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Kandi Technologies Group Inc (NASDAQ:KNDI)
Q2 2019 Earnings Call
Aug 9, 2019, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the Kandi Technologies Second Quarter 2019 Financial Results Call. [Operator Instructions] At this time, I'd like to turn the conference over to Kewa Luo, IR Manager. Please go ahead.

Kewa Luo -- Manager Investor Relations

Thank you, Jenny. Hello, everyone, and welcome to Kandi Technologies Group Inc.'s Second Quarter 2019 Earnings Conference Call. The Company distributed it's earnings press release earlier today, and you can find a copy on Kandi's website at www.kandivehicle.com.

With us today are Kandi's Founder, Chairman, and Chief Executive Officer, Mr. Hu Xiaoming; and Interim Chief Financial Officer, Ms. Zhu Xiaoying. Mr. Hu and Ms. Zhu will deliver prepared remarks followed by a question-answer session.

Before we get started, I'm going to review the Safe Harbor Statement regarding today's conference call. Please note that the discussions today will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the Company's results may differ materially from views expressed today.

Further information regarding these and other risks and uncertainties are included in the Company's annual report on Form-10 K for the fiscal year ended December 31st, 2018 and in other documents filed with the US Securities and Exchange Commission. Kandi does not assume any obligation to update any forward-looking statements, except as required under applicable law. As a reminder, this conference call is being recorded. In addition, a audio webcast of this conference will be available on Kandi's Investor Relations website.

I will now turn the call over to Kandi's Founder, Chairman, and Chief Executive Officer, Mr. Hu Xiaoming.

Xiaoming Hu -- Chairman, President and Chief Executive Officer

[Foreign Speech] First of all, hello, everyone. Thank you for joining our second quarter 2019 earnings conference call. Due to the suggestions I have received from a lot of shareholders, I'd like to make some changes to our conference call. As the information we have already disclosed in the news and 10-Q, I'm going to skip those, including the CFO's remarks, so this way I can leave more time to talk about some new comments that we haven't talked about in the news and leave more time for the shareholders to ask questions.

[Foreign Speech]

The second quarter is still not very satisfying because of the JV company's pending restructuring. This caused the loss of the JV company and which resulted in Kandi's overall loss. However, Kandi's traditional business such as EV parts and off-road vehicle sales I believe that they have achieved very good results during this quarter.

[Foreign Speech]

In the first half, because of the restructuring of joint venture, as a result Geely is becoming the controlling shareholder with about 78% equity stake in the joint venture. So Geely has started with business plan refining and updating all our -- all the JV's EV models to accommodate the new subsidy policy that government has come up with. If we continue to produce and sell the original models the result is going to be losing more money. So that's why right now we are still at a stage of refining the business plan for the JV company.

[Foreign Speech] So from now on, we are going to have completely new EV lines that are going to be utilize Geely's technology, their supply chain system, to come up new product.

[Foreign Speech] One model we are going to launch is the -- going to have a more advanced technology, but however, the cost is going to be 30% reduced compared to the old model.

[Foreign Speech] This model is close to be launched, and I believe it has lot of advantage in terms of price and performance and technologies.

[Foreign Speech] So that's why I said in my comments, in the news we released on Wednesday, that with the new products that are going to be launched, I believe JV company will be able to achieve exciting future growth on the dealer's [Phonetic] leadership.

[Foreign Speech] So this is the obstacles that JV has been going through. And I'd like to share with you about updates with JV's recent developments.

[Foreign Speech] Additionally, we have finally received the dual production license, and once we get that, I believe we're going to get additional support from local government.

[Foreign Speech] Besides what's happening at JV, our traditional business, off-road vehicle, is also going through some changes, too.

[Foreign Speech] For example, the UTV [Indecipherable] to produce still only has a few functions such like store some products, but right now, based on the younger generation's demands, we're going to have UTV upgraded to have, such as air-conditioning and other features. So we're also going to upgrade the UTV models to meet the market demand.

