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

Thank you, operator. Hello, everyone, and thank you for joining us today for ZincoSolar's second quarter 2026 earnings conference call. The company's results were released earlier today and available on the company's IR website at ir.zincosolar.com, as well as on use-while 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. Jimmy Zhu, CEO of JinkoSolar Holding Co Ltd, Mr. Janet Miao, CMO of JinkoSolar Co Ltd, Mr. Pan Li, CFO of JinkoSolar Holding Co Ltd, and Mr. Charlie Tao, CEO of JinkoSolar Co Ltd. Mr. Zhu will discuss JinkoSolar's business operations and company highlights, followed by Mr. Miao, who will provide an update on sales and marketing, and then Mr. Pan Li, who will go through the financials. Management will be available to answer questions during the Q&A session. Please note that today's discussion will contain forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainty. As such, our future results may be materially different from the views expressed today. Further information regarding this and other risks is included in ZincoSolar's public filings with the Securities and Exchange Commission. ZincoSolar does not assume any obligation to update any overlooking statements except as required under the applicable law. It's now my pleasure to turn the call over to Mr. Jimmy Du, CEO of ZincoSolar. Please go ahead, Jimmy.

Hello everyone, this is Jimmy Du and thank you for joining JinkoSolar second quarter 2026 earnings call. It is an honor to take the role of CEO. I appreciate the trust the board of directors and management team have placed in me. Standing at this milestone of our 20th anniversary as we embark on the next stage of development, I look forward to working closely together to further enhance our operating performance and a strategic execution to drive sustainable high-quality growth. I will begin by reviewing our operational performance in the second quarter and then outline our key priorities going forward. In the second quarter, module shipments increased sequentially to approximately 16 gigawatts. Supply and demand imbalances across the PV industry remained dynamic. These pressures were further compounded by shifts in domestic and overseas policies with prices across the supply chain and industry probability remaining under pressure. As the cost of ramping up, our high-efficiency products remained evaluated during the quarter, together with impact of delivering certain low-value orders. Growth margin decreased sequentially during the quarter, while our net loss expanded. Facing this operating pressure, we optimized our order books and geographic mix Rationally manage utilization rates and continue to expand the proportion of high-efficiency products within shipments while introducing technologies that lower costs These measures are driving a gradual recovery in profitability The underlying pattern of PV industry competition is gradually shifting from capacity and shipment scale to effective supply, product value, and earnings quality The mandatory new national standard on energy efficiency for modules and inverters released in July will take effect in January 2027. The new standard set Level 3 energy efficiency as a minimum threshold for market access. Products that fail to meet these minimum thresholds will not be permitted for production or sale. Placing high-efficiency products in a stronger position for large-scale renewable energy project tenders Meanwhile, the implementation of market-based pricing for renewable power is pushing customers to increasingly focus on energy yield, reliability, and the lifetime value of modules. These changes are beneficiary to industry leaders with advanced manufacturing capacity, technological expertise, global delivery, and long-term service capabilities, which will accelerate the phase-out of inefficient production capacity. By the end of 2026, we expect to have more than 40 gigawatts of TOPCON 3.0 production capacity. Based on the new standard thresholds, these products are expected to meet level 1 energy efficiency requirements and strengthen or analyze production capacity for high-efficiency products to lead the industry. We continue to advance our product portfolio and build a solid base for next-generation technologies based on our TOPCON technology roadmap. In June, we unveiled our newest next-generation Topcon TigerNEW 5.0 modules. By optimizing multiple core technologies, the TigerNEW 5.0 achieved mass-produced efficiency of 25.91% and power output of over 700W, setting a new benchmark for Topcon product performance once again. ESS shipments in the first half of the year were 3.1 GWh. increased significantly year-over-year. Benefiting from our presence in high-value market, gross margin improved year-over-year in the first half of 2026. Due to uncertainties in timing of project delivery and other factors, recognized revenue remains in ramp-up stage. Approximately 1.5 GWh were recognized as revenue in first half, including more than 1 GWh in the second quarter. As project data rates increase, alongside ongoing enhancement of our in-house PCS, EMS, and other capabilities, we will continue to boost efficiency of both revenue recognition and profit realization, driving high-quality growth for our ESS business. Now, I will move on to our guidance for the third quarter and full year of 2026. We expect our annual integrated production capacity to reach approximately 100GW by year-end 2026, including approximately 14GW from overseas facilities. Considering demand dynamics in certain markets, we will place greater emphasizes on balancing shipment volume, profitability, cash flow, and order quality going forward, and adjusting guidance for full-year 2026 module shipments to between 60GW and 70GW. and high efficiency products accounting for over 60%. We expect module shipments to between 15 gigawatts and 17 gigawatts in third quarter of 2026. For full year 2026, we expect our energy storage system shipments to more than double year over year. As we continue to strengthen the competitiveness of our core solar and energy storage businesses, we are also building an investment platform through disciplined capital allocation and professional investment management that will act as a complementary driver for long-term value creation. Over the past several years, leveraging our deep industry expertise and long-term perspective on technological trends, we have made disciplined and selective investments directly or through fund platforms, focusing on strategic synergies, technological innovation and long-term value creation. Our earlier investment primary focused on the solar and energy storage value chain, In recent years, as AI drives demand for computing power and electricity demand, we have selectively expanded our investment scope to the AI ecosystem and other frontier technologies. To date, we have invested in more than 40 companies in total. As of June 30, 2026, we have invested an aggregate of approximately RMB 1.86 billion in cash. The original cash quotes The cash cost of the investment remaining in our portfolio is approximately RMB 1.5 billion, with a fair value of approximately RMB 1.99 billion as of the same date. Our investment portfolio has generated cumulative value appreciation of approximately RMB 880 million, comprising of approximately RMB 410 million in realized gain from exit and approximately RMB 470 million in unrealized fair value from remaining investments in the portfolio. During the first half of 2026, our portfolio generated gains of approximately RMB 490 million, comprising approximately RMB 110 million in realized gain and approximately RMB 380 million in unrealized fair value gains. In the first half of 2026, We divested a substantial portion of our equity interest in Laplace Renewable Energy Technology Co Ltd, receiving over RMB 300 million in cash proceeds. Since our initial investment in Laplace, the cumulative realized gain on this disposal exceeded RMB 250 million. This gain was recognized over multiple periods through fair value adjustments following its IPO in late 2024. with over RMB 100 million recorded in changing fair value of long-term investment upon settlement in the first half of 2026. In addition, Hangzhou Gold Electronic Equipment Co Ltd successfully completed its listing on Chinex Markets of Shenzhen Stock Exchange during the second quarter, creating an additional pathway for future value realization. Looking ahead, we will continue to maintain a disciplined approach to capital allocation, Supporting the long-term development of our core solar and energy storage business will remain our top priority. At the same time, we will continue to evaluate our existing strategic investments based on the operating performance, strategic synergies, and the long-term value creation potential of each portfolio company while remaining disciplined and selective in pursuing new opportunities. Through strengthening our core businesses, realizing portfolio value, and improving capital utilization efficiency, We remain committed to creating sustainable long-term value for shareholders. This concludes my remarks. I will now turn the call over to Jenna.

