profile and contribute meaningfully to our overall bottom line.

[Foreign Language]

[Interpreted] Before I turn it over to Gener, I would like to go over our guidance for the second quarter and the full year of 2026. We expect annual integrated production capacity to reach approximately 100 gigawatts by the end of this year, including 14 gigawatts from overseas facilities.

We expect module shipments to be between 14 gigawatts and 16 gigawatts for the second quarter of 2026 and between 75 gigawatts and 85 gigawatts for the full year 2026, with high-efficiency products accounting for over 60%.

We will continue to enhance our technological leadership and product competitiveness, deepen our global footprint, accelerate the development of our integrated solar-plus storage strategy, improve operating efficiency and drive gradual improvement in profitability.

Thank you, Mr. Li. Total module shipments were 13.7 gigawatts in the first quarter. We capitalized on opportunities arising from demand shift in overseas markets by leveraging our outstanding global sales network and product competitiveness.

Non-China market accounted for over 80% of our total shipments over the quarter, mainly from Europe, Asia-Pacific and the emerging markets.

Shipments to the United States accounted for about 4%. For the full year, we expect overseas markets to remain our primary growth driver as domestic demand faced temporary pressure while overseas demand grows steadily.

The proportion of high-efficient product shipment continued to rise sequentially. This included deliveries of a small amount of 3.0 products. High-efficient products command a premium of approximately [indiscernible] over conventional products.

With capacity of Tiger Neo 3.0 series gradually ramping up and being released, we expect high-efficient product shipments to account for over 60% of total shipments for the full year.

To address the increasing scenario-based nature of PV demand, we launched a series of specialized products in the first quarter, including anti-glare, fire-resistant, dust-resistant and AIDC modules.

These products are designed to target premium and high-specification application segments with more demanding requirements so far.

The products have been widespread market interest and positive customer feedback. This will further strengthen our premium positioning and market reach as we continue to build on years of accumulated technology, expertise and advantage in product performance.

Global computing power demand continues to grow. Data centers are becoming a major new category of power consumption. To address this shift, we launched a full scenario PV plus energy storage solution tailored for AIDC, which provides all-weather renewable energy security for power demands requiring high reliability and continuously expand the boundaries of PV applications.

Recently, we have made significant progress in our strategic markets. For example, in the Middle East, we supplied our high-performance Tiger Neo modules to a world-leading solar-plus-storage benchmark project that integrates energy and computer applications.

This will further validate our competitive advantages in large-scale project delivery and global service capabilities.

With deep market insights and disciplined efficient execution, we are confident we will continue to capture opportunities for market and industry shifts. By continuously enhancing our technologies, products and brand strength, we will continue to deliver high-performance, high-reliability solar plus ESS solutions while continuously growing our market competitiveness.

Thank you, Gener. We're pleased to report steadily improving financial results, driven by our high-performance products and expanding footprint in high-value markets.

Gross profit increased by 17x sequentially and fourfold year-over-year, while gross margin expanded by 8 percentage points sequentially and 10.8 percentage points year-over-year.

Operating loss margin improved both sequentially and year-over-year. As we head into 2026, we are focused on improving our operating performance, optimizing our asset and liability structure and maintaining healthy operating cash flow to enhance our resilience against the risks.

Looking at our first quarter results in more detail. Total revenue was $1.78 billion, down 30% sequentially and 11.5% year-over-year, driven primarily by lower solar module shipment volumes.

Gross margin was 8.3% compared with gross margin of 0.3% in the fourth quarter of '25 and gross loss margin of 2.5% in the first quarter of '25. The sequential and year-over-year increases were primarily due to the higher average selling prices of solar modules.

Total operating expenses were about $233 million, down 51.5% from $473.6 million in the fourth quarter last year and 36% from $346 million in the first quarter last year.

The sequential decreases were primarily due to the impairment of long-lived assets in the fourth quarter, while the year-over-year decrease was primarily driven by lower expected credit losses in the first quarter this year.

Total operating expenses accounted for 13.1% of total revenues during the quarter, compared 18.9% in the fourth quarter of '25 and 18.1% in the first quarter of '25.

Operating loss margin was 4.8%, compared with 18.6% in fourth quarter last year and 20.7% in the first quarter. Excluding the impact of changes in the fair value of convertible notes issued by JinkoSolar in 2023, changes in the fair value of long-term investments and share-based compensation expenses, adjusted net loss attributed to JinkoSolar Holdings of ordinary shareholders was about $79.6 million in the first quarter, compared with $119.8 million in the fourth quarter of last year and $147.4 million in the first quarter last year, representing a significant improvement both sequentially and year-over-year.

Net loss attributed to JinkoSolar Holdings ordinary shareholders was $67.2 million in the first quarter compared with $214.5 million in the fourth quarter of '25 and $181.7 million in the first quarter of '25, improving significantly both sequentially and year-over-year.

Moving to the balance sheet. As of the end of the first quarter this year, cash and cash equivalents were $3.3 billion compared with $3.28 billion at the end of fourth quarter of '25.

AR turnover days was 128 days compared with 94 days in the fourth quarter of last year. Inventory turnover was 142 days compared to 75 days in the fourth quarter of last year.

As of the end of the first quarter, total debt was $6.85 billion compared to $6.72 billion at the end of the fourth quarter of '25. Net debt was $3.5 billion compared to $3.4 billion at the end of the fourth quarter of '25.

This concludes our prepared remarks. We are now happy to take your questions.

Operator, please proceed.

[Operator Instructions] Your first question comes from Philip Shen with ROTH Capital Partners.

First one is just on margins. I was wondering if you could give us your outlook for margins for Q2, 3 and 4. You just hosted your Q4 call and your Q1 margin came in much better than expected. So I was wondering if Q2 should be at a similar level or if not maybe better? And then what's your sense for Q3 and 4?

Yes, Philip, this is Charlie. And the Q4 gross margin jumped a lot, quarter-by-quarter. And it's -- I think it is a combination of the efforts we are trying to push up the price as well as optimize the cost.

And looking to the second quarter, we expect it relatively stable, because we're still facing -- we need to manage some of the impact from the old orders. But looking to the second half year, given our new capacity, new high inflation capacity platform is going to deliver more and more percentage as well as we optimize the cost structures and we expect the gross margin in second half year will jump compared to the first half year.

Okay. Next one for me is on your full year guidance of 80 gigawatts. The run rate in the first half is 14 gigawatts. So then you might need more than 25 gigawatts on a quarterly run rate in the second half of 2026.

Is this expected to come from -- like think of this growth in quarterly run rate from 14 to 25 gigawatts, is that expected to come from market growth? Or do you think you take share or maybe another source?

I think the first half year and each quarter, we get roughly 15 gigawatts. And China, the market is relatively soft, right, given last year's very, very high numbers.

And on top of that, a lot of projects in China is expected to be implemented in the second half of the year. And -- but for the market out of China, we expect relatively in growth. And so back to your question and we guide 75 to 85.

And I think the first priority for us is to improve the gross margin capabilities and we will be more selective on top. I think one of the factors we are very confident for the shipment is we get a very, very strong demand for the Tiger Neo 3, the next-generation TOPCon products.

And the second one is we believe we're relatively good position to take the market shares from our peers. So it's a combination.

But back to your questions and we are -- second half year, we definitely will have more shipments for first half year and it's a relatively higher shipment, but we are quite flexible in terms of range, 75 to 85. And we expect to get more customers from the next-generation TOPCon customers and get more market share from our peers.

[Operator Instructions] Your next question comes from Alan Lau with Jefferies.

So actually seeing quite strong momentum in ESS business for the company, would like to know if there's any updates on to the order book the company has on ESS and the regional split or anything to share because I'm seeing in the results that resi ESS is also quite strong in Europe. So wonder if there's any updates on ESS.

Yes. Definitely, we are expecting more business opportunities in Europe, particularly the impact from the Middle East conflict. And in terms of the global mix from different regions and we are trying to minimize the China exposure. It's roughly 10% to 15%.

So the remaining part, 85%, it's a combination of the first target market in Europe as well as we have relatively good targets for the Asia-Pacific regions and the Middle East and Latin America. And we also expect some shipments in the U.S. as well.

So how is the margin profile across these regions?

In Europe and U.S. it's relatively higher, it's over 30% in other regions and it's relatively lower and I think roughly 10% to 15%.

And in the first quarter, we delivered 60% gross margin. It's -- I think we expect a continuous challenge from the higher material cost. So combination-wise, we shipped 10 gigawatt hours shipment this year, it's roughly 15% gross margin.

Understood. So this has already factored in the increase in lithium carbonate cost, right, to 15% gross margin guidance?

Yes.

