Hello ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co., Ltd’s fourth quarter 2017 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 to Mr. Sebastian Liu, JinkoSolar’s investor relations director. Please proceed Sebastian.

Thank you, Operator. Thank everyone for joining us today for JinkoSolar's fourth quarter 2017 earnings conference call. The Company's results were released earlier today and available on the Company's IR website at www.jinkosolar.com, as well as on NewsWire's 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. Chen Kangping, Chief Executive Officer, Mr. Cao Haiyun, Chief Financial Officer, Mr. Gener Miao, VP Global Sales, and Mr. Sebastian Liu, IR Director. Mr. Chen will discuss JinkoSolar’s business operations and company highlights, followed by Mr. Gener Miao, who will talk about the sales and marketing, and then Mr. Cao, who will go through the financials. They will all be available to answer your questions during the Q&A session that follows. Please note that today’s discussion will contain forward-looking statements made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding 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 law. 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. We shipped 2,481MW of modules during the quarter, an increase of 4.5% sequentially and an increase of 43.1% year-over-year. Total revenues during the quarter reached $976.4 million, a decrease of 1.0% sequentially and an increase of 24.0% year-over-year. Gross margin was 11.6%, compared with 12.0% last quarter, primarily due to the increase in the price of polysilicon and the appreciation of RMB against USD. For full year 2017, we shipped 9,807 MW solar modules, an increase of 47.3% from 2016, further solidifying our leading position in terms of global market share. Total revenues for the full year 2017 were US$4.07 billion, an increase of 23.7% from 2016. Gross margin was 11.3% for the full year 2017, compared with 18.1% for the full year 2016. Earnings for the year came in below our expectations, primarily because we had to allocate more of our production than expected to OEM partners especially in the first half of 2017 due to the surge in market demand which averaged down our margins. Second, a large portion of our orders for 2017 were booked at the end of 2016 and early 2017 with fixed prices, meanwhile the cost of raw materials increased throughout the year, especially the price of polysilicon, which increase our cost pressure. And finally, during 2017 we continued the transition our product mix from multi to mono with limited high margin products delivered. Looking into 2018, we believe our margins and profitability have room to improve as we will control the usage of OEM and further optimize our cost structure, including initiatives in technology improvement and supply chain management. Raw material cost has already begun to ease, including polysilicon. At the same time leveraging our strong…

Thank you, Mr. Chen. I am happy to report a strong finish to 2017 in which we shipped a total of 2,481MW of solar modules during the fourth quarter and 9,807MW for the entire year, as we further consolidated our industry leading position in terms of global market share. This demonstrates the efficiency of our business operations and sales capability, and the trust that our customers all over the world have in our brand and products. We are confident in our business prospects for 2018 and the ability to further expand our global market share despite the challenges we expect to face. First, looking at the geographic distribution of our module shipments of fourth quarter: new emerging markets accounted for approximately 40% of total shipments. China and North America tied for the second place followed by the Asian Pacific and European markets. This change underlines how flexible and adaptable our global sales networks are, as well as our strategic foresight to invest in emerging markets early in order to benefit from their current phase of rapid growth. China is still the largest and the most important market. While Q1 is traditionally a slow season, but ASPs remained stable. We expect rush orders to continue coming in before the June 30 cutoff, but this wave may not be as strong as during the same period last year and meanwhile, total demand of China this year could slip a little compare with last year. But there is no lack of excitement: new round of top runner projects and Poverty Alleviation projects all over the country have begun, and spontaneous DG projects especially residential ones will continue to maintain strong growth this year. We will continue to strengthen our Chinese sales and marketing strategy accordingly to benefit from current and future growth trends…

