Sebastian Liu - Investor Relations Director Chen Kangping - CEO Gener Miao - VP of Global Sales and Marketing Cao Haiyun - CFO.

Philip Shen - ROTH Capital Partners Brad Meikle - Craig-Hallum Capital Group, LLC Gordon Johnson - Axiom Capital.

Thank you for standing by and welcome to the JinkoSolar Third Quarter 2016 Earnings Conference Call. I must advice you that this conference is being recorded today, Wednesday, November 16, 2016. I'd now like to hand the conference over to your host today, Mr. Sebastian Liu, Investor Relations Director. Please go ahead, Mr. Liu..

Thank you, operator. Thank you, everyone, for joining us today for JinkoSolar's third quarter 2016 earnings conference call. The Company's results were released earlier today and available on the company's IR website at www.jinkosolar.com, as well as on the newswire services.

We have also provided a supplemental presentation for today's conference call, which can also be found on IR's Web site. On the call today from JinkoSolar are Mr. Chen Kangping, Chief Executive Officer; Mr. Cao Haiyun, Chief Financial Officer; Mr. Gener Miao, VP of Global Sales and Marketing; and Sebastian Liu, IR Director. Mr.

Chen will discuss JinkoSolar's business operations and the Company's highlights, followed by Mr. Gener Miao, who will talk about the sales and marketing and then, Mr. Cao, will go through the financials. We will all be available to answer your questions during the Q&A session that follows.

Please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today.

Further information regarding these and other risks is included in JinkoSolar's public filings with the Securities and Exchange Commission. JinkoSolar does not assume any obligation to update any forward-looking statements except required under applicable law. It is now my pleasure to introduce Mr. Chen Kangping, CEO of JinkoSolar. Mr.

Chen will speak in Mandarin and I'll translate his comments into English. Please go ahead, Mr. Chen..

Thank you, Sebastian. Good morning and good evening to everyone, and thank you for joining us today. I’m pleased to announce another strong quarter. Module shipment reached 1,606 megawatt, an increase of 41.6% year-over-year, while the total revenues reached $855.3 million, an increase of 39% over the same period of last year.

Gross margin was 22.1% compared with 20.4% in the second quarter of 2016 and 21.3% in the same period of last year. Based on our current visibility into the fourth quarter, we are once again increasing our full-year shipment guidance to 6.6 gigawatts to 6.7 gigawatts from our previous guidance of 6 gigawatts to 6.5 gigawatts.

During the third quarter, Jinko Power connected 184 megawatts solar project, bringing total connection to 1,314 megawatts. Electricity output increased 20.8% sequentially to 395 GWh, generating RMB372.4 million in revenue. Our sales of Jinko Power has been closed yesterday for $250 million in cash.

Through this spinoff, we will significantly improve our balance sheet by reducing debt and our net gearing ratio. Our strong cash position will also provide us added flexibility to expand our module business, further reduce risk and initiate share buyback when appropriate.

Turning to global markets where we don’t see massive [technical difficulty] module price stabilize, demand is expected to pick up again with announcements of next round of feed-in tariff costs, which should act as a catalyst for strong growth during the first half of 2017.

As such, from the traditional utility scale market in China, we’re also diversifying our revenue streams, but accelerating [indiscernible] shipments project of Top Runner Program and poverty alleviation program. Demand in Europe is stable, thus the market as we’ve created challenging environment.

And also a sense of uncertainty is spreading in the market after the presidential election. We view this as a center [indiscernible] and all the reaction by the market, and we believe it has already begun to stabilize. We expect the U.S market will be back on track. We are sure it will hit up again during the second half of 2017.

Looking at the European market, the withdrawal of major solar manufacturers from the EU's MIP agreement is actually benefiting for the customers, by helping boost competitiveness. We like this fair, more transparent and predictable marketing revenues. Our India operations are also growing real fast.

We have reinforced our sales team with an opening of our New Delhi office, to provide local technical, and logistical support to our customers. We consolidated our leading position in new emerging markets such as Latin America and the Middle East, especially in key markets such as Chile, Mexico, and the UAE, which Gener will go over in detail later.

On the technology front, we remain focused on developing high-efficiency products. Our multi products have a clear competitive advantage in the market and our mono wafer production capacity using diamond-wire cutting is now operational and is scaling up rapidly to support our high-efficiency PERC lines.

Our MCP process less silicon solar sales are also about to begin mass production. For technical reserves, we continue to develop our [indiscernible] silicon sales. As a leader in the industry our team is constantly focusing on providing on approximately the highest quality, most reliable and high efficient products.

