Canadian Solar (NASDAQ:CSIQ) Q4 2019 Earnings Call

0:00 Ladies and gentlemen, thanks for standing by, and welcome to Canadian Solar's fourth quarter and four year of 2019 earnings conference call. My name is Anne, and I will be your operator for today. At this time, all participants are listen-only mode. Later, we'll conduct a question and answer session. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Ed Job, Managing Director, Investor Relations at Canadian Solar. Please go ahead.

0:30 Thank you, Annie, and welcome everyone to Canadian Solar's fourth quarter and full year 2019 earnings conference call. Joining us today are Dr. Sean Chu, Chairman and Chief Executive Officer, Yan Zhuang, Acting Chief Executive Officer, and Dr. Huifang Cheng, Chief Financial Officer. On this call, Sean will provide a brief update, followed by Yan, who will review our recent progress and Outlook. Kuifang will then review our financial results before we open the call to your questions. Before we begin, may I remind listeners that management's prepared remarks today, as well as their answers to your questions, will contain forward-looking statements, which are subject to risks and uncertainties.

1:25 Therefore, the company claims the protection of the safe harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from management's current expectations. Any projections of the company's future performance represent management estimates. As of today, Canadian Solar assumes no obligation to update its projections in the future unless otherwise required by applicable law. A more detailed discussion of the risks and uncertainties can be found in the company's annual report on Form 20F filed with the Securities and Exchange Commission.

2:11 Management's prepared remarks will be presented within the bounds of SEC Reg G regarding generally accepted accounting principles or GAAP. Some financial information presented during the call will be provided on both a GAAP and a non-GAAP basis. By disclosing certain non-GAAP information, management intends to provide investors with additional information to allow further analysis of the company's performance and underlying trends. Management uses non-GAAP measures to better assess operating performance and to establish operational goals. Non-GAAP information should not be viewed by investors as a substitute for data prepared in accordance to GAAP.

3:00 At this time, I would like to turn the call over to Canadian Solar's Chairman and CEO, Dr. Shawn Chi. Shawn, please go ahead.

3:11 Thank you, Ed. Welcome, everyone. 2019 was a strong year as our revenue and profit both exceeded expectations. Then we'll go through our business review and outlook in more details. Given the current pandemic and macro situation, I would like to share with you some of my views and perspectives. First of all, we have been working hard to ensure the health and safety of our employees. This is our top priority. We are also taking all the necessary measures to support our customers and partners in the current market environment while still planning for the market to rebound.

4:01 Today, solar is already one of the most environmental and economically attractive sources of energy. Innovation continues to drive solar energy's competitiveness. As the cost and performance of storage continues to improve, All this ability to gain market share in a global energy generation mix will accelerate. In addition to market forces, global decarbonization efforts are intensifying creating even greater demand for clean energy and solar assets. The current shock resulting from coronavirus will likely interrupt the clean energy transition, but there's no turning back.

4:56 Canadian solar has a proven track record of 19 years and has established strong foundations to capture an outsized share of the demand growth. We have built a globally diversified and flexible capacity structure, strong customer relationships and Bankability is a resilient business model that adapts to change in the market. Currently, we are also putting in place risk controls to preserve cash and navigate the market volatility. We believe that the robust and conservative nature of a long-term strategy will allow the company to emerge stronger from the current period Thank you, Sean.

5:55 Let me start with some key messages. First, we achieved strong results for the fourth quarter and full year 2019, with revenue and profitability meaningfully above our expectations. It continues to grow and monetize our operating solar assets and pipeline. It currently has 880 megawatts under operation, 512 megawatts under construction, 3.7 gigawatts in backlog and 11.7 gigawatts in pipeline. We are expanding our presence in regions such as EMEA while solidifying our leadership position in North America, Latin America, and Asia Pacific.

6:43 Third, we are evaluating the energy business model and extending previously successful strategies. For example, the Canadian Solar Infrastructure Fund in Japan, which was sponsored by the company, was a successful way of capturing additional value by retaining partial ownership in selected projects we develop. This strategy will increase the predictability and stability of our revenue streams through power cells, O&M, and asset management services. Fourth, we have set up a global team with a focus on system integration and energy storage, which will help to build the new technology DNA of the company and lead the next wave of growth in this industry. It is the natural next step as we have the advantage of a strong anchor brand, a large pipeline, and a tight control over our distribution channels.

