Thank you for standing by and welcome to the JinkoSolar First Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session (Operator Instructions). I must advise you that this conference call is being recorded today, May 27, 2014. I would now like to hand the conference over to your first speaker today, Sebastian Liu, Investor Relations Director. Please go ahead, Mr. Liu.

Thank you, operator. Thank you everyone for joining us today for JinkoSolar's first quarter 2014 earnings conference call. The Company's results were released earlier today and available on the Company's IR Web-site at www.jinkosolar.com, as well as on the newswire services. We have also provided a supplemental presentation for today's earnings call which can also be found on the IR Web-site. On the call today from JinkoSolar are Mr. Chen Kangping, Chief Executive Officer; Mr. Arturo Herrero, Chief Strategy Officer; and Mr. Zhang Longgen, Chief Financial Officer. Mr. Chen will discuss Jinko's business operations and Company's highlights, followed by Mr. Herrero, who will talk about the Company's business strategies, and then Mr. Zhang who will go through the financials and guidance. 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 these 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 laws. Please be noted that to supplement its consolidated financial results presented in accordance with the United States Generally Accepted Accounting Principles or GAAP, JinkoSolar uses certain non-GAAP financial measures. The Company believes that the use of non-GAAP information is useful for analysts and the investors to evaluate Jinko's current and future performances based on a more meaningful comparison of the net income and diluted net income per ADS, when compared with its peers and historical results from prior period. These measures are not intended to represent or substitute numbers as measured under GAAP. The submission of non-GAAP numbers is voluntary and should be reviewed together with GAAP results. It is now my pleasure to introduce Mr. Chen Kangping, CEO of JinkoSolar. Mr. Chen will speak in Mandarin and I will translate his comments into English. Please go ahead, Mr. Chen.

Thank you, Sebastian. Good morning and good evening to everyone and thank you for joining us today. I'm pleased to report another successful quarter as we record our fourth consecutive quarter of profitability, well within our previously issued guidance. We continued to expand our manufacturing and downstream businesses by increasing our geographic reach, further cutting costs and keeping high gross margins throughout the quarter. We are confident in our ability to deliver solid results for the rest of the year as we benefit from high gross margins from our module business and growing profits from our downstream business. Our revenue streams continue to diversify as we focus on developing our downstream business. Revenue from power generation increased sequentially 62.3% to RMB48.3 million as we generated a record 50 million kWh of energy during the first quarter. Despite unusually cold winter in China and the effects of seasonality, we are confident that the project development will quickly rebound next quarter, given the first half of 2014 we expect to connect 140MW solar PV project to the grid and on top of that begin constructing another 200MW to 250MW during the second quarter. Looking forward, we remain well optimistic about the coming quarters. We expect module shipments to increase by approximately 30% sequentially during the second quarter and are confident to meet our full year guidance. Despite the seasonally slow first quarter in China, we believe China will remain largest solar market this year and that installation will reach 12 GW to 14 GW. We mentioned our market-leading position in China by shipping over 200 MW in China and anticipate a strong recovery for the next quarter and during the second half of the year. We continue to gain market share in the U.S. and Japan, which now account for approximately 22%…

Thank you very much, Mr. Chen. The first quarter of 2014 has been a good start to the year for JinkoSolar considering the traditional effects of seasonality in the PV market. Despite this, we seek our targets for the quarter and reaffirm our guidance for the entire year. We are very optimistic about our future opportunities that will arise in the quarters to come. Despite the effects of seasonality affecting the Chinese market and also the European issues regarding anti-dumping regulations, we managed to ship more than 200 MW to China and over 30 MW in Europe during this quarter. We had a successful quarter with record shipments to the USA, totaling over 100 MW. To give you some perspective, our shipments to the United States during the first quarter of 2014 almost exceeded total shipments for the year before, 2013. Approximately 10% of all 45 MW was shipped to Asia-Pacific during the quarter and mainly to Japanese market. We expect more in the next coming quarters as we take full advantage of [affordable] (ph) market conditions and a high feeding tariff, even after the tax in Japan. Demand from new emerging markets, such as South American countries and South Africa, remains strong as we shipped over 70 MW in this quarter and have signed contracts for more than 250 MW for the next coming quarter of this year. This growth has positioned Jinko as the number one brand in South Africa with over 40% market share, and in Chile in South American country with a better than expected 30% market share. Japan is the world's second-largest PV market in terms of demand that we expect between 7 to 9 GW, will continue to be an important market for Jinko in the next coming quarters. In the U.K. in Europe,…