Thanks, Timmy. Total shipments were 32.9 gigawatts in the first half, with total module shipments accounting for over 90%, leveraging sales network covering nearly 200 countries and regions, and 35 service centers globally. We continue to optimize our geographic mix and customer structure overseas. In the first half, shipment to the overseas markets accounted for over 70%, mainly across Asia Pacific, Europe, and emerging markets. In the second quarter, the proportion of high-efficiency product shipment improved sequentially. Our Tiger Neo 3.0 series continues to command a premium of approximately $0.01 per watt over conventional products. We also began to ship a small number of scenario-based products in the second quarter and gradually plan to increase deliveries in the second half. Those products already command a premium of approximately 0.5 to 1 USD cents per watt over conventional products. Following the launch of AIDC and other scenario-based module products in the first quarter, we recently released the Sunny 365 Smart Solar Storage System. This comprehensive series of integrated PV storage solutions covers several scenarios, such as retail, supermarkets, AIDC, and the manufacturing sector. Specially, the AIDC solution is built around our TIGER NEO 3.0 module platform technology and the Sunterra energy storage system. capable of meeting the demand from data center for power supply reliability, energy economics, and sustainable low-carbon development through the coordinated control of energy storage system, PCS, EMS, and smart operations and maintenance. We recently received the highest AAAA bankability rating in the Q2 2026 Bankability Rating Report for module manufacturers released by QVTECH. Since first participating in the evaluation in 2014, we have maintained an A-grade rating for 12 consecutive years. Also, we were recognized as a Tier 1 energy storage provider by BNEF for the 10th consecutive quarter. These ratings reinforce our bankability project implementation capabilities and Long-term delivery capabilities for the international market. Impacted by the market-based pricing mechanism for renewable energy and the pace of project investment, domestic insulation demand has slowed. Yet, we observe the positive signs of shifting structural demand with national-level, large-scale renewable energy-based projects led by the central and state-owned enterprises maintaining a steady pace of progress. The share of tenders for high-efficiency modules has increased significantly in decentralized procurement, and the criteria has shifted from simply pursuing lowest bidding price to greater emphasis on module efficiency, lifecycle power generation performance, reliability, and long-term delivery capability. High-efficiency modules have already commanded a reasonable premium in tenders. At the same time, the distributed generation market is transitioning from scale-driven growth towards a focus on scenarios and operational value. Brand reputation, channel, local services, and scenario adaptability are becoming increasingly critical. This trend benefits enterprises with global channels, established brands, and differentiated products. which enable conversion of technology and product power into more stable price relationship and product value. Looking forward to 2027, as electricity pricing marketization policies are gradually absorbed and mechanism-based pricing and project ROI models become clear, Several projects that were delayed due to insufficient returns are expected to gradually resume. Large-scale renewable energy-based projects, direct green power connections, and distributed scenario-based applications will continue to drive domestic demand. The overseas market is expected to maintain some growth resilience, benefiting from energy security. growing power demand and improved solar plus storage economics. Leveraging our global sales network, leading high efficiency products and continuously expanding solar plus storage solutions, we will capitalize on the opportunities arising from changes in demand structure and expanding application scenarios. We will continue to optimize our market and product mix and leverage our technological advantages to strengthen our presence in high-value markets, enhance product value, and improve the quality of our operations. With that, I will turn the call over to Fan.