7:54 And finally, I'd like to echo Sean's comments. We had a robust start to the year, but have started to see more negative demand impact from the COVID-19. Q1 was somewhat affected by the capacity loss in China, and now there is greater uncertainty over demand in Q2 and Q3. However, the recovery is bound to come, so we have kept a fairly wide range for the 2020 guidance. The pandemic is a new challenge, and over the past years, we have learned many lessons in navigating Volatile Markets.

8:41 Now, let me go through this quarter's results. On the energy business side, we closed various project sales while we continued to originate, develop, and finance new projects In Japan, we closed the project sales of 10 MW in Q4 2019 and 56 MW in Q1 2020, as cited. We also achieved commercial operation on one project and started construction of another two projects, continuing to build our leadership position in Japan. In the Latam region, we sold a 49% interest in the 370 megawatts portfolio of projects in Mexico that are currently under development to solve Korea's largest electric utility, Capco, and a leading fund manager, Sprott Korea.

9:44 We viewed from the success of our first transaction with Capco in 2018 when we sold them over 230 megawatts of projects in California. Additionally, we're growing in the commercial and industrial space, signing more PPAs with large corporate off-takers. For example, in Australia, we announced a PPA with Amazon for electricity to be supplied from our 146 megawatts Gunaida solar plant, while in Mexico, we signed a 15-year PPA with a packaging assay. to build a 103 megawatt solar plant.

10:29 In order to capture more of the solar value chain, we are increasingly retaining partial ownership of solar project assets to reduce the lumpiness of the energy business, increase income predictability, and therefore shareholder value. The Canadian Solar Infrastructure Fund listed in the Tokyo Stock Exchange is an example of how we successfully executed on this strategy. Now we are exploring ways to expand this approach in other regions. On the MFF side, Q4 revenue reached $766 million. The underlying gross margin improved 380 business points quarter over quarter to 27.1%, driven by growth in shipments, especially in the U.S.

11:21 Fable ASPs, and Lower Planet Total Production. One of the key drivers of Canadian solar sector leading margins is our focus on profitable growth. For example, over the past few years, multi-crystalline modules have accounted for a greater share of our product mix. This leverages our leadership in multi-technology. provides customers with the most LCOE competitive products and delivers an attractive margin due to the lower cost of production. At the same time, our manufacturing capacity has the flexibility to produce both multi and nono, which allows us to respond nimbly should market conditions change.

12:14 Given the latest supply and demand dynamics, We have recently shifted some of our capacity over to mono. We also continued to innovate. In 2019, we broke the world record in multicrystalline cell conversion efficiency three times in a row. Our latest record was announced a few weeks ago when we achieved 33.81% efficiency for NPIKE large area multisolar cells. R&D activities allow Canadian solar to stay at the forefront of technological innovation as we continue to introduce more high-efficiency modules of 400 plus watt.

13:01 Now let me comment on guidance for Q1 and full year 2020. The first quarter of 2020, we expect total module shipments to be in the range of 2.15 to 2.25 gigawatts, including approximately 250 megawatts of module shipments for our own projects that may not be recognized as revenue. Total revenue for Q1 expected to be in the range of 780 to $810 million. Gross margin is expected to be between 26% and 28%. For the full year of 2020, we expect total multi-shipments to be in the range of approximately 10 to 12 gigawatts, with total revenue expected to be in the range of $3.4 to $3.9 billion.

13:57 As we noted in the press release, our guidance is based on current views given the existing market conditions. which may be subject to change due to uncertainties, including the ongoing COVID-19 pandemic. We were experiencing strong demand across all regions until the past few days as we started to see some delays and weakening demand. We're closely monitoring and analyzing market conditions. We have a globally diversified revenue base and tight control over the supply chain. which gives us significant flexibility and room to adjust to external changes. Our long-term outlook remains optimistic as we continue to execute on our strategy and create value for the company and its shareholders.