Thank you, Arturo. Good morning and good evening to everyone on the call. First, I would like to walk you through our financial results for the first quarter of 2014, followed by second quarter and full-year 2014 guidance. As Mr. Chen mentioned earlier, total solar products shipments in first quarter of 2014 were 581.2 megawatts. Total revenues in the first quarter of 2014 were $323.9 million, a decrease of 8% sequentially and an increase of 73.1% year-over-year. Gross margin was 24% in the first quarter of 2014 compared with 24.7% in the fourth quarter of 2013 and 12.7% in the first quarter of 2013. The year-over-year increase in gross margins was mainly due to improvements in operating efficiencies and continued cost reductions for the silicon and auxiliary materials and improved ASPs. The Company also enjoyed higher gross margin generated by solar project electricity revenues. In-house gross margins relating to in-house silicon wafer, solar cell and solar module production was 26.6% in the first quarter of 2014 compared with 24.3% in the fourth quarter of 2013, compared with 13.1% in the first quarter of 2013. Income from operations in the first quarter was US$32.7 million compared with income from operations in the fourth quarter of 2013 of US$43.3 million and a loss from operations of $2.7 million in the first quarter of 2013. The operating expenses in the first quarter of 2014 were $45 million, an increase of 0.4% sequentially and an increase of 70.4% year-over-year. The year-over-year increase in operating expenses was mainly due to the increase in shipping and warranty costs and research and development expenses. The Company's operating expenses excluding the provision for bad debts and impairment of long-lived assets represented 13.1% of its total revenue in the first quarter of 2014, representing an increase from 12.3% sequentially…

(Operator Instructions) Your first question comes from the line of Philip Shen from ROTH capital. Your line is open. Please go ahead.

Can we talk about your capacity, when do you expect to take full ownership of the [top one] (ph) assets and what's your view on acquiring additional distressed assets in 2014?

I think as of the end of Q1, our capacity still is around officially 2 GW and on the [indiscernible] cell and 2.1 GW I think on the module segments. In [indiscernible] right now, we are running at lease basis and we're still thinking because tuning up for the machine, today we're still running around like 80%. So basically we believe we're continuing to look at opportunities I think like [indiscernible] opportunities, and by the end of this year hopefully we can reach our capacity on the cell to 2.5 GW and module around 3 GW to 3.5 GW by the end of this year.

Okay great. And can you give us an update on your yield co plans, how many megawatts would be like to have in place for the yield co and what do you expect the timing of the yield co to be as well as which markets would you like to actually list in?

I think as of March 31, we have 213 MW connected with the grid and we have 100 MW under construction, and as of today as we already announced in the release, and we I think complete another two projects totaling 39 MW. So as of today, we have 252 MW connected with the grid and we have 100 MW under construction and we have also given guidance on this quarter. By the end of this quarter, we think we'll have additional 100 MW, [indiscernible] this quarter we were around like 139 MW connected with grid in the second quarter and by the end of second quarter we were on a construction around 200 to 250 MW on the construction.

And any comments on the yield co at all, what the timing might be and which markets you would like to list?

