Yingli’s YGE CEO Miao Liansheng on Q1 2014 Results
Hello, ladies and gentlemen. This is Eric. I’ll be the operator for this conference call. I would like to welcome everyone to Yingli Green Energy Holding Company Limited First Quarter of 2014 Financial Results Conference Call. All lines have been placed on mute to prevent background noise. After today’s presentation, there will be a question and answer session. Please follow the instruction given at that time if you would like to ask a question.Now I would like to transfer the call to the host for today’s call, Ms. [Gene Chen] (ph), Director of Investor Relations of Yingli Green Energy. [Gene] (ph), please proceed.Thank you, . And thank you everyone for joining us today for Yingli’s first quarter of 2014 financial results conference call. We have already provided supplemental presentation for today’s earnings call, which can be also found on our IR website. I hope you all have the chance to review it by now.On the call today from Yingli Green Energy are Mr. Miao Liansheng, Chairman and Chief Executive Officer; Mr. Wang Yiyu, Chief Financial Officer; Mr. Bryan Li, Executive Director and Chief Strategy Officer; Ms. Miao Qing, Vice President of Corporate Communications; Mr. Robert Petrina, Vice President of Sales and Managing Director of Yingli America; Mr. Darren Thompson, Vice President of Sales and Managing Director of Yingli Europe; and Zhenhua Fan, Director of Legal Affairs.The call today will feature a presentation from Mr. Miao, covering business and operational developments. Mr. Petrina and Mr. Thompson will talk about development of American, European and the other emerging markets with respectively; and then Mr. Wang will take you through a discussion of the company’s financial performance. After that, we will open the floor to questions from the audience. Private Securities Litigation Reform Act of 1995. These forward looking statements can be identified by terminologies such as will, expect, anticipate, future, intends, plans, believes, estimates, and similar phrases.Such statements are based upon management’s current expectations and current market and operating conditions and relate to events that involves known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond Yingli Green Energy’s control, which may cause Yingli Green Energy’s actual results, performance or achievements to differ materially from those in the forward looking statements. Securities and Exchange Commission. Yingli Green Energy does not undertake any obligation to update any forward looking statements as a result of new information, future events or otherwise, except as required as applicable law.I would like to turn the call over to Mr. Miao Liansheng now. Please begin.Hello, everyone. Thank you for joining us today. I’m very pleased to announce that during the first quarter of 2014, the company significantly improved its financial performance market, overall gross margin up 15.7%, a substantial increase from 12.2% in the fourth quarter of 2014. This was attributable to a slight increase in ASP of PV module and our ongoing efforts on cost reduction.In the first quarter, a traditional slow season for PV industry will shift approximately 630 megawatt of PV modules, decreased by 33% from the fourth quarter of 2013, primarily due to a slower demand from China, as well as high delay associated with the certain projects in Algeria.However, since the beginning of the second quarter, we have been seeing significant demand uptick from China, as well as emerging markets such South America, Southeast Asia and Africa, and that trend we believe that will continue in second half of 2014. We therefore expect our shipments in the second quarter to be in the range of 870 megawatt to 950 megawatts and we maintain our annual shipment guidance of 4 gigawatts to 4.2 gigawatts for fiscal year 2014.In the first quarter, we witnessed a continued evolution of demand diversification. and stabilization in Europe were important and promising signals for first quarter in 2014.In Japan, our shipments increased by more than 50% quarter over quarter while our customer base quadrupled. This has been driven by a growth growing acceptance of a Yingli solar products as a [primary] (ph) of choice in both commercial and residential segments.Furthermore, we have continued to build strong relationship with utility scale project developers and several EPC contractors, thus well positioned for future. and Europe doubled and accounted for 35% of our total shipments in the first quarter of 2014, versus 16% in the fourth quarter of 2013.Beyond module sales, Yingli is actively involved in a balanced downstream strategy through a variety of projects in order to maximize profitability while mitigating risk associated with downstream development.The company currently has approximately 1 gigawatts of PV projects pipeline processing to different approval stages across 10 provinces in China such as Hebei, Xinjiang, Yunnan, Guangxi, and Heilongjiang province and continue to develop actively new pipeline for PV projects in other provinces including Inner Mongolia, Qinghai, Gansu and Ningxia province.During the first quarter of 2014, the company had started the construction of two ground mounded PV plants, which are expected to be completed in the third quarter of 2014, with total capacity of up to 25 megawatts located in Hebei province.The company also began to construct 110 megawatts of utility scale projects and 20 megawatts of distributed generation projects located in Hebei, Guangxi and Sichuan province in June of 2014.For all of those PV projects under construction, we have identified committed buyers that will undertake all or part of the equity of those projects, including the joint venture with China National Nuclear Corporation, and the renewable energy fund established with Shanghai Sailing Capital Investment Fund, etcetera. Meanwhile, the company continues to explore project development opportunities outside of China and expect to achieve significant milestones in the second half of 2014.Based on the current project development status and the expectation progress of project pipelines, the company expects to build approximately 400 megawatts to 600 megawatts of PV projects through the end of 2014.In order to support the rapid expansion of our downstream business and to efficiently manage capital expenditure and establish the strong financial platform, the company and Sailing Capital, the first large cross border RMB private equity fund launched in China, jointly formed a RMB 1 billion fund. It aims to invest primarily in Yingli Green Energy’s solar PV projects in China.Yingli are leveraging each parties’ advantages in the respective sectors. The cooperation will not only open more options for the efficient commercialization of downstream projects, but also help transfer the most effective financing solutions and development as securitization of PV projects.As cost continue to decline and efficiency increase, PV power is closing the cost gap, the traditional cost energy especially distributed generation off grid systems. Given its importance as further in government’s efforts to promote solar applications for residential and commercial estates, we continue to focus on distributed PV generation.Currently, we have about 20 megawatts distributed generation project under construction in Sichuan province which we have already entered into PPA with the large state owned company.For distributed PV power owners with monthly revenue of less than RMB 20,000 which is roughly $3,252, they will be exempted from paying value added tax. And for owners with monthly revenue of more than RMB 20,000, 50% of the AT will be exempted and this basically invoice their owners. Accordingly, we believe that the distributed PV project in China will accelerate given the coordination by all projects and steady stream of quarterly projects.We have worked privately to build Yingli Solar into a global recognized universally for its innovative products and awesome quality. With the beginning of FIFA World Cup in Brazil, we’re adding other level to the goal of offering affordable energy to all.