14:47 Now, let me turn over the call to Huifeng for a review of our financial results and latest risk mitigation strategies. Huifeng, please go ahead.

15:00 Thank you, Yan. As Xiang and Yan noted, we closed the Q4 and the 2019 above our expectations. Total revenues in Q4 were $920 million, up 21% potentially over Q3. The higher than expected revenue was given by increased module shipments and a stable ASP that tracks above our peers. Total revenues for the fourth year 2019 were $3.2 billion, down 15% year-over-year, but in line with guidance. As you would recall, in 2018, we sold several large solar power plants in the U.S. We knew that the sell cycle of our project was such that 2019 would be lower and over 12 years, which we indicated in our guidance Back in Q3 2018, the beauty of our business is that whenever our project business was in the build part of the cycle, the MSS business will be strong.

16:13 As a result, we have delivered profits every year since 2013. In addition, our non-module revenues in MSS increased by 80% year over year. from $238 million in 2018 to $426 million in 2019. This includes sales of system kits, EPC, and O&M services. We see our Biang module revenues as a key top-line driver for Canadian solar. They accounted for 17% of MSS revenues in 2019, up from 11% in 2018.

16:58 We expect this trend to continue as Yang is pushing the team from manufacturing to technology to roll out system-integrated products and solutions, particularly related to battery storage. The Q4 non-GAAP underlying growth margin for the company, excluding the ADCVD effect, was 24.3%. 130 basic points higher than Q3. The improvement was mainly driven by a higher MSS growth margin. For 2019, the underlying growth margin was 20.8%, the highest growth margin Canadian solar has ever achieved since 2011.

17:47 While we grew our business, we continued to keep tight control of operating expenses. OPAC Excluding other operating incomes grew by 3% in 2019, mainly driven by higher shipping and handling expenses and labor costs associated to the higher shipments. Let's move on to liquidity and balance sheet. Our liquidity and leverage are both at healthy levels. However, Given the macro circumstances, we are taking a more cautious than usual approach. Let's review the numbers. We generated $247 million in operating cash flow in Q4 2019 and $600 million in the full year. We increased our total cash position to $1.2 billion, of which $670 million is unrestricted.

18:49 We reduced our total debt slightly to $1.95 billion and lengthened the average maturity of our total debt. Short-term debt accounted for 50% of the total debt, down from 73% just two years ago. We have no major financial principal repayment due in 2020, as the maturity of the short-term debt is on an annual rolling basis at the Chinese vet and we do not see any high risk in rolling over those loans. We also have around 3.3 billion in credit facilities of which only 2.2 billion have been drawn.

19:36 Our gap EBITDA over net interest expense coverage was as healthy 6.3 times in 2019 The highest level since 2014. As part of our financial discipline, we continue to maintain tight control over working capital. Typically, two-thirds of our inventory is in finished goods, of which over 70% is in transit to the customers. At the end of 2019, inventory turnover was 62 days, lower than most of our competitors. Likewise, we have heightened control over accounts receivable, which is currently up to 60 days. In 2019, our provision for doubtful accounts was just over 1 million. This is incredibly low for a company of 3.2 billion in revenue.

20:35 Overall, we have consistently kept a negative cash cycle of approximately 25 days in the past few years. Nevertheless, we remain alert on managing risk from every possible direction. To reflect, capital in 2019 was 291 million. This was associated with our capacity expansion in Thailand and Vientiane, as well as other factory upgrades. Given the uncertainties in the current market environment, we have decided to be extra prudent in our capital expenditures in 2020. and cancel all non-essential spending. This is why our 2020 year-end capacity is lower than what we previously announced.

21:25 However, to know that these projects can be restarted very quickly should demand the bond faster than expected. Given our ongoing volatility in the currency market, I'd also like to add a word on our FX exposure. U.S. dollar strength. relative to RMB benefits our top line and margin as a large portion of our revenues are denominated in U.S. dollar, while a large portion of our cost base is denominated in RMB. We also have revenue exposures to currencies such as the Brazilian real and Australian dollar, which have been depreciating relative to the U.S. dollar.