I think we still continue looking on that. As you can see, the whole year guidance in this year we have additional 400 MW and we are working hard because you see really the yield co is capital intensive investment and we are working hard, I think continue to looking at some opportunities I think along with some probably equity funds and to bring equity funds and to see possible and future we can really more capital I think in the downstream project, and hopefully I think smoothly, I think yes, we hopefully I think are going to list either in U.S. market or Hong Kong market and we have to depend on market capital window possible open and also the timing and also to maximize the Jinko shareholdings value and we believe I think the earliest maybe the December or early the next year and possibly the mid of next year, if we got it to Hong Kong.

Your next question comes from the line of Brandon Heiken from Credit Suisse. Your line is open. Please go ahead.

I just wanted to clarify, have you officially acquired the [indiscernible] as the – have the bankruptcy proceedings been finalized?

[indiscernible] the 500 MW [indiscernible] and we already signed a lease agreement for six months and we're still waiting for the call in a go-through of the legal processing and we believe I think in Q3 we can completely finish the acquirement and also to reach fully operation by the end of this quarter.

Okay great. And it looks like the wafer shipments were fairly high in the first quarter over 90 MW, is that just a one-time event or do you expect to ship a little more wafers now, what happened in the first quarter?

Basically the first quarter we shipped more than 90 MW to outside third party and actually also we buy – because we export to U.S. 100 MW, we have to buy cell from outside from Taiwanese. So we have to sell to outside and buy the cell back. So this is purely the fall of the U.S. module shipments.

Okay, and just a follow-up on the question of financing for project development, you've talked about the potential IPO of the project business, you mentioned the possibility of some private equity, are there any more details that you can offer on other financing mechanisms or your outlook there for needs for financing projects this year?

I think basically as everybody knows that, I think it's a good question, Jinko is I think the only one right now, the Chinese silicon manufacturing company in the United States right now on the project, and the reason why we are on the project because we got [indiscernible] support from [CD] (ph) and we have signed agreements and our credit line totaled last year RMB3.3 billion loans, [indiscernible] to support leverage our downstream project, and today I think with that support, so we have continued to hold the project, and because the leverage, today all the projects if without leverage the IRR is about 10% to 12% considering the bet and with leverage IRR is higher than even 20%, 18% to 22%. The reason is because the CD loans is 15 years and first year without paying the principal and the second year through the 15th year, the principal payment is minimum. So the majority principal payment back is 11 years to 15 years. So that's also increased our leverage ability. So I think all these together we want to looking for some strategic part of the equity fund coming to continue to support us hold the project and continue with leverage for certainty and for the future we can accelerate all of the extension on the downstream projects than to accelerate our ASP ASAP.

Your next question comes from the line of Vishal Shah from Deutsche Bank. Your line is open. Please go ahead.

Of the 250 MW that you have connected to the grid, have you been receiving payments on all those projects regularly, what are the delays that you are experiencing on those projects?

I think, Vishal, on the projects that you mentioned, the project side [indiscernible] this quarter the way we recognize the revenue from the downstream projects total is $7.78 million and the gross profit is around $5 million and most of it now, [indiscernible] the only feeding tariff and we are working on that because we connect already in the middle of 2013, probably mid of 2013 as I mentioned last time I think in the Deutsche Bank Conference. We are arguing now the VAT payment and I think as soon as we smoke out that issue, I think very quickly we can collect those money, and I think today our AR in the downstream project side I think is around six months. So basically hopefully I think to Q3, definitely I think we can reduce that DSO to 30 days to 45 days.

So you expect the decision on the VAT payments in Q3?

Yes, I think by the end of Q3 we should be clear. Even there, maybe even going to pay the VAT first to see maybe the policy [to be clear] (ph) that we can repay back apply.

Okay that's helpful. And then as you think about the rest of the year and also the policy changes that you are expecting, I think that everyone is expecting change in the DG policy, I mean is your guidance for 400 MW dependent on that change or you can hit your targets even if there is no policy change?

