Operator: Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co., Ltd.’s second quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. After management’s prepared remarks, there will be a question and answer session. As a reminder, today’s conference call is being recorded. I would now like to turn the meeting over to your host for today’s call, Ms. Stella Wang, JinkoSolar’s Investor Relations Manager. Please proceed, Stella.

Stella Wang, Investor Relations Manager, JinkoSolar Holding Co., Ltd.: Thank you, operator. Hello, everyone, and thank you for joining us today for JinkoSolar’s second quarter 2026 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. Dimi Xu, CEO of JinkoSolar Holding Company Limited; Mr. Gener Miao, CMO of JinkoSolar Co., Ltd.; Mr. Pan Li, CFO of JinkoSolar Holding Company Limited; and Mr. Charlie Cao, CEO of JinkoSolar Co., Ltd. Mr. Xu will discuss JinkoSolar’s business operations and company highlights, followed by Mr. Miao, who will provide an update on sales and marketing, and then Mr. Pan Li, who will go through the 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. It is now my pleasure to turn the call over to Mr. Dimi Xu, CEO of JinkoSolar. Please go ahead, Dimi.

Dimi Xu, CEO, JinkoSolar Holding Company Limited: Hello, everyone. This is Dimi Xu, and thank you for joining JinkoSolar second quarter 2026 earnings call. It is an honor to take the role of CEO. I appreciate the trust the board of directors and management team have placed in me. Standing at 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 GW. Supply and demand imbalances across the PV industry remain dynamic. These pressures were further compounded by shifts in domestic and overseas policies, with prices across the supply chain and industry profitability remaining under pressure.

At the cost of ramping up, our high-efficiency products remained evaluated during the quarter. Together with impact of 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 to rationally manage utilization rates and continue to expand the proportion of high-efficiency products within shipments while introducing technologies that lower costs. These measures are driving a gradual recovery in profitability. The underlying pattern of PV 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 standard set level 3 energy efficiency as a minimum threshold for market access.

Products that fail to meet these minimum thresholds will not be permitted for production or sale, 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 the 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 phase-out of inefficient production capacity. By the end of 2026, we expect to have more than 40 GW of TOPCon 3.0 production capacity. Based on the new standard thresholds, these products are expected to meet level 1 energy efficiency requirements and strengthen our annualized 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 roadmap. 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 GWh, 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 GWh were recognized as revenue in first half, including more than 1 GWh in the second quarter.

As project deliveries increase, 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 GW by year-end 2026, including approximately 14 GW from overseas facilities. Considering demand dynamics in certain markets, we will place greater emphasizes on balancing shipment volume, profitability, cash flow, and order quality going forward. And adjusting guidance for full year 2026 module shipments to between 60 GW and 70 GW, and high-efficiency products accounting for over 60%. We expect module shipments to between 15 GW and 17 GW 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 platform 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 disciplined and selective investments directly or through fund platforms, focusing on strategic synergies, technological innovation, and long-term value creation. Our early investment primarily focused on the solar and energy 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 cash. The original cash cost of the investments remaining 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 gain 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 110 million in realized gain 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 Co., Ltd., receiving over RMB 300 million in cash proceeds.

Since our initial investment in LAPLACE, the cumulative realized gain on this disposal exceeded RMB 250 million. This gain was recognized over multiple periods through fair value adjustments following its IPO in late 2024, with over RMB 100 million recorded in change in fair value of long-term investments upon settlement in the first half of 2026. In addition, Hangzhou Gold Electronic Equipment Co., Ltd. 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 core 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 portfolio 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 Jenna.

Gener Miao, CMO, JinkoSolar Co., Ltd.: Thanks, Jimmy. Total shipments were 32.9 GW in the first half, with solar module shipment 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 shipment improved sequentially. Our Tiger Neo 3.0 series continued to command a premium of approximately $0.01 per watt over conventional products. We also began to ship a small number of scenario-based product in the second quarter, and gradually plan to increase deliveries in the second half. Those products already command a premium of approximately $0.005 to $0.01 per watt over conventional products.

