Q4 2025 Daqo New Energy Corp Earnings Call

February 26, 2026

Operator: Good day, welcome to the Daqo New Energy new Q4 2025 Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star then one on a touch-tone phone. To withdraw your question, please press Star then two. Please note this event is being recorded. I would now like to turn the conference over to Jessie Zhao, Investor Relations Director. Please go ahead.

Speaker #3: Good day, and welcome to the DAQO ENERGY NEW 4th Quarter, 2025 results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal the conference specialist by pressing the star key followed by 0.

Speaker #3: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on the touch-tone phone.

Speaker #3: To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Jessie Zhao, Investor Relations Director.

Speaker #3: Please go ahead.

Speaker #4: Hello, everyone. I'm Jessie Zhao, the Investor Relations Director of Daqo New Energy. Thank you for joining our conference call today. Daqo New Energy just issued its financial results for the fourth quarter of 2025, which can be found on our website at www.dqsolar.com.

Jessie Zhao: Hello, everyone, I'm Jessie Zhao, the Investor Relations Director of Daqo New Energy. Thank you for joining our conference call today. Daqo New Energy just issued its financial results for Q4 2025, which can be found on our website at www.dqsolar.com. Today, attending the conference call, we have our Deputy CEO, Ms. Xiaoyu Xu, our CFO, Mr. Ming Yang, and myself. Our Chairman and CEO, Mr. Xiang Xu, is on a business trip now, so Ms. Xiaoyu Xu will deliver our management remarks on behalf of Mr. Xiang Xu. Today's call will begin with an update from Ms. Xiaoyu Xu on market conditions and company operations, and then Mr. Ming Yang will discuss the company's financial performance for the quarter. After that, we will open the floor to Q&A from the audience.

Speaker #4: Today, attending the conference call, we have our Deputy CEO, Ms. Anita Zhu; our CFO, Mr. Ming Yang; and myself. Our Chairman and CEO, Mr. Xiang Xu, is on a business trip now, so Ms. Anita Zhu will deliver our management remarks on behalf of Mr. Xu.

Speaker #4: Today's call will begin with an update from Ms. Xu on market conditions and company operations. And then Mr. Yang will discuss the company's financial performance for the quarter.

Speaker #4: After that, we will open the floor to Q&A from the audience. Before we begin the formal remarks, I would like to remind you that certain statements on today's call, including expected future operational and financial performance and industry growth, are forward-looking statements that are made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.

Jessie Zhao: Before we begin the formal remarks, I would like to remind you that certain statements on today's call, including expected future operational and financial performance and industry growth, are forward-looking statements that are made under the Safe Harbor Provisions of the US Private Securities Litigation Reform Act of 1995. These statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement. Further information regarding these and other risks is included in the reports or documents we have filed with or furnished to the Securities and Exchange Commission. These statements only reflect our current and preliminary review as of today and may be subject to change. Our ability to achieve these projections is subject to risks and uncertainties.

Speaker #4: These statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement.

Speaker #4: Further information regarding these and other risks is included in the reports. All documents we have filed with are furnished to the Securities and Exchange Commission.

Speaker #4: These statements are only reflect our current and preliminary view as of today, and may be subject to change. Our ability to achieve these projections is subject to risks and uncertainties.

Speaker #4: All information provided in today's call is as of today. And we undertake no duty to update such information. Except as required under applicable rule.

Jessie Zhao: All information provided in today's call is as of today, we undertake no duty to update such information except as required under applicable law. Also, during the call, we will occasionally reference monetary amounts in US dollar terms. Please keep in mind that our functional currency is the Chinese RMB. We offer this translation into US dollars solely for the convenience of the audience. Now, I will turn the call to our Deputy CEO, Ms. Xiaoyu Xu. Ms. Xu, please go ahead.

Speaker #4: Also, during the call, we will occasionally reference monetary amounts in US dollar terms; please keep in mind that our functional currency is the Chinese RMB.

Speaker #4: We offer this translation into US dollars solely for the convenience of the audience. Now, I will turn the call to our Deputy CEO, Ms. Anita Zhu.

Speaker #4: Ms. Zhu, please go ahead.

Speaker #5: Hello, everyone. This is Anita. Happy Year of the Horse, and I'll now deliver the remarks on behalf of our Chairman, Mr. Zhu. In 2025, China's anti-involution initiative supported the solar PV industry's gradual emergence from a cyclical downturn.

Xiaoyu Xu: Hello, everyone. This is Anita. Happy Year of the Horse, and I'll now deliver the remarks on behalf of our chairman, Mr. Zhu. In 2025, China's N-type evolution initiative supported the solar PV industry's gradual emergence from a cyclical downturn. As a result, solar product market prices rebounded from Q3 onward, with the solid silicon sector posting the most notable gains. Following with this trend, our utilization rate increased from 33% in Q1 to 55% in Q4, bringing our annual production volumes to 123,652 metric ton, in line with our guidance of 121,000 metric ton to 124,000 metric ton, representing a 39.7% year-over-year decrease from 205,068 metric tons in 2024.

Anita Zhu: Hello, everyone. This is Anita. Happy Year of the Horse, and I'll now deliver the remarks on behalf of our chairman, Mr. Zhu. In 2025, China's N-type evolution initiative supported the solar PV industry's gradual emergence from a cyclical downturn. As a result, solar product market prices rebounded from Q3 onward, with the solid silicon sector posting the most notable gains. Following with this trend, our utilization rate increased from 33% in Q1 to 55% in Q4, bringing our annual production volumes to 123,652 metric ton, in line with our guidance of 121,000 metric ton to 124,000 metric ton, representing a 39.7% year-over-year decrease from 205,068 metric tons in 2024.

Speaker #5: As a result, solar product market prices rebounded from the third quarter onward, with a solid silicon sector posting the most notable gains. Following this trend, our utilization rate increased from 33% in Q1 to 55% in Q4, bringing to 123,652 metric tons in line with our guidance of 121,000 metric tons to 124,000 metric tons.

Speaker #5: Representing a 39.7% year-over-year decrease. From 205.68 metric tons in 2024. Furthermore, our 2025 sales volume reached 126,707 metric tons, exceeding production volume and reducing year-end inventory to a reasonable level.

Xiaoyu Xu: Furthermore, our 2025 sales volume reached 126,707 metric tons, exceeding production volume and reducing year-end inventory to a reasonable level. In the second half of 2025, we strategically ramped up sales efforts to capitalize on favorable pricing dynamics. The strong market response highlighted growing customer confidence in our product quality and their continued preference for our brand in this new pricing environment. However, polysilicon ASPs decreased 7.2% from $5.66 per kilogram in 2024 to $5.25 per kilogram in 2025. This lower pricing, combined with reduced sales volume, resulted in revenue of $665 million in 2025, compared to $1 billion in 2024.

Anita Zhu: Furthermore, our 2025 sales volume reached 126,707 metric tons, exceeding production volume and reducing year-end inventory to a reasonable level. In the second half of 2025, we strategically ramped up sales efforts to capitalize on favorable pricing dynamics. The strong market response highlighted growing customer confidence in our product quality and their continued preference for our brand in this new pricing environment. However, polysilicon ASPs decreased 7.2% from $5.66 per kilogram in 2024 to $5.25 per kilogram in 2025. This lower pricing, combined with reduced sales volume, resulted in revenue of $665 million in 2025, compared to $1 billion in 2024.

Speaker #5: In the second half of 2025, we strategically ramped up sales efforts to capitalize on favorable pricing dynamics. The strong market response highlighted growing customer confidence in our product quality and their continued preference for our brand in this new pricing environment.

Speaker #5: However, power silicon ASPs decreased 7.2% from 5.66 US dollar per kilogram in 2024 to 5.25 US dollar per kilogram in 2025. This lower pricing, combined with reduced sales volume, resulted in revenue of 665 million US dollars in 2025, compared to 1 billion USD in 2024.

Speaker #5: Despite the decline in our top line, we significantly narrowed our losses during the year as compared to 2024. In particular, a slump to a positive 1.7 million US dollars in 2025 compared to a negative 337.4 million US dollars in 2024.

Xiaoyu Xu: Despite the decline in our top line, we significantly narrowed our losses during the year as compared to 2024. In particular, EBITDA swung to a positive $1.7 million in 2025, compared to a negative $337.4 million in 2024. Net loss attributable to Daqo New Energy Corp shareholders narrowed to $170.5 million from $345.2 million in 2024. We generated $66.1 million in positive operating cash flow in 2025, marking a notable debt turnaround from the $435 million outflow recorded in 2024. We continue to maintain a strong balance sheet and ample cash reserves.

Anita Zhu: Despite the decline in our top line, we significantly narrowed our losses during the year as compared to 2024. In particular, EBITDA swung to a positive $1.7 million in 2025, compared to a negative $337.4 million in 2024. Net loss attributable to Daqo New Energy Corp shareholders narrowed to $170.5 million from $345.2 million in 2024. We generated $66.1 million in positive operating cash flow in 2025, marking a notable debt turnaround from the $435 million outflow recorded in 2024. We continue to maintain a strong balance sheet and ample cash reserves.

Speaker #5: While net loss attributable to DAQO NEW ENERGY CORP shareholders narrowed to 170.5 million US dollars from 345.2 million US dollars in 2024. Moreover, we generated a 56.1 million US dollars in positive operating cash flow in 2025, marking a notable debt turnaround from the 435 million US dollar outflow recorded in 2024.

Speaker #5: We continue to maintain a strong balance sheet and ample cash reserves. At the end of 2025, we had a cash balance of 980 US dollars million US dollars short-term investments of 114 million US dollars, bank notes receivable of 136 million, and a fixed-term bank deposit balance of 1 billion US dollars.