Understood. So switching gears to solar business, I would like to know what's the view of the company on the field of compliance and also on the Section 232 investigation on polysilicon?

I think 232, we don't know what exactly the timetable the policy will come out. But we have, I think, separate independent suppliers from polysilicon to the manufacturing wafer cell module. So if 232 come out, I think we have plan B to deal with the situation.

And so your first question is talking about [indiscernible], right, in the U.S.?

Yes, yes, on the field as well.

You mean the supply side or the manufacturing side?

How confident is the company to get the credits? And at the same time, are your clients confident that using Jinko's product will also enable them to get the AIDC as well?

Yes, yes, I think for the -- in the next 2 years, I think there's a lot of demand for the pair of modules because of safe harbor regulations.

And at the same time and we have manufacturing in the U.S. and we expect to convert to [indiscernible] joint venture manufacturing very soon by the end of second quarter. And it's highly possible the joint venture, the majority of the newcomer is going to expand the capacity as well.

And from the supply side, we have several solar cell manufacturing suppliers in different regions out of China, out of the Asia-Pacific regions. And so we are confident for the shipment in this year as well as we try to build more resources and to have a good foundation for next year.

So the JV partner will be known by end of second quarter, which is basically 2 months from now. And is it a U.S. player?

It's an investor -- China investor is definitely compliant with the OBED regulations.

Understood. So -- but we will know in 2 months?

Yes, yes.

Understood. And is there any plan for capacity expansion like -- and speaking of capacity expansion, there is quite some concern on the export of solar equipment from China. So wondering what's your view on that like?

Yes, there's -- I think in the news and company news and there's may be possible some kind of export restrictions. And -- but we didn't get the final confirmation through any signed documents.

And -- but in terms of what I'm talking about the capacity expansion, they could be go through the merger acquisition, existing module capacity in the U.S. So I think it's -- and I think the joint venture is not looking for expansion. It's not -- it's doable through other ways.

Understood. So -- and switching gears to space-based solar. So what is the progress on that front? Like are there any products dedicated to AI data centers in space? And are there any relevant updates on that part of the business?

I think our R&D team has done some kind of preparations for the solar panels depending on different technologies like the [indiscernible], like the perovskite.

And we've made some progress on the silicon-based technology for space testing. And our target is by the end of the second quarter, we can get the example ready and to be worked with some space companies to do the testing.

Understood. So there will be -- so the panels will be launched in satellites and be tested in Q2?

It's not determined, but it's going to -- we are trying to explore the different -- but definitely, when we do some space-based solar panels, definitely, we try to test in the space.

Understood. That's clear. So my final question is, what's your view on the demand, second half, because the demand now is quite weak. So wondering if you are expecting any policies or any signs that demand will recover in second half on solar?

Yes. Yes, so from demand side, we expect the current slowing down in Q2 or early Q2 is perfectly in nature because of the rush hour by end of Q1 has pulled in a lot of demand from Q2, right?

So everyone tried to get a benefit for the last-minute rush before the China VAT policy change. So I think that the slowing down in Q2 is within the expectations. But we still are looking to the whole year demand, especially for second half, we are still kind of optimistic. I think 3 reasons behind it.

One reason is because after the recent conflict in the Middle East, we heard a lot of energy security topics, right, solar or wind, can provide more energy securities. Many countries put that into a national strategy. So that potentially trigger more demand.

And secondly is because of the rising demand from AIDC topics, we see a massive upcoming projects combined between renewables and AIDCs all over the world.

And the third important reason is because of the -- we call it the C&I or distributed generation market demand is still very robust. And we -- now we have -- we can feel a very strong demand from that perspective. Many -- like even in the emerging markets, the C&I sectors, DG sectors, demand are pretty solid and robust for the -- for the whole year.

So combine everything together, we still expect a healthy or at least a solid demand in second half. That's from the high levels.

If you break it into details because of the strong demand in China in last year, we believe the China demand will drop roughly 20% compared to last year. But if we're talking about the non-China demand, we can see a roughly 10% increase year-over-year.

So combine everything together, I think it will be roughly 5% to 10% demand decrease in 2026 versus '25. But if you look into the seasonality, the second half definitely will be stronger than first half.

Your next question comes from Rajiv Chaudhri from Sunsara Capital.

So my question -- the first question I have is about average selling prices. You have mentioned that prices are stable in the -- going into the second quarter versus the first quarter. And -- but I want to get your sense on how the second half pricing is going to be.

And also, you have been doing a lot of product development, focusing on higher end facilities or better positioning of the product in terms of market segments, like trying to aim for markets where there's a lot of dust, for example. So you have been positioning -- segmenting the market and trying to bring out products for these different use cases.

My question is, does this allow you to get better pricing than the market on average? And could we see your average selling prices actually be inching up, both because of higher performance as well as because of market segmentation as we go through the year? That's my first question.

Yes. Thank you for the question and thank you for your insight. Actually, that's our target. What you're just saying is exactly what we are targeting at, but nobody has a crystal ball to know the future. So we are working hard.

On one side, there's a strong government push in China, trying to have the whole industry get rid of or get out from the price competition. Another way we are looking to is we try to target the customers and the business as a value-added perspective instead of price competition perspective. So in that case, we hope we can work with the scenario of a steady, healthy market prices.

Actually, if you take a deeper look into the prices, recent days versus the price in Q1, you can feel that actually even the policy change in demand is weak in Q2, actually, the market price is not dropping as many people expected, right? So it's really because of the manufacturer side has suffered so much and nobody would like to sell at huge loss-making.

Another reason is really the market itself -- the market demand itself is still capable to absorb the higher prices. It doesn't have to be a price competition. We could make the market competition more healthy way instead of a number game.

So yes, back to your question, personally I'm optimistic about the market prices in the rest of the year. And hopefully, it would remain at a healthy range for everyone.

Great. And my second question is about costs. As you are pushing towards the higher value-added products, does that automatically mean that your costs will also be higher or the costs are going to keep on coming down because you are just getting better and the scale is getting better in terms of the size of the business?

So the high inflation product like the Neo 3 definitely is going to generate more profitability than gross margins. And you are talking about the scenario-based product, right? That is what we are trying to build in different use for different scenario like AIDC, like [indiscernible] and whatever and the channel penetrations, which will definitely bring, I think, additional capabilities.

And with -- I think we are upgrading our capacity to the next high-efficiency products and the cost with the economy of scale, the cost will be optimized as well.

There are no further questions at this time. With that, we conclude our conference for today. Thank you for participating and you may now disconnect.

Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co Limited's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded.

I would now like to turn the meeting over to your host today, for today's call, Ms. Stella Wang, JinkoSolar's Investor Relations. Please proceed, Stella.

Thank you, operator. Thank you, everyone, for joining us today for JinkoSolar's Fourth Quarter 2025 Earnings Conference Call. The company's results were released earlier today and available on the company's IR website at www.jinkosolar.com as well as on Newswire services. We have also provided a supplemental presentation for today's earnings call, which can also be found on the IR website.

On the call today from JinkoSolar are Mr. Xiande Li, Chairman and CEO of JinkoSolar Holding Company Limited; Mr. Pan Li, CFO of JinkoSolar Holding Company Limited; and Mr. Charlie Cao, CEO of JinkoSolar Company Limited. Mr. Li will discuss JinkoSolar's business operations and company highlights. Since our CMO, Mr. Gener Miao, is currently on a business trip, I will deliver the remarks on sales and marketing in his behalf. Following that, Mr. Pan Li will walk through the financials. After that, we will open the call for questions.

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. Li, Xiande, Chairman and CEO of JinkoSolar Holdings. Mr. Li will speak in Mandarin, and I will translate his comments into English. Please go ahead, Mr. Li.

[Interpreted] The global PV industry continued to experience volatility due to structural imbalances and shifting trade environment in 2025 impacting financials across the industrial chain. In this entering environment, we maintained disciplined operations and our technological leadership continuously driving upgrades of our n-type TOPCon technology and iterating our high-efficiency products.

For the full year 2025, total module shipments reached 86 gigawatts ranking first globally for the seventh consecutive year, impacted by persistently low module prices, the elimination of obsolete production capacity and still evolving product mix and high-efficiency products ramp up. We incurred a net loss for the full year.

In the fourth quarter, gross margin decreased sequentially, and our net loss expanded due to rising costs of raw materials such as polysilicon and silver as well as foreign exchange rate fluctuations. However, our energy storage business maintained its rapid growth trajectory, marking an important step in our ongoing transformation into an integrated energy solutions provider.

Shipments of ESS grew significantly year-over-year to 5.2 gigawatts in 2025. This approximately 1.7 gigawatts hours recognized as revenue. Our deepening penetration into high-value markets is expected to more than double ESS shipments in 2026, serving as a primary driver for enhancing our profitability profile.

