Thank you for standing by and welcome to the JinkoSolar Fourth Quarter and Full Year 2016 Earnings Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today, Tuesday, the 27th of February, 2017. I would now like to hand the conference over to your first speaker today, Mr. Sebastian Liu, Investor Relations Director. Please go ahead, Mr. Liu.

Thank you, Operator. Thank you, everyone, for joining us today for today’s JinkoSolar fourth quarter 2016 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 the newswire services. We have also provided a supplemental presentation for today’s earnings call, which can also be found on IR’s website. On the call today from JinkoSolar are Mr. Chen Kangping, Chief Executive Officer; Mr. Cao Haiyun, Chief Financial Officer; Mr. Gener Miao, VP Global Sales and Marketing; and Sebastian Liu, IR Director. Mr. Chen will discuss JinkoSolar’s business operations and Company’s highlights, followed by Mr. Gener Miao, who will talk about sales and marketing and then, and Mr. Cao, will go through the financials. We will all be available to answer your questions during the Q&A session that follows. Please note 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 applicable law. It is now my pleasure to introduce Mr. Chen Kangping, CEO of JinkoSolar. Mr. Chen will speak in Mandarin and I’ll 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 am pleased to announce another strong quarter to finish out the year. Total revenue in Q4 hit $737.6 million and $3.08 billion for the whole year. Module shipments were 1,733 megawatt in the fourth quarter and 6,656 megawatt for the full year, which puts us formally in the position as the largest module supplier globally. Gross margin was 14.3% compared with 19.2% from manufacturing of last quarter, despite the sharp decline in ASPs in Q4. We successfully completed the spin-off process of Jinko Power’s project business which generated $145.2 million in investment gain for JinkoSolar and strengthened our balance sheet by cutting debt to $892 million from about $2.1 billion, during last month, we further cut our debt by repurchasing almost all of our convertible notes due in 2019 at holders’ put option. [Indiscernible] the market situation further deteriorated. So, there are few things I would like to highlight. Demand in China was strong during the quarter with growth momentum expected to continue during the first half of 2017, due to rush orders coming in before the FiT cut in June and additional quota for utility projects announced in the yearend of 2016. We expect to see demand during the later part of the year to decline but will not nosedive as many have expressed concerns about. Distributed generation and Top Runner projects will provide strong support for the market demand in second half of the year. We now see China this year will remain a 30-plus-gigawatt market. Looking at U.S., we’re seeing ASPs again to stabilize after the sharp decline in Q4. Although political factors may create some uncertainties for the future prospects of renewable energy in the U.S., we don’t…

Thank you, Mr. Chen. I am happy to report a strong finish to the year in which we shipped a total 1,733 megawatt of modules during the fourth quarter and a 6,656 megawatts for the entire year. During the year, we retained our leading position as the largest solar module supplier worldwide and increased our market share in several key solar markets. During the quarter, we continued to balance our geographic distribution, which is composed of 40% shipments to China, 24% to Asia Pacific, 19% to North America, 10% to emerging markets and the 7% to Europe. Looking at the full year, we shipped to 1,048 customers in 78 countries. Total module shipments for the year increased 47.5% over 2015. This includes 2,580 megawatts in China. 1,981 megawatts in North America, 769 megawatts in Asia Pacific region, 582 megawatts in emerging markets and 374 megawatts in Europe. We are optimistic about the global market demand in 2017 and expect to further increase shipments and our market share in key markets. Q4 demand in China was strong, retaining its position as our largest market. We expect this momentum will continue as a result of extra project quotas and the rush orders coming in before FiT cut in June 2017. While demand may begin to decrease after that, we expect that to be a lot better than current market sentiment, given that many distributed generation projects and the most Top Runner programs should begin to kick in and make up for the demand during the second half of the year. As Mr. Chen said, China could be a 30 gigawatt or above market again this year. And we anticipate demand from above to in this case in the second half along will come for above $8 gigawatt. In the U.S. market, while…