22:11 Anticipating the currency fluctuations to continue, We have increased the hedging ratios of those currencies and reduced our risk exposure. Of course, hedging comes with a cost, so we take a balanced approach, that is, willing to run the risk of certain level of loss while keeping the hedging cost at a reasonable level. To sum up, we exit 2019 in a strong business and financial position. Our liquidity and balance sheets are healthy, We are actively taking contingency measures to prevent cash and minimize risk exposure in the current market environment. Meanwhile, our business and financial plans have the flexibility to quickly switch gears if and when the global economy recovers.

23:05 With that, I would now like to open the call to your questions. Thank you. Ladies and gentlemen, we now begin the question and answer session. And for your questions, it is star one on your telephone keypads and will continue to be announced. And to cancel the request, it is the pound or hash key. Once again, for your questions, it is star one on your telephones. Our first question comes from the line of Colin Rush of Oppenheimer. Please go ahead.

23:38 Thanks so much, guys. You know, as you look at the initial indications of weakness from your channel, can you be a bit more specific about which geographies and which portions of your sales channel are seeing that weakness? Specifically, you know, we're looking for a bit more color on the direct sales channel where we know you guys have a sensible position and a little bit of outsized margin there.

24:02 Well, this is Yen, and right on Crescent. So... I think the immediate impact actually comes from the residential market. We're observing the channel inventory is increasing and the demand is slowing down. So that, you know, not slowed down, but we made assessment. As of today, the drop-off from Q1 is very low. There's nothing in Q1. And in Q2, we start to observe something slowing down. But we know that things are changing. So the residential market slowed down mainly coming from Europe and the U.S.

24:52 But that has not materialized yet in a significant way. So in Japan, which is where the most profit comes from, We do not see a slowdown, so everything is still normal. And the second channel is probably the impact on ITC. So that is more about second half, which is less scary. Some Q2 and some mostly second half. But we have time to remedy that. We can find other demand. So... That's the impact that we are observing.

25:39 Perfect. And then on the project business and your construction timelines, you know, have you looked at a priority list yet of which projects may be delayed for work stoppages or, you know, the shelter-in-place type mandates on a country-by-country basis and, you know, what that waterfall looks like at this point?

26:00 We're following that situation on a daily basis. Actually, until today, there's not even a single solo project construction testing stop. We even, we checked, we have almost nothing in Italy, so we don't know what's happening there, but in Spain, in the U.S., the construction is proceeding without being disrupted, with no disruption.

26:22 Okay, thanks so much, guys. Thank you. Our next question is from the line of Philip Shen of Ross Capital Partners. Please go ahead.

26:36 Hey, guys. Thanks for the questions. You know, I know you just shared with Colin what you're observing as it relates to the impact of coronavirus in the markets throughout the world, U.S., Europe, but was wondering if you could share what you expect to happen. So, for example, you guys have experienced and many others, and really effectively dealt with it as a country in China. But what do you expect given the measures that are being taken in Europe, in the US? How do you expect, for example, demand to change in Q2?

27:24 Never mind the observations today. You know, clearly in the past four days, things have changed. for the past few days, as you mentioned in your prepared remarks. But play the game out for us. What does Q2 look like? Maybe from a volume standpoint, are we down 10% or 20% from – I know you haven't provided guidance, but just help us understand how Q2 demand could evolve Q3 and potentially even Q4. What does it look like by quarter? Thanks, Ken.

27:55 Well, good question. This is what we always do. We always try to anticipate instead of being reactive to today's situation, because what matters is actually the future. So we're not medical doctors, and we're not very good magicians, but I would say solar is probably less effective industry compared to others. And our... Our annual guidance already reflected our judgment for the year. And I would not say Q2 is going to be fully utilizing our capacity, but I don't think it's going to be a disaster.

28:41 So I think we're still optimistic about this whole thing. So we have taken into consideration of the immediate impact, impact to the rooftop to the financial market and also the IT impact ITC. So I think overall we believe the annual, our assessment of annual demand for the year should be still okay. Sean?