Basically I think that the downstream 400 MW is based on without considering any downstream continuing [indiscernible] the capital and beside our inside cash flow we can do that, even consider right now the China policy, because we have the pipeline as I mentioned. This quarter we will connect another, second quarter where we're finish I think connecting 139 MW. So plus that beginning of the year 213 MW, total is around 352 MW will be connected by the mid of this year. Actually end of the mid of the year, we still have 200 to 250 MW under construction. So we believe that 400 MW to us is the minimum target right now.

The 250 MW that are under construction, are those approved projects, are those fully approved projects?

I mentioned that. All the projects that we are starting to construction, we got all the possible license available, also the [indiscernible] grids accessible. So all these we've already done as we started because all we'll consider here is because we're not going to start the project, we'll hold the project, we don't want starting the project then have problem.

Just one last question, can you talk about your pipeline of approvals that you have in place, so as you think about the next 12 to 18 months, how do you plan to grow this business, do you expect a 600 MW zone run rate in 2015?

Basically right now we say because the pipeline always [indiscernible] and we say we have DG 400 MW and utility-scale is around 700 MW and within that pipeline and some projects may drop some projects may be adding. So I think of that 1.1 GW today, if you are asking me everything is ready for this year and I think we maybe still have like 300 to 500 MW available and the rest of them maybe towards the next year. So we believe I think as this year as we are going to basically right now the guidance 400 MW is I think no problem and for the next year we didn't give a guidance. If we go ahead and say add another 500 to 600, even don't think any problem. [Approaching] (ph) U.S. I see be careful right now I think a lot of people, the money right now invested in this segment, I think the license, everything ready at project I think right now also [indiscernible]. So today, the price also [go up] (ph). Already you can buy let's say $0.20 per watt, everything is ready, the license, everything. Today right now maybe increased to $0.80 to RMB1 per watt.

We will now move on to our next question from the line of [indiscernible] from AN Capital. Your line is open. Please go ahead.

First question is on what type of development you are doing on the distribution generation, DG projects now, can you give a little bit of update and do you have any plan to do [indiscernible] sales going forward?

I think right now the DG right now, you know the government I think has given a total target of 14.5 GW for this year and 60% is DG and 40% is the utility scale. I feel the government if want to reach I think the target, already inside around 10 GW to 12 GW, even higher, we believe 12 GW to 14 GW, if some things were to change, have to change, adjust the percentage. Second, also for the DG, the government right now is discussing and the new policy may come out. For example right now the DG related to third-party I think the government maybe change, just deal with the [indiscernible] without further dealing with the third parties. Then also other issues, for example the install cost. I think because utility scale you have to finally generate, actually you have to transmission to higher pressure, high transmission, but DG you didn't spend that money on the facility, so you can save like RMB1 per watt. So all of these I think and then also the local different level subsidies I think that will unify and as the central government too give subsidized. So all of these I think is a discussion around. I think if the Chinese government really want to encourage and stimulate the DG, they have to have some policy, continued subsidized on the DG side.

That is fine, I understand, but my question was also to add on, like what is your involvement in the developing under DG [indiscernible], have you started building up your own team on that for DG projects and if that is, how many people are there on that team and what type of technology partner may be on the energy storage solution and all those stuff as we starting to those things?

We basically already have a team. We have I think [indiscernible] and we also have a EPC team. The team is now in the utility scale but also do the DG. As you can see, the pipeline of 400 MW is just not collect all the data because we are working on those projects and also a feasibility study, send the people, so then to capitalize [indiscernible]. I think all the team today is ready. So in the second quarter it's possible also under construction by the mid of the year, we say we have 200 to 250 MW under construction, of which maybe around up to 50 MW is DG. So we have to see the policy of what's going on. For inside the company, we are ready.

Okay perfect. And how about going for the high-efficiency module like [M-type] (ph), are you doing any development on the [M-type] (ph) cells now?

