Alan Lau

Alan Lau asked about JinkoSolar's engagement with AI data centers for its ESS business, the specific demand profiles from these clients, regional variations in ESS gross margins, strategies for managing raw material costs amid increases, and the demand growth outlook for both solar modules and ESS in 2026.

Answer

CFO Charlie Cao confirmed discussions with potential AI data center clients across the U.S., Europe, and China, anticipating significant milestones early next year. He noted that ESS gross margins are decent in Europe and the U.S., but relatively lower in China and the Middle East. Regarding costs, he mentioned leveraging JinkoSolar's 5 GWh battery capacity and supplier partnerships to manage rising raw material prices. CMO Gener Miao provided a demand outlook for 2026, projecting a flat year for PV due to an expected drop in China demand, but a sharp increase of at least 25% year-over-year for BESS. He estimated China's module demand for 2026 to be around mid-200 GW. Charlie Cao also detailed the company's share buyback plans, committing at least $100 million annually for shareholder returns.

Alan Lau asked about the target gross margin for the ESS business, the status of receiving or selling IRA 45X credits, the U.S. shipment target for 2025, and the specifics of the shareholder return program, including the timing and scale of buybacks and dividends.

Answer

CFO Charlie Cao projected a 5% to 10% gross margin for the ESS business. He confirmed the company is exploring the sale of 2025 IRA credits after filing for 2024 credits as a tax deduction. The U.S. shipment target is 5-10% of total volume. Cao also announced plans to initiate buybacks and declare a dividend post-Q1 results, with an initial plan for at least $100 million split between the two, potentially increasing with asset monetization.

Alan Lau of Jefferies asked about the margin outlook for the second half of 2025, the timing and details of the share buyback plan, the company's view on China's supply-side reforms, and the status of the Saudi Arabia factory project.

Answer

CFO Charlie Cao explained that H2 margins depend on market conditions and industry capacity phase-outs. He stated the $200M shareholder return plan is not linked to the GDR issuance and a buyback is likely to be considered after the Q1 earnings release. Regarding China's policies, he expects supply-side reforms to emerge. He also noted the Saudi factory is in early preparation, with groundbreaking targeted for Q2 2025 and full operations by the end of 2026.

Alan Lau asked for details on U.S. shipment volumes and expectations for H2 2024, the company's view on U.S. policy risks like the critical circumstances filing, and the timeline and expected benefits of the new Saudi Arabia manufacturing facility. He also asked for clarification on a financial calculation and the current usage rate of FBR polysilicon.

Answer

Gener Miao (CMO) and Haiyun 'Charlie' Cao (CFO) provided responses. Miao stated U.S. shipments are expected to be 5-10% of the annual total. Cao addressed the policy risk, stating they have 'proactively managed the volume' and believe the risk to Jinko is low. Regarding the Saudi Arabia JV, Cao described it as a strategic move for global manufacturing, expecting operations to start in 2026 with a 'first-mover advantage' and premium pricing due to local content policies. He also confirmed the FBR polysilicon usage rate is typically 30% to 50%.

Alan Lau from Jefferies inquired about Canadian Solar's outlook on U.S. market demand for solar and energy storage in 2026, separately. He also asked about the expected growth rate for Energy Storage Systems (ESS), particularly in the U.S., and the contribution from AI-driven data center demand. Furthermore, he sought clarification on the typical duration and application of ESS for data centers (e.g., 2-4 hours for peak shaving vs. longer duration for main power supply) and the geographical distribution of the 2026 ESS shipment guidance.

Answer

Yan Zhuang, President of CSI Solar, indicated strong U.S. demand for storage in 2026, driven by OBBBA compliance and safe harbor projects, while solar demand is expected to remain flat due to potential cell supply bottlenecks. He noted that while AI-driven data centers represent significant future demand, their installation impact is expected after 2026, with 2026 storage growth primarily from conventional safe harbor projects. For data centers, initial ESS applications are typically 2-3 hours for load smoothing and supply stabilization, rather than long-duration off-grid solutions. Mr. Zhuang also stated that approximately two-thirds of the 14 GWh-17 GWh ESS shipment guidance for 2026 would be outside the U.S., reflecting a diversified portfolio.