Following the launch of AIDC and other scenario-based module products in the first quarter, we recently released the Sunny 365 Smart Solar Storage System. This comprehensive series of integrated PV storage solutions cover several scenarios such as retail, supermarkets, AIDC, and the manufacturing sectors. Especially, the AIDC solution is built around our Tiger Neo 3.0 module platform technology and the SunTera energy storage system, capable of meeting the demand from data center for power supply reliability, energy economics, and the sustainable low-carbon development through the coordinated control of energy storage system, PCS, EMS, and smart operations and maintenance. We recently received the highest AAA bankability rating in the Q2 2026 bankability rating report for module manufacturers released by PV Tech. Since first participating in the evaluation in 2014, we have maintained an A grade rating for 12 consecutive years.

Also, we were recognized as a tier 1 energy storage provider by BloombergNEF for the 10th consecutive quarter. These ratings reinforce 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. Yet, 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 emphasize 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 forward to 2027, as electricity pricing marketization policies are gradually absorbed and mechanism-based pricing and project ROI models become clearer, several projects that were delayed due to insufficient returns are expected to gradually resume. Large-scale renewable energy-based projects, direct green 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 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 changes 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 Fan.

Pan Li, CFO, JinkoSolar Holding Company Limited: Thank you, Jian. Leveraging our leading position and 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 2025. 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, while the year-over-year increase were 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 a 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 4.8% in the first quarter this year and 7.7% in the second quarter last year. Moving to the balance sheet.

At end of second quarter, our cash and cash equivalent were about $2.5 billion, compared with about $3.3 billion at the end of the first quarter this year. AR turnover days was 113 days, compared with 128 days in the first quarter of 2026. Inventory turnover was 125 days compared to 142 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 2026. Net debt was $4.1 billion, compared to $3.5 billion at the end of the first quarter of 2026. This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed.

Operator: Thank you. If you wish to ask a question, please press star on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you are on a speakerphone, please pick up your handset to ask your question. Your first question comes from Brian Lee with Goldman, Sachs & Co. Please go ahead.

Tyler Bisset, Analyst, Goldman Sachs & Co.: Hey, guys. This is Tyler Bisset for Brian. Thanks for taking our questions. ASPs declined pretty meaningfully sequentially. Curious how you are viewing ASPs so far in Q3, and how much of an impact you could see from greater shipments of Tiger Neo 3.0 modules.

Gener Miao, CMO, JinkoSolar Co., Ltd.: For the ASP side, firstly, apple to apple, we are expecting the price goes up a little bit in Q3. If we look into the average prices, it will go up as well. The first reason is because, from the current market situations, the price is going up because of different reasons. The spot market goes up. Most of the DG prices are following the spot market. 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, the ratio in Q3 will be definitely higher than Q2, which will be helpful to lift up the ASP in Q3 as well.

Tyler Bisset, Analyst, Goldman Sachs & Co.: Super helpful. We have seen pricing for wafers and cells increase pretty meaningfully over the past month. We have also seen futures prices for poly also increasing following some industry self-regulation. Wanted to see how you are thinking about your input costs over the near term and whether you are expecting any impacts from some of these recent moves in input costs.

Gener Miao, CMO, JinkoSolar Co., Ltd.: You are talking about the increase of cost, right?

Tyler Bisset, Analyst, Goldman Sachs & Co.: Yeah.

Gener Miao, CMO, JinkoSolar Co., Ltd.: What is the impact? We believe it’s a kind of healthy rebound, including polysilicon, glasses, and a couple of materials. That is why I think the industrial pair and the increased module price, we don’t believe this is going to have negative impact on the customer side. If you look at landscape, the solar is the cheapest energy sources. Now there’s a huge demand for storage. Solar plus storage will be the dominator of the energy diversifications for most of the regions.