Thank you, General. Leveraging our leading position and high-efficiency products, we optimized our sales mix during the quarter. resulting gross margin reaching 4.2% at 1.3 percentage points year over year. We also continue to optimize our capital structure and cash flow management and generated positive operating cash flow during the period, a significant improvement compared to last quarter. Our asset to liability ratio declined by approximately 1.5 percentage points from the beginning of the year. For the remainder of the year, our focus will be on balancing scale and earnings quality while carefully controlling cash flow. We expect full-year operating cash flow to improve compared to 2025. Looking at our second quarter financials in more detail, total revenue was $1.82 billion at 0.9% sequentially and down 31% year-over-year. The sequential and year-over-year changes were mainly due to the fluctuation in the shipment volume of modules. Gross margin was 4.2% compared with 8.3% in the first quarter and 2.9% in the second quarter last year. The sequential decrease was mainly due to lower average selling price of solar modules by the year-over-year increase were primarily due to the higher ASP. Total operating expenses were $287 million, up 21% sequentially and 2% year-over-year. The sequential and year-over-year increases were mainly due to higher expected credit losses in the second quarter this year. Operating expenses accounted for 15.8% of Total Revenues compared to 13.1% in the first quarter this year and 10.6% in the second quarter last year. Operating loss margin was 11.6% compared with 4.8% in the first quarter this year and 7.7% in the second quarter last year. Moving to the balance sheet. At the end of the second quarter, our cash and cash equivalent were about $2.5 billion compared with about $3.3 billion at the end of the first quarter this year. AR turnover days was 113 days compared with 128 days in the first quarter of 2016. Inventory turnover was 125 days compared to 142 days in the first quarter. This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed.

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

Hey, guys. This is Tyler Bissedon for Brian. Thanks for taking our questions. ASPs declined pretty meaningfully sequentially, so curious how you're viewing ASPs so far in Q3, and how much of an impact you could see from greater shipments of Tiger Neo 3.0 modules.

So, yeah, for the ASP side, we are expecting, firstly, Apple to Apple, we are expecting the price goes up a little bit in Q3. and if we look into the average prices, it will go up as well. The first reason is because from the current market situation, the price is going up because of different reasons, but small market is going up, so most of the DG prices are following the small market, so we are expecting the price of Kyusu to go up. The second reason is because of the mix of different products. and many more.

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

So you are talking about the increase of cost, right?

So what is the impact? You know, we believe it's a kind of healthy rebound, including, you know, polysilicon glasses and a couple of materials. And that is why I think we, you know, the industrial repair and the increased module price, we don't believe this is going to have negative impact on the customer side. and if you look at landscape and the solar is the cheapest energy sources and now there's a huge demand for storage and solar plus storage will be the dominator of the energy diversification for most of the ratings.