[M-type] (ph) right now the technology but we didn't commercial production right now, and as you can see we have Eagle+ and also very high [indiscernible] is around 275. All these are things [in the wood] (ph), we have to take in cost-effective. Were manufacturing high-efficiency panel, we also should be lower cost and to reach the reasonable gross margins or minimum gross margin target. So we are working on that, continue on the technology side.

And my last question is on your comment on channel inventory, how do you see channel inventory as it stands in the market now?

This is Arturo Herrero, Chief Strategic Officer. Regarding inventory we see in the channel, right now is quite low. We are seeing quite strong demand in many markets not only in China but also in Japan as we mentioned before or in [indiscernible] USA markets like India also South Africa, and even if European markets has been going down in global but U.K. has been surprising all the community in the PV industry by connecting more than 1.2 GW in the first quarter. So there is not so much inventory in the channel. On the contrary right now for top tiers like Jinko we are facing kind of lack of enough production to cover all our demand. This is why we are expanding our factories.

Your next question comes from the line of [indiscernible]. Your line is open. Please go ahead.

Regarding your $22 million foreign exchange related loss, could you explain a little bit your hedging strategies and if any possible improvement of that going forward or is this a very volatile type of situation that is very difficult to control?

I think for this part, yes, we have a large loss on the foreign exchange, and as you know that on the currency as renminbi so it is around [$4.7 million] come from, we get issues of new CD in January. So because of the renminbi devaluation so quickly, so I think that's what happened. We leased I think CD 150 million on top of that offering. That's [indiscernible] that cost, I think the majority of the CD. Then also on the long-term contract, the hedging, all the policy in the history is we go and project the future for months, the sales revenue in U.S. dollars, how much, and we are taking certain percentage of ourselves, less than 20%, we buy the hedging contract. In history we are making money on the betting on the renminbi continuing to appreciation and [indiscernible] in Q1 this year the Chinese government and also the central bank and the unexpected devaluation of renminbi and we believe right now the foreign currency rate and renminbi versus the U.S. dollar is more stable for this year. So we think this year maybe I think long-time big loss and the future we also need to base it on the forward contract recalculation I think re-book each quarter, but hopefully I think we can make some profit.

Your next question comes from the line of Colin Rusch from Northland Capital Markets. Please go ahead.

Just a quick follow up on that last question. Can you give us a sense of what level you're at in terms of the RMB target with your future contractor right now?

I think I cannot tell you exactly. I think basically how much won't suffice [indiscernible] U.S. dollar we are running like right now I think by the end of next year we forward a contract around like $500 million U.S. dollars and the euro is around €100 million. So basically that accounts all revenues I think less than 10% basically. So we think it's very conservative. It's like renminbi currency, if the appreciation for long time and suddenly 15%, 20% drop becomes appreciation, so that's where the [indiscernible] unexpected downward cost of forward contract, revaluation of fan market value than the cost of big loss.

Okay great. And then can you talk about your capital allocation decision-making process, as you look at the opportunities in front of you on both the project side as well as the manufacturing side, how are you differentiating between those opportunities and deciding where to put your capital?