Since the fourth quarter, government guidance supporting the high-quality development of the TV industry has continued to strengthen. A series of policy measures have steadily accelerated the phasing out of outdated capacity and the normalization of market competition. guiding the industry to gradually transition from competing on scale and price to quality and value. Leading companies have actively responded to this high-quality development directive pushing module prices back to reasonable levels.

In the first quarter of 2026, driven by the pass-through of cost pressures from rising commodity prices, such as silver coupled with the impact of export tax rebates on demand, module prices rebounded significantly sequentially. As the industry's competitive landscape continues to normalize, and supply and demand dynamics marginally improved. Module prices are expected to remain relatively stable with high efficiency and differentiated products continue to command a premium.

We continue to drive technological breakthroughs and lead the direction of industry innovation. As of the end of 2025, the maximum lab efficiency of our anti TOPCon cells reached 27.99% while conversion efficiency of our anti TOPCon-based perovskite tandem cell reached 34.76%. As a global leader for TOPCon technology, we held over 700 TOPCon patents by the end of the fourth quarter, surpassing most of our competitors.

Furthermore, we partnered with Crystalline to provide the application of AI in R&D of perovskite tandem cell and accelerate the commercialization of next-generation technologies. We continue to drive product upgrades and performance iterations consistently enhancing product competitiveness. In the fourth quarter, shipments of high-efficiency products that exceed 640 wattP increased sequentially to approximately 3 gigawatts, a USD 0.01 premium compared to our conventional products.

As our Tiger Neo, the third generation of Tiger Neo series which delivers maximum power output of 670wattp sequentially scales up production volume and shipments this year and accelerate market penetration across diverse application scenarios. The value proposition of our high-performance products will increasingly stand out and is expected to command a higher premium. We continued to enhance our cost control capabilities across market cycles offsetting the impact from raw material price fluctuations through supply chain optimization and technology core upgrades. Development of silver coated copper technology is progressing as planned with large-scale production expected to gradually ramp up in 2026.

Our initiatives in smart manufacturing have already begun to generate initial results. Through our lighthouse projects represented by Shanxi Super Factory, our vertically integrated production model continues to improve production efficiency and cost competitiveness providing a replicable blueprint for our global manufacturing footprint.

We view our energy storage business as a strategically vital second growth engine. We continue to strengthen our R&D for our core technologies, enhance our system solution capabilities and improved localized customer service and life cycle support, leveraging our global PV distribution channels, we are steadily scaling east shipments and greater synergies between our solar and storage solutions are increasingly materializing.

Currently, our sign and high potential ESS orders exceeded 10 gigawatt hour in total. As the global energy transition advances and the demand for great flexibility increases, the role of energy storage with the renewable energy system continues to strengthen. Looking ahead to 2026, we will continue to deepen penetration into high-value markets and explore application scenarios, including 0 carbon industrial parks and data centers.

We continue to optimize our global manufacturing and supply chain footprint, enhancing our ability to adapt to diverse market policies and customer needs. Our 2 gigawatts N-type module facility in the U.S. maintained high utilization rates as we continue to strengthen local manufacturing and service capabilities. We are also actively developing new models for long-term engagement in key markets to better address customer demand for high-efficiency products and solutions.

2025 mark the final year of the 14th 5-year plan during which cumulative installed capacity of wind and solar power surpassed the coal-fired power for the first time, becoming the largest source of electricity generation. At the same time, solar power generation has fully entered a market driving phase. The industry's development framework is shifting from scaled expansion towards greater emphasis on operational capabilities and comprehensive value creation, which read is the competitive bar for technology and products. At the same time, recent volatility in global energy markets has highlighted the critical need for energy security, we're enforcing the long-term value of renewable energy.

Looking forward to the medium to long-term as the construction of new power systems advances and the new load demand growth from data centers, for example, application scenarios for solar and storage will continue to broaden, enhancing the value of the green power. Industry competition will gradually transition from being cost and skill driven to a model centered on technology called innovation, product competitiveness and the ability to deliver integrated solar/storage solution.

We will continue to consolidate our technological leadership, deepening our global footprint accelerate the development of our integrated solar plus storage strategy and consistently improve our capabilities to deliver comprehensive solutions. This will steadily strengthen our long-term competitiveness and profitability at an industry landscape reship.

Before turning over to Gener, I would like to go over our guidance for the full year of 2026. We expect a new integrated production capacity to reach approximately 100 gigawatts by the end of 2026, including 14 gigawatts from overseas facilities. We expect module shipments to be between 13 gigawatts and 14 gigawatts for the fourth quarter of 2026 and between 75 gigawatts and 85 gigawatts for the full year 2026.

Thank you, Mr. Li. We are pleased to report that both our robust global sales network and strong product competitiveness drove quarterly and annual module shipments to once again ranking first across the industry. Total shipments were 26 gigawatts in the fourth quarter with total motor accounting for nearly 93% of the mix. For full year, total module shipments were 86 gigawatts.

Geographically, overseas markets remained our primary driver accounting for about 60% of total module shipments in 2025. We actively capitalized on growing demand across Asia Pacific and emerging markets, which together accounted for nearly 40% Shipments to the U.S. were in line with our expectations and accounted for approximately 5%.

We continue to optimize our product mix increasing the proportion of high-efficiency product shipments and focusing on high-value application scenarios. This high efficiency models highlighted by the Tiger Neo, the third generation of Tiger Neo series have earned widespread recognition for their higher power generation and better LCOE. The order book for these modules has grown steadily since the fourth quarter, allowing us to command a premium over conventional products.

As we continue to enhance our product competitiveness, our brand reputation and the customer recognition has strengthened in tandem. Internet's latest global energy storage Tier 1 list for the first quarter of 2026, we are recognized as a Tier 1 energy storage provider for eighth consecutive quarter. Furthermore, we achieved an S&P Global CSE score of 78 points, the highest one among PV module companies. And we were included in the 2026 surtainability year book.

On the demand side, recent policy guidance and the discussions during China's 2 sessions and the subsequent industry forums have reinforced the strategic focus on energy efficiency carbon reduction and zero-carbon industrial parts. This provides a solid foundation for the continued growth in Chinese solar market during the 5-year plan. Globally, the ongoing global electrification process, the continuous growth of new power loads from data centers and increased focus on energy security following recent energy crisis are collectively driving demand.

Local solar and solar plus storage solutions and their deployment flexibility are ideally positioned to address these issues. In healthy energy system resilience and facilitating seamless incremental power demand for countries. By the end of the fourth quarter of 2025, cumulative global module shipments surpassed 390 gigawatts with other sales network covering nearly to 100 countries and regions. Notably, total cumulative shipments of our Tiger Neo series exceeded 220 gigawatts ranking first in the industry as we continue to reinforce our global market leadership and a strong customer base.

2026 marks our 20th anniversary, and we are using this milestone as an opportunity to further strengthen our product, brand and customer service systems to continuously enhance our competitiveness in the global market.

With that, I will turn the call over to Pan.

Thank you, Stella. In the challenging fourth quarter, we achieved a 20.9% sequential increase in solar module shipments and a slight sequential increase in total revenues. Our operating efficiency improved significantly from last quarter Operating cash flow was approximately $470 million in the fourth quarter and $280 million for the full year, $25 million hitting the target we set at the beginning of the year to reach positive full year operating cash flow. Looking ahead to we expect full year operating cash flow to remain positive.

Looking at our fourth quarter financials in more detail. Total revenue was $2.5 billion, up 8.3% sequentially and down 15% year-over-year. The sequential increase was probably driven by increase in solar motor shipments, while the year-over-year decrease was mainly due to a decrease in average selling price of modules. Gross margin was 0.3% compared with 7.3% in the third quarter and 3.8% in the fourth quarter '24. The sequential decrease was mainly due to a higher revenue cost for products sold while the year-over-year decrease was mainly due to a decrease in average selling price of modules.

Total operating expenses were $473.6 million up 28% sequentially and 21% year-over-year. The sequential and year-over-year increases were mainly due to an increase in the impairment of long-lived assets in the fourth quarter of '25. Total operating expenses accounted for 18.9% of total revenues compared to 16% in the third quarter. Operating loss margin was 18.6% compared with 8.7% in the third quarter.

Now let me briefly review our '25 full year financial results. total module shipments were 86 gigawatts, down 7.3% year-over-year. Total revenues were about $9.4 billion, down 29% year-over-year. The decrease was mainly attributed to the decrease in the average selling price of solar modules. For the full year, gross profit was USD 201 million, a decrease of 86% year-over-year. Gross margin was 2.2% compared to 10.9% in '24, primarily due to a decrease in average selling price of modules.