Xiaoyu Xu: At the end of 2025, we had a cash balance of $980 million, short-term investments of $114 million, bank notes receivable worth $136 million, and a fixed-term bank deposit balance of $1 billion. In total, these highly liquid assets stood at $2.27 billion, representing an increase of $57 million compared to the end of the previous quarter. This solid financial foundation provides us with confidence and strategic flexibility to navigate the ongoing market recovery and capitalize on long-term opportunities. Operationally, we continue to implement proactive measures in Q4 to mitigate market oversupply, including operating at a nameplate capacity utilization rate of 55%.

Anita Zhu: At the end of 2025, we had a cash balance of $980 million, short-term investments of $114 million, bank notes receivable worth $136 million, and a fixed-term bank deposit balance of $1 billion. In total, these highly liquid assets stood at $2.27 billion, representing an increase of $57 million compared to the end of the previous quarter. This solid financial foundation provides us with confidence and strategic flexibility to navigate the ongoing market recovery and capitalize on long-term opportunities. Operationally, we continue to implement proactive measures in Q4 to mitigate market oversupply, including operating at a nameplate capacity utilization rate of 55%.

Speaker #5: In total, these highly liquid assets stood at a 2.27 billion US dollars, representing an increase of 57 million US dollars compared to the end of the previous quarter.

Speaker #5: This solid financial foundation provides us with confidence and strategic flexibility to navigate the ongoing market recovery and capitalize on long-term opportunities. Operationally, we continue to implement proactive measures in the fourth quarter to mitigate market oversupply.

Speaker #5: Including operating at a nameplate capacity utilization rate of 55%. Total power silicon production for the fourth quarter was 542,181 metric tons, in line with our guidance range of 3,900 and 39,500 to 42,500 metric tons.

Xiaoyu Xu: Total polysilicon production for Q4 was 42,181 metric ton, in line with our guidance range of 39,500 to 42,500 metric tons. Our sales volume for the quarter reached 38,167 metric tons. In addition, we comprehensively reduced our production costs through process improvements, manufacturing efficiency gains, and raw material cost optimization. Extending our ongoing cost reduction initiatives, total production costs declined by 9% to $5.83 per kilogram in Q4 2025, from $6.38 per kilogram in Q3 2025.

Anita Zhu: Total polysilicon production for Q4 was 42,181 metric ton, in line with our guidance range of 39,500 to 42,500 metric tons. Our sales volume for the quarter reached 38,167 metric tons. In addition, we comprehensively reduced our production costs through process improvements, manufacturing efficiency gains, and raw material cost optimization. Extending our ongoing cost reduction initiatives, total production costs declined by 9% to $5.83 per kilogram in Q4 2025, from $6.38 per kilogram in Q3 2025.

Speaker #5: And our sales volume for the quarter reached 38,167 metric tons. In addition, we comprehensively reduced our production costs through process improvements, manufacturing efficiency gains, and raw material cost optimization.

Speaker #5: Extending our ongoing cost reduction initiatives total production costs declined by 9% to 5.83 US dollars per kilogram in Q4 2025 from 6.38 US dollars per kilogram in Q3 2025.

Speaker #5: Total idle facility-related costs, which consist primarily of non-cash depreciation expenses alongside approximately $0.10 per kilogram in cash costs for maintenance, also fell to $0.74 per kilogram in Q4 from $1.18 per kilogram in Q3.

Xiaoyu Xu: Total idle facility-related costs, which consist primarily of non-cash depreciation expenses, alongside approximately at $0.1 per kg in cash costs for maintenance, also fell to $0.74 per kg in Q4 from $1.18 per kg in Q3, driven by higher production levels. Notably, cash costs decreased by 2% from $4.54 per kg in Q3 to a new record low of $4.46 per kg in Q4. In light of current market conditions, we expect our total polysilicon production volume in Q1 2026 to be approximately 35,000 to 40,000 metric tons, and our full year 2026 production volume to be in the range of 140,000 to 170,000 metric tons.

Anita Zhu: Total idle facility-related costs, which consist primarily of non-cash depreciation expenses, alongside approximately at $0.1 per kg in cash costs for maintenance, also fell to $0.74 per kg in Q4 from $1.18 per kg in Q3, driven by higher production levels. Notably, cash costs decreased by 2% from $4.54 per kg in Q3 to a new record low of $4.46 per kg in Q4. In light of current market conditions, we expect our total polysilicon production volume in Q1 2026 to be approximately 35,000 to 40,000 metric tons, and our full year 2026 production volume to be in the range of 140,000 to 170,000 metric tons.

Speaker #5: Driven by higher production levels, notably cash costs decreased by 2% from 4.54 US dollars per kilogram in Q3 to a new record low of 4.46 US dollars per kilogram in Q4.

Speaker #5: In light of current market conditions, we expect our total power silicon production volume in the first quarter of 2026 to be approximately 35,000 metric tons to 40,000 metric tons.

Speaker #5: And our full year 2026 production volume to be in the range of 140,000 metric tons to 170,000 metric tons. Chinese authorities demonstrate a strong resolve in tackling irrational competition and industry overcapacity.

Xiaoyu Xu: Chinese authorities demonstrate a strong resolve in tackling irrational competition and industry overcapacity, formally designating anti-involution as a national priority within China's 15th Five-Year Plan. The solar PV industry was a key focus of these efforts. These initiatives have driven a structural shift from price-based competition to value-driven differentiation. To advance industry governance, authorities deployed targeted measures, including standards, guidance, quality supervision, price enforcement, and promotion of technological progress. Specifically, this involved updating legislative frameworks such as the revised Anti-Unfair Competition Law and the Draft Amendment to the Price Law, which mandate that sales shall not be below cost. Furthermore, a new mandatory national standard was drafted to set strict energy consumption limits for polysilicon production on a per unit basis.

Anita Zhu: Chinese authorities demonstrate a strong resolve in tackling irrational competition and industry overcapacity, formally designating anti-involution as a national priority within China's 15th Five-Year Plan. The solar PV industry was a key focus of these efforts. These initiatives have driven a structural shift from price-based competition to value-driven differentiation. To advance industry governance, authorities deployed targeted measures, including standards, guidance, quality supervision, price enforcement, and promotion of technological progress. Specifically, this involved updating legislative frameworks such as the revised Anti-Unfair Competition Law and the Draft Amendment to the Price Law, which mandate that sales shall not be below cost. Furthermore, a new mandatory national standard was drafted to set strict energy consumption limits for polysilicon production on a per unit basis.

Speaker #5: Formerly designating anti-involution as a national priority within China's 15 five-year plan, and the solar PV industry was a key focus of these efforts. These initiatives have driven a structural shift from price-based competition to value-driven differentiation.

Speaker #5: To advance industry governance, authorities deploy targeted measures including standards guidance, quality supervision, price enforcement, and promotion of technological progress. Specifically, this involved updating legislative frameworks such as a revised anti-unfair competition law and the draft amendment to the price law.

Speaker #5: Which mandate that sales shall not be below cost. Furthermore, a new mandatory national standard was drafted to set strict energy consumption limits for polysilicon production on a per-unit basis.

Speaker #5: Led by the China Photovoltaic Industry Association, major polysilicon manufacturers have proactively responded to these initiatives. Enforcing self-discipline and exploring innovative market-oriented approaches to combat excess capacity and pricing violations.

Xiaoyu Xu: Led by the China Photovoltaic Industry Association, major polysilicon manufacturers have proactively responded to these initiatives, enforcing self-discipline and exploring innovative, market-oriented approaches to combat excess capacity and pricing violations. These coordinated efforts have yielded measurable results in curbing overcapacity. The overall production volume fell by 28.4% to 1.32 million metric tons in 2025, and market prices surged more than 50% from the mid-2025 lows to RMB 50 to 66 per kilogram by year-end. Looking ahead, we expect anti-involution initiatives will remain a central theme for the solar PV industry, supporting a more balanced supply and demand dynamic and driving higher quality growth through 2026. More broadly, the solar PV industry continues to exhibit compelling long-term growth prospects.

Anita Zhu: Led by the China Photovoltaic Industry Association, major polysilicon manufacturers have proactively responded to these initiatives, enforcing self-discipline and exploring innovative, market-oriented approaches to combat excess capacity and pricing violations. These coordinated efforts have yielded measurable results in curbing overcapacity. The overall production volume fell by 28.4% to 1.32 million metric tons in 2025, and market prices surged more than 50% from the mid-2025 lows to RMB 50 to 66 per kilogram by year-end. Looking ahead, we expect anti-involution initiatives will remain a central theme for the solar PV industry, supporting a more balanced supply and demand dynamic and driving higher quality growth through 2026. More broadly, the solar PV industry continues to exhibit compelling long-term growth prospects.

Speaker #5: These coordinated efforts have yielded measurable results in curbing overcapacity. The overall production volumes fell by 28.4% to 1.32 million metric tons in 2025, and market prices surged more than 50% from the mid-2025 lows to RMB 50 to 66 per kilogram by year-end.

Speaker #5: Looking ahead, we expect anti-involution initiatives will remain a central theme for the solar PV industry, supporting a more balanced supply and demand dynamic and driving higher quality growth through 2026.

Speaker #5: More broadly, the solar PV industry continues to exhibit compelling long-term growth prospects. In 2025, China's newly installed solar PV capacity grew 14% year over year to 317 gigawatts.

Xiaoyu Xu: In 2025, China's newly installed solar PV capacity grew 14% year-over-year to 317 gigawatts, setting yet another record high and proving that market potential continues to exceed expectations. As the global AI industry scales rapidly, space-based solar power is increasingly viewed as a vital solution to the immense and expanding energy demands of AI data centers, creating a significant new growth engine for the sector. Looking ahead, as one of the world's lowest cost producers of the highest quality N-type polysilicon, with a strong balance sheet and no debt, we remain optimistic about the sector and believe we're ideally positioned to capitalize on the market recovery and these long-term growth opportunities. We will continue to strengthen our competitive edge through advancements in high-efficiency N-type technology and cost optimization via digital transformation and AI adoption.