Thank you, Gener. I would like to walk you through our Q4 results. Total solar module shipments were 2.48GW, up 5% sequentially, up 43% year over year. Total revenue was $976 million, down 1% sequentially, and up 24% year-over-year. The sequential decrease was mainly attributable to due to a decrease in shipment of solar wafer and cells. Gross margin was 11.6%, compared to 12.0% in Q3 and 14.3% in Q4 2016. Our blended cost increased slightly to $33.6 cents per Watt in the fourth quarter due to higher polysilicon price and appreciation of RMB against USD. The operating expense represented 10.1% of total revenue, compared to 10.6% in Q3 and 12.7% in Q4 2016. The exchange loss is US$5 million, compared to a net exchange loss of US$7 million in Q3 2017 and a net exchange gain of US$3 million in Q4 2016. EBITDA was $45 million, compared to $36 million in Q3 and $44 million in Q4 2016. Net income was $3.5 million. This translates into basic and diluted earnings per ADS of $0.12. Non-GAAP net income was $6.4 million. This translates into non-GAAP diluted earnings per ADS of $0.20. Now, I will briefly review our full year 2017 financial results. We concluded our 2017 with total solar shipments of 9.8 GW, up 47% year over year. Total revenue was $4.1 billion, up 24% year over year. Gross margin was 11.3%, compared to 18.1% in 2016. The decrease was due to the decline in the average selling price of solar modules and increased volume of OEM partners and higher polysilicon price in 2017. Operating expense was 10.1% of total revenue, compared to 11.8% in 2016. EBITDA was $156 million, compared to $331 million in 2016. Net income was $22 million, compared to $143 million in 2016. This translates into basic and diluted earnings per ADS of $0.68. Non-GAAP net income was $32 million, compared to $179 million in 2016. This translates into non-GAAP diluted earnings per ADS of $1.00 and $0.96, respectively. Now, let’s move to the balance sheet. By the end of Q4, cash, cash equivalents and restricted cash were $424 million, compared to $371 million at the end of Q3. The accounts receivables due from third parties were $691 million, compared to $875 million at the end of Q3. Inventories were $657 million compared to $788 million at the end of Q3. We have improved our inventory turnover days to 66 days. The total debt was $1.1 billion, compared to $1.2 billion at the end of Q3. The net debt was $718 million, compared to $824 million at the end of Q3. At this moment, we are happy to take your questions. Operator?

Thank you. We will now begin the Question-And-Answer Session. [Operator Instructions]. Your first question comes from Maheep Mandloi from Credit Suisse. Please go ahead.

Thanks for taking my question and thanks for the clarity on the CapEx capacity expansion in the year. But could you just talk about if the plan includes the 1.5 gigawatts U.S. module factory?

I think you know in this year if you look at our competitive expansions and we reached by the end of this year to 9.5 gigawatt wafer and 6 gigawatt sale under the same gigawatt module capacity. And towards the wafer capacity we are going to increase 1.5 gigawatt, its going through the improvement, operating efficiency outlook during the ramp up process. So I just want to touch the CapEx as well you are talking about the U.S. factory and the wafer is in China and we don’t expect to invest a lot on wafer through the improvements of outputs during the ramp up and we have discussed, our costs has been improved dramatically during the ramp up process and for the sale we plan to add one gigawatt PERC cell capacity is out of China and it’s in the Southeast Asia. For the module capacity, we are targeting 2 gigawatt increase is going to be located in Southeast Asia, United States and China. And back to [indiscernible] for the update of the solar module capacities in the U.S. we have launched a plan and the plant is under the final process by the relevant government authorities and we are [indiscernible] and we are planning to release the details in the next couple of weeks.

Thanks. And just on the U.S. capacity if I may, we have definitely seen news around potential exemption for some of the international manufacturers from the tariff. How does that impact the manufacturing factory in Florida. Could you talk about that?

Actually maybe talking about some companies that are targeting to apply the events through some specific technology right and we are also in the process you know but back to your question, there's still uncertainty on certain companies like Jinko, we have the technological advantage and we like participating in [indiscernible] but back to the U.S. factory, solar module capacities, we don’t anticipate any impact or no change on our plan.

Got that. And one last question from me on the U.S. factory. How much of that plant capacity is already sold or already booked orders with the U.S. developers and do you plan to receive any fee payments from the customers this year?

Sure. This is Gener. So to answer your question from capacity allocation side, we do not allocate a specific workshop or factories to single orders or the customers and that is necessary or is a must. In general, we sign a supply contract to make sure we will fulfill our obligation to supply that’s our let’s say top tier product and we should keep the flexibility for the supply resources. So make it simple, we lock our capacity, but we don’t lock into the specific factory.