Thank you, Gener. I’d like to walk you through our Q4 2016 and annual results. Let me draw your attention to our financial statements. Because of the sale of Jinko Power, its financial results are reported in discontinued operations according to our Company standards. So, all the numbers I will share with you are based on ongoing operation basis including the comparatives unless indicated otherwise. In the fourth quarter, total solar module shipments were 1.7 gigawatts, up 8% sequentially and up 1% year-over-year. Total revenue was $738 million, down 4% sequentially and down 14% year-over-year. Gross margin was 14.3% compared to 19.2% in Q3 and 19% in Q4 2015. The sequential decrease was due to the decline of module price. We are on the track to cut the production cost, the blended cost reached to $0.35 per watt in the fourth quarter. The operating expense represented 12.7% of total revenue compared to 11.1% in Q3 and 11.2% in Q4, 2015. EBITDA from continuing operations was $44 million compared to $85 million in Q3 and $111 million in Q4, 2015. Net income from continuing operation was $21 million. This translates into basic and diluted earnings per ADS of $0.68 and $0.64 respectively. Non-GAAP net income from continuing operations was $33 million. This translates into non-GAAP and diluted earnings per ADS of $1.04. Now, I’ll briefly give you our full year 2016 financial results. We concluded our 2016 with total solar module shipment of 6.7 gigawatts, up 48% year-over-year. Total revenue was $3.1 billion, up 39% year-over-year. Gross margin was 18.1% compared to 19% in 2015. Operating expense was 11.8% of total revenue compared to 11.7% in 2015. EBITDA from continuing operations was $331 million compared to $239 million in 2015. Net income from continuing operations was $143 million compared to $180 million in 2013. This translates into basic and diluted earnings per ADS of $4.52 and $4.20 respectively. Non-GAAP net income from continuing operations as $179 million compared to $163 million in 2015. This translates into non-GAAP basic and diluted earnings per ADS of $5.72 and $5.24 respectively. Now, let’s move to the balance sheet. By the end of Q4, cash, cash equivalents and the restricted cash were $406 million. The total debt was reduced to $892 million and the net debt was $486 million. The Company’s working capital improved to $192 million. At this moment, we are happy to take your questions. Operator?

[Operator Instructions] We will now take our next question from Maheep Mandloi from Credit Suisse. Please go ahead.

Hi. Maheep Mandloi from Credit Suisse. Thanks for taking my question. Just looking at the capacity guidance of 18 gigawatt and shipment guidance of 8.5 to 9 gigawatts. Would you be buying panels from spot market or have you already contracted it to any panel OEM manufacturer? And would it be mono or multi? Any color would be appreciated.

In terms of the capacity expansion, no, we have planned to invest on the high-efficiency capacity, particularly for the mono wafer capacity. The key investments in 2017 include 2 gigawatts mono wafer capacity and 600 megawatts PERC capacity. And we think the high-efficiency module is supply shortage and the markets for the high-efficiency products are expected to increase step-by-step in next year. So that is why we made the strategic decision to invest on the mono PERC capacity.

This is Gener. Just one more comment from me. Actually, if you’re looking to the capacity expansion, we have more wafer compared with cell. And actually, the cell we are making, we finally asked to help us to convert our wafer into cell and manufactured into module.

Thanks. And as you look at the 2017 guidance, how much of it is already booked and how much of it includes shipments to Mexico or your international projects in the year?

Okay. So, for the order book, actually we are happy to see for the first half, we are almost fully booked; and for the second half, we are around let’s say one-third of order book that’s been occupied. And regarding your question regarding the shipments to our international investments, I think the total number compared with our total shipments will be pretty small. I think it will be around less than 10%, maybe single digits, around 5% of the total shipments.

And last question from me and I will jump back into the queue, around your expectations for ASP and cost reductions for the year, any color will be appreciated.