Total operating expenses were $1.48 billion, down 23% year-on-year, primarily due to a reduction in shipping costs driven by lower volumes of solar module shipments and declining average freight rate in 25 as well as lower employee compensation cost. Operating loss margin for full year of '25 was 13.6% compared with 3.6% for the full year of '24. Excluding the impact of the changes in fair value of convertible notes issued by JinkoSolar in '23, changes in the fair value of the long-term investments, share-based compensation expenses, the net loss resulting from a 5 incident at one of our production facilities in Shanxi province in 2024. And the impairment of the long-lived assets, adjusted net loss attribute to JinkoSolar Holdings ordinary shareholders were about for $8 million in 2025.

Moving to the balance sheet. At the end of the fourth quarter, our cash and cash equivalents were $3.3 billion compared even at the end of the third quarter of '25 at $3.8 billion at the end of fourth quarter of '24. AR turnover days were 94 days compared with 105 days in the third quarter. Inventory turnover days was 75 days compared to 90 days in the third quarter. As these metrics show, operating efficiency is steadily improving. At the end of the fourth quarter, total debt was about $6.7 compared to $5.6 billion at the end of the fourth quarter of '24. Net debt was $3.44 billion compared to $1.76 billion at the end of the fourth quarter of '24.

This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed.

[Operator Instructions] Your first question today comes from Philip Shen from ROTH Capital Partners.

Wanted to get your outlook and assumptions for pricing for Q1 and Q2. I think in your prepared remarks, you said you expect the global ASP to be stable. But are you assuming $0.10 a lot in Q1 and Q2? And then can you also talk about your gross margin cadence as we get through the year? Do you think Q1 is low, is it lower than Q4? And can it go higher from here? Are you guys speaking? Did you guys hear my question?

Sorry, Philip, this is Charlie. I'm [ muting ] my phone. Can you hear me?

Okay. Yes, I can hear you now. We didn't...

Okay. Let's get back to your question. And if you look at the price index, the market pricing. And I think the module price is rebounding in the last 3 to 5 months and reflecting the cost inflation and as well as I think most of the Tier 1 companies is more disciplined. And as well as there's backdrop as anti-evolutions. And if I talk to specifically Q1, Q2 ASP, we expect quarter-by-quarter, the improve and gradually. And it's a combination of the price inflation in placing as well as we are marking the next-generation Tiger Neo 3 high-inflation products.

And that is -- I think we get a lot of changing from our customers, and there is a price premium. So as a combination, I think the market price is up and players are more disciplined. and we have more mix on the high increasing products.

Great. And so we can see the pricing improves. So can you quantify at all? So Q1, do we see $0.11. Q2, do we see $0.12? And then can you also speak to Q1 and Q2?

Yes, I think we're not in a position to disclose detailed in ASP for looking. But if you look at the market price, I think you're right, it's kind of the price level depending on different products and different ratings. It's roughly in the range of, I think, 11.5% or maybe 14, depending on different markets, different products in different regions.

Your next question comes from Rajiv Chaudhri from Sunsara Capital.

I just have a few questions. The first 1 is on the gross margin impact of the 3 factors you mentioned the foreign exchange, the U.S. dollar rate, cost of silver and the cost of polysilicon. Can you break down for us the amount -- the significance of each of these factors. And just give us a sort of -- if these factors had not shifted from Q3, what the gross margin could have been in Q4, so we understand what the impact was?

Yes, I think -- so back to your question, I think if nothing changed, we expect the Q4 margin should be stable or maybe a little bit higher in the fourth quarter. But fourth quarter, there's some headwinds. And just -- you are talking about it's -- if we look at the magnitude, the first one will definitely the commodities, particularly the silver. And I think the price -- the market price is sold. It's up 250% to 300%, not a dramatic change. And second one will be the RMB appreciation. And the polysilicon is not -- the price a little bit higher in Q4, but it's not a significant impact.

Okay. So silver was #1, the exchange rate #2 and polysilicon, much less. Great. Next question is on depreciation and CapEx. What were the depreciation and CapEx numbers for '25? And what is your target for '26.

The depreciation a year per year in 2025, it's roughly -- sorry, an USD 1 billion per year. So -- and the CapEx in 2025, I think roughly, it's the same number. It's USD 1 billion. It's a totally different number, okay, it's coincidence. And definitely in 2026, we will further cut the CapEx is roughly, I think, roughly RMB 5 billion and roughly USD 700 million.

And we make the investment on the CapEx, particularly the last year. It's -- the purpose it upgrades the roughly 40 gigawatts capacity through the next-generation technology, we call it Tiger Neo 3, and we don't have any additional investment plan in 2026. By 2026 payment is the outstanding the payable to the suppliers.

I see. Okay. And the other question is on market share and size of market. Can you give us an idea of what you think the market size was in 2025. And obviously, that will allow me to calculate your market share. But related to that is a question of your guidance and the market share that you expect to get in 2026.

We -- last year, we delivered roughly 85% roughly gigawatts and were the top 1 in the industry. I think roughly, we get 13%, maybe 13% to 14% market share. And we expect 2026, the global demand a little bit flat or maybe down a little bit small percentage given last year, China reached to the very high peak over 300 gigawatts. And -- but overseas market continued to grow in 2026 and it's kind of the short term, the market size, the total market size a little bit down in 2026 because China specific situations.

But for the next year, long term, we are very optimistic. If you look at the conflict Middle East, I think more and more countries, including China, have more determination to push more renewable energy and the energy independence securities are more -- will become more first priorities and for a lot of governments.

And for the '26, we guided to 85 gigawatts with a flat with last year, maybe a little bit lower, reflecting the total market size in 2026. I'm talking about that the total markets could be a little bit lower compared to last year. And basically, I think the market share will be relatively stable. But the key operational targets will be improved -- significantly improve our financial performance were healthy operational cash flows, and we will more focus on the high-value customers and from the Utility segment and the DG segment as well.

I see. So would you expect in this scenario that your -- the share of international will be even higher than last year in your sales?

I think so. I think so because we are trying to lower our exposure in China. And definitely, China last year, it takes around 40% of our shipments in 2025 for Jinko. And I expect 2026, China the percentage will be will be lowered to 30%, maybe a little bit lower, and we're getting more market share from overseas market, particularly the markets with more disciplined and the customer would like to pay for the branding, the qualities and the high increasing products.

So Charlie, if some of the Tier 3 and the weaker companies are getting out of the market shouldn't we expect your market share to grow in 2026 even if the market overall is down, are you just being very conservative here?

No. Unfortunately, it's not a conservative estimation. And we think this year is kind of the -- how to say, the transition year. And next year, we are looking forward to a lot of good opportunities. And we believe this year, you're right, a lot of Tier 2, Tier 3 even relatively bigger guys will be facing, I think, liquidation issues or maybe consolidation issues. And we -- what we want to do is we penetrate the market with customers who is willing to be a ratable price and we are able to get a reasonable, I think, reasonable profitabilities.

Charlie, final question. On the exchange rate, obviously, you experienced a negative margin pressure because the dollar weakened -- sorry, the dollar weakened against the renminbi and your products are priced in dollars globally. Would you consider shifting that into pricing globally in so that in future, as the dollar continues to weaken against RMB that you will -- you are not punished for it because it seems to me that it makes sense to consider this as a strategic rethink.

Yes. We're trying to diversify the minimize the risk of facturation in the currencies. And if you look at the price determination in our sales orders, it really depends on the customers, how they view their exposures. Most of our customers, I think the PPA is still in U.S. dollars. So it's kind of a natural hit when they prop the modules from the module makers, but some customers are willing to pay RMB denominated. And we are encouraging the customers who is willing to switch to the to RMB to a little bit lower, the exposure -- currency exposures.

And on top of that, I think currency hedging will continue to do that. It's a little bit difficult, but we're trying to minimize impact. And for the pricing impact, we periodically, we reassess the possible the exchange rates and put into the pricing for the future sales order.

Your next question comes from Alan Lau from Jefferies.

So First of all, I would like to understand the company's view on its potential collaboration with the U.S. leader in its local plan in both the space-based solar and also in some huge local 100 gigawatts deployment heard that Ghana was on the ground with some progress. So I would like to know if the company would share updates on that front? And another thing is recently, it seems there's market discussion on China may be prohibiting or stopping the export of solar equipment as well. So would this impact that collaboration?