So, what Gener want to emphasize is, I think in last month we released the news and we seized the largest solar module contract 1.7 gigawatt with a counterparty in the United States. And we are also in the process with another over 1 gigawatt sales contract. But we have the flexibility to fulfill the contract through both from the factories in the U.S., and Southeast Asia. So…

But definitely, the customer's long-term contract, together with the - let's say the friendly payment terms will be helpful to our capacity expansions.

Got it. Thanks for the clarification and I’ll pass along the questions.

Thank you.

Thank you. Your next question comes from the line of Alex Liu from UBS. Go ahead.

Thanks for taking my questions. I have two questions. First is, can you give us some color on your cost of reduction potential this year in terms of wafer sale module, each product you have, how much percentage of cost-reduction potential this year? And also what is your view on the polysilicon price this year, and what is your starting strategy for polysilicon? And the second is that we have seen that wafer price has dropped significantly year-to-date driven by the long energy cells price cut. But we also see that the module price drop very limited year-to-date, so it doesn’t mean that your first quarter and your first half of margins should see some improvement? Thanks.

Okay. So back to you, I think three type of questions and which may - some questions are interconnected. And so for the first question of polysilicon. Last year, the polysilicon increased a lot, some $20 even and it’s because of the strong and anticipated demand from China, United States et cetera. And we don’t believe that polysilicon [indiscernible] high level is sustainable and we are seeing the price adjustments through our supply chain, not only the polysilicon but also the potential diamond wire, glasses. And now the polysilicon start I think 25% and with respect to the polysilicon pricing to be stable in the second quarter and in the second half of the year with more come back to online and we're cost competitive come back to online, the polysilicon will continue to be downward trend. And the second question is with cost reduction target. We breakdown our cost, production cut by non-silicon on our -silicon cost. And we have already touched on the polysilicon cost, for the non-silicon cost by the end of last year, we have $0.23 per watt for the last non-silicon cost. And we are targeting 13% to 20% silicon cost reduction target. And a couple of initiatives and it's in the process. I think raw material is technology driven, technology will be the key drivers for the cost reduction versus half-cell, bifacial PERC. And we will still continue to invest on R&D and technology advancement to increase the conversion efficiencies. At the same time, we while we deploying our new capacity field for existing capacity. We are doing a lot of efforts to increase our automatic levels and to reduce the use the total non-silicon cost reductions. And the third key area is the lower material costs and by streamline the supply chain likely we said about the diamond wire, silver piece with chemical gas. And what is your third question?

Yes. So the wafer price shop versus the market price right,. So for this wafer price, I think nearly the wafer manufactures are based in China. So when the China domestic wafer price shops, we have seen the relative movement from the Chinese domestic module market almost at the same time. Because the market is quite transparent. However, if we look into the international market, we will see as you just said the module price shop less than it were wafer price has [indiscernible]. So it's mainly [indiscernible] Q1 is traditionally a slow season for China. So mainly this international market traded in terms of U.S. dollars. So the weaker U.S. dollar or strong RMB will compensate a lot of this RMB price job in wafers. Secondly is mainly the module side or the sale side has suffered a lot during the Q4 in early Q1 before the Chinese new year, so when the wafer price [indiscernible] process of the model on the sale side. And I will leave the market question...

Yes thanks. I think the leading branding and the sales capabilities, I just want to emphasize we have the capabilities and to side solar module sales contract [indiscernible] before the actual shipments and we had lost a lot of sales contracts through to 2018 and because of lower material cost and continuing increase in the second quarter , we are expecting our gross margin in the first half year are going to increase quarter-by-quarter.

Thank you very much.

Thank you.

[Operator Instructions]. Your next question comes the line of Philip Shen. Please go ahead.

Yes, operator that’s okay [indiscernible] so please move to next one.

The next question comes from the line of Brian Lee from Goldman Sachs. Please go ahead.