Alan Lau from Jefferies inquired about the projected U.S. market demand for solar and energy storage in 2026, the expected growth rate for ESS (including AIPC demand), the typical duration of ESS installations for AIPC, and the geographical distribution of Canadian Solar's 2026 ESS shipments.

Answer

Yan Zhuang, President of CSI Solar, projected strong U.S. energy storage demand in 2026, driven by OBBBA compliance and safe harbor projects, while solar demand is expected to remain flat due to potential cell supply bottlenecks. He noted that significant AIPC-driven storage installations are anticipated post-2026, with current data center applications focusing on 2-3 hour systems for load smoothing. Mr. Zhuang also clarified that approximately two-thirds of the 14-17 GWh ESS shipments guided for 2026 will be outside the U.S.

Alan Lau from Jefferies sought confirmation that the Q2 margin benefit from a project deconsolidation is a one-off event. He also asked for clarification on Canadian Solar's potential classification as an FEOC, inquired about reported investment plans in Ethiopia, and questioned the primary driver for the reduced module shipment guidance.

Answer

Senior VP and CFO Xinbo Zhu confirmed the deconsolidation impact is a one-time event for Q2. Chairman and CEO Dr. Shawn Qu detailed the company's ownership structure, acknowledging that the current FEOC draft would require changes but expressed confidence in their ability to adapt and that the draft law will evolve. Dr. Qu also clarified there are no committed investments in Ethiopia and stated the module guidance was reduced to strategically exit less profitable markets.

Alan Lau of Jefferies LLC asked about the confidence in achieving the full-year 11-13 GWh energy storage shipment guidance, including the extent of contracted volumes and fixed pricing. He also inquired about the U.S. module shipment mix for 2025 and the reason for elevated G&A expenses in Q4 2024.

Answer

Yan Zhuang, President of CSI Solar, confirmed that most of the 2025 energy storage volume is already under contract with decided pricing and includes change-of-law protections for tariffs. CEO Shawn Qu stated the U.S. module shipment mix would remain around 25% of the global total. CFO Xinbo Zhu clarified that the Q4 G&A increase was due to one-off impairments.

Alan Lau of Jefferies questioned whether the strategic slowdown in H2 2025 deliveries would lead to a significant acceleration in revenue growth for the following year. He also asked for an update on overseas business progress, particularly regarding sales breakthroughs and order volumes in markets like Thailand and Japan.

Answer

CFO Connor Yang expressed confidence in achieving significantly faster growth next year, viewing the current phase as a six-month adjustment period. Regarding overseas markets, he highlighted a goal to achieve commercial operations within six months, detailing a 'sandbox testing model' in Thailand (Bangkok, Pattaya) and a similar project in Abu Dhabi, UAE. These point-to-point trials are designed to secure local certification and serve as a replicable model for regional expansion.

Alan Lau of Jefferies asked for a breakdown of the Q3 inventory impairment, the reasons for the increase in production cost, the Q4 cost outlook, and the likelihood of energy control policies materializing. He also requested the company's specific energy consumption figures.

Answer

CFO Ming Yang explained that the company recorded an $80 million inventory write-down in Q3, with about two-thirds being finished goods. He confirmed the production cost increase to $6.61/kg was due to lower utilization, with $0.55/kg attributed to facility idle costs. For Q4, he expects cash costs to decrease but total production costs to rise due to even lower utilization. Mr. Yang provided specific energy consumption figures: ~55 kWh/kg for Xinjiang and low-to-mid 50s for Inner Mongolia, noting the need for standardized measurement.

Alan Lau from Jefferies asked for a detailed breakdown of the $108 million inventory impairment, the rationale for reducing Q3 production guidance, the liquidity of the company's $1.4 billion in investments, and the strategy for the ongoing share buyback program.

Answer

CFO Ming Yang explained the impairment charge was applied to finished goods (60%), work-in-process inventory, and raw materials to align their book value with market prices below RMB 40/kg. He confirmed the Q3 production cut to 43,000-46,000 metric tons is a prudent measure to minimize cash burn, with minimal impact on unit costs. He also clarified the $1.4 billion in investments are primarily 3-6 month fixed-term deposits held by a subsidiary. IR executive Anita Zhu added that the company will be opportunistic with its $100 million share repurchase program, viewing the stock as undervalued.