Thanks for the questions. And for the second question, I didn't have any information or comment. And I know there is some kind of message, even public news from overseas media channels. And -- but for the -- I think you are talking about the U.S., the Tesla SpaceX it's probably information Elon Musk is making very bullish and plan to build and 100 gigawatts by Tesla and 100 gigawatts by the SpaceX. And I think it's -- why do you have such bullish plan? I think particularly from Tesla perspective, public news show, okay, because the AI, it is -- there's a lot of demand for electricity, renewable energies and the U.S. is lack of electricity and renewable energy will be the final solutions.

And I think we size simply we have visited a lot of equipment suppliers and manufacturing, including JinkoSolar. They have decided the technology to be TOPCon but we don't have any further information to disclose. But again, under Jinko is Pioneer and the innovators for the top content knowledge. And we have, I think, the most powerful capabilities to build integrated the capacities, the digitalizations and have a very strong powerful patterns as well in the gold. And we are quite open to explore the corporate rating opportunities and with partners in different countries. And you can -- so that is the information I think I can see.

But in summary, I think the property information show, okay. The Tesla, SpaceX has a plan to build capacities. They are doing a lot of the work including visiting Chinese manufacturing. And -- but we -- from Jinko perspective, we didn't have any further information to these goals. And -- but we are open for the business opportunities, if any.

So good luck for the potential chance on collaboration. And then to follow up, is there any -- what's your view on the pattern -- popcorn patent loss raised by First Solar. So are you seeing this is impacting your shipment in the U.S. or it's not really affected.

Yes. We don't expect any disruption or impact in our business and ongoing business in the United States and the first solar litigations, and we have been actively engaged experienced lawyers and to Fight. And we don't believe we infringe relevant patents of First Solar, and we did the research for the producing process. We don't believe it's relevant. And on top of that, we have a very solid experience a couple of years ago, and to deal with 337 with [indiscernible] Solar and remain in the final. And -- but again, we do a lot of preparation work and -- but we are confident, and there is an impact for our operations in the United States.

Understood. Clear. So switching gear to the fee-related issue. So I would like to know, I think probably for this year, there are sufficient projects already safe harbor for this year. So I wonder if you may share with investors on your plan on meeting the fee requirement going forward? Like is there any progress in sourcing partner, et cetera?

Yes. I think there's a lot of the safe harbor, the downstream projects and the project will get through the construction and the connections in the next 2 or 3 years. And for the long felt compliance for the manufacturing in our Florida facilities and we are in the final stages and recent negotiations with potential investors. And if there are any is significant make too. We will make the announcement. And we expect it to be closed in the next couple of months.

Understood. That's very good news. And then I would like to switch gears to ESS, like I think the Chairman has guided on the shipment that in the shipment may be doubled. I wonder if you can share in which region are those shipments is going to be? And is there any AI data center-related deals that is being negotiated or in discussion.

For the storage business, ESS business and AIDC definitely it's a very hot topic, and we are actively in early stage and discussion with few potential customers. And return. And I think we -- hopefully, we are able to finalize some deals by the end of this year. And therefore, the stories segment by ratings and China really take our small precedes and is roughly 10% to 15%. And our focus will be the Europe, Latin America and some projects from Middle East and Asia Pacific regions.

So that's the breakdowns. In the U.S., last year, received around 600-megawatt hours, and we are building solidify our teams. And hopefully, we can make significant breakthrough in the U.S. market in 2026 as well.

Understood. So is there an expected gross margin target on the ESS side of the business?

Yes. It's we estimate to be 10% to 15%. That -- we did have a very good backlog last year. And the industry is facing increase of the price of late. And -- but we are trying to manage and minimize exposures, but we estimate it could be in a range of 10% to 15%.

Understood. That's very clear. I think my last question is on the shareholders' return. I wonder if the company -- what's the pace of the buyback or the company? Like is there any further shareholders' return program for this year?

I think we will convene 1 make the investment return in the combination of the share repurchase and the dividend and -- it could be -- the magnitude we have not determined, but we'll definitely do that.

Resulting in the past, it was around like the plan was around $200 million per year, but I'm not sure if this is still the plan, different situation in the industry for now.

U.S. holding companies and I think now the U.S. company has around USD 200 million in cash. And -- but we're trying to make some investment on this so -- including solar, robotics and some relevant and industries. And so we need to allocate between equity investment and shareholder returns. But we have sufficient, I think, the cash and to return on investment and to investors maybe in the range of 50% to a year.

Your next question is a follow-up from Philip Shen from ROTH Capital Partners.

I wanted to ask about the perovskite outlook. You guys have highlighted your efficiencies there in the laboratory and was interested in getting your perspective on when perovskite could be commercialized in your capacity footprint? Are we looking at maybe 2 to 5 years? Or do you think it's beyond 5 years?

So we did make some through the laboratory for the perovskite technology and it's reaching roughly 24% to 25%. But talking to commercial mass adjusting, we think still have a lot of R&D work to do. it will be in the next maybe 3 to 5 years and -- but it's not -- definitely, it's not in the near term.

Yes. Okay, Charlie. And then in terms of your shipments to the U.S. market I think you had in your deck 5% of your shipments went to the U.S. What is your expectation for shipments to the U.S. market in 2026?

It's 5% to 10%. And there's a little bit of talent because the shortage of the solar cell in supplies. And -- but we are trying to reach to at least the metal point.

The midpoint of the 5% to 10%, is that what you mean?

Yes, yes. Midpoint, yes.

Got it. Can you talk about the source of your non-fosales? Are you sourcing them from the Mid East? Or where are they coming from?

Yes, in general, there's several different players and manufacturing, I think, in Africa in different continents. And we I think we are able to secure some of the productions from the suppliers.

Okay. And then in terms of the war, I just wanted to if there are any impacts to the business at all? And then you have your large manufacturing facility here your building in Saudi Arabia. So I want to see if -- do you have any thoughts on that?

Thanks for the question. And the Saudi joint ventures, we didn't make any, I think, the break ground, and it's still in the early preparations and waiting for the implementations of the policies, local policies. So we didn't make any investment and significant investment in the joint ventures. And the Middle East contract that it has several impacts.

I don't believe it's a long term. Firstly, it will have an impact on our shipment to the Middle East, and we take a sizable market in the Middle East. And given the logistic challenge, and we need to replan we work with our customers, we schedule the cement plants. And there is a significant push for the oil price. And it's a kind of the fundamental cost for a lot of materials, particularly the chemicals and as well as logistics cost. So there is some kind of push for the cost from shipment costs, EV and -- but we are trying to manage in a renewable level. But I don't believe that's a long term, but short-term, there is some kind of impact, but we can get it.

Right. Charlie, so how much do you plan -- like what's the plan for shipments to the Mid East before the war 2026 percentage of your '26 shipments were you thinking?

You mean by year? A year?

Yes. For the full year. Like prewar were you thinking like 20%.

Yes. I think it's roughly 20%. And -- but it's not is not impacting all the countries but impacts some countries.

Right, in the short term right? Right. So in the short term, maybe it's half of that is maybe challenged by the? .

There are no further questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect.

Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co. Limited's Second and Third Quarter 2025 Earnings Conference Call. [Operator Instructions] 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. Stella Wang, JinkoSolar's Investor Relations. Please proceed, Stella.

Thank you, operator. Thank you, everyone, for joining us today for JinkoSolar's Second and Third Quarter 2025 Earnings Conference Call. The company's results were released earlier today and available on the company's IR website at www.jinkosolar.com as well as on Newswire services. We have also provided a supplemental presentation for today's earnings call, which can also be found on the IR website.

On the call today from JinkoSolar are Mr. Xiande, Chairman and CEO of JinkoSolar Company Limited; Mr. Gener Miao, CMO of JinkoSolar Company Limited; Mr. Pan Li, CFO of JinkoSolar Holding Company Limited; and Mr. Charlie Cao, CFO of JinkoSolar Company Limited. Mr. Li will discuss JinkoSolar's business operations and the company highlights followed by Mr. Miao, who will talk about the sales and marketing, and then Mr. Pan Li will go through the financials. They will all be available to answer 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.

Now it's my pleasure to introduce Mr. Xiande, Chairman and CEO of JinkoSolar Holdings. Mr. Li will speak in Mandarin, and I will translate his comments into English. Please go ahead, Mr. Li.

[Foreign Language]

[Interpreted] In the first of 3 quarters of 2025, our global module shipments totaled 61.9 gigawatts once again ranking #1 worldwide. Driven by our outstanding product performance and a strong presence in high-value overseas market, gross margin improved sequentially for 2 consecutive quarters to 2.9% in the second quarter and 7.3% in the third quarter. Net loss continue to narrow sequentially. We are pleased to see that our intensive efforts devoted to storage, R&D and products in the past 2 years started to bear fruit gradually.