Yes. I will answer your question regarding ASPs. And for the ASPs, we are seeing the market become stabilizing, especially given the strong push -- strong pull in demand in the first half of China, which impacts the global market quite large. So, for the first half, we see only a small let’s say difference, change compared with the ASP market price as compared about what we have in Q4. And for the second half, people are expecting the market price decline sharply; that’s what happened in last year. However, personally, I still take a conservative approach on that because lots of the Top Runner and also this DG project in China will happen in second half. Demand will not be as weak as people are expecting. So, I still think that there will be around I’d say 10% to 15% job growth in the second half, not as big as what’s happened in last year.

On the cost side, we’re going to keep our leading cost positions. We target to cut cost by 8% to 10%. We estimate the total blended cost will reach to $0.30 to $0.31 by the end of 2016 compared to the $0.35 blended cost by the end of last year.

We will now take our next question from Philip Shen from ROTH Capital Partners. Please go ahead.

Hi, everyone. Thank you for the questions. I’d like to explore the ASPs a little bit more. I just want to confirm that you said Q1 ASP should be similar to Q4 and if so, can you put a number a number on that on a blended basis? And then, as follow-up to ASPs, is this true that based on some of the checks that we’re doing, we’re seeing ASPs in China between $0.36 and $0.38 from kind of plain multi that compares to global ASPs kind of between $0.32 and $0.35. Are you starting to see a disparity in global pricing where Chinese ASP pricing could be actually higher than rest of the world? This is for the first time I’ve seen this in my time following the industry. But that’s an interesting dynamic to say the least.

So, as for input, actually we have seen the similar change. However, from our order book or we have in our order book, we have seen a pretty aligned market price. What we have for the first half ASP, for the first half, the number we got is pretty aligned with what we have from the market, which would be about at least 37 to 39, like high-30 range, I’d say between 37 and 39. And for the market price, your observations are pretty sharp. Actually China market prices are slightly higher than some highly competitive markets. However, if you take the overall global price, I think that it’s pretty aligned because the China market price payment terms are slightly different from what do we have from our other markets. So, if we combine all these factors together, the marketing prices are pretty aligned from what the owners and the contracts we have, no matter it’s Chinese or non-Chinese, the numbers are kind of close to each other.

Phil, this is Sebastian. I’ll just have one point. So, ASP, we just mentioned or just talked about, just so you know probably average multi high-efficiency product but remember that we have more and more shipments of the mono PERC, which definitely will help increase our overall ASP as well.

Okay. That’s definitely helpful. So, as we think about margins, can you share what your expectations might be for Q1 and Q2?

In terms of gross margin, we estimate a gross margin is relatively stable and in range of 12% to 15%. The high polysilicon price did put some pressures on the gross margin but we are taking our efforts to consolidate silicon cost.

Okay, great. I believe in your prepared remarks you talked about China overall demand being around 30 gigawatts. Can you confirm that and also in the back half, the demand would be closer to 8. Can you talk about what Q3 demand might be, if you have that? And I think you mentioned that ASPs might drop about 10ish percent sequentially between the back half and the first half. So, if you just talk about China in general. And thank you.

Okay. For China, as Mr. Chen just said and we are pretty -- in the Company internally we are pretty aligned for the China, demand will continue to be strong in 2017. So first half is mainly driven by all this let’s say, last minute rushing orders from all the permits, which got hold [ph] down from the previous year and which have not finished the construction yet. Meanwhile, it will pull in [ph] all these guys for the DG project -- pull [ph] means the 100% saying they actually stick to the grid. Such kind of demand adding up together, we believe will be more than 20 gigawatts only in the first half. For the second half, China demand are mainly driven or is mainly driven by this Top Runner program. Meanwhile the cell consumption, the DG project, given people are expecting a price let’s say drop after this rushing hour, and if it drops a little, even a little, the cells consumption, DG project IRR will be very attractive. So, it will accelerate more and more demand from that part. Meanwhile, the Top Runner program is a fixed number, we can see around 5 gigawatts. If you -- from the central government to provincial level adding up together, it will be around 5.5 to 6 gigawatts total. So, adding up all this demand together, it comes to our number, we believe second half demand will be more than 8 gigawatt. Plus, first half 20 gigawatt, the total number will be more than 30 gigawatt.