Hey guys thanks for taking the questions. Maybe just the first one, real quickly as a follow-up to the prior question or answer around gross margin cadence. When you say that gross margins are expected to improve quarter-on-quarter moving through the first half. I just wanted to clarify one point, with Q1 shipment guidance being sequentially lower off of the 4Q levels. Is it fair to assume that you know gross margins will be flat to down in Q1 of 2018 versus the 11.6 you just did in Q4?

Back to the guidance on gross margin class, I think Q1 typically seasonality low season and quarter and China is slowing down after vast infuriation band on offer and the U.S. because of the certainly and before announcement of the U.S. President and trade activities particularly in the second half year or last year and we are saying kind of temporary slowdown in the U.S. So that’s kind of a combination and regarding the lower shipments in Q1. And in terms of gross margin, because Q1 almost I think we have size order sales contract by the end of last year and in fact its last and the polysilicon is from 28 to 25% and the continually improve the production cost and we are expecting the global margin will improve in Q1 compared to Q4 last year.

Okay, fair enough. And then second question around just the capacity expansion in CapEx outlook. If I look at 2017, you spent about $480 million of CapEx and then if look at your capacity targets for 2018. It’s basically the same as what you did in 2017 except for 1 gigawatt less on modules. If I look at cell wafer module, is it fair to assume that you are going to be spending a similar amount maybe slightly lower given the 1 gigawatt less in module capacity expansion in 2018 as you did in 2017, just trying to think about what is your inferring in terms of CapEx given the capacity targets are fairly similar on a year-on-year basis?

The CapEx in 2018 is lower than 2017. We are expecting and targeting around US$350 million compared to, I think over roughly US$450 million from last year and if you look at the capacity, it seems like the same, just like you said, 1 gigawatt smaller sale - new sale capacity. I just talked about the wafer capacity, we have 1.5 gigawatt this year but actually the CapEx has already spent by the end of last year, because the capacity needs to go through some [indiscernible]. So if you look Q1 and our wafer capacity already reached to 9 gigawatt and we continue to increase output. So we don’t spend a lot of CapEx on wafers. So the key investment is 1 gigawatt per cell capacity and 2 gigawatt module capacity, as well as I'm talking about the equipment upgrades to increase a significant level. So the CapEx is, roughly, this year $350 million.

Okay. That’s helpful. Thank you. And then maybe last question for me and I’ll pass it on. With that CapEx level in mind, I know you guys just raised capital, but I’m just wondering how you are thinking about liquidity and the need to raise additional capital because it seems like you will still burned a decent amount of cash again this year, so if you can maybe comment on your view on liquidity in cash flow, moving through 2018 and then if you have a number in mind, what we should be budgeting for the rough level of cash burn this year? Thank you.

Sure. We don’t have any intent to reduce the leverage in the future. And last month, we reached about US$110 million and as well as we have sized - significant sales contract with U.S counterparty and we are expecting to receive advance payments, which will be leveraged for the capacity expansion. So we have sufficient cash flow trend for the capacity expansion $350 million. And this year, our focus is on the profitability is the operating cash flows, we expect our free cash flow are expecting to be breakeven and that is our target.

This is Sebastian. We've got significant amount of down pay from our - the contract we signed in the U.S., and also we have other orders to come, which also maybe follow the same pattern. So this year we assume our impact to the cash flow will be good.

Okay, thanks guys. I'll follow-up offline.

Sure, thank you.

Thank you. Your next question comes from the line of Philip Shen from ROTH Capital Partners. Please go ahead.

Yes guys, let's try again, hopefully this works. Can you hear me? Great, okay thanks for the questions. Hi everyone. Quick question on and apologies if some of these questions have may have been asked since I was having some technical difficulties. But in terms of your full-year outlook, can you give the geographic mix that you expect? And specifically, can you talk about the megawatt shipped to the U.S. in 2017? And then what the expectations might be for 2018 given some of the challenges in the U.S. market?

Sure, this is Gener. So for 2018, we are foreseeing the China market continue to become continues to be our number one market. And followed by is emerging market as well. And our emerging market has a pretty big geographic coverage like Middle East, Africa and Latin America even some Southeast Asian countries. And then it should be followed by the European market together with our Asia-Pacific market like Australia, India and et cetera. And for your question of the U.S. shipment. I think our U.S. market contributes number three in our 2017 shipment. And it's approximately around 30% I think. So we are continuing to see the importance of contribution from the U.S. market because we deeply believe U.S. market will continuing to be a their key market across whole industry all over the world.