Anita Zhu: In 2025, China's newly installed solar PV capacity grew 14% year-over-year to 317 gigawatts, setting yet another record high and proving that market potential continues to exceed expectations. As the global AI industry scales rapidly, space-based solar power is increasingly viewed as a vital solution to the immense and expanding energy demands of AI data centers, creating a significant new growth engine for the sector. Looking ahead, as one of the world's lowest cost producers of the highest quality N-type polysilicon, with a strong balance sheet and no debt, we remain optimistic about the sector and believe we're ideally positioned to capitalize on the market recovery and these long-term growth opportunities. We will continue to strengthen our competitive edge through advancements in high-efficiency N-type technology and cost optimization via digital transformation and AI adoption.

Speaker #5: Setting yet another record high and proving that market potential continues to exceed expectations. As a global AI industry scales rapidly, space-based solar power is increasingly viewed as a vital solution to the immense and expanding energy demands of AI data centers creating a significant new growth engine for the sector.

Speaker #5: Looking ahead, as one of the world's lowest cost producers of the highest quality anti-policylicon with a strong balance sheet and no debt, we remain optimistic about the sector and believe we're ideally positioned to capitalize on the market recovery and these long-term growth opportunities.

Speaker #5: We will continue to strengthen our competitive edge through advancements in high-efficiency anti-technology and cost optimization via digital transformation and AI adoption. As a world accelerates its transition to clean energy, we're confident in our ability to play a leading role in powering the future.

Xiaoyu Xu: As the world accelerates its transition to clean energy, we're confident in our ability to play a leading role in powering the future. Now I'll turn the call to our CFO, Mr. Ming Yang, who will discuss the company's financial performance for the quarter. Ming, please go ahead.

Anita Zhu: As the world accelerates its transition to clean energy, we're confident in our ability to play a leading role in powering the future. Now I'll turn the call to our CFO, Mr. Ming Yang, who will discuss the company's financial performance for the quarter. Ming, please go ahead.

Speaker #5: Now I'll turn the call to our CFO, Mr. Ming Yang, who will discuss the company's financial performance for the quarter. Ming, please go ahead.

Speaker #1: Thank you, Anita, and hello everyone. This is Ming Yang, CFO of DAQO NEW ENERGY. We appreciate you joining our earnings conference call today. I will now go over the company's fourth quarter 2025 financial performance.

Ming Yang: Thank you, Anita. Hello, everyone. This is Ming Yang, CFO of Daqo New Energy. We appreciate you joining our earnings conference call today. I will now go over the company's Q4 2025 financial performance. Revenues were $221.7 million, compared to $244.6 million in Q3 2025, and $195.4 million in Q4 2024. The decrease in revenue compared to Q3 2025 was primarily due to a decrease in sales volume. Gross profit was $15.4 million, compared to $9.7 million in Q3 2025, and gross loss of $65.3 million in Q4 2024.

Speaker #1: Revenues were 221.7 million compared to 244.6 million in the third quarter of 2025 and 195.4 million in the fourth quarter of 2024. The decreasing revenue compared to the third quarter of 2025 was primarily due to a decrease in sales volume.

Speaker #1: Gross profit was 15.4 million compared to 9.7 million in the third quarter of 2025 and gross loss of 65.3 million in the fourth quarter of 2024.

Speaker #1: Gross margin was 7% compared to 3.9% in the third quarter of 2025 and negative 33% in the fourth quarter of 2024. The increase in gross margin compared to the third quarter of 2025 was primarily due to the decrease in production costs.

Ming Yang: Gross margin was 7%, compared to 3.9% in Q3 2025, and -33% in Q4 2024. The increase in gross margin compared to Q3 2025 was primarily due to the decrease in production costs. Selling, general, and administrative expenses were CNY 18.7 million, compared to CNY 32.3 million in Q3 2025 and CNY 29.4 million in Q4 2024. The decrease was primarily due to the reduction in non-cash share-based compensation costs related to the company's sharing incentive plan, which was 0 for Q4 and CNY 18.6 million in Q3 2025.

Speaker #1: Selling, general, and administrative expenses were $18.7 million, compared to $32.3 million in the third quarter of 2025 and $29.4 million in the fourth quarter of 2024.

Speaker #1: The decrease was primarily due to the reduction in non-cashier-based compensation costs related to the company's share incentive plan, which was zero for the fourth quarter and 18.6 million in the third quarter of 2025.

Speaker #1: The company recognized 19.3 million in non-cash expense related to allowance for credit loss in the fourth quarter mainly due to the uncertainty regarding the recoverability of long outstanding other receivables that limit give a little more color on this.

Ming Yang: The company recognized $19.3 million in non-cash expense related to allowance for credit loss in Q4, mainly due to the uncertainty regarding the recoverability of long outstanding other receivables. Let me give a little more color on this. During the early development stage of the company's Inner Mongolia polysilicon project, funds were lent to a local government affiliated industrial park development entity for supporting the infrastructure building and development of our Inner Mongolia polysilicon site. The local government-affiliated entity will repay these funds later. However, due to industry downturn that resulted in insufficient local tax revenue, the repayment has been delayed. As a result, we recorded an allowance for credit loss due to the delayed repayment of these funds. All amounts due has been reserved, and we do not expect any future related allowance for credit loss.

Speaker #1: During the early development stage of the company's inner Mongolia polysilicon project, funds were lent to a local government affiliated industrial park development entity for supporting the infrastructure building and development of our inner Mongolia polysilicon site.

Speaker #1: The local government-affiliated entity will repay these funds later. However, due to the industry downturn that resulted in insufficient local tax revenue, the repayment has been delayed.

Speaker #1: As a result, we recorded an allowance for credit loss due to the delayed repayment of these funds. All amounts due have been reserved, and we do not expect any future-related allowance for credit loss.

Speaker #1: R&D expenses were 0.7 million compared to 0.6 million in the third quarter of 2025 and 0.4 million in the fourth quarter of 2024. R&D expenses can vary from period to period and reflect R&D activities that take place during the quarter.

Ming Yang: R&D expenses were CNY 0.7 million, compared to CNY 0.6 million in Q3 2025 and CNY 0.4 million in Q4 2024. R&D expenses converted from period to period reflect R&D activities that take place during the quarter. As a result, the foregoing, loss from operations was CNY 20.9 million, compared to CNY 20.3 million in Q3 2025 and CNY 300 million in Q4 2024. Operating margin was -9.4%, compared to -8.3% in Q3 2025, and -154% in Q4 2024.

Speaker #1: As a result, the foregoing loss on operations was 20.9 million compared to 20.3 million in the third quarter of 2025 and 300 million in the fourth quarter of 2024.

Speaker #1: Operating margin was negative 9.4% compared to negative 8.3% in the third quarter of 2025 and negative 154% in the fourth quarter of 2024. Net loss, attributable to DAQO NEW ENERGY shareholders, was 7.3 million compared to 14.9 million in the third quarter of 2025 and 180 million in the fourth quarter of 2024.

Ming Yang: Net loss attributable to Daqo New Energy shareholders was $7.3 million, compared to $14.9 million in Q3 2025 and $180 million in Q4 2024. Loss per basic ADS was $0.11, compared to $0.22 in Q3 2025 and $2.71 in Q4 2024. Adjusted net loss attributable to Daqo New Energy shareholders, excluding non-cash share-based compensation costs, was $7.3 million, compared to adjusted net income attributable to Daqo New Energy Corp. shareholders of $3.7 million in Q3 2025, and adjusted net loss attributable to Daqo New Energy shareholders of $170.6 million in Q4 2024.

Speaker #1: Loss per basic ADS was 11 cents compared to 22 cents in the third quarter of 2025 and 2.71 cents in the fourth quarter of 2024.

Speaker #1: Adjusted net loss, attributable to DAQO NEW ENERGY shareholders, excluding non-cashier-based compensation costs, was 7.3 million compared to adjusted net income, attributable to DAQO NEW ENERGY shareholders of 3.7 million in the third quarter of 2025 and adjusted net loss attributable to DAQO NEW ENERGY shareholders of 170.6 million in the fourth quarter of 2024.

Speaker #1: Adjusted loss per basic ADS was $0.11, compared to adjusted earnings per basic ADS of $0.05 in the third quarter of 2025, and adjusted loss per basic ADS of $0.0256 in the fourth quarter of 2024.

Ming Yang: Adjusted loss per basic ADS was $0.11, compared to adjusted earnings per basic ADS of $0.05 in Q3 2025, and adjusted loss per basic ADS of $2.56 in Q4 2024. EBITDA was $52 million, compared to $45.8 million in Q3 2025, and -$235 million in Q4 2024. EBITDA margin was 23.7%, compared to 18.7% in Q3 2025, and -120% in Q4 2024. Now I will go over the company's full year 2025 financial results. Revenues were $665 million, compared to $1.03 billion in 2024.

Speaker #1: EBITDA was 52 million compared to 45.8 million in the third quarter of 2025 and negative 235 million in the fourth quarter of 2024. EBITDA margin was 23.7% compared to 18.7% in the third quarter of 2025 and negative 120% in the fourth quarter of 2024.

Speaker #1: Now I will go over the company's full year 2025 financial results. Revenues were 665 million compared to 1.03 billion in 2024. The decrease was primarily due to lower sales volume as well as lower polysilicon average selling prices.

Ming Yang: The decrease was primarily due to lower sales volume as well as lower polysilicon and average selling prices. Gross loss was $137.9 million, compared to $212.9 million in 2024. Gross margin was negative 20.7%, compared to negative 20.7% in 2024. The decrease in gross loss was primarily due to lower revenue. SG&A expenses were $118.2 million, compared to $143 million in 2024. The decrease was primarily due to the reduction in non-cash share-based compensation costs related to the company's share incentive plan, which was $55.8 million and $72.4 million in 2025 and 2024, respectively. R&D expenses were $2.6 million, compared to $4.6 million in 2024. R&D expenses reflect R&D activities that take place during the period.