Okay. One last question here and I’ll pass it on. Week and half or two weeks ago, the NEA announced that they see only about 18 gigawatts of interconnections in 2017 in China and I think they talked about 20 gigawatts as a number for construction. So, how does that kind of goes relative to your expectations of closer to 30 gigawatts? Does that number not include the Top Runner program or the poverty alleviation program or does it actually include it?

Yes. The poverty assumption not included in to NEA’s announcement. Actually if you look into all the wording into detail, you will see, they add additional $0.10 to upgrade is talking about this 20 gigawatt, there will be additional amount for this poverty program. That’s one thing. Another thing is NEA announcement the number is there for 2016 plus 2016 permitted -- newly permitted project. Actually historically speaking, there are still lots of projects which have not finished their construction due to different kinds of reasons such as limited of the land, availability of the grid connection segment after several years and also because of such a huge cost for the feed in tariff. And it will pull them in the first half. So adding up all those things together, it will go to beyond 30 gigawatts we believe. Actually that’s pretty aligned for what happened in 2016, if you compare what is the announcement by the beginning of the year from NEA and what is the final number announced by year end from NEA.

We will now take our next question from Brad Meikle from Craig-Hallum Capital.

Hi, good morning. So for OpEx, how much do you think the total will decline following the sale of the Jinko Power business?

So, you’re talking of our operating expenses?

Yes.

Operating expenses, we look into 2017, we still are seeing operating leverage and we estimate it in the range of 10% to 11% of total revenue.

Right. And can you provide more color in terms of your topline guidance for -- 8.5 to 9 gigawatts is a big number; can you talk more about what type of geographies you see being strong in the second half of this year?

Well, so, first half, yes, for the first half, we think that demand -- global demand has been driven by China. Meanwhile, we have seen -- for the second half, we have seen this U.S. demand will continue -- after this development cycle finish and more and more project demand will happen starting from second half from North American market. Meanwhile, Japan market still has some pretty obvious demand. Just another new emerging market coming up as let’s say 5 gigawatts fast market which will be the India market. And also there are some new trends, which is not as a core strong demand country which will keep in for the second half such as some Middle East countries, African countries and even Australia.

Thanks. And what do you think your depreciation CapEx will be this year?

For the total CapEx, we estimated in our range of $400 million to $500 million. And we discussed the capacity expansion plan and the key investment is on the mono wafer PERC and module capacities.

So, for depreciation, I think it will be similar to 2016, nothing big change. I think as we compare to fourth quarter, in 2017, it should be a little bit higher because we invest on the $400 million to $500 million CapEx this year.

And just last question, it seems like there is a bit of a stand-off in terms of some orders not having been placed for the second half yet in terms some customers thinking the pricing would come down to low 30s and obviously you seem to be seeing a little more strength in that. Can you just speak to what the order dynamic is out there? And I think customers always seem to think that pricing will be down forever. And do, you think that in general, the lack of expansion polysilicon across the industry going forward is going to be to more rationale price environment? Thank you.

Yes. Thank you. So, I will let expand on that. So, for the global demand work and supply side, I think for solar market, people always see up and down all time. That’s pretty the nature of the business. However, if we look into let’s say mid-term, 6 months or 10 months time, we see more and more reasonable investors and the customers kick in into the industry. Because if we look in to all these investments which is IRR based investors who are need the stable sustainable and stable supply and commitment for their investment in next coming 8 or even 10 months time, in that case as long as the Company can has provided such let’s say share, such philosophy and that provides such commitment to such investors and customers, I think everyone will join such partnership to make business more strategic and in the long-term. And that’s why we have seen lots of orders have come in only for the second half for 2018 because we have the confidence to conclude such contract to get. And meanwhile the customers and investors side, they can reach their IRR expectations based on cash financial model. So, we are working to the win-win solution; that given this partnership we have together with our partners. Meanwhile for the whole industry, we are sharing the same philosophies with our suppliers, no matter it’s polysilicon or other suppliers as well to make sure we can join a win-win solution instead of cutting throughout competitions, price or number game.