We have experienced ups and downs with the solar industry, but we’ve never had any doubts about its great potential as technology improves and [indiscernible]. Solar energy is to become increasingly competitive and actually reshaping the global energy landscape.

We are very proud to be part of this trend and we’re continuing to grow our business sustainably as we fulfill our commitment to green energy. [Technical difficulty] for the third quarter and the full-year 2016. In the first quarter, the Company estimated total solar module shipments to be in the range of 1.7 gigawatts to 1.8 gigawatts.

As I mentioned before, we are reaching our full-year 2016 guidance to 6.6 gigawatts to 6.7 gigawatts. With that, I will turn the call over to Gener..

Thank you, Mr. Chen. As Mr. Chen mentioned, we shipped a total of 1,606 megawatts of solar modules during the quarter. We are very proud to have achieved this great results and are raising our full-year shipment guidance beside a challenging environment.

We remain cautiously optimistic about the '17 prospect, especially with certain markets gaining a growth momentum. To give you a quick overview of the geographic distribution of our shipment.

We shipped 1,556 megawatt of solar modules to third-parties, including 38% in China, 38% to North America, 11% to Asia Pacific, 6% to Europe and 7% to emerging markets. As demand in India, Latin America and the Middle East pick up, our geographic mix will improve and continue to balance out in the following quarters.

During this quarter, we expanded our market presence from 47 to 57 countries and regions and established New Delhi office in India to provide to local service and support to our customers there. China remain one of our largest markets during this quarter.

Although clean [ph] orders in fourth quarter are not very evident, demand remain strong as prices stabilize, and began to increase again. We expect this amount to grow again during the first half 2017 as a result of FIT cuts to be announced by LRDC.

We are also further consolidating competitive advantage in market by supplying more of our high-end modules to solar projects organized by the Top Runner Program which required high efficiency and [indiscernible] product. Outside China, the U.S market continues to be our main focus. As Mr.

Chen just briefly mentioned, there was relatively sharp decline in ASPs during the first quarter, which we believe has already bottomed up and the presidential election results [technical difficulty] and certainty such as ITC expansion. Despite near-term headwinds, we remain optimistic about the U.S market.

Solar energy is gaining more and more popularity and are creating a large number of jobs in U.S. The market is now rapidly recovering as ASPs stabilize. We expect to see the U.S market return to positive growth during the second half of 2017. Demand and ASPs in Japan and EU have remained relatively stable.

We are pleased to see competition in the EU become more market driven following the withdraw from the EU's MIP by a number of major solar manufacturers. We welcome this more market driven environment which we believe is fair and [indiscernible]. Japan is still a sizable market, which we expect will be a top three country next year.

We continue to monitor and evaluate new opportunities in Japan as we try to increase our share of this high margin market. As I mentioned in last quarter, shipments to the emerging markets will be concentrated towards the end of 2016 and into 2017.

We continue to expand our competitive edge in this market, especially in Latin America and the Middle East with more than 30% market share in key markets such as Chile, Mexico, and Brazil, which I’m very proud. We now cover over 40 countries and regions in emerging markets.

India shows great potential as we devote more resources towards this strategic important market. We enlarge the sales team in our New Delhi office and established a local service team, including logistics and technical to support our clients. Total ASPs during this quarter came in at US$0.49.

We expect ASPs to continue to increase in the fourth quarter and stabilize during the first quarter of 2017. Moving to marketing and branding. We participated in a number of events, exhibitions and conferences during the quarter.

In August, we attended Intersolar South America in Brazil where we exhibited our Eagle II and 72-cell Eagle Series as the largest supplier in Brazil. In September, we attended SPI in Las Vegas, where we exhibited our brand new Eagle model Plus series and also [indiscernible] which is marketed for the residential market.

In October, we attended the Great Expo in Mexico, which was the largest industry credential in Mexico. We exhibited our new TS4 Smart Solution and the [indiscernible] solutions there. We were also named as one of the Fortune magazine's top 100 highest fastest growing public company, ranking number 16 of all.

We were also appointed as one of Co-Chair for the B20 under the leadership of the German G20 Presidency. We further strengthened our leading position and brand value and the recognition worldwide by participating in those events. Now I'd like to turn the call over to Charlie, who will go over our financial results of this quarter..

Thank you, Gener. I’d like to walk you through our financial results for the third quarter 2016. Total solar module shipments were 1.6 gigawatts, down 6% sequentially and up 42% year-over-year. We connected 184 megawatts of projects this quarter and had 1,140 megawatts in operation by the end of Q3.