[Foreign Speech] And also one more thing I'm very excited to update you is about battery exchange. That's something we're always passionate about. However, there was a seminar hosted on a July 31st. The seminar is about the exchanged batteries.

[Foreign Speech] And in the seminar the speakers, once again, acknowledging the importance of quick battery exchange. And you know that in the past years, the quick battery exchange received lot of misunderstanding, but right now they finally came to realize that how important this is and how efficient it's going to be working for EVs. So going forward this is going to be a -- lay down a great foundation for our EV's development, such as our collaboration with Ankao. I believe this is a very good news for us.

[Foreign Speech] That's all I have for today, and I will leave the rest of the time for our shareholders to ask questions. And then I can share more with you in detail.

And operator, we can start to take some questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] And we will hear first from Michael Fearnow of FocusTech Investments.

Michael Fearnow -- Focus Tech Investments Inc. -- Analyst

Yes. Good morning, and I enjoyed your type of conference model that you're now doing. And my question relates to the press about the recent slowdown in China, overall, and to some extent expecting auto sales. It seems in this kind of environment that the rideshare like DiDi and [Indecipherable] would greatly benefit. So would Mr. Hu give us his input as to how it will affect Kandi going forward? Thank you.

Xiaoming Hu -- Chairman, President and Chief Executive Officer

I'm sorry, Mike, can you repeat your question that -- just your question part?

Michael Fearnow -- Focus Tech Investments Inc. -- Analyst

Yes. It relates to the slowdown in overall business in China and affected to some extent auto sales in China. I would think that that would benefit the ridesharing services such as Didi and Cao Cao. If that is so, would Mr. Hu, give us his input on how it should affect Kandi's business going forward?

Xiaoming Hu -- Chairman, President and Chief Executive Officer

[Foreign Speech] Yes, the market has been having reduced policies -- subsidy policy to support the EVs recently in this year. That's why I mentioned earlier that if we continue to produce and sell the EV models, we're going to continue to lose money. But however, the new models we are developing together with Geely is going to reduce at least 30% cost and have more features, technologies, that we can offer, including the online ride-hailing market. That's going to help us to gain more market share to survive in this kind of slowing down market.

Michael Fearnow -- Focus Tech Investments Inc. -- Analyst

Well, thank you. And again, I appreciate the new format of the conference call.

Xiaoming Hu -- Chairman, President and Chief Executive Officer

Thank you. [Foreign Speech]

Operator

And we'll go to our next question from Mike Pfeffer of Oppenheimer. Sir, your line is open. Please go ahead. Mr. Pfeffer, your line is open. Perhaps you're on mute.

Xiaoming Hu -- Chairman, President and Chief Executive Officer

Hello?

Operator

We're not able to hear you. If you're on mute, please depress your mute function so that we can hear you. With no response on the line, we'll have to move to our next question. At this time, we'll move to Walter Hill with Carty & Company.

Walter Hill -- Carty & Co., Inc. -- Analyst

Thank you. Since we haven't seen the Q2 2019 10-Q yet, based on last quarter filing, Kandi had just under $116 million in short-term liabilities and $198 million in total liabilities reported. This already is way down from $217 million in Q3 of 2018.

Assuming the JV pays back the $65 million it owes Kandi, and Li Shufu and Geely pays the balance of some $63 million it still owes Kandi for the purchase of the 22% interest in the JV, Kandi's total liabilities would drop to under $70 million against the book value of some $240 million for a debt to equity ratio of less than 0.3.

Totally ridiculous for our current market cap of only around $260 million. And this does not even take into consideration the additional $160 million to $200 million sales value of Kandi's legacy Jinhua facility, which has only some $7.8 million in debt against it. As grossly undervalued as Kandi is, why wouldn't Kandi consider selling the Jinhua facility and then increase the buyback to $100 million or more of its outstanding shares in the open market, which, by the way, would increase Mr. Hu's ownership back to above 50%?

Xiaoming Hu -- Chairman, President and Chief Executive Officer

Thank you for your questions. [Foreign Speech] First of all, I really appreciate how closely you follow up Kandi. I can tell from the numbers that you are very familiar with our financials side. Really appreciate that. Of course, our current market capital is extremely undervalued by the market. I think that's also due to the misunderstanding our battery exchange [Phonetic] in the past years and years and JV restructuring and our own performance.