29:17 Okay.

29:23 Hi, Shawn, did you want to comment as well?

29:27 Yeah, I agree with him. The situation is on ground and we have made our best estimate.

29:40 Okay, great. Shifting over to some housekeeping questions, was wondering if you could share the number of megawatts recognized in revenue for Q4? and how many megawatts were systems?

30:00 This is Dylan. It's around 2.1 gigawatt for the pure module cells in Q4.

30:16 Great. Thank you. So I guess roughly I think ASP in Q4 about 28 cents. Can you confirm if that's right? And then how do you expect the ASP to trend in Q1 and through the rest of this year?

30:38 You mean ASP? Yes. We've been observing some down decline on ASP from Q4 into Q1. However, costs also coming down. So you can see our guidance for Q1, our growth margin. Of course, that's blended between module and project. But for Q1, our module growth margin is still healthy. So even with the ongoing situation, I think with the The graph of competition on pricing that I think the cost, we're already seeing that sales cost is coming down already this week. So it's going to accelerate.

31:32 So very quickly you will see that the move on pricing, module pricing and the upstream material cost will be in parallel reaching the balance.

31:46 Okay. Great. You know, one more big picture question. You talked about, Yan, building the new DNA for the company with systems and storage. Was wondering if you could share, you know, when do you expect new revenue to come from systems and storage to be meaningful? Are we looking at six months from now? Could it be a year from now? I'm guessing coronavirus might impact that. But was wondering if you could elaborate more on your comment there. about the new DNA for the company. Thanks.

32:21 Thank you. The team actually is actively working on setting up the value chain for this direction. So it's not, aside from the technology know-how, it also involves setting up technology partnership with the leaders in the industry and identify the companies that has the right but also the cost-compativeness aside from technology strength. On top of that, we have to set up economic modeling of this business line. And besides that, beyond that also there's legal, there's financing element of this business model.

33:09 So we're moving pretty fast. and we're closing one deal. We're on our way to closing one deal. Not for one because there's certain impact from this coronavirus. But we're pretty at the pretty last minute of the deal. And in terms of revenue, it will come in next year, not this year. And in our project pipeline, we have a pretty big and many more. Thank you. Thank you. Once again, for those who asked For those who wish to ask a question, please press star one on your telephone and wait for your name to be announced. Next question is from the line of Mark Strauss of JPMorgan.

34:12 Please go ahead.

34:15 Yeah, thank you very much for taking our questions. Most of them have actually been answered, but we found a couple of modeling questions, if I can. So I understand it's early in the year and things can certainly change, but as we stand here today, What are your expectations for mix between the two segments this year for the energy? The energy segments either on a dollar basis or on a percentage of total basis. That would be helpful. Thank you.

34:45 I think that this question better answered by Yan. Yan, would you please give some color on the breakdown of our total annual revenue guidance?

34:59 Well, somehow we anticipate this question is coming, but to be honest, we find that a little early to provide that, given the situation right now. It's so fluid on both sides. So we will provide that information when we have more clarity. Maybe in the investors' presentation, maybe a slide later. So that's not, I know it's not a real answer, but I hope it can help you.

35:30 Yeah, no, that's fair. I get it. And that's probably going to be the same answer for this next question, but as we think about gross margins this year, you've obviously got a very strong start in 1Q. You're coming off of 2019, which is the highest, like you said, for several years in gross margin. Do you think 2020 could be even higher than 2019? I imagine it's still early to tell, but I just wanted to ask.

36:02 I think 2020 is going to be a little bigger challenge than 2019. I think we all have that consensus. But that's always, I'm the guy who always have faith and we supported facts. I think at least our business from Japan and Korea is not affected. And we have locked almost all the orders for P2. And even for second half we have almost 40-50% already locked and demand. And we assess our, so when we look at our different channels at different geographical locations, I will realize that most of our profit is actually less impacted by this coronavirus.