Speaker #1: Gross loss was $137.9 million compared to $212.9 million in 2024. Gross margin was negative 20.7% compared to negative 20.7% in 2024. The decrease in gross loss was primarily due to lower revenue.

Speaker #1: SG&A expenses were 118.2 million compared to 143 million in 2024. The decrease was primarily due to the reduction in non-cashier-based compensation costs related to the company's share incentive plan, which was 55.8 million and 72.4 million in 2025 and 2024, respectively.

Speaker #1: R&D expenses were 2.6 million compared to 4.6 million in 2024. R&D expenses reflect R&D activities that take place during the period. As a result, the foregoing loss on operations was 270 million compared to 564 million in 2024.

Ming Yang: As a result of the foregoing, loss from operations was CNY 270 million, compared to CNY 564 million in 2024. Operating margin was negative 40.6%, compared to negative 54.8% in 2024. Net interest income was CNY 9 million, compared to CNY 30.2 million in 2024. The decrease in interest income was due to lower cash bank balance as well as lower bank interest rate. In addition to the interest income, the company did record CNY 24.1 million in gain on short-term investments for 2025 related to the purchase of bank short-term investment products. Net loss attributable to Daqo New Energy Corp. shareholders was CNY 170.5 million, compared to CNY 345 million in 2024.

Speaker #1: Operating margin was negative 40.6% compared to negative 54.8% in 2024. Net interest income was $9 million compared to $30.2 million in 2024. The decrease in interest income was due to lower cash bank balance as well as lower bank interest rate.

Speaker #1: In addition to the interest income, the company did record 24.1 million in gain on short-term investment for 2025 related to the purchase of being short-term investment products.

Speaker #1: Net loss, attributable to DAQO NEW ENERGY shareholders, was 170.5 million compared to 345 million in 2024. Loss per basic ADS was 2.53 cents compared to 5.22 cents in 2024.

Ming Yang: Loss per basic ADS was $2.53, compared to $5.22 in 2024. Adjusted net loss to Daqo New Energy shareholders was $114.7 million, compared to $272 million in 2024. Adjusted loss per basic ADS was $1.70, compared to $4.12 in 2024. EBITDA was $1.7 million, compared to negative $237 million in 2024. EBITDA margin was 0.3%, compared to negative 32.8% in 2024. Now on the company's financial condition.

Speaker #1: Adjusted net loss to DAQO NEW ENERGY shareholders was 114.7 million compared to 272 million in 2024. Adjusted loss per basic ADS was 1.70 cents compared to 4.12 cents in 2024.

Speaker #1: EBITDA was $1.7 million compared to negative $337 million in 2024. EBITDA margin was 0.3% compared to negative 32.8% in 2024. Now, on the company's financial condition.

Speaker #1: As of December 31, 2025, the company had 980 million in cash, cash equivalent, and interested cash compared to 551.6 million since September 30, 2025, and 1.04 billion as of December 31, 2024.

Ming Yang: As of 31 December 2025, the company had CNY 980 million in cash equivalents, and restricted cash, compared to CNY 551.6 million as of 30 September 2025, and CNY 1.04 billion as of 31 December 2024. As of 31 December 2025, short-term investment was CNY 114 million, compared to CNY 31 million as of 30 September 2025, and CNY 9.6 million as of 31 December 2024. As of 31 December 2025, note receivable balance was CNY 135.5 million, compared to CNY 157 million as of 30 September 2025, and CNY 55.2 million as of 31 December 2024. Note receivables represents bank notes with maturity within six months.

Speaker #1: And as of December 31, 2025, short-term investment was 114 million compared to 31 million as of September 30, 2025, and 9.6 million as of December 31, 2024.

Speaker #1: And as of December 31, 2025, no receivable balance was 135.5 million compared to 157 million as of September 30, 2025, and 55.2 million as of December 31, 2024.

Speaker #1: No receivable represents bank notes with maturity within six months. As of December 31, 2025, the balance of six treasury deposits within one year was 972.4 million compared to 1.03 billion as of September 30, 2025, and 1.08 billion as of December 31, 2024.

Ming Yang: As of 31 December 2025, the balance of six term deposit within one year was $972.4 million, compared to $1.03 billion as of 38 September 2025, and $1.08 billion as of 31 December 2024. Now on the company's cash flows. For the 12 months ended 31 December 2025, net cash provided operating activities was $56.1 million, compared to net cash used in operating activities of $435 million in the same period of 2024. For the 12 months ended 31 December 2025, net cash used in investing activities was $140.7 million, compared to $1.48 billion in the same period of 2024.

Speaker #1: Now, on the company's cash flows. For the 12 months ended December 31, 2025, net cash provided by operating activities was $56.1 million, compared to net cash used in operating activities of $435 million in the same period of 2024.

Speaker #1: And for the 12 months ended December 31, 2025, net cash used in investment activities was 140.7 million compared to 1.48 billion in the same period of 2024.

Speaker #1: The net cash used in investment activities in 2025 include 179.5 million for the purchase of property plans and equipment, primarily related to the remaining capital expenditures of the company's inner Mongolia polysilicon project.

Ming Yang: The net cash used in investing activities in 2025 include $179.5 million for the purchase of property, plant, and equipment, primarily related to the remaining capital expenditures of the company in the Mongolia polysilicon project. For the year 2026, the company currently expects approximately $100 to $150 million of capital expenditures for the year, primarily related to the remaining payments for the Inner Mongolia project, as well as maintenance CapEx. For the 12 months ended 31 December 2025, net cash using finance activities was $0.9 million, compared to $47.4 million in the same period of 2024. The net cash using this finance activity in 2025 was related to $0.9 million in stock repurchases made by the company's subsidiary in Xinjiang Daqo to its minority shareholders.

Speaker #1: For the year 2026, the company currently expects approximately 100 to 150 million of capital expenditures for the year primarily related to the remaining payments for the inner Mongolia project as well as maintenance CapEx.

Speaker #1: For the 12 months ended December 31, 2025, net cash used in finance activities was 0.9 million compared to 47.4 million in the same period of 2024.

Speaker #1: The net cash used in financing activities in 2025 was related to $0.9 million in stock repurchases made by the company's subsidiaries in Daqo to its minority shareholders.

Speaker #1: And that concludes our prepared remarks. We will now open the call to Q&A from the audience. Operator, please begin.

Ming Yang: That concludes our prepared remarks. We will now open the call to Q&A from the audience. Operator, please begin.

Speaker #2: We will now begin the question and answer session. To ask a question, you may press star and one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Alan Hon with J.P. Morgan. Please go ahead.

Speaker #2: If at any time your question has been addressed and you would like to withdraw your question, please press star and two. At this time, we will pause momentarily to assemble our roster.

Speaker #2: The first question today comes from Alan Han with JPMorgan. Please go ahead.

Speaker #3: Well, thank you, management, for taking my questions, and it's great to see a recovery for the company. I mean, the first question I have is regarding potential buybacks, because it's great to see we are finally generating positive operating cash flow for the full year last year.

Alan Hon: Thank you, management, for taking my questions. It's great to see, like, a recovery for the company. I mean, I have, like, The first question I have is regarding, like, a potential buyback, because, like, it's great to see we are finally generating operating, positive operating cash flow for the full year last year. In this sort of environment, like, how should we think about, like, a buyback strategy?

Speaker #3: And in this sort of environment, how should we think about buyback strategy?

Speaker #2: Thank you, Alan, for raising the question. So first, I would say that share repurchase is absolutely a topic that we would be monitoring closely as part of our capital allocation strategy.

Xiaoyu Xu: Thank you, Alan, for raising the question. First, I would say that share repurchase is absolutely a topic that we've been monitoring closely as part of our capital allocation strategy. We're taking a more prudent and informed approach, especially given the evolving landscape around China's anti-involution policies in the solar sector. We definitely see tremendous value and intrinsic value in our shares, especially amid the current market dynamics. We believe it's essential to wait for more clarity on the policy implementation and also the outcomes before proceeding. Well, we believe that this wait and see stance would allow us to optimize the timing and also the impact of the repurchase program better.

Anita Zhu: Thank you, Alan, for raising the question. First, I would say that share repurchase is absolutely a topic that we've been monitoring closely as part of our capital allocation strategy. We're taking a more prudent and informed approach, especially given the evolving landscape around China's anti-involution policies in the solar sector. We definitely see tremendous value and intrinsic value in our shares, especially amid the current market dynamics. We believe it's essential to wait for more clarity on the policy implementation and also the outcomes before proceeding. Well, we believe that this wait and see stance would allow us to optimize the timing and also the impact of the repurchase program better.

Speaker #2: And we're taking a more prudent and informed approach. Especially given the evolving landscape around China's anti-involution policies in the solar sector, while we definitely see tremendous value in terms of valuing our shares, especially amid the current market dynamics, we believe it's essential to wait for more clarity on the policy implementation and also the outcomes before proceeding.

Speaker #2: We believe that this wait-and-see stance would allow us to optimize the timing and also the impact of the repurchase program better.

Alan Hon: Thank you. My next question is on the policy outlook. I guess, we are aware that, like, a consolidation platform was formed in December, soon after, followed by, like, antitrust, I mean, questions by some of the regulator. I mean, can you give us, like, a call? I mean, or what do you think how the industry consolidation would happen? I mean, should we just, like, discount the consolidation from the moment, or how should we think about that? Also, I just noticed, like, one of your peers, has just conducted, like, M&A, I mean, on buying out some of the small players. I mean, is that part of your strategy as well?

Speaker #3: Thank you. And my next question is on the policy outlook. I guess we are aware that a consolidation platform was formed in December soon after followed by anti-trust, I mean, questions by some of the regulators.

Speaker #3: I mean, can you give us a little more color? I mean, what do you think about how the industry consolidation would happen? I mean, should we just discount the consolidation for the moment, or how should we think about that?

Speaker #3: And also, I just noticed one of your peers has just conducted an M&A on buying out some of the small players. I mean, is that part of your strategy as well?