Total revenue was US$855 million, down 4% sequentially and up 39% year-over-year. Revenue generated from solar power projects was $56 million, up 29% sequentially and up 81% year-over-year. Gross margin was 22.1% compared to 28.4% in Q2 and 21.3% in Q3 2015. ASP was $0.50 per watt.

We continue to cut our integrated silicon costs to $0.27 per watt from $0.29 in Q2. The blended cost, excluding the U.S. tariff costs, were cut to $0.37 per watt, from $0.41 in Q2. Power operating expenses represented 11.5% of total revenue compared to 12.9% in Q2 and 11.9% in Q3 2015.

Excluding non-cash expenses, the operating expense was 10.9% of total revenue in Q3 2016. Operating margin was 7.5% compared to 7.5% in Q21 and 9.5% in Q3 2015. Net interest expense was $33 million, up 81% sequentially and up 50% year-over-year.

The sequential increase was mainly due to the increase in loans associated with Jinko Power solar projects and a fee charged by financial institutions associated with the discounted notes receivables. EBITDA was $131 million compared to $136 million in Q2 and $74 million in Q3 2015.

EBITDA related to module business was $85 million compared to $102 million in Q2 and $52 million in Q3 2015. Net income was $35 million. This translates into basic and diluted earnings per ADS of $1.12 and $0.92, respectively. Non-GAAP net income was $46 million.

This translates into non-GAAP basic and diluted earnings per ADS of $1.44 and $1.40, respectively. Now let’s move to the balance sheet. By the end of Q3, cash, cash equivalents and restricted cash were $547 million compared to $557 million by the end of second quarter. Our accounts receivable was $881 million compared to $628 million by the end of Q2.

Accounts receivable related to module business was $694 million compared to $478 million by the end of second quarter. Inventories were $489 million compared to $466 million by the end of second quarter. Total debts was $2.2 billion compared to $1.8 billion at the end of Q2.

The total debt related to module business was $980 million compared to $809 million at the end of Q2. We closed the sale of Jinko Power, which significantly solidified our balance sheet position.

In the investor relations presentation page 13, we provided the pro forma key items of our balance sheet assuming this transaction was completed in September. Post the transaction, the cash under restricted cash increased to $571 million compared to $547 million. The total debt was reduced to $980 million compared to $2.2 billion.

Net debt significantly declined to $347 million compared to $1.6 billion. Total liabilities dropped to $2.5 billion compared to $4 billion. After the transaction, we’re able to recognize this revenue for the module shipments to Jinko Power. At this moment, we're happy to take your questions.

Operator?.

Thank you. [Operator Instructions] We’ll take our first question from Philip Shen of ROTH Capital Partners. Please go ahead. Your line is open..

Hi, everyone. Thank you for taking my questions. You mentioned your Q3 ASP was $0.49. I know you see some weakness and there has been some weakness since then.

Can you share with us what you expect your ASP to be on a blended basis in Q4? And can you also share what the ASP you see is by region in Q4? And then finally, how do you expect ASPs to trend by quarter in the -- by region in 2017?.

So, let me correct one type or one mistake from my speech just now. This is Gener. So, the ASP in Q3 actually is $0.50 instead of the number $0.49. So please take $0.50 as ASP for Q3. And your follow-up question regarding with Q4 ASP, we are believing Q4 ASPs will at the range of low $0.40 for this Q4.

And actually we’ve seen the market price has dropped after the first half and pretty sharp decrease. However, we’ve seen the picking up demand is very obvious, especially in China, also as well as in India.

So we’re expecting the market price will not only become stable, but sometimes it will be coming back to a more reasonable and -- more reasonable market numbers. So in that case we’re expecting the Q4 ASP will at the range of low $0.40. And for the 2017, in general, we believe that the price will continue to decrease a little bit.

However, if we’re looking to this quarter-by-quarter, we have seen -- obviously we’re expecting the China rush will impact the total ASP significantly. Meanwhile -- as well as this rushing in Japan, as well as India, because both India and Japan got this fiscal year ended by March.

So in that case with this three major markets rush coming in online at the same time, we expect our market price will become better..

Thanks, Gener. As a follow-up to your response there, you mentioned that there might be a rush in China. I think this time around the deadline to receive the 2016 tariff is September 30 of 2017, whereas earlier this year the deadline was for June 30, and I think we’ve seen that in prior years.