Thanks Gener. So do you expect U.S. to be down year-over-year relative to your 2017 mix? Or do you think it could be fly pass way?

For 2018, we think U.S. market first half will be slightly slow because the industry is rebalancing after this rushing moment by the year-end report. But we have seen a lot of let's say active inquiries and demand by second half in 2018. So we believe starting from second half of 2018 even into 2021 even further, and U.S. market will continue to be very strong.

Okay, great. Moving on to ASPs and sorry if you already talked about this. But I think as we estimated for Q4 was $0.39. Can you confirm what the ASP was in the quarter? And then what the outlook is for Q1 and Q2?

Yes. We see kind of Q4 compared with Q3 we see is kind of stable. Mainly there are small changes according as because of the currency exchange rates. And for 2018, let's say early 2018 at the Q1 at least we see a slight decrease. But in general it's a stable trend as far as we have seen right now.

Okay. And then moving on to the overall general Chinese market, I think in your comments Gener you talked about China slip possibly in the 2018 versus last year. So can you give us a sense for the size of the market that you see and then I know the DG market is becoming ever more important in China. In the last year it was 19 gigawatts. How big do you think the DG market could be at 2018, you know we are getting a word that you know the [indiscernible] is considering some potential targets or caps for the DG segment and I think the DG segment should, there is a key source of growth in 2018 and China. So is there some risks that in the growth of DG in China in 2018?

Okay. So let me share my view regarding the China market. For 2017, it’s a historical year for China - market. It’s a strong booming year for and that’s over 50 gigawatt installation. So I think it’s at 53 gigawatt. As for 2018, we believe our China market will continue to be strong, but personally I doubt if we can over pass the 50 gigawatt again. So as a rationale estimation, I see that or see the China demand to be stable and be state as I state as a level of 45 gigawatt-ish mainly contributing from you know top runner program which is approximately 8 gigawatt and the traditional utility project with approximately I say 10 gigawatt or 12 gigawatt. Plus it’s the DG market and which will be let’s say around 15 gigawatt and then followed by some - Poverty Elevation is around let’s say 12 gigawatts to 15 gigawatts again. So adding some number up and down but adding those numbers together you should end up around 45 gigawatt. That’s my guess.

Phil this is Sebastian, so here I think a good question about the Chinese demand. In fact you can see we are very conservative about the expectation of this year because we don’t want to give the market too high expectation, although the market definitely could be better than we have solved. Our strategy is definitely do the work first. That means we have balanced our geographic mix first even China is not as strong cash flow for the year. But I just want to say it again, we are just being [indiscernible].

Okay, that’s very helpful, thanks. And then one quick housekeeping questions, this one might be for Charlie. On the sales and marketing Charlie, was there any reversal of expenses at all in the quarter, Q4?

I don’t think so and actually we increased some kind of I think roughly $2 million provision for the accounts receivable. So it’s kind of increased some provision for the accounts receivable this quarter in Q4.

Great, and one last question. In terms of the OEM partners, what was the OEM shipment mix in Q4 and then I know the expectation is that it should come down but can you give us a more percentage for the cost of Q1 or full-year 2018?

In Q4 we look at our shipment, I think 2.4 gigawatt and our composite module is 8 gigawatt. So roughly I think 20 percentage and looking to Q1 and I think the OEM is very small, below 5%. And this year you can do the calculation, 11.5% to 20 gigawatts. And we have 10 gigawatt module capacity, so it's roughly 15%.

Okay. That makes sense. Thanks, Charlie, Gener, and Sebastian. I’ll pass it on.

Thank you.

Thank you. Your next question comes from Maheep Mandloi from Credit Suisse. Go ahead.

Hi, thanks for taking my question again. We said $181 million revenues from related parties on the income statement. Could you just talk about what that is related to, and how should we think about that in 2018?