Speaker #2: Yeah, thank you, Alan. I'll answer it. I'll answer the question of the recent acquisition by our peers. First, and then move on to the anti-involution dynamics.

Xiaoyu Xu: Yeah. Thank you, Alan. Maybe I'll answer it. I'll answer the question of the recent acquisition by our peers first, and then move on to the anti-involution dynamics. I would say that we see this as the individual player's strategic decision, especially reflecting their confidence in the sector's future and also their determination to further strengthen their competitive positioning. For us, I would say we are completely open-minded toward opportunities that could create value for the industry and also for our shareholders. We do view such transactions as constructive, that would drive the market consolidation. The national anti-involution policy is designed to achieve. Direct acquisition or consolidation via the SPV that you mentioned, are both forms toward achieving the same goal, essentially.

Anita Zhu: Yeah. Thank you, Alan. Maybe I'll answer it. I'll answer the question of the recent acquisition by our peers first, and then move on to the anti-involution dynamics. I would say that we see this as the individual player's strategic decision, especially reflecting their confidence in the sector's future and also their determination to further strengthen their competitive positioning. For us, I would say we are completely open-minded toward opportunities that could create value for the industry and also for our shareholders. We do view such transactions as constructive, that would drive the market consolidation. The national anti-involution policy is designed to achieve. Direct acquisition or consolidation via the SPV that you mentioned, are both forms toward achieving the same goal, essentially.

Speaker #2: So I would say that we see this as the individual players' strategic decision, especially reflecting their confidence in the sector's future and also their determination to further strengthen their competitive positioning.

Speaker #2: For us, I would say we are completely open-minded toward our opportunities that could create value for the industry and also for our shareholders. And we do view such transactions as constructive that would drive the market consolidation, the national anti-involution policy is designed to achieve.

Speaker #2: And direct acquisition or consolidation via the SPV that you mentioned are both forms toward achieving the same goal, essentially, shifting toward a more rational and a more efficient industry structure, something that we strongly support.

Xiaoyu Xu: Shifting toward a more rational and a more efficient industry structure, something that we strongly support. That being said, I just want to reiterate that the anti-involution designated as a national priority within China's next 5-year plan. As one of the major players in industries, we are determined to address the overcapacity challenge, which we believe will ultimately become a value-driven gain by innovations and also technological progresses, instead of the current price-based competition, and lead to a more healthier and more sustainable industry. Indeed, the SPV for consolidation that many of you might be aware, was successfully established by the end of 2025 in December, which marks the first step and also signaling our resolve to collaboratively tackle the overcapacity issue.

Anita Zhu: Shifting toward a more rational and a more efficient industry structure, something that we strongly support. That being said, I just want to reiterate that the anti-involution designated as a national priority within China's next 5-year plan. As one of the major players in industries, we are determined to address the overcapacity challenge, which we believe will ultimately become a value-driven gain by innovations and also technological progresses, instead of the current price-based competition, and lead to a more healthier and more sustainable industry. Indeed, the SPV for consolidation that many of you might be aware, was successfully established by the end of 2025 in December, which marks the first step and also signaling our resolve to collaboratively tackle the overcapacity issue.

Speaker #2: That being said, I just want to reiterate that the anti-involution is designated as a national priority within China's next five-year plan. And as one of the major players in the industry, we are determined to address the overcapacity challenge, which we believe would ultimately become a value-driven gain by innovations and also technological progress instead of the current price-based competition, and lead to a healthier and more sustainable industry.

Speaker #2: And indeed, the SPV for consolidation that many of you might be aware was successfully established by the end of 2025 in December, which marks the first step.

Speaker #2: And also signaling our resolve to collaboratively tackle the overcapacity issue but, of course, it's not an easy task with lots of back and forth.

Xiaoyu Xu: Of course, it's not an easy task, with lots of back and forth within the participants and also with the government entities. I want to say that discussions are actively ongoing, with a strong emphasis on maintaining a more market-oriented approach to ensure that we meet fair competition, and we are abiding by the guidelines, the regulatory guidelines. To provide more color, we will approach this in a more well-defined phases, potentially with initial investment injections anticipated in near term, which would lay the foundation of the financial stability. Also we, from there, we would gradually move towards the consolidation, allowing for more efficient resource allocation and enhanced operational synergies across the value chain.

Anita Zhu: Of course, it's not an easy task, with lots of back and forth within the participants and also with the government entities. I want to say that discussions are actively ongoing, with a strong emphasis on maintaining a more market-oriented approach to ensure that we meet fair competition, and we are abiding by the guidelines, the regulatory guidelines. To provide more color, we will approach this in a more well-defined phases, potentially with initial investment injections anticipated in near term, which would lay the foundation of the financial stability. Also we, from there, we would gradually move towards the consolidation, allowing for more efficient resource allocation and enhanced operational synergies across the value chain.

Speaker #2: Within the participants and also with the government entities, but I want to say that discussions are actively ongoing with a strong emphasis on maintaining a more market-oriented approach to ensure that we meet their competition and that we are abiding by the guidelines.

Speaker #2: The regulatory guidelines. And to provide more color, we will approach this in a more well-defined phases potentially with initial investment injections anticipated in the near term.

Speaker #2: Which would lay the foundation of the financial stability and also from there, we would gradually move toward the consolidation, allowing for more efficient resource allocation and enhanced operational synergies across the value chain.

Speaker #2: And we believe that this structured progression would not only align with the current regulatory guidelines but also position our company and the industry at large for longer-term resilience and profitability.

Xiaoyu Xu: We believe that this structured progression will not only align with the current regulatory guidelines, but also position our company and the industry at large for longer-term resilience and profitability. We are quite optimistic about these developments.

Anita Zhu: We believe that this structured progression will not only align with the current regulatory guidelines, but also position our company and the industry at large for longer-term resilience and profitability. We are quite optimistic about these developments.

Speaker #2: So we're quite optimistic about these developments.

Speaker #3: Okay, thank you. For your answer. And with that, I'll pass it on.

Alan Hon: Okay, thank you, for your answer. With that, I'll pass it on.

Speaker #2: Thank you, Alan.

Xiaoyu Xu: Thank you, Alan.

Anita Zhu: Thank you, Alan.

Operator: The next question comes from Philip Shen with ROTH Capital Partners. Please go ahead.

Speaker #3: Next.

Speaker #4: The next question comes from Phil Shen with Roth Capital Partners. Please go ahead.

Operator: The next question comes from Philip Shen with ROTH Capital Partners. Please go ahead.

Speaker #5: Hey, guys. Thanks for taking my questions. As a follow-up to that last question, from Alan, I was wondering if you might be able to share what are some of the key milestones that we should be looking for in the coming quarters that show progress on the mandatory national standard?

Philip Shen: Hey, guys. Thanks for taking my questions. As a follow-up to that last question from Alan, I was wondering if you might be able to share what are some of the key milestones that we should be looking for in the coming quarters that show progress on, you know, the mandatory national standard? You know, there's a draft, but when does that become implemented, for example? Then with the Anti-Unfair Competition Law and the Draft Amendment to the Price Law, like, what are the milestones that we should be following so that we can see the progress in the industry structure as well as the competition or the, you know, the industry consolidating? Thank you.

Phil Shen: Hey, guys. Thanks for taking my questions. As a follow-up to that last question from Alan, I was wondering if you might be able to share what are some of the key milestones that we should be looking for in the coming quarters that show progress on, you know, the mandatory national standard? You know, there's a draft, but when does that become implemented, for example? Then with the Anti-Unfair Competition Law and the Draft Amendment to the Price Law, like, what are the milestones that we should be following so that we can see the progress in the industry structure as well as the competition or the, you know, the industry consolidating? Thank you.

Speaker #5: There's a draft, but when does that become implemented, for example? And then with the anti-unfair competition law, and the draft amendment to the price law, what are the milestones that we should be following so that we can see the progress in the industry structure as well as the competition or the industry consolidating?

Speaker #5: Thank you.

Xiaoyu Xu: Thank you, Phil. I would say because there's not much information and there's a lack of clarity and transparency in the current dynamics, it's difficult for us to say exactly what we might be monitoring, because not a lot of details are released until the policies land. Prices, we definitely see a pricing recovery. As part of the price laws, sales should not be below the industry level cost. That's a positive side. Yeah, I would say we would have to be a bit more patient with the policies as the conversations are still ongoing.

Speaker #2: Thank you, Phil. I would say, because there's not much information and there's a lack of clarity and transparency in the current dynamics, it's difficult for us to say exactly what you might be monitoring, because not a lot of details are released until the policies land.

Anita Zhu: Thank you, Phil. I would say because there's not much information and there's a lack of clarity and transparency in the current dynamics, it's difficult for us to say exactly what we might be monitoring, because not a lot of details are released until the policies land. Prices, we definitely see a pricing recovery. As part of the price laws, sales should not be below the industry level cost. That's a positive side. Yeah, I would say we would have to be a bit more patient with the policies as the conversations are still ongoing.

Speaker #2: But prices, we definitely see a pricing recovery and as part of the price loss, sales should not be below the industry-level cost. So that's a positive side.

Speaker #2: But yeah, I would say we would have to be a bit more patient with the policies as the conversations are still ongoing.

Speaker #5: Okay. Got it. Thank you. And then let me quickly follow up. So I think there's a very high level to government meeting coming up that will discuss the next five-year plan.

Philip Shen: Okay. Got it. Thank you.

Phil Shen: Okay. Got it. Thank you.

Ming Yang: This is Ming.

Philip Shen: Go ahead, Ming.

Phil Shen: Go ahead, Ming.

Ming Yang: Let me just quickly follow up. I think there's a very high level, like, government meeting coming up, that will discuss the next five-year plan. As part of that, I think there's a presentation by a key government agency on the progress of anti-involution. I think after the top-level central government meeting, I think more policies will come forward. That's something to monitor.

Speaker #5: As part of that, I think there's a presentation by a key government agency on the progress of anti-involution. So I think after the top level central government meeting, then I think more policies will come forward.