Tyler Bisset, Analyst, Goldman Sachs & Co.: Okay, 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? Are there certain markets that you are prioritizing or de-emphasizing?

Charlie Cao, CEO, JinkoSolar Co., Ltd.: We guided down the shipments, right? To 60 GW to 70 GW. That’s very clear message. We don’t believe it’s the right time to focus on the scale, and the profitabilities and the operating cash flow is the key. We do a lot of optimization of the structures, not only the markets as well as the products and the efficiencies, even our employee resources. Particularly, if you look at 2026, the demand in China is 30%-40% lower than last year. Definitely, we have less and less exposure in China, and China is still relatively competitive and the price is one of the lowest of the markets. What we are doing is not only the country by country, as well as the customer by customer.

On top of that, because we are zoning out to the Tiger Neo 3.0, that is one of the key markets and targeting the essential markets, and particularly for the premier markets including U.S., including Europe. So that is one of the area we would like to penetrate more market share and to get relatively good profitabilities.

Tyler Bisset, Analyst, Goldman Sachs & Co.: All right. Thank you very much.

Charlie Cao, CEO, JinkoSolar Co., Ltd.: Yeah. I’d just like to take the opportunity to I think the investor in on the call and one, this quarter meeting, earning dates are relatively different. If you look at the JKS and the U.S. companies, we like to reposition the company’s now strategies. Firstly, JKS is kind of the controlling shareholders of Jinko Solar Co., Ltd., with the company which is the focus on integration of the solar plus storage. But now JKS has more capabilities. In the last five years, we built up a very, very strong strategic investment teams and dozens of investment. A lot of investment are very, very successful. In the last five years, we focus on solar storage related upstream, downstream, kind of the very high growth potential companies to make the financial investment and to get the investment returns, as well as get some synergies for Jinko Solar Co., Ltd..

On top of that, because China is more kind of the more competitive on the new technology like the AI content and computing, robotics, the team is shifting the focus to more kind of strategic and broad industries, particularly the next generation. We think the JKS is kind of shifting to both. One is the controlling of the Jinko Solar Co., Ltd. and the focus on renewable energy. On top of that, the JKS and the U.S. companies were shifting more capabilities to invest on the high growth opportunities. China is the second most powerful country. There’s a lot of massive opportunities. Our teams are able to take the advantage.

We would like the investor gradually to have the communication with our IR teams, to understand what is the progress particularly for the strategic investment we are planning and we have made, which we believe will get a very strong return for the JKS in the next 2 or 3 years. Again, we think it is good for the valuation of JKS. If you look at purely the China versus U.S., there is a very big valuation gap. The U.S. is just 20%, 30% valuations. Plus, we have a lot of portfolios investment and unique investment, which we are able to monetize. I would like to take the opportunity to bring this key topic and have the investor understand what we are going to do in the future. Thank you.

Operator: Your next question comes from Phil Shen with Roth Capital Partners. Please go ahead.

Phil Shen, Analyst, Roth Capital Partners: Hey, guys. Thanks for taking my questions. Dimi, 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? How do you expect module pricing to be impacted? Do you expect the landscape of manufacturers to shift as a result of the Section 232? Thanks.

Charlie Cao, CEO, JinkoSolar Co., Ltd.: In general, we believe it is very good for JinkoSolar’s strategy to dive in first. Our manufacturing is shifting to long-term entities in the United States. Specifically, I think JV, because we are the financial minority investors, we are not in a position to discuss the plan for the joint ventures because the majority shareholder takes the leadership, and we are not involved in any operations. For the 232, in general, we believe that it is consistent with Trump administration to bring manufacturing back to the United States, not only the module capacity as well as the wafer, polysilicon, and the solar cell capabilities. We have expectation, anticipation, the 232 will be coming in the early year. It 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 increase the cost of the solar modules. That is going to have the impact to the solar development cost. But we believe because it’s a little bit significant increase for the potential solar module price, but it does not have a significant impact for the solar farm investment returns, given the U.S. PPA prices in recent years gradually increase to a relatively competitive but a little bit higher level. Back to your question, we think it’s anticipated, but it’s a little bit exceeding expectation because the input price tax rate is a little bit higher, but it’s not so high to make the industry demand dramatically go down.

