JinkoSolar Holding Company Limited (NYSE: JKS) reported strong growth in module shipments in the second quarter of 2024, despite industry challenges. The company’s gross margin remained steady at 11.1%, with adjusted net income reaching $52.1 million. Key strategic developments included a partnership in Saudi Arabia and advancements in N-type cell technology.
Key Takeaways:
– Module shipments increased by 34.1% YoY, reaching 23.8 gigawatts.
– Gross margin remained at 11.1%, with adjusted net income at $52.1 million.
– The company paid a cash dividend of $1.5 per ADS and repurchased 5.6 million ADS for over $130 million.
– Total revenue for the quarter was $3.3 billion, with a sequential increase but a YoY decline.
– A strategic partnership was announced in Saudi Arabia to produce high-efficiency solar cells and modules.
– JinkoSolar remains optimistic about cost reductions and market improvements.
Company Outlook:
– Full-year 2024 module shipment forecast is between 100 and 110 gigawatts.
– The company aims for a net produced N-type cell efficiency of 26.5% by year-end.
– Expansion plans in the Middle East, particularly in Saudi Arabia, are underway.
Bearish Highlights:
– Capacity expansion projects were delayed or suspended.
– Industry chain prices remained low and volatile.
– Net loss reported at $13.9 million for the quarter.
Bullish Highlights:
– Global demand for solar installations rose, with China adding 102 gigawatts.
– Solar module exports increased by 20% YoY.
– The company maintains a strong R&D and patent position in the TOPCon IP landscape.
Misses:
– Average selling prices of solar modules decreased, leading to a 21% YoY revenue decline.
– Gross margin decreased YoY.
– Operating expenses increased both sequentially and YoY.
Q&A Highlights:
– JinkoSolar expects 5% to 10% of total shipments to be in the US market.
– Tandem cell technology is in the early stage.
– Average selling price is expected to stabilize in Q3 and remain stable in Q4.
– Gross margin is not expected to increase in Q3.
– N-type TOPCon is expected to dominate with 100% penetration next year.
JinkoSolar’s Q2 2024 results demonstrate the company’s proactive approach in a challenging industry landscape. Strategic initiatives and technological advancements position the company for growth and efficiency. With a clear outlook for the year, JinkoSolar continues to adapt to market conditions while pursuing opportunities for expansion.
InvestingPro Insights:
– JinkoSolar’s Market Cap is $962.1 million.
– Price/Book multiple is low at 0.34, suggesting undervaluation.
– P/E Ratio (Adjusted) is at a low 2.46.
– Considerations include debt burden and low revenue valuation multiple.
In conclusion, JinkoSolar’s resilience in the solar industry, strategic moves, and financial indicators present opportunities for investors amidst challenges. For a more in-depth analysis, InvestingPro offers additional insights on JinkoSolar’s potential for growth and value. For more information on this and other risks, please refer to JinkoSolar’s public filings with the Securities and Exchange Commission. JinkoSolar is not obligated to update any forward-looking statements except as required by law. Now, I am pleased to introduce Mr. Li Xiande, Chairman and CEO of JinkoSolar Holdings. Mr. Li will be speaking in Mandarin, and I will provide an English translation of his comments. Please proceed, Mr. Li.
Li Xiande: [Foreign Language] We are delighted to announce that our module shipments grew by 34.1% year-over-year to 23.8 gigawatts in the second quarter, making us the industry leader. By the end of the quarter, we reached a milestone of 260 gigawatts in total module shipments to nearly 200 countries and regions. Despite some challenges in the industry chain, we maintained a gross margin of 11.1% and adjusted net income of $52.1 million. Global demand has been strong, with China alone adding 102 gigawatts of installations in the first half of 2024. We are optimistic about the future and continue to focus on innovation and efficiency to maintain our industry leadership.
Gener Miao: Thank you, Mr. Li. Total shipments reached 25.3 gigawatts in the second quarter, with module shipments accounting for the majority at approximately 94%. We are delighted to announce that we have maintained our position as the number one solar company in the world for market shipments. Our reputation for delivering efficient and reliable products and services is being increasingly recognized by global clients. In the second quarter, approximately 60% of our module shipments were sent to overseas markets, with Asia Pacific and Europe being the primary recipients. Shipments to the US remained stable, while shipments to Europe saw a 40% increase. The success of our Tiger Neo product line is evident, as it accounted for 85% of total shipments in the second quarter. We are proud to be the first solar company to achieve a cumulative N-type module shipment of 100 gigawatts, and our modules continue to command a premium in key markets such as Europe, the US, and the Middle East.
We have been consistently recognized for our reliability and bankability, having topped various industry reports and rankings. Our commitment to quality, innovation, and R&D has earned us the trust of our clients, as evidenced by our continued success in the market. We are also proud to have been acknowledged as a top performer in the PV Module Reliability Scorecard and the PV Tech 2024 Q2 ModuleTech Bankability Report.