Basically I think for the manufacturing segment, it will continue on the key business. As you can see Jinko today we are in the best position lower cost and as the market continues consolidation, we will become I think the key player there. So that's why you can see in the Q1 we continue CapEx around 17 million. Those money including [indiscernible] aligned with top plant equipment. Then we also will continue looking for second quarter maybe spending more CapEx on the manufacturing side but we will continue looking for top line opportunities there. So we think that will give us like top line – we didn't spend CapEx too much because you're assuming the liability, and the top line of 500 MW from wafer sale and if the deal is closed, we get paid RMB600 million and also basically we're assuming the liability, net liability, but we also have accounts receivables more than 100 million and even totaling 100 million. So the net pay is around 400 million. So this is good opportunity for us. We are continuing looking for that opportunities, pay the market value investments, CapEx around the 30% and continue to expanding our capacity on the wafer sale module, but be very cautiously because this industry we still believe is in the consolidation. We will continue to see some company [indiscernible] where we exited in this industry. So that's all opportunities to continue to get the market inch by inch but all on the condition if we have to keep our gross margin above 20%, if without any dramatic change on the silicon price. That's one area. The second area is the downstream project and we believe right now we have forecasted China projects. Yes, those China projects at the beginning, especially two years ago is not too much investor interesting because one is connection issue, one is [credibility] issue, but today more and more clear, a lot of the investors are jumping through this industry right now and Jinko is in the right position. We have right now 252 MW connected with the grid, we have a strong EPC team, we have good structure, downstream yield co structure and a lot of clubbed equity fund including some governments, the sovereign equity funds also confident with us. So we think in that area today we believe I think that we already [enchanted] (ph) around US$150 million assets into the [indiscernible]. In the future we may be increase to, by the end of this year, we may be increase to US$200 million. That's what our total CapEx investment in the downstream I think in [yield co] (ph). I think it allow [indiscernible] if possible we can raise more private equity funds, I think to achieve that target I think by the end of this year, we're working that to 600 MW maybe even accelerate it than on [tier two] (ph) spinoff. I think it's enough for us to put that capital in there.

Right, and can you just give us a little bit of color on gross margins and as you see them trending into 2Q and potentially into 3Q?

I think if you look our Q1, our ASP is 60% and our cost is around $0.47 and of which the silicon cost or the average cost is around US$20.4 per kilogram and is around $0.10 and our marketing cost is $0.47 of which – $0.37 and of which I think the wafer is $0.09 and cell is $0.10 and module is $0.18. So I think then the in-house gross margin, that means use our own wafer and cell to manufacturing module is around 26%. I think this is the best quarter for this year. Of course this is attribute to the renminbi I think appreciation. And our actual gross margin is around 24%, the reason because we are shipping 100 MW to the U.S. market and we have to buy cell from outside, we have to sell wafer to outside and buy cell from Taiwanese. So that increases our cost. So that means we're not 100% perfectly integrated. So that's why our actual gross margin is around 24%. From middle on, I think we have not given the guidance to the gross margin but we believe I think in 2Q right now the ASP should be status quo and we will continue cutting on the cost side. So we believe the gross margin should become – have the ability to stable in the second quarter.

Your next question comes from the line of Brian Lee from Goldman Sachs. Your line is open. Please go ahead.

Just a follow up on the approval side for the downstream projects, so we see more and more companies entering into the market for the silicon projects, so have you seen growing difficulties to obtain permissions to build the new projects right now is the first question?

I think it's a good question. I think it's not difficult to get permission if a lot of people jump into the projects. So the scarcity of the projects and also too much people that now apply for really I think increase the possible on the cost side, and luckily and fortunately at Jinko we already have the pipeline of 1.1 GW. Of course we still are working hard because we have professional teams and also have strong EPC team and we also face such kind of challenge but it's not big challenge for us.

Okay, and next question is about your Q2 shipment [indiscernible], could you give some color about the shipment by country or region?

I think in Q1 as you'll see, and Arturo just mentioned that, Q1 we ship to China is 44%, Asia-Pacific is 10% and the U.S. around 7% and the emerging markets 17% and North America is around 20%. I think the Q2 the guidance we still think that China is around 40%, Asia-Pacific is 15% and Europe is 15% and the emerging markets 10% and America and North America is 20%.

Okay, and last question, just want to clarify that your target, the total project to be connected to the grid by end of this year is likely to reach 400 MW right?

We say we were additional add 400 MW this year. By the end of this year we should be connected to more than 600 MW on the grid on the downstream project. Is that clear?

Yes, thank you.

It appears there are no further questions at this time. I'll now hand the call back over to Mr. Sebastian Liu for any additional or closing remarks.

Okay, so on behalf of the entire JinkoSolar's management team, I want to thank you for your interest and the participation on this call. If you have further questions or concerns, please feel free to contact us and have a good day and good evening. Thank you and good bye.

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