That's why right now we are going through all these business refining. And we believe that once we upgrade our business to meet the new market conditions and to improve our internal operational results, we will be able to regain market recognition and the market cap will eventually return to a reasonable range.

The Company's buyback shares also showing the Company's confidence in the Company's future. So for that we are very confident that we are going to achieve all these.

[Foreign Speech] Also I'd like to add on regarding to Jinhua facility, since right now I don't really need the cash urgently, so I'm not rushing to selling that part. But however I believe the longer it last, the longer -- the more value it's going to become. And yes, that's all.

Walter Hill -- Carty & Co., Inc. -- Analyst

Thank you.

Xiaoming Hu -- Chairman, President and Chief Executive Officer

Thank you.

Operator

And we'll hear next from Li Gao [Phonetic] a private investor.

Unidentified Participant

Good evening, Mr. Hu, and good morning, Kewa. So I have three questions, still should be short ones. So the first one is about the license that Kandi just received from MIIT. It was excellent to see Kandi JV finally being awarded its long-overdue manufacturing license from MIIT. To the longtime holders of Kandi, this is exciting inflection point we have waited over -- we have waited over five years for. For the sake of new investors, could Mr. Hu please explain why [Indecipherable] only 14 EV makers, which does not even include Tesla or Nio, out of more than 200 prospective EV makers in all of China to receive this dual award. It's so big for Kandi. [Foreign Speech]

Kewa Luo -- Manager Investor Relations

big for Kandi.

Xiaoming Hu -- Chairman, President and Chief Executive Officer

[Foreign Speech] Hi, Li Gao [Phonetic], would you like me to translate or you want to translate?

Unidentified Participant

No, you go ahead please.

Xiaoming Hu -- Chairman, President and Chief Executive Officer

Okay. So Mr. Hu was saying that to Kandi -- Kandi has waited for five years to receive the dual production license. But for himself, he actually has waited for 30 years to receive this license. It's really, really valuable.

And in terms of what kind of benefits Kandi is going to receive after having the dual production license, there are a couple things. First, again, in the past we were accused about battery exchange and the government came up with a lot of misunderstanding on this kind of business model. And this certainly impacted Kandi JV to receive the approval for the license. That's why it has been delaying for this long time. But right now, this has finally got cleared.

Second of all, as everyone know, in the past the JV company is producing and selling -- was producing and selling EVs through Geely's license. So now once the JV has its own license, no longer need to rely on Geely's license. And this is a big step forward.

Thirdly, after the license is received, the Jiangsu -- Kandi Jiangsu is going to -- definitely going to receive a lot of support from the local government. And in fact Jiangsu's license is the first that received in Nantong. So this is definitely a big deal. And Li Gao [Phonetic] [Indecipherable] mentioned that out of 200 manufacturers there were only about dozens, about 14 EV makers got a license, but I have to say that those 200 car manufacturers, most of them are traditional carmakers, but however, these -- over dozens of EV car makers they are EV makers. So we are I think about 17 manufactures to receive this. And I believe there will be one more to be approved. After that I think there won't be no more dual production license will be granted to an EV produce -- EV manufacturer. So indeed, this is very valuable.

And I really appreciate this investors closely following up and support to Kandi. And right now, we do have the money and we'll also have the license. I think what's come next is execution. That's why I keep saying that I'm very excited that [Indecipherable] going to under Geely's leadership with their resources and technologies and their network, the Kandi's JV going to have a very good future.

[Foreign Speech] Also, I'd like to mention that the moment we receive the final documents about the approval of the production license, I got very emotional, even had tears in my eyes, but I really couldn't believe that once the press release went out, the market didn't really react the way that we were hoping for. And for that, I'm kind of disappointed, just a joke on the side.