We still believe U.S. is a good market in the next few years, and Jinko has minority interest, and the joint venture will penetrate the U.S. market to take the opportunity in the U.S. market.

Phil Shen, Analyst, Roth Capital Partners: Okay. Thanks, Charlie. Would you expect pricing to 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. What’s your sense of where module pricing goes in the U.S.? Thanks.

Charlie Cao, CEO, JinkoSolar Co., Ltd.: If you look at the minimum price, $0.38, right? $0.38, 15% tariff. I think the market is evaluating the potential impact, and customer is evaluating how they are going to proceed their project plan. I think we don’t have definitive answer from customers, but the initial feedback is that most projects will continue even under the kind of 232 policy disruptions. That is my initial preliminary information.

Phil Shen, Analyst, Roth Capital Partners: Okay, great. That’s very helpful. Thanks, Charlie. You just mentioned two elements of the 232, the minimum import price and the 15% ad valorem tariff. 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?

Charlie Cao, CEO, JinkoSolar Co., Ltd.: It’s still the JV question. I’m not in position. Based on interpretation of policy, my understanding is firstly, it’s a kind of new capacity expansion. Secondly, it should include wafer, cell, and maybe polysilicon, right? It’s a new capacity addition. The solar module is not included, and it looks like it’s targeting for the wafer, cell, and as well as polysilicon.

Phil Shen, Analyst, Roth Capital Partners: Right. That’s true. It’s based on new capacity, but it can support manufacturers to expand capacity. Okay. I’ll pass it on from here. Thank you very much.

Charlie Cao, CEO, JinkoSolar Co., Ltd.: Welcome.

Operator: Your next question comes from Rajiv Chaudhri with Sunsara Capital. Please go ahead.

Rajiv Chaudhri, Analyst, Sunsara Capital: Good morning everybody. 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? Then break it down between the total size in China and international.

Gener Miao, CMO, JinkoSolar Co., Ltd.: You mean the 2026 total demand, right?

Rajiv Chaudhri, Analyst, Sunsara Capital: Yes.

Gener Miao, CMO, JinkoSolar Co., Ltd.: Yeah. 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 module side, it will be roughly 600 GW or slightly below that. That will be our expectation. If you break them into different categories, you will find out, for example, in China, you will find out the demand disappear from the utility market. But the distribution market are still strong or robust during the first half. If you look at the non-China market demand, you will find out the European market had some up and downs during the first half. But if 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 slightly higher than last year.

That’s what we had for the first half and our expectation for this year. For next year, we believe there will be some recovery in the utility market in China. We are expecting a better 2027 demand than 2026. If you want to quantify that, we will look at roughly between 600 GW to 650 GW in 2027, versus around 600 GW or slightly below 600 GW in 2026.

Rajiv Chaudhri, Analyst, Sunsara Capital: Okay. If the 2026 is around 600, that means that you are now looking at your market share globally going down from last year, because your market share would be about 11%, right?

Gener Miao, CMO, JinkoSolar Co., Ltd.: Yes. There are some reasons behind it. The first one is, we call it accessible market is reducing. There are certain sizable market is introducing a more and more strict trade barriers or policy barriers, which is not easy to access. The second reason is because the competitions across the manufacturers, where some of the tier 3, tier 2 players, they are playing low price strategy, sacrificing the quality, et cetera, to attack the market or even protect their own cash flow, which is not what JinkoSolar can do. JinkoSolar is still taking care of the long-term reputation and the qualities. That is why we have to give up some of the low price deal and protect our own interest.