So, how do you expect that extended three months deadline to impact the demand? And could there be a less of a demand pulling in the first half since its spread over more months?.

For China, actually even -- no matter its June -- end of June or end of September, it's still a drop to face. So it has not been finalized yet.

So we don’t know what will be the finalized date, but the extended three months from the first drop to a certain drop may, let's say, extend or ease some of this analysis from the industry that the drop off feed-in-tariff are truly far more significant than expectation.

In the meanwhile for this -- if the [indiscernible] or the decrease of the feed-in-tariff happened as what the drop test is saying right now, I think the rush will become a [indiscernible] and stronger, because everyone prefer to get this better feed-in-tariff.

And meanwhile for this China rush, there is another side or just another consideration will be this Top Runner Program, actually it is [indiscernible] let's say beyond the normal hitting tariff grid electricity price or the final feed-in-tariff is in the bidder phase, so once the bid is open all the number is fixed.

So that is something beyond the rush..

Great. I have one more and then I will pass it on..

Yes..

In terms of your cost structure, you improved it to $0.27 I believe, down so in cost structure from $0.29, so you improved by two pennies in Q3.

To what degree was that due to lower external wafer and cell costs? How much of the two penny was due to the rapid decline in the external costs? And then, do you expect that benefit, if there is any or wasn’t any to continue for and then what you expect your cost structure to be in Q4 and then by Q4 of 2017? Thanks..

Hey, Philip, this is Charlie. And you’re right. We successfully cost cut our silicon cost to $0.27. I think the saving of $0.02 is coming from -- the $0.01 is from the wafer side and another one $0.01 is from the module side. We’re still on the top two to cut our total -- from our perspective we’re targeting the total blended cost quarter-by-quarter.

Q3, the total blended cost is $0.40 and we’re targeting to reach -- to advance $0.35 and of which actually the $0.05, $0.03 is coming from the U.S tariff costs. You know Q3 we feel we need to pay some tariff costs, including some inventories carried forward from the second quarter. In the fourth quarter we don’t need to pay the tariff cost.

And for the in-house module costs we’re working on every aspect to continue to cut the in-house module costs, including -- we’re getting lower material cost from our strategic suppliers and we continue to increase the production efficiencies and increase automatic production levels.

So, all in all, I think we’re very confident we can achieve the total blended cost to $0.35 compared to the $0.40 in the third quarter..

And then thoughts on Q4 2017, where could the cost structure be at?.

Yes, Q4. I’m saying the total blended costs will be around $0.35..

Sorry, I mean, Q4 2017.

So one year from now how -- is that $0.35 for Q4 2017?.

[Indiscernible] about 2017 last? Sorry, I think we are [multiple speakers]. Yes, we’re still doing the planning for 2017. I think we will announce in the next quarter, but I think the 10% I think it's our initial target..

Great. Thanks. I will pass it on..

Thank you..

We will take our next question from Brad Meikle of Craig-Hallum. Please go ahead. Your line is open..

Hi. Good morning.

Can you talk a little bit more about 2017 and what -- you said you see a rebound in the U.S market and overall they’re coming out of STI [ph], it was pretty negative about [indiscernible] spot pricing and you said it will come down a little bit more, just -- what do you generally see in terms of how 2017 is shaping up, in terms of your visibility and what the second half could look like?.

A good question. This is Gener. Actually we have seen the U.S market has -- especially to market price, significantly drop after I think Q3. The main reason we believe will be this -- actually the extension happened the year before.

Actually the correction is ITC previously August pipeline [indiscernible] cycles are designed and developed for this previous ITC schedule which is ended -- by end of this year. So all the projects is scheduled to get the grid connection by year end.

So once the ITC extension announced and the new business cycle start, I think August pipeline of Greenfield development activities will take couple of months, let's say around 10 months business cycle to get it [indiscernible].

So in that case, [indiscernible] and new -- before the new pipeline is coming up online, and there will be some kind of, let's say timing or lack of demand, that’s mainly the reason why the market price is [indiscernible] so significant for this year end.

However, we believe starting from the [indiscernible] or let's say early 2017, things will become better. One way is saying that other major markets such as China, Japan, India, the demand is pretty strong. Everyone is very busy with get grid connection by first half.

Meanwhile U.S, some of the earliest development has been done, so it's -- more and more demand is picking up and people will not panic -- will not be as panic as before. So we believe in the second half of 2017, U.S market will develop kind of a booming compared to what’s happening for this year end..

And how much of 2017 orders are on the books at all? Do you know where you’re kind of looking at pricing in terms of taking orders and giving customers some level of guidance on what they expect?.