Unidentified Participant

So and a follow-up on this question, so we longtime shareholders followed the license very closely, especially there's some value added to the Company. So we understand that many Chinese EV start-ups has formed a joint venture or bought out some old car company which has the production license. For example, Aiways just formed a -- acquired a [Indecipherable] stake in Jiangling Motor Holding. So, Mr. Hu, what kind of value you think this license alone added to the JV company? [Foreign Speech]

Xiaoming Hu -- Chairman, President and Chief Executive Officer

[Foreign Speech] I think it's very hard to evaluate the license itself, how much value it's in dollars going to add it to. While you mentioned the transaction, and it's complicated than it seems. But however, for us, I think it at least adds a couple-fold [Phonetic] to our current value.

Unidentified Participant

So another question is about, Mr. Hu mentioned on the last conference -- actually, Mr. Hu also just mentioned after we received the license and also after the JV reorganization local government will give Kandi JV a lot more support. You mentioned a number about something closer to RMB10 billion investment or some kind of cash or I don't know what kind of form from the government. So if I heard that correctly about that number, could Mr. Hu clarify this? So what kind of support from local government after the manufacturing license? [Foreign Speech]

Xiaoming Hu -- Chairman, President and Chief Executive Officer

[Foreign Speech] The government didn't indicate in much detail -- much more detail. So once we have received the support, either in payment or anything else, we will update the market accordingly.

Unidentified Participant

Okay. Finally, a very quick question about the new car Mr. Hu mentioned in the last conference and just now. So is this the car with the 30% cost reduction and a very competitive auto market, the K8 you mentioned in the last conference? If it is, when will that be ready for sale? [Foreign Speech]

Xiaoming Hu -- Chairman, President and Chief Executive Officer

[Foreign Speech] It's not K8 you ask. It's going to be a brand new car that utilize Geely's technology. It will be much more advanced in all -- overall features. [Indecipherable] going to come out at the end of year, but at this moment, I cannot release any more details.

Unidentified Participant

Thank you very much, Mr. Hu. Yeah, that's all from me, Kewa.

Kewa Luo -- Manager Investor Relations

Thank you. We can take the next question.

Operator

And we'll go next to Arthur Porcari of Corporate Strategies, Inc. Please go ahead. Your line is open.

Arthur Porcari -- Corporate Strategies, Inc. -- Analyst

Okay. Thank you very much. Mr. Hu, I really do like this new format you created right now. It truly does prove to us long-term holders Kandi may have finally hit an inflection point after 10 years, and as far as [Indecipherable]

But I want to revisit an update on some comments you made in the year-end 2018 and Q1 2019 conference calls. Mainly [Indecipherable] this year's JV [Indecipherable] along with Kandi's 100% owned Ankao subsidiary, with battery exchange unit, as Mr. Hu talked about earlier, and its relationship with the 300,000 government-accredited EV program Kandi has announced.

But I also want to congratulate Mr. Hu. He is almost understated, but I'm glad he mentioned about the meeting that was held just last week [Indecipherable] Kandi really [Indecipherable] people was really the [Indecipherable] battery exchange. That's why Mr. Hu was so happy about it. He invented and then turned it over to Kandi, the first patent they put battery exchange, which was originally approved by the MIIT as one of the only three models, and some nine years ago it was approved for global use in China, but it was kind of overrun by all the conventional manufacturers who were sticking batteries in every bumper and fender and everywhere else. And it didn't [Indecipherable] easily to quick battery exchange.

For that reason, it seemed that [Indecipherable] for a number of years that Mr. Hu always had his feeling that this was going to work. So when they had that meeting last week, he also understated the fact that he was also quoted in all the articles to cover the media in China last week, as he truly is the father of this type of technology, which is almost going to be mandatory as I'll talk about in a moment for a quick battery exchange, for ride-hailing in particular.

Go ahead and tell that to Mr. Hu right now. Then I've ...

Xiaoming Hu -- Chairman, President and Chief Executive Officer

[Foreign Speech] Go ahead, Art.