In the first 3 quarters, our cumulative energy storage system, ESS shipments extend 3.3 gigawatts hour, increasing significantly for 2 consecutive quarters. This, combined with the rising share of overseas markets has helped the profitability of our energy storage business improved noticeably.

Considering that energy store products and the process of installation, positions and acceptance, there will be a lag in revenue recognition in our financial statements. We are confident that at economics of sale accelerate and the competitiveness continues to improve, our energy storage business will more than double next year as revenue distribution is expected to rise significantly and the third as a key driver of our overall gross margin expansion.

[Foreign Language]

[Interpreted] In the second and third quarter, we continue to keep modeling to that utilization rates at a reasonable level. Since third quarter, prices of polysilicon wafers and the cells have all run and the module prices showed some upward trends. Given that bidding will see all provinces are still in implementation stage, centered on enterprises need some time to recalculate their IR returns and adjust their business model for end projects. It is expected that [indiscernible] take some time to release. However, we have seen some positive signals in the raw materials segment supported by rising raw material prices, module prices in overseas markets have also increased.

[Foreign Language]

[Interpreted] The upgrade to world's high power production capacity has become an important direction for evaluating industry high-quality development. This technical upgrade automates end customers' demand for high-power products to achieve more reliable investment return. As an industry pioneer to upgrade existing TOPCon capacity through technology enhancements, we made steady progress in high-power product upgrade in the third quarter. We have already delivered some high power products, carrying a premium of USD $0.01 to USD 0.02 for work, compared to the conventional products. As upgrade of the first-generation Tiger Neo product service maximum power 670 watts is completed. We expect the shipment proportion of high-power products to increase quarter-over-quarter next year, accounting for 60% or above 2026.

[Foreign Language]

[Interpreted] Since the market elasticity reform has removed the mandatory energy storage requirements, China's energy store industry is accelerating its market-oriented development with the increasing gap between peak and off-peak electricity prices and the implementation of policies by storage capacity pricing and capacity compensation, independent energy storage projects in multiple provinces that can achieve uneconomic returns.

Driven by both improving economics and global energization, demand is increasing in Europe, Asia Pacific, Middle East and Latin America. U.S., the rapid expansion of AI-based -- in the U.S., a rapid expansion of AI data centers have led to unprecedented surge in electricity demand, streaming domestic electricity supply, storage has therefore emerged as a safer and more easily deployed solution.

We expect global demand for energy storage to experience exploded growth driven by creating renewable energy penetration and declining storage on cost. This once again validates our strategic decision to invest in the energy storage business in line with other industry trends, and it has helped us to build a long-term competitive advantage.

As a leading enterprise in the PV sector, we possessed long-established advantages in channels, brand reputation and customer resources enabling us to provide a localized one-stop solar plus storage solutions. On the manufacturing side, we currently have 12 gigawatt hour of pack capacity and 5 gigawatts hour of battery cell capacity and continuously improve product performance through self-developed technology call breakthrough.

On the market side, we focus on high margin overseas markets, particularly utility scale and industry and commercial projects. Although delivery cycles are relatively long, demand remains strong, providing stable and sustainable growth momentum for the company's energy storage.

[Foreign Language]

[Interpreted] In summary, the global supply chain is a recipe for the balance between slide and is gradually proven. As technological upgrades accelerated industry high development, the market share of high power and high-value products will continue to expand and become a dominant force in market pricing as market competition, particularly in project increasingly favors leading enterprises that demonstrates strong technology cost capabilities and the long-term reliability results such as bank financing are also concentrating to both leading enterprises, further strengthening their market share. With strong technological capabilities, long-term reliability and global diversification of our energy storage business, we are well positioned to further strengthen our competitiveness and benefit from the industry's next upward cycle.

[Foreign Language]

[Interpreted] The 15th 5-year plan proposed accelerating the decarbonization of both the energy supply and the construction sectors, the National Development and Reform Commission, NDRC and the National Energy Administration, NEA, have all recently issued guidance on promoting renewable energy integration and power system regulation, further emphasizing the critical role of energy storage in the construction of a new energy. We expect these matters will further strengthen the competitiveness of China's renewable energy sector and steer the industry back on to a healthy and rational development path. .

[Foreign Language]

[Interpreted] Looking forward to fourth quarter and the full year, we will continue to actively respond to the industry's for rational development by mention with reasonable production levels and focusing on upgrading and transforming high efficiency capacity. At the same time, we will proactively adapted to changes in over displaces to ensure sustainable slide for our customers. We will keep strengthening our competitive advantages in technology and global operations achieve a balance between scale and the profitability while consolidating our industry-leading position. We expect the total shipments, including solar modules, sales and wafers to be between 85 gigawatts to 500 gigawatts for the full year of 2025, and ESS shipments to be 6 gigawatts over for the full year 2025.

Thank you, Mr. Li. Total shipments were 25 gigawatts in the third quarter, with market shipments of 93%. By the end of the quarter, we paid the first module manufacturing in the industry to achieve but cumulative global model shipments of 370 gigawatts with total cumulative shipments of Tiger Neo series surpassing 200 gigawatts, the best-selling module series in history.

In terms of a geographic mix in the third quarter, we focused on high-value overseas markets, with shipments account for over 55%, achieving strong growth in Asia Pacific, emerging markets and Europe. Shipments to the U.S. were near a 1.3 gigawatts in the third quarter of stable sequentially. Against the backdrop of the electricity market reform, customer demand for high-power products continues to rise. Our high-power Tiger Neo 3.0 series with this difficulty rate of 85% and excellent low-life performance can generate stable electricity during storms and the cloudy weather effectively extending power generation hours.

At the same time, in a market environment with increasing volatility in electricity spot prices, the outstanding power generation performance of Tiger Neo 3.0 enables more power generation during peak price superior in the morning and evening, creating higher yield and more reliable returns for clients. According to our field test data in Chengdu, China and in low lights conditions such as storm and dust, Tiger Neo achieved 7.2% gain compared to BC products. And in Kagoshima, Japan, Tiger Neo shows 10.79% gain over BC products in low-light conditions.

In the third quarter, we delivered some high-power products that carries USD 1 to USD 2 premium compared to conventional products. We expect our high power Tiger Neo 3.0 products with maximum power of up to 670 watts to be produced in large scale next year, further strengthening our competitiveness on the product side.

We once again started the PVEL 2025 Q3 volume track, ability reported with [indiscernible] thanks to our solid operational capabilities, outstanding not innovation and a strong recognition from global customers. As once the few interest prices to continuously maintain top-tier credit worthiness and technological strength in the global PV industry. In the last -- latest, the release of BN energy storage Tier 1 list of 4Q 2025, we were recognized as Tier 1 energy storage provider for the seventh consecutive quarter.

Our continuous efforts in sustainable development have also earned the international recognition reps. In the recent MSCI ESG, we were upgraded to an A rating, maintaining our position in the top tier of ESG performers in the global PV industry. Additionally, our S&P score continues to improve from 2024 rising significantly to 78, far ahead of the industry.

On the demand side, we expect global PV demand to slightly contract in 2026. In China, due to the implementation of policy reform 136, the pace of carry out 15th 5-year plan as well as industry self-discipline and anti-evolution measures, demand is expected to slightly increase year-over-year in 2026.

Markets outside China are generally expected to remain healthy. In the mid to long term, the urgent power demand from AI data center, combined with most countries commitments to reduce coverage emissions will jointly drive growth in the global deployment of clean energy and a new grid infrastructure over the next 3 to 5 years.

The information office of state council recently released the white paper of China's action on carbon picking and carbon neutrality, which emphasizes that energy storage is a key support for building a new type of power system and actively developing the renewable energy plus energy storage solutions.

In the United States, we are already seeing some tech giants deploying co-located or nearby solar plus storage at their data centers to meet rapidly growing electricity needs. We believe renewable energy club energy storage has become an invisible and accelerate interest. We remain optimistic about the long-term prospects of the U.S. market, although trade policies impose certain constraints on the manufacturing side, we have taken proactive matters and make early strategic deployments adjusting our manufacturing and supply chain in response to quality changes to provide U.S. customers with long-term, stable and reliable solutions.

We are confident that leveraging our advantage in technology innovation, high power products and global network, we can continue to satisfy our global client demand for clean, safe, high-efficiency and a reliable integrated solar and storage solutions. We will also continue to improve our competitiveness in global markets.

Thank you, Gener. We are pleased that our focus on high-performance products and high-value markets as well as our efforts in cost expenses control have delivered steadily improved financial results.

Gross profit margin turned positive in the second quarter and continued to improve by 4.4 percentage points in the third quarter. Net loss and adjusted net loss narrowed sequentially for 2 consecutive quarters. Operating cash flow was $340 million in the third quarter, improving significantly quarter-over-quarter. Operating cash flow is expected to be positive for the full year '25.