Looking ahead, we anticipate strong demand in the global market, with an expected demand of around 600 gigawatts in 2024 and steady growth in 2025. Emerging markets like the Middle East and certain countries in Asia Pacific are showing promising growth potential. With our extensive global sales network and industry expertise, we are well-positioned to capitalize on these opportunities and optimize our overseas supply chain to adapt to changes in international trade policies.
Despite the challenges faced by the industry, we are pleased to report sequential growth in module shipments and total revenues in the second quarter. By optimizing our supply chain and investing in technology upgrades, we have been able to reduce costs and improve operating efficiency. We remain committed to delivering value to our shareholders, as demonstrated by the cash dividend and share repurchase programs we have implemented.
In conclusion, we are confident in our ability to continue enhancing our competitiveness globally through strategic market positioning and outstanding client relationship management. We are grateful for the continued support of our shareholders and look forward to continued success in the future. Thank you for your questions.
Alan Lau: Thank you for taking my question. This is Alan from Jefferies. First of all, the results are quite impressive, especially in a challenging market environment. I have a couple of questions for management. Can you provide the US shipment amount and expectations for the second half of this year? What is your view on policy risks in the US market, especially with recent filings of critical circumstances?
Gener Miao: The US market is unique for us. We have gradually regained market share over the past two years. Our annual shipment range is 5% to 10%, with Q4 estimated at 5% to 6%. Seasonal changes and market demand fluctuations will impact quarter by quarter, but in general, we expect to fall within the 5% to 10% range. Long-term, we see the US as a strong market due to AI driving electricity demand and support from the IRA act. We are prepared for any turbulence in trade policy.
Charlie Cao: Regarding recent developments, we have proactively managed the situation and believe the risk to Jinko is relatively low due to our compliant volume shipments.
Alan Lau: Thank you, that’s clear. Can you provide an update on our progress in the Middle East, especially with the capacity expansion in Saudi Arabia? What is the estimated timeline for this capacity and what policies do you expect to benefit from?
Charlie Cao: The capacity expansion in Saudi Arabia is a strategic move for our international manufacturing efforts. Charlie Cao explained that they are working on developing advanced capacities for energy transitions in Saudi Arabia and have ambitious plans for localization of production by 2030. He mentioned that the government in Saudi Arabia has policies to promote local production and that they expect their modules to have a premium compared to others produced outside of Saudi Arabia. When asked about the financials, Pan Li clarified the calculations of adjusted net income. Alan Lau inquired about the usage of FBR polysilicon and Charlie Cao mentioned that they have seen improvements in utilization levels, typically ranging from 30% to 50%. Later, William Grippin asked about the development process of tandem cell efficiency technology and the intellectual property landscape for TOPCon technology. Charlie Cao expressed confidence in their patents for TOPCon technology and their position as a leader in the field.
William Grippin: Thank you for your question, Rajiv. I’d like to highlight our strong capabilities in research and development as well as our robust patent position.
Charlie Cao: Yes, as a TOPCon company, we have been focused on managing sustainable growth in a challenging industry environment. Our strategic approach to balancing shipments and solidifying our position has allowed us to optimize operations, reduce operating expenses, and cut CapEx significantly. Our commitment to R&D investment and patent protection further strengthens our position in the market.
Rajiv Chaudhri: So are you suggesting that our future CapEx will continue to decrease, demonstrating our focus on efficient operations and strategic investments?
Charlie Cao: Yes, that’s correct. Our plans for future CapEx are aligned with our strategy to prioritize R&D investments and maintain a strong financial position. Our commitment to innovation and cost optimization will continue to drive down costs and improve our competitive position in the market.
Rajiv Chaudhri: Thank you for the insights. It’s clear that our focus on R&D and operational efficiency is key to our success in navigating market challenges and maintaining profitability.
Rajiv Chaudhri: We are currently focusing on improving working efficiencies, cutting labor costs, and optimizing operating expenses. These efforts require a lot of work and dedication.
Charlie Cao: While we are confident in stabilizing our gross margin, we do not anticipate a significant increase from Q2 to Q3. It will take time to phase out and stabilize, possibly over several quarters. We are leveraging our global manufacturing and marketing capabilities to optimize our economics.
Rajiv Chaudhri: Do you have any projections for the N-type market size in 2024 and your market share if you achieve 90 to 95 gigawatts?
Stella Wang: Let’s make this the final question for now. We can discuss further after the call. Is that acceptable?
Charlie Cao: In 2024, the N-type market will likely be dominated by TOPCon technology, with a market penetration of 70% to 75%. Jinko’s market share is expected to be around 90%. Looking ahead, we anticipate 100% penetration for N-type technology in the coming years.
Operator: There are no more questions at this time. Thank you for participating in today’s conference call. You may now disconnect.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.