Arthur Porcari -- Corporate Strategies, Inc. -- Analyst

In the year-end conference call, Mr. Hu said, and I quote, "management team hopes the JV to achieve its projected goals of producing and selling 20,000 EVs in 2019." Mr. Hu made this surprise forecast in March, while being fully aware of the upcoming restructuring with Geely Holdings and Li Shufu at that time. And the Company had already announced it was upgrading its business model to the much broader ride-hailing market, as shown by its signed agreements with Ruibo and China giant such as China Resources and Didi Chuxing for 300,000 EVs over five years, along with an additional 20,000 EVs to Geely's high-end EV unicorn Cao Cao over three years.

Is it unreasonable to assume, with the recent approval of the ride-hailing K23, and I'd like him to talk a little bit more about the K23, that we still have a shot at this strong second half push toward achieving the 20,000 car target that was originally management's goal for 2019? And I'll follow with a couple more questions after.

Kewa Luo -- Manager Investor Relations

[Foreign Speech]

Xiaoming Hu -- Chairman, President and Chief Executive Officer

[Foreign Speech]

Kewa Luo -- Manager Investor Relations

I want to mention that the EV model that I talked about earlier and this is going to -- really going to be the turning point for the Company because it's going to reduce the cost and regain the market share once [Indecipherable] But right now I cannot say much until the car is launched. Regarding to 20,000 EV goal, I think probably it's not going to realize this year since that was still on the stage of refining the business model and the product.

Arthur Porcari -- Corporate Strategies, Inc. -- Analyst

A follow up on that question then. The K23, it was approved recently and that was [Indecipherable] car -- I understand that [Indecipherable] had paid Kandi some -- itself some $44 million, $45 million to develop. What is the status of the K23? And then I still have more behind that.

Kewa Luo -- Manager Investor Relations

[Foreign Speech]

Xiaoming Hu -- Chairman, President and Chief Executive Officer

[Foreign Speech]

Kewa Luo -- Manager Investor Relations

For the K23, it's also going through the upgrading and utilize Geely's technology, because right now what K23 has seen in the supply, cost is still very high. So we are going to upgrading that model as well. And there was another EV model that right now is going through the developing stage. Yeah, the Hainan [Phonetic] is the one that was going to export to the US. And that one also aiming to reduce at least 30% cost. So, yes, the Hainan [Phonetic] facility right now is also going through a dramatic change to upgrading all our products.

Arthur Porcari -- Corporate Strategies, Inc. -- Analyst

A little more follow up on that. The Hainan [Phonetic] facility, the way I understand, is still owned by KNDI, Kandi, not the JV. In a past conference call I think Mr. Hu mentioned something along the lines of whatever is made in that facility basically would be revenues derived exclusively to Kandi, but run through the JV. Is that correct?

Kewa Luo -- Manager Investor Relations

Are you asking right now -- are you asking whether Hainan [Phonetic] is under Kandi or whether it's going to be run through by Geely, right?

Arthur Porcari -- Corporate Strategies, Inc. -- Analyst

Yeah. Anything you license under Geely, anything that's made in Hainan [Phonetic] whether it be products or SKDs or parts, that's revenues all to Kandi. Is that still correct?

Kewa Luo -- Manager Investor Relations

[Foreign Speech]

Unidentified Participant

[Foreign Speech]

Xiaoming Hu -- Chairman, President and Chief Executive Officer

[Foreign Speech]

Kewa Luo -- Manager Investor Relations

Correct.

Arthur Porcari -- Corporate Strategies, Inc. -- Analyst

Great. Okay. In the past -- and this goes back -- I want to touch right now on the media. In the past conference call, Mr. Hu also stated that ride-hailing EVs would be expected to do some 8,000 kilometers per month, or about 266 kilometers per day, that's ride-hailing now, like Didi Chuxing or CaoCao. If that's the case, consider in the city use, each EV would have to be driven at least two shifts per day, making the quick battery exchange almost mandatory for a ride-hailing EV due to recharging times.

Based on Kandi's QBX used in car share doing much fewer kilometers per day each EV, it would -- in the old days, this was back when we had the car share, would take four batteries, two in the car and two in the charging rack. But now with these much higher rates expected from ride-hailing, would it be more realistic to assume that each car would have to have as many as six batteries; two in the car, four on the charging rack?