Moving to the details in the third quarter. Total revenue was $2.27 billion, down 10% sequentially and 34% year-over-year. The sequential decrease was mainly due to a decrease in the total module shipment and the year-over-year decrease was primarily due to a decrease in average selling price of solar modules. Gross margin was 7.3%. The sequential improvement was mainly due to a lower unit cost product sold and year-on-year decrease was mainly due to a decrease in ASP of solar modules.

Total operating expenses was $363 million up 36% sequentially and down 32% over year. The sequential decrease -- increase was primarily due to an increase in the impairment of long lead assets. For the year-on-year decrease was mainly due to a decrease in shipping costs, our solar module shipment decreased and an average freight rate decline during the third quarter this year.

Total operating expenses accounted for 16% of total revenues compared to 10.6% in the second quarter and 15.4% in the third quarter last year. Operating loss margin was 8.7% compared with operating loss margin of 10.7% in the second quarter this year and operating profit margin of 0.3% in the second quarter last year.

Moving to the balance sheet. At the end of the third quarter, our cash and cash equivalents was $3.3 billion compared with $3.4 billion at the end of the second quarter of '25 and $3.2 billion at the end of the third quarter of '24.

AR turnover days, were 105 days compared with 97 days in the second quarter, inventory turnover days were 90 days compared with 66 days in the second quarter this year. At the end of the third quarter, total debt was $6.4 billion compared to $6.7 billion at the end of second quarter. Net debt was $3.1 billion compared with $3.3 billion at the end of second quarter this year. Debt conditions improved sequentially.

Let me go into more details of the second quarter. Total revenue was $2.51 billion, up 30% sequentially and down 25% year-over-year. The sequential increase was primarily due to increase in solar module shipments, while year-over-year decrease was mainly due to a decrease in ASP of solar modules. Gross margin was 2.9%. The sequential improvement was mainly due to lower unit cost of products sold, while year-on-year decrease was mainly due to the decrease in ASP of modules.

Total operating expenses were $266 million, down 24% sequentially and 15% year-over-year. The sequential decrease was mainly due to the reduced expected credit loss expense in the same quarter, while the year-over-year decrease were mainly due to 3 points, a decrease in the impairment of loan assets reduced expected credit loss expenses and decreased shrink cost as the average rate declined during the second quarter this year.

Total operating expenses accounted for 10.6% of total revenues compared to 18.1% in the first quarter of '25 and 16.9% in the second quarter of '24. Operating loss margin was 7.7% compared to 20.7% in the first quarter this year and 4.7% in the second quarter last year.

Moving to the balance sheet. At end of the second quarter, our cash and cash equivalent was $3.4 billion compared with $3.77 billion at the end of the first quarter this year and $1.9 billion at the end of second quarter last year. AR turnover days were 97 days compared with 111 days in the first quarter this year. Inventory turnover days was 66 days compared to 84 days in the first quarter, our operating efficiency is improving.

At the end of the second quarter, total debt was $6.7 billion compared to $6.4 billion at the end of the first quarter. Net debt was $3.3 billion compared to $2.6 billion at the end of the first quarter this year.

This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed.

[Operator Instructions] Your first question comes from Philip Shen with ROTH Capital Partners.

First one is on your gross margins. Can you share some color on what you see as the difference between your's and Canadian Solar's, they reported recently 15% you guys have Q3 gross margins at about 7%. And what was the main driver you think for that underperformance? And then can you provide some color on the storage and solar gross margin difference? And then finally, what do you think margins look like for Q4?

Thanks, Philip. And I think compared to our peers, particularly the Chinese order, the gross margin difference is different revenue contribution from the energy storage business. And -- but if you look at the Jinko quarter-by-quarter, we did improve gross margin dramatically, it's coming from majority of the module business. But for the energy storage sectors, we did want to have a very, very positive update, I think, in the prepared remarks, so Chairman Li, and we think we -- our energy storage business is really for the dramatically growth in next year 2026 and we are expecting significant revenue contributions and gross margin expansions.

And the story is really in supply shortage. And this year, we shipped around 6 gigawatt hours shipments. And next year, we expect to double -- at least double. And in terms of the revenue recognition, it different because the revenue is recognized for the Siemens with the final acceptance. It's a little bit delayed 1 quarter to 2 quarters. And therefore, the energy storage business, the gross margin is at a decent level. We expect at least 15%, 20% gross margin.

And looking forward, particularly for the ESS business out of China, and we target 70%, 80% in the ESS business next year. And in terms of revenue contribution from the energy storage business, we expect 10% to 15%. I mean, the revenue from ESS business compared to the total revenues of Jinko next year. So it's -- we are actually -- we think our business is shifting from surely module business to module plus ESS next year.

Great, Charlie. Thank you very much for the color. And can you share also a little bit more color on your view. You've given us some color on the storage market. You shared that next year could be 6 gigawatt hours, what might be geographic even mix be for 2026? And how much to the U.S., how much to China and then maybe Europe and others?

Yes, yes. This year, it's 6 gigawatts hours and next year is double, okay? That is the total volume in terms of geographical distribution and non-China roughly we think 70%, 80%, including United States. And United States, we are discussing with a lot of potential customers and is developing, and we believe step-by-step, we are gaining more and more orders from the U.S., but we are gaining a lot -- we have a strong pipeline, particularly I think from Europe, Latin America and Asia Pacific.

Got it. Okay. Great. Shifting over to -- one more question here, on the foreign entity of concern for the U.S. Peak. Can you help us understand, you plan to -- you have a big business shipping U.S. -- sorry, shipping solar modules to the U.S. Now you plan to ship batteries also to the U.S. Can you help us understand how you plan to comply with foreign entity of concern requirements for the U.S. market?

Yes. And looking for the next year, we don't believe there's a lot of kind of impact -- negative impact from the FERC, let's say, BBB compliance, we think a lot of safe harbor projects, particularly for the solar plus some storage projects, and we committed to -- from long term, and we -- I think we reshaped our supply chain globally and including, and we're exploring options for our solar module facilities in Florida. And we think from the long term and there is going to be demand for both FERC and non-FERC. And we are in the -- if there is some kind of development, particularly for transforming our solar module facilities in the United States to the non-FERC entities, and we will let investors know. But we have been in the positive discussion with potential investors.

Our next question comes from Alan Lau with Jefferies .

Alan from Jefferies. So my first question is about the ESS business. I would like to know if there's any discussion with any of the AI data centers or hyperscaler clients? And what type of demand are they requiring? Like are they more like 2 to 4 hours of good capability, compatible demand? Or it's more like even longer our storage required?

We think the AI-driven data center, it's going to put a lot of demand for the global electricities from long term. And we're -- our ESS team is in discussion with potential pipeline for the data center, including your U.S., Europe and including China. But it's still is in progress, and we believe we are able to reach a significant milestone early next year.

Okay, clear. So in relation to the geographic group breakdown, I would like to know if the gross margin of ESS is similar across the regions? Or it should be higher in Europe or U.S.? Like how do you see the margins in different regions that you operate?

You mean, ESS margin different regions, right? Yes. It's depending on different markets, and China is still a little bit low, but I think it's recovering a little bit. ESS is very competitive in China. But Europe and the U.S. is still, we think that there is a decent gross margin. So -- and the Middle East is a little bit low. And I think China and Middle East is, yes, is the pricing, the competitiveness and the margin is relatively low to 100 regions, but we think it's still a very healthy and business and the next 2 years.

Yes. I would like to know on the cost side of ESS because I've noticed that the upstream raw materials or the cost of raw materials are increasing or surging. Any plans to lock in any raw materials or your view on different raw materials like batteries or like even more upstream battery materials like within carbon, et cetera?

Yes. And we -- because the strong demand is materially in upward, firstly, we have 5 gigawatts and batteries capacities and which put us a relative advantage. And the second one, we partner with key materials and suppliers, and the second one, when we negotiate contracts, we did anticipate some kind of material cost upwards. So as a combination, I think it's a little bit challenged, but we think we can manage and how to minimize the impact of the material, the pricing.

I see. I think my next question is about the demand on the solar module market. So how do you see the demand growth in next year for maybe both solar and like what is the growth rate you see?

Yes. For the demand side, definitely, we should looking separately for both for PV and BEVs, right? So for PV side, I think we are -- in a conservative way, we are expecting more or less a flat year in 2026 versus 2025. The main reason is because China demand, we believe to have a drop compared with 2025 which because the weight of trend demand is so high in the global demand, which drives even with the other markets booming or other markets growth, we still expect the demand of the globe in the PV industry for next year will be more or less flat year.