Speaker #5: So that's something to monitor. Okay. Great. Okay. Thanks, Ming. And then shifting over to the price outlook, I know there's not as much clarity on the milestones.

Philip Shen: Okay, great. Okay, thanks, Ming. Shifting over to the price outlook, you know, I know there's not as much clarity on the milestones for policy. What's your assumption for poly prices in Q1 and Q2? If you have a view for the rest of the year, that would be great. Thanks.

Phil Shen: Okay, great. Okay, thanks, Ming. Shifting over to the price outlook, you know, I know there's not as much clarity on the milestones for policy. What's your assumption for poly prices in Q1 and Q2? If you have a view for the rest of the year, that would be great. Thanks.

Speaker #5: For a policy, but what's your assumption for poly prices in Q1 and Q2? And if you have a view for the rest of the year, that would be great.

Speaker #5: Thanks.

Speaker #2: Okay. So like I just said, so as part of the pricing law, sales are not should not be below the industry-level cost. So I would say the lower bound will be at least 53, 54 and be per kilogram.

Xiaoyu Xu: Okay. Like I just said, as part of the Price Law, like, sales should not be below the industry level cost. I would say, the lower bound will be at least 53, 54 RMB per kilogram, and we would remain around that level for the coming quarters. It's hard for us to say what, where prices would go in the coming quarters, because that would essentially depends on how the SPV would evolve and what would be the pace of the consolidation.

Anita Zhu: Okay. Like I just said, as part of the Price Law, like, sales should not be below the industry level cost. I would say, the lower bound will be at least 53, 54 RMB per kilogram, and we would remain around that level for the coming quarters. It's hard for us to say what, where prices would go in the coming quarters, because that would essentially depends on how the SPV would evolve and what would be the pace of the consolidation.

Speaker #2: And we would remain around that level for the coming quarters. And it's hard for us to say what where prices would go in the coming quarters because that would essentially depend on how the SPV would evolve and what would be the pace of the consolidation.

Speaker #5: Okay. Got it. And then for the things that you guys can control, costs were down and hit a record low in Q4. How much do you think you can lower your cash costs by the end of '26?

Philip Shen: Okay, got it. For the things that you guys can control, costs were down, and hit a record low in Q4. How much do you think you can lower your cash costs, you know, by the end of 2026? Thanks.

Phil Shen: Okay, got it. For the things that you guys can control, costs were down, and hit a record low in Q4. How much do you think you can lower your cash costs, you know, by the end of 2026? Thanks.

Speaker #5: Thanks.

Ming Yang: Hi, Phil. This is Ming. I think we continue to make progress on both production costs and cash costs. I think this quarter will benefited from lower energy price or costs, as well as additional manufacturing efficiencies. I think we should continue to benefit. I do think that I, for probably Q1 and Q2, we're likely to see similar cash costs to the Q4 level, with further reduction in the second half.

Speaker #6: Hey, Phil. This is Ming. So, I think we continue to make progress on both production costs and cash costs. I think this quarter will benefit from lower energy prices or costs.

Speaker #6: So it was an additional manufacturing efficiencies. I think we should continue to benefit I do think that for probably Q1 and Q2, we're likely to see similar cash costs to the Q4 level.

Speaker #6: And then with further reduction in the second half.

Speaker #5: Great. Okay. All right, Ming. Anita, thank you very much. I'll pass it on.

Philip Shen: Great. Okay. All right, Ming, Anita, thank you very much. I'll pass it on.

Phil Shen: Great. Okay. All right, Ming, Anita, thank you very much. I'll pass it on.

Speaker #6: Great. Thank you.

Ming Yang: Great. Thank you.

Speaker #2: Thank you, Phil.

Operator: Thank you, Phil. The next question comes from Emmett Lau with Jefferies. Please go ahead.

Anita Zhu: Thank you, Phil.

Operator: The next question comes from Emmett Lau with Jefferies. Please go ahead.

Speaker #4: The next question comes from Annette Lau with Jeffrey. Please go ahead.

Emmett Lau: Thanks for taking my question. I think it's a follow-up on the previous question. Basically, it's intertwined, like if the price you have mentioned, it should be above 60 RMB. The question here is, but if the price is not allowed to push up to above 60 RMB, then what is the incentive here for acquiring others' capacities like the plan before? I don't know, like, what was the thinking behind or the acquisition will happen, like what your peers are doing. Basically, each company are having a standalone basis, or like, I don't know, like how is the whole coordination versus the price is coordinated?

Speaker #3: Thanks for taking my question. I think I'd say follow-up on the previous question. Basically, it's intertwined like if the price you have mentioned, it should be above 50 RMB.

Alan Lau: Thanks for taking my question. I think it's a follow-up on the previous question. Basically, it's intertwined, like if the price you have mentioned, it should be above 60 RMB. The question here is, but if the price is not allowed to push up to above 60 RMB, then what is the incentive here for acquiring others' capacities like the plan before? I don't know, like, what was the thinking behind or the acquisition will happen, like what your peers are doing. Basically, each company are having a standalone basis, or like, I don't know, like how is the whole coordination versus the price is coordinated?

Speaker #3: So the question here is, but if the price is not allowed to push up to above 60 RMB, then what is the incentive here for acquiring others' capacities like the plan before?

Speaker #3: I don't know who was thinking behind or the acquisition will happen like what your peers are doing basically each company are having a standalone basis or I don't know how the whole coordination versus the price is coordinated.

Speaker #2: Sorry, Alan. Can you repeat the question again? I don't think I caught all the question.

Xiaoyu Xu: Sorry, Alan, can you repeat the question again? I don't think I caught all the questions.

Anita Zhu: Sorry, Alan, can you repeat the question again? I don't think I caught all the questions.

Emmett Lau: Yeah. I mean, previously, the incentive to my understanding is that the remaining players can push prices above 60 RMB. I think there was some, maybe window guidance from the regulatory kind of, saying that you cannot control prices. If the industry or the major players are still going to acquire the smaller players, but then you can't push up the prices, then what is the point of acquiring smaller players? How do you expect the price outlook going forward? Like, if you couldn't make money, then why would you acquire anyone?

Alan Lau: Yeah. I mean, previously, the incentive to my understanding is that the remaining players can push prices above 60 RMB. I think there was some, maybe window guidance from the regulatory kind of, saying that you cannot control prices. If the industry or the major players are still going to acquire the smaller players, but then you can't push up the prices, then what is the point of acquiring smaller players? How do you expect the price outlook going forward? Like, if you couldn't make money, then why would you acquire anyone?

Speaker #3: Yeah. So yeah. So I mean, previously, the incentive to manage standing is that you the remaining players can push prices above 60 RMB. And then I think there were some maybe window guidance from the regulatory kind of saying that you cannot control prices.

Speaker #3: So if the industry or the major players are still going to acquire the smaller players but then you can't push up the prices, then what is the point of acquiring smaller players?

Speaker #3: And how do you expect the price outlook going forward? Because if we couldn't make money, then why would you acquire anyone?

Xiaoyu Xu: like I said, I think it would have to be done in phases, right? First step is that you're not allowed to be selling below the cost. Then, gradually, you would move on to the consolidation and phasing out the excess in outdated capacities. It's hard for us to say how high prices can go because we want to focus on a more market-oriented approach to achieving this.

Speaker #2: Like I said, I think it would have to be done in phases, right? So first step is that you're not allowed to be selling below the cost.

Anita Zhu: like I said, I think it would have to be done in phases, right? First step is that you're not allowed to be selling below the cost. Then, gradually, you would move on to the consolidation and phasing out the excess in outdated capacities. It's hard for us to say how high prices can go because we want to focus on a more market-oriented approach to achieving this.

Speaker #2: And then gradually, you would move on to the consolidation. And phasing out the excess and outdated capacity. And it's hard for us to say how high prices can go because we want to focus on a more market-oriented approach to achieving this.

Speaker #3: So do you mean the acquisition or will happen in phases? Which probably lasts for a longer time?

Emmett Lau: Do you mean, like, the acquisition or will happen in phases which probably last for a longer time?

Alan Lau: Do you mean, like, the acquisition or will happen in phases which probably last for a longer time?

Speaker #2: Yeah. I would say it would have to be done over a couple of years. It won't be done all at once.

Xiaoyu Xu: Yeah, I would say it would have to be done over a couple years. Like, it won't be done, like, all at once.

Anita Zhu: Yeah, I would say it would have to be done over a couple years. Like, it won't be done, like, all at once.

Emmett Lau: I see. I've noticed that prices actually have gone down a little bit recently from around CNY 60 to the 50-ish. I think futures price is below 50 already. What do you expect the price in Q1 and Q2?

Alan Lau: I see. I've noticed that prices actually have gone down a little bit recently from around CNY 60 to the 50-ish. I think futures price is below 50 already. What do you expect the price in Q1 and Q2?

Speaker #3: I see. So and I've noticed that prices actually have gone down a little bit recently from around 60 RMB to 50-ish. I think futures price is below 50 already.

Speaker #3: So what do you expect the price in the first Q and second quarter?

Speaker #2: Well, I think Phil also touched upon the pricing outlook for the first half of 2026. And I would say it would be at least around 53, 54, given that's roughly the industry-level cost currently.

Xiaoyu Xu: Well, I think Phil also touched upon the pricing outlook for the first half of 2026, I would say it would be at least, around CNY 53, CNY 54, given that's roughly the industry level cost currently. Yeah, moving forward, it will really depend on the pace of the consolidation. That will determine.

Anita Zhu: Well, I think Phil also touched upon the pricing outlook for the first half of 2026, I would say it would be at least, around CNY 53, CNY 54, given that's roughly the industry level cost currently. Yeah, moving forward, it will really depend on the pace of the consolidation. That will determine.

Speaker #2: Yeah. And moving forward, it will really depend on the pace of the consolidation. And that will determine.

Emmett Lau: Understood.