Kewa Luo -- Manager Investor Relations

[Foreign Speech]

Xiaoming Hu -- Chairman, President and Chief Executive Officer

[Foreign Speech]

Kewa Luo -- Manager Investor Relations

Now, we are planning on launching EV models with a driving range of over 300 kilometers to the

Xiaoming Hu -- Chairman, President and Chief Executive Officer

online ride-hailing market. Therefore, one shift will be enough for the online ride-hailing. This is not going to exceed 300 kilometers -- I mean, once shift for the online ride-hailing will not exceed 300 kilometers and two shifts per day will be good to go. Therefore, because each battery only needs six hours to charge and each day can charge four times, and as long as the battery exchange the companies equipped battery with 1 versus 0.3 kind of ratio, in fact, it's 0.25 ratio, but however, we give or take. So, it's 1 versus 0.3 ratio, it should be operating normally.

Arthur Porcari -- Corporate Strategies, Inc. -- Analyst

Okay. And Kandi, of course, will provide all those parts and the batteries continue. That's correct?

Kewa Luo -- Manager Investor Relations

You mean the exchange -- the equipment parts, right, in a battery, is that what you're asking?

Arthur Porcari -- Corporate Strategies, Inc. -- Analyst

Yeah. I'm asking, again, as has been in the past, Kandi will still be the provider of all the batteries, the initial ones that are with the car and the ones that will be in the charging racks. Kandi will be providing ...

Kewa Luo -- Manager Investor Relations

[Foreign Speech]

Xiaoming Hu -- Chairman, President and Chief Executive Officer

[Foreign Speech]

Kewa Luo -- Manager Investor Relations

Yes. We are not only supplying the battery, also are supplying the battery and the equipment, which is totally automatic system. Each year battery exchange only takes 10 seconds.

Arthur Porcari -- Corporate Strategies, Inc. -- Analyst

10 seconds. Okay. All right, I want to go back. That touches on my next and last point here. And this has to do with his comment earlier about Jinhua Ankao. Kandi purchased Jinhua Ankao for some $30 million plus in December 2017. Considering Mr. Hu and Kandi were already experts in the QBX field, as we said earlier, being the first to introduce QBX with its own government-approved system back in 2010, Jinhua Ankao must have an exceptional system to have Kandi give up its own patented technology and pay so much for this new technology. How much will Jinhua Ankao be selling each system for and how many slots per day can each system deliver?

Kewa Luo -- Manager Investor Relations

Okay. [Foreign Speech]

Unidentified Speaker

Okay. [Foreign Speech]

Xiaoming Hu -- Chairman, President and Chief Executive Officer

[Foreign Speech]

Kewa Luo -- Manager Investor Relations

Okay. Art, I want to correct myself for last question's answer. It actually takes 90 seconds to change the batteries, not 10 seconds, sorry. So to answer your question for this one, Mr. Hu is saying that the battery exchange technology is just constantly upgrading and changing. So in-house system is also very advanced. They have one, which is a fully automatic powertrain [Phonetic] system, which the prices not exceed RMB800,000. So which is very comparative. And based on what [Indecipherable] has, it's going to cost us over $1 million. So we believe that what Ankao has is very competitive and this only takes about 90 seconds to change the battery pack each time. So you can kind of talk to calculate how many times it can change.

Unidentified Participant

Well, RMB800,000 to $1 million is much higher than I was expecting and the 300,000 ride-hailing program like the existing contract agreement that we have with China Resources, the 76th largest corporation in the world according to Fortune, where they're going to be responsible, as I said earlier, in acquiring these systems to be used in the 300,000 car accredited system. About how many of these units would he anticipate we could be selling just for 300,000 cars?

Kewa Luo -- Manager Investor Relations

[Foreign Speech]

Xiaoming Hu -- Chairman, President and Chief Executive Officer

[Foreign Speech]

Kewa Luo -- Manager Investor Relations

Mr. Hu is saying that right now it's hard to estimate. The program is going to last for five years so as well as demand and we're going to update you as we go forward.