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

You know, we guided down the shipment, right, to 60 to 70. That's where clear message and We don't believe, you know, it's the right time to focus on the scale and the probabilities and the operating cash flow is the key. So we do a lot of, you know, optimization of the structures, not only the markets as well as, you know, the products and the efficiencies, even our, you know, employee resources. and particularly if you look at 2026 and the demand in China is 30% to 40% lower than last year. So definitely we have less and less exposure in China and China is still relatively competitive and the prices is one of the lowest of the markets But what we are doing is not only the country by country, as well as the customer by customer. And on top of that, because we are zoning out the Tiger Near Free, that is one of the key markets and targeting the central markets, and particularly for the premium markets, including the United States, including Europe. So that is one of the areas will like to penetrate more market share and to get relatively good profitability.

Thank you very much.

I'd just like to take it out today to, I think, the investor on the call. This quarter meeting, earnings rates are relatively different. and if you look at the JKS and the U.S. companies, we like to requisition the companies among strategies. And firstly, you know, JKS is kind of the controlling shareholders of Jinko China, the company which is the focus on integration of the solar plus storage. But now JKS has more capabilities in the last five years We built up very, very strong strategic investment teams, and thousands of investments, a lot of investments are very, very successful. And in the last five years, we focused on solar storage related, upstream, downstream, kind of the very high-growth potential and other companies to make the financial investment and to get the investment returns and as well as get some synergies for Jinko China. On top of that, China is more competitive on the new technology like the AI, quantum computing, robotics and the team is shifting the focus to more kind of strategic board, you know, industries, particularly the next generation. So we think, you know, the JKs is kind of shifting to both. One is the controlling of the Jinko China and the focus on renewable energy. And on top of that, the JKs and the U.S. companies were shifting more capabilities We are able to invest on the high growth opportunities. China is the second most powerful country. There's a lot of massive opportunities and our teams are able to take advantage. So we would like to invest gradually to have the communication with our IR teams. and to understand what is the progress particularly for the strategic investment we are planning and we have made, which we believe will be get a very strong return for the GKS in the next two or three years. And again, we think it's good for the valuation of GKS. If you look at purely the China versus US, there's a very big valuation gap The US is just 20-30% of valuations and plus we have a lot of portfolios investment and unique investment which we are able to monetize and so I'd like to take the opportunity to bring this key topic and have the investor understand what are we going to do in the future. Thank you.

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

Hey, guys. Thanks for taking my questions. Demi, nice to meet you. Congratulations on the new position. Wanted to check in with you guys on the Section 232. Specifically, you know, given your recent transition and sale, of your US assets to FH Capital. Can you talk about the impacts of the 232 on that JV? How do you expect module pricing to be impacted? And then ultimately, how do you expect the landscape of manufacturers to shift as a result of the Section 232? Thanks.

In general, we believe it's kind of very good for Jinko's strategy to die in France. Our manufacturing is shifting to long-field entities in the United States. And specifically, I think JV, because we are the financial minority investors, we are not in a position to discuss the plan for the joint ventures because the majority of shareholders take the leadership. and we are not involved in any operations. But for the 232, in general, we believe that it is consistent with the Trump administration to bring manufacturing back to the United States, not only the module capacity as well as the wafer, polysilicon and the solar cell capabilities. And we have expectation and anticipation the 232 will become will be coming in the early year. It's come a little bit late, but we have some kind of diversified potential supply chain to minimize the impact. But anyway, we believe that is going to increase the cost of the solar modules. That is going to have the impact to the solar We believe because it's a little bit of a significant increase for the potential solar module price, but it does not have a significant impact for the solar farm investment returns given the US PPA prices in recent years gradually increased to and so on. So back to your question and we think it's anticipated but it's a little bit exceeding expectation because the input price tax rate is a little bit higher but it's not so high to make the industry demand dramatically We still believe the U.S. is a good market in the next few years, and Jinko's minority interest and the joint venture will penetrate the U.S. market to take the opportunity in the U.S. market.

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

If you look at the minimum price, $0.38, $0.38, that's 15% tariff. I think the market is evaluating the potential impact, and customers are evaluating how they are going to proceed with their project plan. I think we don't have a definitive answer from customers, but the initial feedback is that most projects will continue, under the kind of 232 policy disruptions. That is my initial preliminary information.

Okay, great. That's very helpful. Thanks, Charlie. And then as it relates to, you just mentioned two elements of the 232, the minimum import price and then the 15% ad valorem tariff. There's also a third part, which is the tariff rebate. A program that is based on U.S. CapEx. Would you expect your JV to qualify for that tariff rebate program?