36:51 Japan, Korea, and the U.S., I think we have a project already locked. and the module D where we already signed the contract and locked. And for now, we don't see a bigger impact yet. Although there's also, of course, there's shortages moving forward, but I think we have the chance for a huge impact on the physical school projects for this year, for 2020. So we're still optimistic. I cannot provide you an exact number on gross margin, but I don't think it's going to be end of the day. And also in 2020, we believe China With more stimulus, I think the government will try to promote the demand side, given the situation we're going in right now. So we're confident that actually the time of demand will help to bridge the gap as well.

37:42 So it's not going to be the end of the day. Once again, we believe solar is going to be one of the least affected in this industry during this crisis.

37:53 Hi, Mark. Mark, this is Sean speaking. I will add some color on the module and on the breakdown of module and project business. For 2020, on the revenue side, the module and system, we call it MSS, will probably be somewhere around $3 billion, and the balance will be the energy business. However, the bottom line is different. The bottom line contribution or the net margin contribution from the project side could be larger or at least in part with the module and system business. Now all those numbers are non-gap and there will be some cancellation between the two business. And I hope those numbers give you some indication for your modeling.

38:51 Okay, very helpful. Thank you very much. Thank you. The next question is from the line of Jun Liu of CICC. Please go ahead.

39:03 Hey, management. Thanks for taking my question. My first question is coming with the demand. You have just mentioned the Q2 capacity is already secured and 60% of the second half is secured. Now, 75% of our four-year guidance is already secured. But I would still like to know if you can share some color on our new order flow, whether we have some difficulty signing new order if we see the coronavirus impact on the transportation. And my second question is on the gross margin side. We are seeing a very amazing gross margin in the 4Q, and we are improving the gross margin in the first quarter this year. So may I understand a little bit more about the breakdown on the gross margin, whether it's coming from the – we see a solid AST in the first quarter, so whether it's coming from the product mix?

40:04 Thank you. For the first question, I think I need to make a little correction.

40:35 So I said for Q2 we were already 100% booked, but actually we lost some order in Q2. So our capacity for Q2 is not 100%, but it's not a heavy loss, so it's still okay. So over the year, for the entire year, yes, we were like 70-75% booked. That's for sure. That's true. and so demand-wise, we're still optimistic. We're not just seeing any disasters. And we're still be healthy, so with a good volume. And then remember, look at the last year's volume with 825 gigawatts and this year we got our guidance between 10 to 12 gigawatts, a major growth.

41:24 With the market, that could be similar market size. So it shows our confidence for the market. It's pretty healthy. And the second question is for Q1. We do have a project from Japan that we sold and recognized, and that has a decent profitability. However, although the module part The overall gross margin of the company is actually boosted by this project from Japan. But module gross margin is still about 20% into one. So it's still very healthy.

42:09 So that answers the question. Hi, John. I think you also asked about transportation, right? Yes. There are some... A little bit of chaos that some countries closed the port today and then open it tomorrow after a heavy protest. For example, it happened in Brazil. I'm told that it also happened in India. But fortunately, we're not shitting that much for India as well. You know, different government, it's kind of panic so things can happen. But we have experience to deal with that kind of roadblock or roadblock, you know, or that kind of stuff in China already.

42:58 Usually it takes a few days, a week, and then people come to sense. They realize that, hey, cargo doesn't really, like, carry virus. It's the human. So I think It's kind of laughable, but it does happen, and it already happened. And I think those are going to be short-term impact rather than long-term.

43:23 Okay. Yeah, I understand. Thanks, John. That's all my questions. Thanks. Thank you. Thank you. Thank you. Next question is from the line of John Segrich of Dominus. Go ahead.

43:40 Hey, guys. Thanks for the question. I'm just wondering, can you give us an update on your share buyback program? It looks like you've got a little bit in December, but how much have you bought to date, and what would you expect to complete the plan by? I'll leave that to people.

43:57 Hi. Thank you, John. This is Wei Feng. The stock buyback program is still going on.

44:15 Hello? Still there? Hello? I think we're finally starting from another location. We probably lost him, but John, I can give you something out there. Yes, we... We executed the buyback in December. We also executed recently. We are looking at the market. You know, the purpose is to, number one, to support the share price to a certain level, and number two, to buy back when the stock price is way below the broker value so we can create value for the shareholders. So, yes, we are executing now.