Rajiv Chaudhri, Analyst, Sunsara Capital: Breaking it down, when you said about some markets becoming less easy to access, I assume you are talking primarily about the U.S. Can you give us a sense of what you expect out of that 65 million GW 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 percentage?

Gener Miao, CMO, JinkoSolar Co., Ltd.: Yeah, sorry to jump in, but not only U.S. Even, for example, Europe, they have this kind of rules, asking for all the EU-funded projects or financed projects cannot use China-based or Chinese factories. For India, it is a kind of technical barrier, but for a China-based manufacturing, it is not accessible at all as well. Together with some other mid or small size of the market as well, like Turkey, like other markets. I will not name all of them, but definitely U.S. is one of them or one of the big ones. But it is not the only one. There is many more because of different reasons, geopolitical or securities.

Rajiv Chaudhri, Analyst, Sunsara Capital: 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?

Gener Miao, CMO, JinkoSolar Co., Ltd.: Credit losses.

Charlie Cao, CEO, JinkoSolar Co., Ltd.: Receivable. What are you talking about? The credit loss for accounts receivable? Are you talking about that?

Rajiv Chaudhri, Analyst, Sunsara Capital: Yes. Can you just give us more details on that?

Charlie Cao, CEO, JinkoSolar Co., Ltd.: You mean kind of provision impairment or whatever you are looking at, right?

Rajiv Chaudhri, Analyst, Sunsara Capital: 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 went delinquent?

Charlie Cao, CEO, JinkoSolar Co., Ltd.: Let us check. Based on my understanding, we did not have any kind of deteriorated credit from customers, and it is accounting perspective based on the agings. Actually, if you look at the operating cash flow, we delivered positive RMB 600 million in the first half of the year. The healthy operating cash flow is one of the key focus from management perspective. We do not see any significant bad debits or whatever from customer perspective.

Rajiv Chaudhri, Analyst, Sunsara Capital: Okay. Another question is on, you mentioned that the cost of production of the newer product line, the 3.0, remained elevated. Can you explain some of the reasons why? Because we were expecting, actually, the cost to start to come down as you ramped up. What happened?

Charlie Cao, CEO, JinkoSolar Co., Ltd.: The second quarter, we ramped up the new facility, the Taicang Year 3. In the ramping up stage, typically the cost is relatively higher. On top of that, the second quarter, because the first quarter, the raw material cost, the silver cost is relatively higher. So carry forward to the second quarter, the cost is relatively higher. But it is a kind of combination of the two factors together to result in the relatively higher cost. But we expect the cost will be lower in the third quarter with the capacity reaching to full operational status, as well as the input cost is relatively lower compared to the second quarter.

Rajiv Chaudhri, Analyst, Sunsara Capital: Given that you are 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?

Charlie Cao, CEO, JinkoSolar Co., Ltd.: Yeah, we did expect gross margin moderate improvement in the third quarter.

Rajiv Chaudhri, Analyst, Sunsara Capital: Okay. Can you also talk a little bit about 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 has chosen to do it at this time?

Charlie Cao, CEO, JinkoSolar Co., Ltd.: David Li, our Chairman, is the founder. He is always focused on the strategic long-term visions. I do not believe there is any change because of the change of the Chief Executive Officer. Because JKS is a controlling shareholder of Jinko China. The key business of JKS on top of the controlling shareholder of Jinko China, that is the primary entity to operate the business. The Chairman believes this is the right time. JKS, on top of the controlling shareholder business and doing the strategic investment, because our Chairman built up the teams, the strategic investment teams, five years ago. There is a strong track record in the last five years, and it is the right time to catch up the massive opportunities in China.