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

Right, that's true. It's based on new capacity but it can support manufacturers to expand Thank you very much.

Welcome.

Your next question comes from Rajiv Chowdhury with Suncera Capital. Please go ahead.

Good morning everybody. I have a few questions starting with can you Calibrate for us the size of the market that you expect globally this year in 2026, and then break it down between the total size in China and international.

So you mean the 2026 total demand, right?

Yes. I think 2016 we are expecting a low year because of the sharp drop of the China domestic demand. If you are looking at number-wise, we are thinking roughly, module-side it will be roughly 600 gigawatts or slightly below that. That will be our expectation. If you break them into different categories, you will find out, for example, in China, you will find out that mainly the demand disappears from the utility market, but the distribution markets are still strong or robust during the first half. And if you look at the non-China market demand, you will find out the European market has some ups and downs during the first half. But if we look into the total numbers, because of the first quarter rush of the VAT policy change in China, most of the non-China demand is almost in line with the expectations, even higher than us. So that's what we had for the first half and our expectation for this year. And for next year, we believe there will be some recovery in the utility market in China. So we are expecting a better 2027 demand than 2026. So if you want to quantify that, we will look at roughly 600 something between 600 to 650 gigawatts in 2027 versus around 600 gigawatts or slightly below 600 gigawatts in 2026.

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

Yes, there are some reasons behind it. First one is we call accessible market is reducing. So there are certain sizeable market is introducing more and more strict barriers, trade barriers or policy barriers which is not easy to access. The second reason is because the competitions across the manufacturers where some of the tier 3, tier 2 players they are playing low price strategies sacrificing the quality etc. to attack the market or even protect their own cash flow which is not what Jinko can do so Jinko is still taking care of the long term reputation and the qualities so that's why we have to Give up some of the low price deal and protect our own interests.

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

Yeah, sorry to jump in, but not only U.S. Even, for example, Europe, they have this kind of rules asking for all the EU-funded projects or financed projects cannot use China-based or Chinese factories. For India, it's a kind of technical barrier, but for Chinese, China-based manufacturing, it's not accessible at all as well, together with some other medium or small size of the market as well, like Turkey, other markets. I won't name all of them, but definitely US is one of them or one of the big ones, but it's not the only one. and many more because of different reasons, geopolitical or securities.

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

Credit losses.

Reggie, while you're talking about the credit loss for accounts receivable, are you talking about that?

Yes, can you just give us more details on that?

So you mean kind of probation, empowerment, or whatever you're looking at, right?

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

Let us check, based on my understanding, we didn't have any kind of deteriorated credit from customers and it's kind of accounting perspective based on the aging. Actually, if you look at operating cash flow, we delivered positive 600 million RMB in the first half year. The health operating cash flow is one of the key focus from management perspective and we don't see any significant bad debits or whatever from customer perspective.

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

The second quarter, we ramped up the new facility, the Taige Nier 3. And in the ramping up stage, typically the cost is relatively higher. On top of that, the second quarter, because the first quarter, the raw material cost, the silver cost is relatively higher. So cover forward to the second quarter, the cost is relatively higher. But it's a kind of combination of the two factors together to resolve the relatively higher cost. but we expect the cost will be lower in the third quarter with the capacity reaching to full operational status as well as the input cost is relatively lower compared to the second quarter.

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

We did expect a moderate improvement in the third quarter.

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

David Li, our chairman, is the founder. He's always focused on the strategic long-term revisions. and I don't believe there's any change because of the change of the chief executive officer because JKF is the controlling shareholder of Jinko China and so the key business of JKF on top of the controlling shareholder of Jinko China the primary entities to operate the business. Chairman believes this is the right time. JPA is on top of the controlling shareholder business and doing the strategic investment because our chairman built up the teams, the strategic investment teams five years ago. There is a strong traffic in the last five years and it is the right time to catch up the massive opportunities in China not only in the last five years there's a solar and storage investment opportunity as well as AI, robotics, quantum computing, a lot of investment opportunities. So that is why I think you know I just like I think I talked about in the beginning of the conference call and we like doing investments to have take the times to understand okay what we have done in the last five years for strategic investment over 10 investment cash out maybe 60% and there is a worrying The team have invested, including the recent large model, the AI model, KME K3, maybe you heard from the news, and we believe there will be a good opportunity to make investment return through the

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

Yes, correct. There will be very very small minimum and minor upgrades and we don't expect any significant investment. Even if we want to do some, in the future we do the local manufacturing in the key countries out of China for the local market, we will do through the joint venture structures that will minimize our capex as well. That is depending on if the market is getting the bond. Back to your question, I don't believe it's significant. Worldwide should be very, very small on the maintenance capex in the next two years.