In general, we have around 30% of orders for 2017 and we are closely following the market changes and we will picking up more orders, we’re feeling that from near-term to mid-term to long-term orders..

Okay. Just last question.

Do you have an estimate on what global demand is from your vantage point for 2017 and 2018?.

Sorry, can you repeat?.

What’s your estimate of global demand is for 2017 and 2018? Do you think the global solar market grows in megawatts next year and the following?.

Okay. So for 2017 we believe the growth will not as strong as what’s happening in 2016. So, however, it is still a good market. We are expecting around 10% to 15% increase between 2017 and 2016.

And follow that with 2018, personally I will be more optimistic for 2018 because we [indiscernible] more system cost increase, we have seen lots of market become economical [indiscernible] viable, meanwhile and more regions will issue the policies of -- credit policy for the solar market.

So more marketing -- market will coming up online for solar market [technical difficulty] a booming for 2018..

You see a lot of [technical difficulty] markets picking in, in terms of expansion to rest of world, outside the U.S [multiple speakers] market?.

Yes, especially in the emerging markets, such as Latin America, East Africa, all this kind of emerging world in solar industry, lots of governments are extending supported policies or they’re moving on this rushes, we believe more clarity will happen within 2017..

Thank you..

Thank you..

We will take our next question from Gordon Johnson from Axiom Capital. Please go ahead. Your line is open..

Hey, guys. Thanks for taking my question. I guess, on the China market, China recently reduced their installation target by 2020 to 110 from a 150 gigawatts, given they’ve already installed 43 and it looks like they’re going to do about 25 this year and 24 next year.

That would suggest there is going to be a significant fall off in 2018, if you just look at 2018, '19, '20, getting to 110 or even maybe 10 gigawatts above it.

So do you guys see a significant fall off in Chinese installations in 2018 due to the reduced target? And can you remind us again how many projects you sold this quarter? Then I have a follow-up. Thanks..

Thank you. For China market, actually the installation or the [indiscernible] for module in 2018 will still be strong, because lot of, let's say, this certification or approved per unit [ph] pipeline has to finish installation by the latest drop saying September 30.

So it means before 2017, end of September lot of this pipeline has to install, otherwise they will lose this all feed-in-tariff. So in that case, I believe China market will still be strong in 2017. For the further year, like 2018, '19, even '20, the current new five-year plan saying that the total number will become smaller at 110 gigawatts.

However, this set up is [indiscernible] less than 110 gigawatts. So it means that they’re setting up 110 at the bottom of their target. And as far as we have heard from the market actually the [indiscernible] are targeting more ambitious target, especially with the current [indiscernible] electricity price in solar business in Top Runner program..

This is Charlie. Just to supplement, we think its conservative target for the over 110 gigawatts. The government wants to promote the [indiscernible] raisings and promote the Top Runner Program to adopt to the high efficiency technology and to lower the TPA.

So the target is to deploy more solar projects in China and with dramatically lower [indiscernible] cost and we’re still -- we’re very optimistic for China market. So [indiscernible] remaining our estimation for the 150 gigawatts by the end of 2020..

Hi, Gordon, this is Sebastian. To make some cut on this and also we want to mention that this year one of the hot topic in China is that poverty alleviation program, which are not included in those five-year plan.

So -- and like Gener and Charlie said, it is a well conservative and kind of a highly levered target just government want to attribute for sure, but new fab [ph] within the real connection will be a lot more than this number..

Okay. That’s helpful. And then, I guess, on the Front Runner Program, it seems like it's clearly a reverse action program, and actually we are hearing that bids are being submitted for the high 30s right now for the Front Runner Program.

And I guess that it hasn’t been specified, but the assumption is that it's going to be 10 gigawatts in 2017, which means Front Runner eligible for roughly 23% of installations in 2016 or roughly 40% in 2017.

If bids are being submitted solo, given the reverse action nature of this program, does that have the potential effect of weighing on module prices more significantly maybe than we would've thought previously?.

Well, for the Top Runner Program we see is that sometimes the bidders are beyond our expectations and they behave very aggressively. Sometimes we believe it's not good for the industry, but we believe it will be the -- it shows some indication that some of our peers are very desperate to get it done on projects in China.

And meanwhile for this pressure of the pricing side, we believe actually at the end of day it will be the market [indiscernible] even you intensify some high-quality, high-efficiency products at very aggressive price, but sometimes not.