We will now take our next question from Yang Yang [ph] from Goldman Sachs, please go ahead.

Hi, management team. I have two questions. First, so, for the tax benefit booked in the fourth quarter, so what’s the nature on this? And the second question is due to the fast decline module pricings, third quarter last year, does the Company see any supply side consolidation recently?

Regarding your first question tax benefits, we did recognize some benefits in the fourth quarter, because one of our significant subsidiary in China successfully reviewed the high technology certificate which will enjoy 15% corporate income tax compared to 25%. So, we did some kind of true up adjustment in the fourth quarter. In terms of supply consolidations, we think the tier 2; tier 3 companies are under pressure to deliver the quality to meet customer demand. And so far because of China demand is pretty strong, so we didn’t see significant pressures for the tier 2, tier 3 companies to consolidate the top -- the tier 1 companies. But because of the most of the tier 2, tier 3 companies, they are working under the OEM capacities, for tier 1 companies, so we are seeing, they are very cautious and expanding the capacity.

Yang, this is Sebastian. And also, you can see that, to be honest, especially in the past year, the technology’s evolution is very fast. Now, it’s very hard for the tier 2 and tier 3 players to catch up with the R&D investments and also the latest technologies that tier 1 has. So with the limited opportunities of consolidation so far especially with our current leading technology, but you as Charlie said and now lot of tier 2 and tier 3 players working as the OEM, if we can have very stringent quality control.

Okay, thank you. So, I have two follow-up questions. So, for the -- you just mentioned for the total blended cost, it would be reduced to $0.30 to $0.31. So, what’s the driver for this cost reduction? And in addition, so what’s the margin difference between mono and multi levels and also by applying the PERC technology? So that’s it.

First, I just have one point to add and Charlie will go through details. So, 30 to 31, it’s our estimation but very conservative estimation. So, I think definitely we have -- we are very confident to achieve that by yearend.

I think a couple of different initiatives from the Company side. We’re working with our suppliers to lower the material input cost and we invest a lot efforts and energy on the R&D and technology improvement and the efficiency improvement as well the key areas, and faster production efficiency and improvement at production levels. Regarding the margin difference between the multi and mono, currently the prices for the mono PERC modules, the price is 10% to 13% higher than the multi, and the cost is only about 8% to 10% higher than multi. So, we estimate the mono PERC, the module gross margin is higher than the multi. Again, we are investing a lot of money on the mono wafers and we will ramp our mono PERC module capacities step-by-step this year, which will help us to improve our gross margin.

Yes. And this question is a little bit misleading because inside we are comparing mono PERC to multi, not just mono to multi, I just want to point that.

We will now take our next question from Paul [indiscernible]. Please go ahead.

Good evening, guys. A question on your guidance, so it looks like for Q1, you’re guiding up about 20% year-over-year plus or minus but for the full year you’re guiding up closer to 30%. How do you expect the trajectory of shipments to sort of shift over the year? And the reason I asked that is you guys specifically didn’t fall off the cliff in Q3 of last year, which shipments were down about 5 or 10%, sequentially from Q2. So, I guess how did you build to that in the 0.5 gigawatt number when Q1 is growing but not surely at the run rate you would need to sort of hit that year-end target?