So is the 5 billion number a maintenance capex? Or even less than that?

No, it should be significantly lower, maybe 500 million or maybe 1 billion. And then it should be worldwide small.

I see, okay. And how much capex is required in the storage business?

The storage business, what is it? Storage. For storage, we don't have a capacity plan. Currently, we have roughly a 5 gigawatt battery cell and a 20 gigawatt battery pack. We don't have a plan to do the capacity expansion. We would like to take a lighter approach and partner with different suppliers. The key part is the solution. The solution for AIDC, for solution for different case, different, you know, projects and the technical branding and marketing capability and the technical services that will be the key investment, but the investment is on the, I think the teams, it's not the equipment.

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

Yes, yes.

Now, going back to module market share, do you think that in the second quarter also you were number one in the world?

Yeah, in the first half year. And I think we are still the number one. but that is not our target and the key is we need to go get through the cycles and we develop our capabilities and the volume does not show any capabilities capabilities shows we are able to have more good planning and we have make sure our you know we have more The capabilities to select different customers and different markets and branding and marketing activities. We don't believe the volume says something.

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

Bottom out? First thing, I don't have a target number, but a fair estimate, I think 10% is a renewable number for current stage. But the market is... We should be ready to get more markets here.

Okay. Thank you very much.

Thank you.

The next question comes from Alan Lowe with Jefferies. Please go ahead.

Thanks, management, for taking my question. Also, congratulations to me. to become the CEO of the company. So I would like to follow up on a couple of stuff. First of all, the section 232 heard there are already quite significant inventory in the US. Like BNEF is quoting close to 100 gigawatt. Not sure if you are aware of it and We would like to know how much inventory we have to get prepared for the policy change?

We did have preparations, but it's based on the short-term sales contract in the next two or three months, and typically we will arrange some kind of We believe the cost fracture is a little bit higher. We believe the market is able to observe.

So how much inventory in the market do you see?

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

Yes, yes, yes.

I think you can check the customer data. Maybe two, three months later, you will see the US customer data. It will have a better understanding about how many or how much Megawatt has been imported.

Understood. Understood. Thanks. So, also heard some feedbacks on the Section 337 investigation regarding to the Topcon patent. I wonder how do you see it and is it affecting any of the top coin sales in the U.S.?

Is that the first solar patent case?

Yeah, patent case and also there's a Section 3V7 investigation and there's some feedback suggesting that This might impact or this might create some problems for selling Topcon into the U.S. market.

I didn't hear the information or any updates, but again, based on our internal and external teams, we are quite confident in our patent capabilities. We don't see any disruptions for Jinko so far.

Understood. Regarding the strategic cooperation with one of the U.S. major players, I wonder if you might share the progress on that front. Is there updates or because there's a recent announcement of a $10 billion of investment into building solar capacities by that largest player in ESS. So I wonder what's the progress of our discussion with that player?

We didn't have any progress so far. If there's any significant improvement or any progress, I think we may take the list of the news. But globalization is our strategy, cooperation with different partners, not only in the United States, in different countries. It's one of the key areas we like to explore the different opportunities. If we reach significant progress, we will definitely share the news.

Understood. My last question is on the ESS business. I think in the last quarter, in the PowerPoint, it showed around 1.42 GWh of ESS shipment, POD, while in this quarter, Since the number is revised, or I'm not sure if the way of calculating the shipments is different, but it seems that Q1 has a lower number of shipments, whereas Q2 has 1 gigawatt-hour plus shipment, and it seems the company is reiterating its annual target. So does it mean that in the second half, there will be close to 8 gigawatt-hour of shipments?

It's second half year loaded and because a lot of projects we shift but we need to go through different stage including testing, commissioning and particularly for the large scale ESS project and we have the confidence that we are able to achieve our guidance by the end of the year and if you're looking to next year and second quarter The first half, we shipped, I think, three gigawatt hours. Again, last year, we shipped, I think, over 5 gigawatt hours, but last year, we were at just 1 gigawatt hours. So there's a gap of 4 gigawatts coming forward into this year. Thank you.

Thank you, Charlie, for taking my question. Thanks, Dingbian in Ghana. So, yeah, thank you.

Thank you. Thank you.

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