Arthur Porcari -- Corporate Strategies, Inc. -- Analyst

Okay. Well, a lot of surprises in this call, and yes, again, the new format is great, and it does apparently really show the shareholders that there is a change happening in Kandi and something that Mr. Hu deserves and I think so do the shareholders thanking him very much on behalf of all of us long-term holders.

Kewa Luo -- Manager Investor Relations

[Foreign Speech]

Operator

And we'll hear next from Mike Pfeffer with Oppenheimer.

Michael Pfeffer -- Oppenheimer & Co. Inc. -- Analyst

Hello. Thanks for taking my question. Regarding the $20 million company share buyback, is this being done as a more complex 10b5-1 plan, which would allow purchases with no blackout but can take several months to implement, or just a conventional share buyback with pre-earnings blackout periods? And then I have a couple other questions.

Unidentified Speaker

Okay. [Foreign Speech]

Kewa Luo -- Manager Investor Relations

Okay. [Foreign Speech]

Xiaoming Hu -- Chairman, President and Chief Executive Officer

[Foreign Speech]

Kewa Luo -- Manager Investor Relations

Like you said, in fact the procedures for the share buyback are quite complicated. And especially, that we have to open accounts and we have to get approval for the funds to transfer to overseas. It takes a long time, but however, the preliminary preparation work has been pretty much done. So we have engaged with a very professional brokerage firm to design a share buyback plan. And we are anticipating to start buying back the stock next week hopefully, and the plan is still the same.

Michael Pfeffer -- Oppenheimer & Co. Inc. -- Analyst

Okay. I guess, so I assume what you're saying it's not a 10b5-1 plan, but maybe you could just get an answer on that. And secondly, do you expect to complete the $20 million stock purchase by year-end? And lastly, will Mr. Hu continue to add to his $4 million in Kandi market purchases? Thank you very much.

Kewa Luo -- Manager Investor Relations

[Foreign Speech]

Xiaoming Hu -- Chairman, President and Chief Executive Officer

[Foreign Speech]

Kewa Luo -- Manager Investor Relations

First, whether or not it's 10b5-1 plan, I cannot confirm with you. This is going to be handled by the brokerage firm. And before it's finalized, I cannot comment on that. Second of all, like we said in the press release, we're going to buy back up to 20 million shares from the open market. So it depends -- depending on the market condition.

In terms of whether or not I personally going to buy back shares, this also depends if the markets still undervalue our stock. At necessarily point, I will buy back. But once again, once I have -- if I buy back, there will be a Form 4 release. But right now, I cannot guarantee whether or not I'm going to buy back shares, personally.

Michael Pfeffer -- Oppenheimer & Co. Inc. -- Analyst

Thanks.

Kewa Luo -- Manager Investor Relations

Hello.

Operator

And at this time, I will turn the call back over to the management team for any additional or closing remarks.

Xiaoming Hu -- Chairman, President and Chief Executive Officer

[Foreign Speech]

Kewa Luo -- Manager Investor Relations

Thank you, ladies and gentlemen, for attending today's meeting. I'm very glad that our new format of the conference call is very welcomed by our shareholders and new investors. We are going to do this next time as well. That'll save time from reading the information that we've already disclosed in the filings and the news, so we have more time to interact with our shareholders to answer more questions.

If you have any additional questions, please don't hesitate to contact our investor relations, and we look forward to speaking with you again next quarter. Goodbye.

Operator

[Operator Closing Remarks]

Duration: 72 minutes

Call participants:

Kewa Luo -- Manager Investor Relations

Xiaoming Hu -- Chairman, President and Chief Executive Officer

Unidentified Speaker

Michael Fearnow -- Focus Tech Investments Inc. -- Analyst

Walter Hill -- Carty & Co., Inc. -- Analyst

Unidentified Participant

Arthur Porcari -- Corporate Strategies, Inc. -- Analyst

Michael Pfeffer -- Oppenheimer & Co. Inc. -- Analyst

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