Okay. We guarded this for the largest Middle East project, an Abu Dhabi project. It's kind of 1.2 gigawatts and we hold 20% equity. And so the shipment of the module to the projects, we hold 20% is accounted for the related party transactions. The total shipment of 1.2 gigawatt will be completed shipments through the Q1 to Q3 this year. So it’s kind of the international projects and we hold 20% and from an accounting perspective it's treated as related party. So the shipments to the companies is recorded as related party transactions.

And for 2018, should it go up or how should we model it for 12 months?

You're talking about related party, right?

Yes.

Yes. The total shipments would be completed by the end of Q2 this year. So it should be - I think Q1 quite stable, Q2 slightly down and Q3 is zero.

Got it. Thanks for taking my questions.

Okay.

Thank you. Your next question comes from [Christian Mihae] (Ph), a private investor. Please go ahead.

Hello, gentlemen. One question regarding the expansion plan for the sector as a whole. Every company is claiming huge expansions plans, module shipments and capacities for the next year. So this is not typical for a sector which operate at extremely low margins. And what's your view on this? What is your view on the broader side of the sector? Because investors are, of course, worrisome regarding this low margin and, at the same time you would expect capacity addition for the future. What is you view on this?

I think from Jinko perspective we are always adapting the prudent capacity expansion approach. I think you read that word [indiscernible] and if you look at our 2018 capacity expansion, it's almost I think over 78% investment is for the future in the U.S. market we have secured the sales contract, so the capacity expansion is directed and also supported by the upfront payment from customers. And back to your questions, we don't think the low gross margin of 2017 is typical for the Jinko as a leading solar module companies. And if you look at upstream suppliers like the polysilicon glasses, diamond wire they are gaining over 40% gross margin that is much renewable and sustainable. So we are seeing a lot the trend and the partner adjustments to the sale supply chain as we as we have strong branding and the sales capabilities and we are able to look at the favorable solar module sales contract. So and, I just wanted to say is the industry is towards the high efficiency and high technology. And we believe if you look at the industries and only Tier-1 capabilities have the capabilities to invest in ramp down capacity. I think most of the peers are prudent when they are investing on the capacity perspective. So hopefully I answered your questions.

This is a Sebastian I have a two points. First, if you have opportunity to visit our factory especially our new added factory. A lot of new lines are automatic line. So this is the a new technology and ultimately how well it could be [indiscernible]. Second is that Jinko has a very strict internal standards of IRR. So we are very like try to say we're prudent and very selective about our investment in capacity.

Yes okay. Thank you. One another question on the market that's consolidation and its capital market structure. So some years ago there were four very large Chinese rooted companies listed at London, the NASDAQ and in the U.S. Jinko seems to the less bond standing should Canadian solar account through this is by [indiscernible], did you already discuss this issue when Jinko will follow second or is this not an issue for you. Thank you.

So this is Gener. So are you asking the question regarding the Jinko's let's say throughout rapid growth strategy to catch up the industry?

No, it's just regarding the listing on the U.S. market. And going private offers from the companies [indiscernible].

Yes, you are right. We are seeing a lot of our competitive peers like Canadian Solar, JA Solar, Trina, they have either completed of in process of go private process. And at the same time, it’s a hard question for a lot of listed companies. China is trying to do the same here and bring the most reputable companies back to China that allows the opportunities for the Chinese investors to invest on the reputable companies. And for Jinko, we don’t have the plan to go private and we think the module variance is kind of very international business. And as a platform, U.S. listed companies is very positive and helpful from the perspective with branding, marketing and transparency of financial statement and et cetera. And we believe with more and more Chinese investors and also the policies like the China [senior] (Ph) policies driven and at the same time we focused on delivering value to the shareholders and our companies will be - the valuation will be more and more reasonable in the future.

Thank you for your questions. Operator.

There are no further questions at this time. I would now like to hand the conference back to Sebastian Liu. Please continue.

On behalf of the entire JinkoSolar’s management team, I want to thank you for your interest and participation on this call. If you have any [Technical difficulty] feel free to contact us. Have a good day and good evening. Thank you, bye-bye.

Ladies and gentlemen that does conclude our conference for today. Thank you for participating, you may all disconnect.