Alan Lau: Understood.

Speaker #3: Understood. And. Understood. And then in 4Q, results if I simply divide the revenue by the sales volume, apparently, the ASP seems to be lower than the spot prices.

Xiaoyu Xu: Uh.

Anita Zhu: Uh.

Emmett Lau: Understood. In Q4 results, if I simply divide the revenue by the sales volume, apparently, the ASP seems to be lower than the spot prices. I wonder if there's some delay recognition that might be delayed to Q1 and some spot prices in Q3's result, or like, why was that the revenue in Q4 up is slightly lower than the spot prices?

Alan Lau: Understood. In Q4 results, if I simply divide the revenue by the sales volume, apparently, the ASP seems to be lower than the spot prices. I wonder if there's some delay recognition that might be delayed to Q1 and some spot prices in Q3's result, or like, why was that the revenue in Q4 up is slightly lower than the spot prices?

Speaker #3: I wonder if there's some delay recognition that might be delayed to first quarter and support prices in third quarters without or why was that the revenue in 4Q updates?

Speaker #3: To be slightly lower than the spot prices.

Ming Yang: Do you mean that the ASP in Q4 was below?

Speaker #6: Do you mean that the ASP in 4Q was below the spot price?

Ming Yang: Do you mean that the ASP in Q4 was below?

Emmett Lau: Yeah.

Alan Lau: Yeah.

Ming Yang: spot price? Okay.

Speaker #3: Yeah.

Speaker #6: Okay. I think in Q4, the mix is such that because we were ramping up additional volume, right, production, and the initial batch of production from that initial ramp-up, I think it's consistent with our past experience that the quality were not that great.

Emmett Lau: Yes.

Alan Lau: Yes.

Ming Yang: I think in Q4, the mix is such that, because we were ramping up additional volume, right? Production. The initial batch of production from that initial ramp up, I think it's consistent with our past experience that the qualities were not that great. Okay. Those actually, you know, had a market discount, right? I think it's maybe December, then we kind of normalized in terms of product quality. It's that factor that led to a slightly lower ASP, overall ASP.

Speaker #6: Okay. So those actually had a market discount, right? I think it's maybe December is when we kind of normalized. In terms of product quality, so it's that factor that led to a slightly lower ASP overall ASP.

Speaker #3: I see. So could investors understand this as a factor that would be normalized in first quarter, meaning that even if the spot market prices are marginally lower, but the ASP of the company will probably be more flattish than the decline in spot prices?

Emmett Lau: I see. Could investors understand this as a factor that would be normalized in Q1? Meaning that even if the spot market prices are marginally lower, but the ASP of the company will probably be more flattish than the decline in spot prices.

Alan Lau: I see. Could investors understand this as a factor that would be normalized in Q1? Meaning that even if the spot market prices are marginally lower, but the ASP of the company will probably be more flattish than the decline in spot prices.

Ming Yang: Yes, I think we would expect that. Yes.

Speaker #6: Yes. I think we would expect that. Yeah.

Ming Yang: Yes, I think we would expect that. Yes.

Emmett Lau: Thank you. I think my last question is on the more broader perspective from the industry. Like, would you consider any acquisition? I noticed that Anita have mentioned you are open-minded, are you liaising with any other specific player already, or it's still not on the schedule yet?

Speaker #3: Thank you. I think my last question is on the more broader perspective from the industry. So would you consider any acquisition? I've noticed that anytime I've mentioned you're open-minded, but are you liaising with any other specific player already, or it's still not on the schedule yet?

Alan Lau: Thank you. I think my last question is on the more broader perspective from the industry. Like, would you consider any acquisition? I noticed that Anita have mentioned you are open-minded, are you liaising with any other specific player already, or it's still not on the schedule yet?

Speaker #2: Well, thank you, Alan. So like I mentioned, at the beginning, so I think that we are open-minded toward these different opportunities either via acquisition or consolidation.

Xiaoyu Xu: Thank you, Alan. Like I mentioned at the beginning, I think that we are open-minded toward these different opportunities, either via acquisition or consolidation. As part of the STVs, we're quite confident that we'll see something in formation in the coming in the near term or in the coming quarters. That would be our primary focus for now. However, in the worst case, of course, acquisition, acquiring directly would also be something that we could consider.

Anita Zhu: Thank you, Alan. Like I mentioned at the beginning, I think that we are open-minded toward these different opportunities, either via acquisition or consolidation. As part of the STVs, we're quite confident that we'll see something in formation in the coming in the near term or in the coming quarters. That would be our primary focus for now. However, in the worst case, of course, acquisition, acquiring directly would also be something that we could consider.

Speaker #2: But as part of the STVs, we're quite confident that we'll see something information in the coming in the near term or in the coming quarters.

Speaker #2: So that would be our primary focus for now. However, in the worst case, of course, acquisition acquiring directly would also be something that we could consider.

Speaker #3: I see. I see. Thanks. I'll pass on. Thank you.

Emmett Lau: I see. I see. Thanks. I'll pass on. Thank you.

Alan Lau: I see. I see. Thanks. I'll pass on. Thank you.

Speaker #6: Great. Thanks, Alan.

Ming Yang: Great. Thanks, Alan.

Operator: The next question comes from Meng Wen with Goldman Sachs. Please go ahead.

Speaker #1: The next question comes from Meng Wen with Goldman Sachs. Please go ahead.

Speaker #4: Yeah. Hello. Thanks, management, for taking my question. To follow up to I have two follow-up questions. First is regarding to our M&A target. I heard Anita you say you are an open-minded for the acquisition opportunities.

Meng Wen: Yeah, hello. Thanks management for taking my question. I have two follow-up questions. First is regarding our M&A target. I heard, Anita, you say you are open-minded for the acquisition opportunities. Could you elaborate from here? Is there any market share target for us, from 10+ to further higher in the future? What kind of capacity do we prefer more in terms of acquisition on our own? That's my first question.

Mengwen Wang: Yeah, hello. Thanks management for taking my question. I have two follow-up questions. First is regarding our M&A target. I heard, Anita, you say you are open-minded for the acquisition opportunities. Could you elaborate from here? Is there any market share target for us, from 10+ to further higher in the future? What kind of capacity do we prefer more in terms of acquisition on our own? That's my first question.

Speaker #4: So could you elaborate from here if there are any market share target for us from 10 plus to for the higher in the future?

Speaker #4: And what kind of capacity do we prefer more in terms of acquisition on our own? That's my first question.

Xiaoyu Xu: Thank you, Meng Wen. First, I would say that we are comfortable with where we are right now, given the current market dynamics, because essentially, none of the players is operating at full utilization rates. Of course, in the future, like our peers, if we wanna further strengthen our positioning by grasping more market share, we don't have a specific number in mind as to how much we want, to where we wanna be. I would say, if it's aligned with the national anti-involution initiative, it's something that we would consider to do in the future.

Speaker #2: So thank you, Mowen. So first, I think we first, I would say that we are comfortable with where we are right now given the current market dynamics because essentially, none of the players is operating at full utilization rate.

Anita Zhu: Thank you, Meng Wen. First, I would say that we are comfortable with where we are right now, given the current market dynamics, because essentially, none of the players is operating at full utilization rates. Of course, in the future, like our peers, if we wanna further strengthen our positioning by grasping more market share, we don't have a specific number in mind as to how much we want, to where we wanna be. I would say, if it's aligned with the national anti-involution initiative, it's something that we would consider to do in the future.

Speaker #2: Of course, in the future, like our peers if we want to further strengthen our positioning by grasping more market share, we don't have a specific number in mind as to how much we want to where we want to be.

Speaker #2: But I would say if it's aligned with the national entity evolution initiative, it's something that we would consider to do in the future.

Speaker #4: Yeah. Sure. Thank you. So that follows my second question. Can you help us to understand a bit more based on our conversation with government and with the leading industry players how we should define the success of the evolution in a poly sector from here?

Meng Wen: Yeah, sure. Thank you. That follows my second question. Can you help us to understand a bit more, like, based on our conversation with government and with the leading industry players, how we should define the success of the anti-involution in the polysilicon sector from here? Because in the past, we saw polysilicon price increase to above our OP cost, and then that concludes the success of the anti-involution. It seems polysilicon price continue increasing and a bit bumpy. Also, there is some ongoing acquisitions. What shall we look forward to in terms of the future anti-involution progress, and when we can call it a successful, complete anti-involution in our polysilicon sector? Thank you.

Mengwen Wang: Yeah, sure. Thank you. That follows my second question. Can you help us to understand a bit more, like, based on our conversation with government and with the leading industry players, how we should define the success of the anti-involution in the polysilicon sector from here? Because in the past, we saw polysilicon price increase to above our OP cost, and then that concludes the success of the anti-involution. It seems polysilicon price continue increasing and a bit bumpy. Also, there is some ongoing acquisitions. What shall we look forward to in terms of the future anti-involution progress, and when we can call it a successful, complete anti-involution in our polysilicon sector? Thank you.

Speaker #4: Because in the past, we saw the ONE poly price increase to above our OP cost. And then that could conclude the success of the evolution.

Speaker #4: And it seems a poly price continue increasing and so a bit bumpy. And also, there's some ongoing acquisitions. So what should we look forward to in terms of the future and evolution progress?

Speaker #4: And when can we call it a successful, complete evolution in our poly sector? Thank you.

Xiaoyu Xu: ... I, first, I think that for the anti-involution initiative, it would extend over a number of years, given that this round, the excess problem is very deep-rooted. The nameplate capacity of, including everything, is more than 3 million metric tons, which is more than double the demand of now. I would say until the more outdated and smaller players exit and prices restore to a more healthier level, so that the industry as a whole becomes profitable to support the overall renewable energy, the goal. Yeah, that's when we would say the anti-involution is completed.