Not only in the last five years, there is a solar and storage investment opportunity, as well as AI, robotics, quantum computing. A lot of investment opportunities. That is why I think I talked about in the beginning of the conference call, we like to investment to take the times to understand, what we have done in the last five years for the strategic investment, overturn the investment, cash out maybe 60%. There is a very good investment opportunity. The team have invested, including the recent large model, the AI model, Kimi K3, maybe you heard from the news. We believe there will be a good opportunity to make investment return through the JKS strategic investment and the team platform.

Rajiv Chaudhri, Analyst, Sunsara Capital: Okay. Moving on to capital spending. Can you tell us what the capital spending plan is for this year, and how you are thinking about 2027? Obviously, you are running well below the 100 GW capacity that you have. Should we expect basically very little capital spending in the next two years?

Charlie Cao, CEO, JinkoSolar Co., Ltd.: Yes, correct. There will be very small minimum and minor upgrades, and we do not expect any significant investment. Even if we want to do some, in the future, we do the local manufacturing in the key countries out of China for the local market, we will do so with the joint venture structures. That will minimize our CapEx as well. That is depending on if the market is gaining rebound. Back to your question, I do not believe it is significant, and it should be very small on the maintenance CapEx in the next two years.

Rajiv Chaudhri, Analyst, Sunsara Capital: Is the RMB 5 billion number a maintenance CapEx, or even less than that?

Charlie Cao, CEO, JinkoSolar Co., Ltd.: No, it should be significantly lower, maybe $500 million or maybe $1 billion, and then it should be very small.

Rajiv Chaudhri, Analyst, Sunsara Capital: I see. Okay. How much CapEx is required in the storage business?

Charlie Cao, CEO, JinkoSolar Co., Ltd.: The storage business?

Rajiv Chaudhri, Analyst, Sunsara Capital: Storage

Charlie Cao, CEO, JinkoSolar Co., Ltd.: Oh, storage. Oh, storage, we do not have capacity plan. Currently, we have roughly 5 GW battery cell and 20 GW battery pack. We do not have plans to do the capacity expansion. We would like to take a lighter approach and partner with different suppliers. The key element part, key part is the solution. The solution for AIDC, solution for different case, different projects, and the technical branding and marketing capability and the technical services. That will be the key investment. The investment is on the, I think the teams is not the equipment.

Rajiv Chaudhri, Analyst, Sunsara Capital: I see. Okay. Your business model in storage is basically an asset-light model?

Charlie Cao, CEO, JinkoSolar Co., Ltd.: Yes.

Rajiv Chaudhri, Analyst, Sunsara Capital: Yeah. Going back to module market share. Do you think that in the second quarter also, you are number one in the world?

Charlie Cao, CEO, JinkoSolar Co., Ltd.: Yeah, in the first half year. I think we are still the number one. That is not our target. The key is, we need to go get through the cycles and we develop our capabilities. The volume does not show any capabilities. Capabilities shows we are able to have more good planning. We have make sure we have more capabilities to select different customers and different markets and branding and marketing activities. We do not believe the volume say something.

Rajiv Chaudhri, Analyst, Sunsara Capital: Okay. 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. Now you’re heading towards 11% to 12%. Where do you think that number bottoms out?

Charlie Cao, CEO, JinkoSolar Co., Ltd.: Bottom out. Frankly, I don’t have a target number, but fairly speaking, I think 10% is a reasonable number for current stage. But the markets pick up. We think we should be ready to get more market share.

Rajiv Chaudhri, Analyst, Sunsara Capital: Okay. Thank you very much.

Charlie Cao, CEO, JinkoSolar Co., Ltd.: Thank you.

Operator: The next question comes from Alan Lau with Jefferies. Please go ahead.

Alan Lau, Analyst, Jefferies: Thanks very much for taking my question. Also, congratulations to becoming the CEO of the company. 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. BloombergNEF is quoting close to 100 GW. Not sure if you are aware of it. Would like to know how much inventory we have to get prepared for the policy change.