You cannot buy it, especially when all this 5 gigawatts Top Runner Program start installation and have such demand in the similar timeframe. Back to your Top Runner theme for this following years, actually we believe Top Runner is designed to get this high-efficiency, high quality product in a stage to show and to showcase from the state level.

However, when the government observe this crazy aggressive pricing for the electricity, what we heard is there is another program is in progress which got a super Top Runner Program , which is -- which will emphasis on efficiency and cutting-edge technology instead of the pricing of the electricity. So that’s what we heard..

Gordon, this is Sebastian. One comment to end. I think there is little bit misunderstanding in the market about Top Runner Program and the final price -- the final bidding price, because I think people pay too much attention to the low price of -- some of the bidding results.

But in fact, lot of the project the price range are making sense and in normal range. Some of the project or the result is super low price, like Gener said [indiscernible] some of our peers they’re little bit desperate to get those project.

[Indiscernible] some SOEs they have their targets or they have their quota to finish by this year than they have the [indiscernible] for those project, no matter what price it is. But if you look at other price, especially the price Jinko have won, it's not that ridiculous.

I think if you ask, we can provide to you details about our -- the project we won and the final results, that will make a lot sense to you. That will make a lot of sense to you..

Okay.

Then lastly, what was your operating cash flow in the quarter?.

I think Charlie will answer this..

Okay.

[Indiscernible] question, I think you’re asking how many positives [ph] we’re seeing?.

Yes..

I think for Jinko Power we have [indiscernible] transaction to sale, the [indiscernible] we have for Jinko Power. So, I think I definitely comment, you can refer to the relevant news we have released on our Web site.

In terms of the cash flow, the operating cash flow for the third quarter, I think it's about around $180 million, which is -- because we are investing on -- the working capital for the strong shipments in the fourth quarter and in the next few quarters.

And one of the items is accounts receivable, which increase -- I think around $200 million, that is because after the first half year [indiscernible] installation in China and based on the market conditions, the payment term has been a little bit longer.

The term over days for the module business increased from 60 days to 80 days and we’re expecting the payment term will improve by the end of the year..

Okay.

What was the operating cash flow for the quarter?.

Operating cash flow is, I said, that’s a negative $180 million..

Okay. Thanks a lot for the questions, guys..

Thank you..

Our next question comes from [indiscernible]. Please go ahead. Your line is open..

Hello.

How are you doing? Just one [technical difficulty] guys may have seen kind of cost guidance, so you’re basically saying Q4 margins are looking around 20%, is that what the implication was or -- want to clarify that? And then what are your thoughts on margins for 2017 as we go through the year?.

[Technical difficulty]..

Can you hear me now?.

[Technical difficulty]..

Yes, there is static on the line.

Can you hear me now?.

Yes, okay. Yes, yes. That’s good..

Okay. So my question was about margins in Q4, are you sort of implying that that’s going to be around 20% based on what you said about ASPs and cost.

And then also what are your thoughts on margins for Q1 and as we have through the year kind of what you’re thinking on margins?.

Q3, I think we’re [indiscernible] successfully to improve our gross margin to 22%, of which module business that was around 19% and Jinko Power business it's around 61%. And by the end of October, we closed the transaction, sale of the Jinko Power.

So looking to the fourth quarter, for the module business, we expect the gross margin is in the range of I think -- in the range of 15% to 18%. And looking -- in terms of Q1 next year and we’re still targeting over 15% gross margin..

Okay. Thank you..

We will take our next question from Mike [indiscernible]. Please go ahead. Your line is open..

Yes, hi. I was wondering if you could tell me what the current outstanding balance of the 4% convertible notes is and what the plan is to repay them assuming they’re put in February? Thank you..

In terms of outstanding the convertible bonds, I think you can refer to our balance sheet and we’ve [technical difficulty] presented, it's around I think $80 million to $85 million..

[Technical difficulty] we cannot give you the number [technical difficulty] that’s kind of a [indiscernible] information and which may reflect the market [technical difficulty]. So we’re looking at the number as the quarter end, you can definitely like try to say, if you refer to our 6-K..

Okay. Thank you..

Thank you, Mike..

As there are no further questions in the queue, I will turn the program back to Mr. Liu for any additional or closing remarks. Thank you..

So, on behalf of the entire JinkoSolar's management team, I want to thank you for your interest and participation on this call. If you have any further questions or concerns, please feel free to contact us and have a good day or good evening. Thank you all. Good bye..

Thank you. That will conclude today's conference call. Thank you for your participation ladies and gentlemen. You may now disconnect..