Anita Zhu: ... I, first, I think that for the anti-involution initiative, it would extend over a number of years, given that this round, the excess problem is very deep-rooted. The nameplate capacity of, including everything, is more than 3 million metric tons, which is more than double the demand of now. I would say until the more outdated and smaller players exit and prices restore to a more healthier level, so that the industry as a whole becomes profitable to support the overall renewable energy, the goal. Yeah, that's when we would say the anti-involution is completed.

Speaker #2: So first, I think that for the entity and evolution initiative, it would extend over a number of years. Given that this round, the success problem is very deep-rooted.

Speaker #2: So the main capacity of including everything is more than 3 million. Metric tons, which is more than double the demand now. So I would say until the more outdated and smaller players exit and prices resort to a more healthier level, so that the industry as a whole becomes profitable to support the overall renewable energy goal.

Speaker #2: Yeah. That's when we would say the entity evolution is completed.

Meng Wen: Thank you, Anita. Can we understand in this way, like, the key target for the anti-involution is to sustain the poly price at over current level at least, and then to help facilitate outdated capacity exit, and that will take longer time than expected. Ultimately, the key target going forward is to take the smaller players offline? Is that correct?

Speaker #4: And thank you, Anita. So can we understand in this way the key target for the evolution is to sustain the poly price at overcurrent level at least, and then to help facilitate outdated capacity exit?

Mengwen Wang: Thank you, Anita. Can we understand in this way, like, the key target for the anti-involution is to sustain the poly price at over current level at least, and then to help facilitate outdated capacity exit, and that will take longer time than expected. Ultimately, the key target going forward is to take the smaller players offline? Is that correct?

Speaker #4: And that would take a longer time than expected, but ultimately, the key target going forward is to take the smaller players offline? Is that correct?

Speaker #2: Yeah. I would say that's the aim.

Xiaoyu Xu: Yeah, I would say that's the aim.

Anita Zhu: Yeah, I would say that's the aim.

Speaker #4: Sure. So the total outdated capacity to go offline is still around 1 million to 1.5 million tons. Is that right?

Meng Wen: Sure. The total outdated capacity to go offline is still around 1 million to 1.5 million tons. Is that right?

Mengwen Wang: Sure. The total outdated capacity to go offline is still around 1 million to 1.5 million tons. Is that right?

Xiaoyu Xu: Yeah, that's about the number.

Speaker #2: Yeah. That's about the number.

Anita Zhu: Yeah, that's about the number.

Speaker #4: Sure. Sure. Thank you so much. That's all from me.

Meng Wen: Sure. Sure. Thank you so much. That's all from me.

Mengwen Wang: Sure. Sure. Thank you so much. That's all from me.

Speaker #6: Okay. Thank you, Mowen.

Ming Yang: Okay, thank you, Mulan.

Speaker #1: The next question comes from Gordon Johnson with GIJ Research. Please go ahead.

Operator: The next question comes from Gordon Johnson with GLJ Research. Please go ahead.

Speaker #5: Hey, guys. Thanks for taking the question. Really appreciate it. So I guess piggybacking off of a question that was touched on earlier, it seems like in the spot market, polysilicon prices had surged, and now they've come off.

Gordon Johnson: Hey, guys. Thanks for taking the question. Really appreciate it. I guess piggybacking off of a question that was touched on earlier, it seems like in the spot market, polysilicon prices had surged and now they've come off. Specifically when I talk about the spot market, I'm talking about the futures market. It also seems like, you know, due to the policy changes in China, demand has been, I think, somewhat subdued. Can you give us an outlook on what your expectations are with the puts and takes around anti-involution, what your outlook is on polysilicon prices in Q1 and maybe Q2? I have a follow-up. Thank you.

Speaker #5: And specifically, when I talk about the spot market, I'm talking about the futures market. And it also seems like due to the policy changes in China, demand has been I think somewhat subdued.

Speaker #5: So, can you give us an outlook on what your expectations are, with the puts and takes around anti-involution? What's your outlook on polysilicon prices in the first quarter, and maybe the second quarter?

Speaker #5: And then I have a follow-up. Thank you.

Xiaoyu Xu: Thank you, Gordon. You're asking about first, the futures market and also the pricing outlook for Q1 and Q2?

Anita Zhu: Thank you, Gordon. You're asking about first, the futures market and also the pricing outlook for Q1 and Q2?

Speaker #2: Thank you, Gordon. So you're asking about, first, the futures market and also the pricing outlook for the first and second quarter?

Speaker #5: Yes, please.

Gordon Johnson: Yes, please.

Speaker #2: Okay. So for the pricing outlook, I already answered Phil and also Alan's question, but I can repeat it again. So for the first and second quarter for pricing, as mandated by the pricing law, sales should not be below the industry level cost.

Xiaoyu Xu: Okay. For the pricing outlook, I already answered Bill and also Alan Hon's question, I can repeat it again. For Q1 and Q2 for pricing, as mandated by the Price Law of the People's Republic of China, sales should not be below the industry level cost. I would say it should be at least RMB 53, RMB 54 per kg in the coming quarters. For the futures market, I would say it's an area with the potential for risk management and also pricing stability in our industry. We do see participation in the futures market as an extension of the current sales strategy, offering the chance to hedge against volatility and also to secure some profitable margins.

Anita Zhu: Okay. For the pricing outlook, I already answered Bill and also Alan Hon's question, I can repeat it again. For Q1 and Q2 for pricing, as mandated by the Price Law of the People's Republic of China, sales should not be below the industry level cost. I would say it should be at least RMB 53, RMB 54 per kg in the coming quarters. For the futures market, I would say it's an area with the potential for risk management and also pricing stability in our industry. We do see participation in the futures market as an extension of the current sales strategy, offering the chance to hedge against volatility and also to secure some profitable margins.

Speaker #2: So I would say it should be at least 53, 54 RMB per kilogram in the coming quarters. And for the futures market, I would say it's an area with the potential for risk management and also pricing stability in our industry.

Speaker #2: And we do see participation in the futures market as an extension of the current sales strategy, offering the chance to hedge against volatility. And also to secure some profitable margins.

Xiaoyu Xu: Similar to our approach on share repurchases, I would say, we are prioritizing policy clarity around the anti-involution dynamics in China before diving in the futures market. We would definitely employ a more disciplined strategy in the future, a strategy gathering more insights as the policy unfolds, to ensure that our involvement is strategic and also value creative.

Speaker #2: But similar to our approach, share repurchases I would say we are prioritizing policy clarity around the anti-involution dynamics in China before diving in the futures market.

Anita Zhu: Similar to our approach on share repurchases, I would say, we are prioritizing policy clarity around the anti-involution dynamics in China before diving in the futures market. We would definitely employ a more disciplined strategy in the future, a strategy gathering more insights as the policy unfolds, to ensure that our involvement is strategic and also value creative.

Speaker #2: We would definitely employ a more disciplined strategy in the futures, a strategy gathering a more insight as the policies unfold to ensure that our involvement is strategic and also value creative.

Speaker #5: Well, that's helpful. But I guess and I appreciate that. I didn't mean to re-ask the question, but looking at the futures price, 46,315 right now, and looking at the recent comments from the government on anti-involution, is there any potential that prices could come in in the first half below the 53 to 54 range you're targeting, or is that something that you're pretty certain of?

Gordon Johnson: That's helpful. I guess... I appreciate that. I didn't mean to re-ask the question, but looking at the futures price CNY 46,315 right now, and looking at the recent comments from the government on anti-involution, is there any potential that prices could come in the first half below the CNY 53 to 54 range you're targeting, or is that something that you're pretty certain of?

Xiaoyu Xu: I think that's the industry level cost at the moment. Given that we're not supposed to be selling below that cost due to the pricing law, I would say it should be somewhat sustained at that level.

Speaker #2: I think that's the industry level cost at the moment. So given that we're not supposed to be selling below that cost due to the pricing law, I would say it should be somewhat sustained at that level.

Anita Zhu: I think that's the industry level cost at the moment. Given that we're not supposed to be selling below that cost due to the pricing law, I would say it should be somewhat sustained at that level.

Gordon Johnson: Helpful. Then the last question is, you made significant improvement on your free cash flow. Congratulations in 2025. Do you have any thoughts on how you expect free cash flow to trend this year? Thanks for the questions.

Speaker #5: Helpful. And then the last question is, you made significant improvement on your free cash flow. Congratulations. In 2025, do you have any thoughts on how you expect free cash flow to trend this year?

Speaker #5: And thanks for the questions.

Ming Yang: Hi, Gordon, let me answer that. This is Ming. Okay, thanks for your question. Yeah, I think free cash flow will turn positive, especially the second half of 2025. I think given our expectation for both volume and average selling price to be held more steady, as well as cost to make stable to lower, we do believe that. I think based on the Q4 level, free cash flow should, I mean, without giving a specific number, free cash flow should improve further, I think, from the Q4 level going forward for 2026.

Speaker #6: Hi, Gordon. Let me answer that. This is Ming. Okay. Thanks for your question. So yeah, I think free cash flow will turn positive, especially the second half of 2025.

Speaker #6: I think given our expectation for both volume and average selling price, to be held more steady as well as a cost to make stable to lower, we do believe that.

Speaker #6: And I think based on the Q4 level, free cash flow should I mean, without giving specific number, free cash flow should improve further, I think, from the Q4 level.

Speaker #6: Going forward for 2026.

Speaker #5: Thanks again for the questions.

Gordon Johnson: Thanks again for the question.

Speaker #6: Great. Thank you so much.

Ming Yang: Great. Thank you so much.

Operator: This concludes our question and answer session. I would like to turn the conference back over for any closing remarks.

Speaker #1: This concludes our question and answer session. I would like to turn the conference back over for any closing remarks.

Speaker #7: Thank you, everyone, again for participating in today's conference call. Should you have any further questions, please don't hesitate to contact us. Thank you and have an awesome day.

Jessie Zhao: Thank you everyone again for participating in today's conference call. Should you have any further questions, please don't hesitate to contact us. Thank you and have an awesome day. Goodbye.

Speaker #7: Goodbye.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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