Charlie Cao, CEO, JinkoSolar Co., Ltd.: We did have preparations. It is based on the short term sales contract in the next two or three months. Typically, we will arrange some kind of purchase agreement. Because there is still sufficient time, two or three months,

Alan Lau, Analyst, Jefferies: Yeah

Charlie Cao, CEO, JinkoSolar Co., Ltd.: we will purchase on regular basis. We believe, because the cost structure is a little bit high, we believe the market are able to absorb the potential cost increase.

Alan Lau, Analyst, Jefferies: Understood. How much inventory in the market do you see?

Charlie Cao, CEO, JinkoSolar Co., Ltd.: We don’t have the information. You mean in module, right?

Alan Lau, Analyst, Jefferies: Yes.

Charlie Cao, CEO, JinkoSolar Co., Ltd.: I think you can check 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.

Alan Lau, Analyst, Jefferies: Understood. Thanks. I also heard some feedbacks on the Section 337 investigation regarding to the TOPCon patent. I wonder how do you see it, and is it affecting any of the TOPCon sales in the U.S.?

Charlie Cao, CEO, JinkoSolar Co., Ltd.: Is that the First Solar patent case?

Alan Lau, Analyst, Jefferies: Yeah. They have a patent case and also there is a Section 337 investigation, and yeah, there is some feedback suggesting that, this might impact or this might create some problems for selling TOPCon into the U.S. market.

Charlie Cao, CEO, JinkoSolar Co., Ltd.: Hmm. I did not hear the information or any update. But, again, based on our internal, external teams, and we are quite confident in our patent capabilities. And, we do not see any disruption for JinkoSolar so far.

Alan Lau, Analyst, Jefferies: Understood. Regarding to the strategic cooperation with one of the U.S. major players, wonder if you might share the progress on that front. Like is there updates or Because there is a recent announcement of a $10 billion of investment into building solar capacities by that largest player in ESS. Wonder what the progress of our discussion with that player.

Charlie Cao, CEO, JinkoSolar Co., Ltd.: We didn’t have any progress so far. If any significant improvement, we will. Any progress will, I think we may take the release on the news. Globalization is our strategy. Cooperation with different partners, not only in U.S., in different countries, it’s one of the key area we like to take, explore the different opportunities. If we reach to significant progress, we definitely will share the news.

Alan Lau, Analyst, Jefferies: Understood. My last question is on the ESS business. I think in the last quarter, in the PowerPoint, it showed around 1.42 GWh of ESS shipment, POD. While, in this quarter seems the number is revised or, I’m not sure if the way of calculating the shipments is different. But it seems that Q1 has a lower number of shipment, whereas Q2 there’s 1 GWh plus shipment. It seems the company is reiterating its annual target. Does it mean that in second half there will be close to 8 GWh of shipment?

Charlie Cao, CEO, JinkoSolar Co., Ltd.: It’s second half year loaded, and because a lot of projects we shift, but we need to go through different stage, including testing, commissioning, and particularly for the large scale ESS project. We have the confidence that we’re able to achieve our guidance by the end of the year. If you’re looking to next year and second, third quarter could be, we are able to recognize maybe 3-4 GWh a quarter, next quarter.

Alan Lau, Analyst, Jefferies: Understood. How much was shipped in the first quarter? Because it seems there’s a change in the method of calculation or what?

Charlie Cao, CEO, JinkoSolar Co., Ltd.: First half we shipped, I think, 3 GWh. Again, last year we shipped I think over 5 GWh, but last year we looked at just 1 GWh. So there is a gap, 4 GW, carried forward into this year. Anyways, I can-

Alan Lau, Analyst, Jefferies: Understood

Charlie Cao, CEO, JinkoSolar Co., Ltd.: yeah.

Alan Lau, Analyst, Jefferies: Understood. Thank you. Thanks, Charlie for taking my question. Thanks. Thanks, Demian and Ghana. Thank you.

Charlie Cao, CEO, JinkoSolar Co., Ltd.: Thank you.

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