Yes. So, if you take the first quarter as 2 gigawatts, you need to think 2 gigawatts a round number. You have to take into -- take the Chinese part there into consideration because the China demand together with this production, the workers, labors, they’re in long vacations like what happened in Christmas, so very few people work. So that will occupy even more than half month in the category. And I believe with the strong demand in China, I think that this -- we would like to see a much stronger demand, not only for Jinko but for the whole industry from the Q2 until the end of the first half. That will let’s say help the Company to finish the annual target.

Okay. And then, just in terms of the Chinese market specifically, so around GAA [ph] or other organization in China announced the pilot program for renewable energy in 2017, but then in 2018, we may move to a full renewable energy credit program. How do you think that impacts demand specifically for larger projects in 2018 and do you think that could have any rush in the back half of the year should China to lock in feed in tariff for the project, even if they won’t get paid anytime soon, or if they can lock in that guarantee, do you think that could pose some negative impact for 2018?

I think you’re talking about the green certificate, right?

Yes.

Yes, China is aiming to launch program in the second half of the year in 2017, it’s still -- the detailed implementation guidance is still in the early stage. But, we believe it’s positive for the industry and as well as for the project returns. After the implementation of the green certificate, we expect it’s going to increase the operating cash flows for the China projects. But no, again, I think there is detailed implementation is still in the early stage. And we are going to see how the government is to implement the policies, particularly at this stage for the green certificate is non-mandatory. And a lot of our experts are in discussion with government on how to implement the manager assistance in China in the future.

And then, one just housekeeping question. So, it look -- couple surveys last week, looks like polysilicon price has actually ticked down or certainly stopped going up for the first time in a while last week. Are you guys seeing any sort of how flattening or softening in the poly market, which actually would benefit you?

I think the poly price now is $17 to $18, it’s stable. And we estimate that it’s going to downward maybe in the middle of the next -- in the second quarter. And again, we are seeing a lot of rooms for poly producer to cut their price. And the operating cost is below $10 per kilo and now it’s -- the market price is $16, $17.

[Operator Instructions] We will now take the follow-up question from Brad Meikle from Craig-Hallum Capital. Please.

Hey, guys. So, what’s your estimate of global demand for 2017 and 2018? And I guess with the $400 million to $500 million CapEx, it’s a lot of investment for the following years. Can you drive more color in terms of your feel on 2018 demand and the balance of supply demand and whether there is going to be pricing leverage, and how you see the overall margins trending for the industry? Obviously it’s been challenging few years. Thanks.

Yes. So, on front global demand side, we believe 2017 -- compared with 2016, 2017 will definitely be another strong year. And for 2018, from what we have seen, the demand will continue to be strong, maybe the increase will not be as big as what happened in between 2016 and 2017 but still we believe the market demand we will continue going up a little bit. In that case, meanwhile actually there is another expectation from the industry that the gap between tier 1 and tier 2 will become bigger. So, it means that for the top part supplier or top player in this industry will increase their market share across this two to three years time, meanwhile the smaller guys may suffer even further. For the ASP side, actually we see the solar industry, actually the demand needs from the PPA of the global market, we have seen the request to keep this -- the module price, even the system cost continue to decrease; it’s a trend which cannot change. Actually that’s the nature of the solar industry. However, we have seen -- in short term, we have seen because of policy driven the short term in rushing hour, we have seen the ASPs will become kind of stable in the short-term, that’s my view.

In terms of gross margin, you’re right. I think the tier 1 company is under pressure at this stage because of the high polysilicon price. And we believe the overall supply chain will back to normal standards in the second half of year. And we continue to invest on the high technology and to lower the module cost. And we are comfortable and we can deliver very healthy and very standard operating cash flows.

As there are no further questions in the queue, I would now like to turn the call back to Sebastian for any additional or closing remarks.

Thank you, Operator. So, on behalf of our entire JinkoSolar’s management team, I want to thank you for your interest and participation on the call. If you have any further questions or concerns, please feel free to contact us. Have a good day and good evening. Thank you and good bye.

That will conclude today’s JinkoSolar’s fourth quarter and full year 2016 earnings conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.