However, when we look into the best, it is in a different scenario, right? So with more and more renewable installed, there needs more security for the best contribution. Certainly, we are seeing a sharp increase for the BEV side. That's why from the BEV, we are still keeping optimistic opinion or expectation for next year's installation. If we need to quantize that, we think it will be at least 25% increase for the BEVs year-over-year.

I see I would like to know what type of installation in China are you looking at, like, because there are different numbers flowing around. Like are you looking at low 200s or even below 200 gigawatts in China?

I'm not that that conservative for China because recently, I visited a lot of our distributors and even installers in China in all the different processes, I think most of them are still keeping an optimistic view for next year. So that having said all those, I believe that it will be around let's say, module-wise, it will be around mid 200 -- let's say, around 250 about. And if we look into the grid connection number, it should be somewhere around low 200.

Okay. That's very clear. I think my last question is on the buyback. I would like to know if the company will start buyback after the blackout period which basically this result? And how is the pace of the buyback will look like?

We monetized 3% shares. And I think end of October, and we're in a process to get money out of China and after regulatory approval, and we have paid withholding tax, and we expect to get the money by the end of this month -- very soon.

And for the shareholder returns, and we commit at least USD 100 million a year and we had deferred dividend early this year. And we bought some shares, certain shares. And I think in last quarter, middle of this year. And after the window after the earnings release and we plan to purchase the share through out of the end of the year.

Is there like how much shares have been purchased or like will the company looking to basically buy all the remaining amount in the buyback program in the remaining 1 month?

Yes. And I think we we plan to use the proceed right monetization issues as the key funding and which is available and the around USD 170 million, USD 180 million. So I think we -- depending how the market moves, but we -- definitely, we will repurchase shares by the end of this year. And roughly, I think this year, USD 100 million, and we had declared dividend, I think $50 million, $60 million. So that's our -- the base plan. It's a year-over-year trend and next year, it's roughly the same trend.

[Operator Instructions] Your next question comes from Rajiv Chaudhri with Sunsara Capital. .

My first question is regarding your guidance for module shipments for the fourth quarter. It's a very big range, 18 to 33 gigawatts, and you have essentially kept to the same range that you gave for the full year back in the early part of the year. But now we are halfway through the fourth quarter. Could you help us narrow down what the range would be for Q4 for module shipments?

Yes. I think we were close to the lower end of the range. I think because of the regulatory requirement, we have to keep that range as before. But from the operational level, we believe the lower end of the range is more, let's say, realistic.

I see. So related to that, what do you think the global shipments of modules would be for the industry as a whole in 2025?

Well, we -- technically, we believe from the production wise, we are looking at roughly 700 gigawatts that's the the high-level numbers we are estimating for the whole industry. And do you believe that 700 gigawatts would actually have been shipped out by the industry as well? Or that was just the production?

Well, I think it's more realized to a production closer to the production side, but because every company has a slightly different ways to calculate or announce their shipment numbers. So that's why it's difficult to figure out what the real shipment number. But production-wise, I think the number is more realistic.

I see. Okay. So moving on to another question relating to CapEx. Could you give us the CapEx target for 2025 and also for 2026?

It's roughly RMB 5 billion this year and next year. And next -- we didn't have any plan to expand capacity and it's kind of upgraded in next-generation top count technology, and it's going to have significant high-end, high-power output solar modules we are able to provide to our customers next year roughly 60%. With price premium and a relatively good margin contributions next year quarter-over-quarter, the capacity was a high-end upgraded, high-end module capacity will be released quarter-by-quarter. .

So Charlie, just to be clear, this year, the CapEx is RMB 5 billion. And next year, it will be flat at RMB 5 billion.

Yes, roughly, roughly. But next year -- I talked about it. This year, it's roughly payment of outstanding amount, RMB 5 billion next year. we are doing the upgrade. We are doing an upgrade existing capacity and to the next high-level top-down capacity, and we foresee a lot of strong demand and with higher motor price and higher gross margin contributions.

So you made a very interesting point that operating cash flow will be positive in 2025. It looks like you will be generating operating cash flow positive in 2026 as well. And may be substantially higher than 2025 because gross margin will be higher. Is that a correct assessment? .

Yes. That's right. That's right. And we talk about, firstly, I think the catalyst is first one is ESS storage business next year. We are looking to 10% to 15% revenue contributing from ESS with decent gross margin and net profitabilities. And second one is the module business. We have, I think, the most on the top on upgrade capacities in the industries and developed by ourselves, our technology and which will roughly have 60% shipments of the modules coming from the next generation Jinko-developed top capacities with higher gross margins.

And second one, we're thinking from the high-level centers industry anti involuting taking -- take the effect step by step and the capacity will accelerate phase out and leading by the -- on top of that industry-leading self-disciplined control production volume and the renewable pricing based on the cost will take further, I think, enforcement.

So combined together, I think the industry is reaching the low point is recovering step-by-step, and Jinko, we are ready for the -- from the market and product perspective and the plus, we are setting solar plus ESS story and the business.

So the basic plan next year, we are -- we are trying -- no, we are confident that we are able to navigate the cycles and turn to positive earnings. That's kind of the business plan next year.

So should we -- you talked about the premium products and the fact that they've got premium pricing. But on the cost side, will your cost for these premium products will still be lower than the cost for the standard products this year? In other words, do the costs keep going down even as the price goes up?

Yes, yes. Initially, by design, the cost is a little bit higher, but a very, very small incremental costs. And -- but we -- our R&D team continue to dive into the details and to try to further improve the cost. But back to your question, I think the high-end product costs -- it's a very, very small incremental cost increase at the beginning. But we believe over time, our R&D team with our operational teams will continue to improve the cost.

Final question, Charlie, on market share. In the past, in 2023 and '24, your global market share had gone up to somewhere between 15% and 16% of the global market. This year, it is down a little bit, I guess, partly because you have restrained production because of the pricing. Should we expect that our market share next year will go up again and maybe go up a lot more than 16% because the industry itself is consolidating?

So -- and what do you think the range for next year module shipments?

The consolidated market share after consolidation of the industry consolidation and phase out the capacity, the industry turn into the kind of normal situation is, for sure, it's very good for Tier 1 companies. If you look at the long term, we are confident that we will continue to penetrate the market share. And next year is still, I think, from the top town port and I think China will continue to implement the anti involution policies, we don't expect significant shipments increase for the module brands. But yes, it's different stories.

Your next question comes from Philip Shen with ROTH Capital Partners.

I wanted to check-in was take back with you in terms of Q4 margin outlook, what kind of solar mindful ASP could you see in Q4? And then what kind of margin for the overall quarter we see?

We expect a relatively stable Q4 versus Q3. And -- but the ESS business is contributing more revenues and we estimate our ESS business in fourth quarter is going to reach a positive profitability levels. And -- but the contribution is not significant, but next year is a different story that we have talked about. And for the module business, we expect relatively stable.

Okay. Got it. And then can you talk about module ASPs for Q1 and Q2 of next year? And then also the trajectory for margins as you blend in more battery?

Yes. So I think it's difficult to share those numbers or estimations right now because you know what is happening is like some of the key markets, they are still -- there are some key or some important policy is upcoming. For example, the U.S., the guidance of the FERC or material systems, or even upcoming to 32, which will significantly impact the market prices, like in China, there's anti-evolution policies and there's even more rumors coming out regarding the polysilicon even to the other part of the manufacturing value chain as well. So those changes could significantly change the market price overnight. That's why we believe it is still too early to share our estimation on the prices for next year.

Okay, Gener. That makes sense. You talked about the rumors on poly. Can you give us a little bit more color on that?

I don't have too much more to share based on there's a lot of rumors on the market or on the Internet. So I don't know what you're referring to.

Yes. I was just -- you mentioned it. So I thought I would try to see if there's more color.

We are not part of the game, so I don't have too much to share with everyone. But thank you for your question. .

Your next question comes from Brian Lee with Goldman Sachs. .

This is Tyler Bisset on for Brian. Just a quick housekeeping question. Can you share what was D&A and CapEx in 2Q and 3Q?

You mean the absolute percentage, right? Hello?

Yes, like the actual number.

I think in the financial statement, you've got to check out the financial statements, the R&D and the operating expenses and we have disclosed quarter-by-quarter. So what would be key questing your and expo.

Sorry, D&A and CapEx in 2Q and 3Q, like the absolute numbers.

You mean the depreciation or CapEx?

Depreciation and CapEx.

Okay. Differentiation by quarter, I think, is roughly and I think USD 300 million a quarter. And the CapEx, I think in the first half year, we spent roughly RMB 2 billion.

That is our last question, and that does conclude our conference for today. Thank you for participating. You may now disconnect.