45:07 the backpack forward and the details we can wait until we come back to line then we can have more discussion as well okay thanks he's back thank you once again to ask a question it is part one on your telephone and wait we need to be announced Next is Alex Li of UBS. Please go ahead.

45:41 Thanks. I've got two questions. One is regarding to the module price. So what's your view on the module price across the year? Do you think if there's any chance that the module price need to be cut a lot to stimulate the demand given the coronavirus situation? And the second question is about the module technology. So as you know that the larger size of waiver is applied across the supply chain. So do you think there could be some major impact from the larger size waiver itself? And what you are doing to prepare for the potential change? Thanks.

46:20 Okay, so first question, pricing. Actually, I think we're seeing out of the Spaniak, we're already seeing the bottom. And actually, I'm seeing a rebound moving into second half. So the demand is actually, some of the volume demand will be shifting from a first half into a second half. So it will create certain surge, demand surge against better capacity. So bankable capacity. So this is what we are observing. And we are observing, we believe most of the volume Most of the volume this year will, I would say 70% of the volume this year will be owned by, shipped by top five manufacturers.

47:11 So this is what is happening. So being part of the top five, so we still see enough demand that is there for us. And also the China project, The 40 gigawatts of China project will be mainly in second half. So that's why we believe price is at least stabilized and may go up into second half.

47:41 Alex, I would like to address the technical question. The first question is mono versus multi. As a matter of fact, what statistics shows that in 2019, we had higher and many more. So we have significantly higher or meaningfully higher gross margin in our multi-product and the mono product. Percentage-wise, you know, we provide some numbers. We shipped way more than, we shipped like 70% multi versus 30% mono gigante. And our average margin in multi is still higher than mono. You know, as a matter of fact, as long as you are the leader in certain technology, you can demand a good market. In this case, we are one of the only leading players in high-power multi. So we do demand a high market. But meanwhile, we also ship very good and high-quality and normal products to certain markets. So those products also help us to got more than 20% growth margin in 2019. So that's in terms of mono versus quality. We also asked about the wafer size. Again, as a matter of fact, Canadian solar is the driver of the new wafer standard.

49:12 For example, we were the first one to introduce so-called high-cool product, which is based on the 166 and many more to emphasize back in 2018. At that time nobody has been doing it and even so this first one. That new product also is also one of the questions. We can get relatively high growth margin in 2019 than many of our peers. So you are right. Technology and product is on technology and the innovation is our DNA. You probably know that some other companies recently are promoting even larger wafers. But I believe there's a limit of wafer size and module size. And the module is not the bigger the better.

50:08 You still have to be able to handle it and carry it to the installation site or even to the rooftop. So there has to be a balance. They believe all solar modules strike the right balance between high power and installation efficiency and also good safety. Protect the health and safety of installation workers.

50:44 and also actually you need to balance between the benefit of a bigger panel and the cost adder on maintaining the reliability of the module itself and also the tracker and also the possible cash order when the workers have to slow down their movements on the installation and so there's a lot of factors you need to worry about and there's The wafer is too big, 210, then upper stream. They have little benefit, which they will not be able to, they may not be willing to pass it on to downstream. And the downstream guy needs to invest capex to rebuild the cell line and the module line. So it's a few about efficiency and LCOE, and that's about just the size.

51:37 Okay, got it. Very clear. Thank you, Sean. Thank you, Ian.

51:41 Thanks, Alex. Thank you. Thank you once again to ask a question. It is power one on your telephones and weekly needs to be announced. For your questions, please press power one and weekly needs to be announced. No questions at this time. I'd like to turn the Congress back to the management for closing remarks.

52:04 Thank you. Thanks very much. And thanks for everyone for joining the call. and if you have any further questions, you can reach us through email or telephones to our department. Thank you and have a nice day. Thank you. Thank you, ladies and gentlemen. That concludes this conference for today and thank you for participating. You've now all disconnect. Management, please do stay on the line. I'll place you back to the next call. Thank you.