JinkoSolar Announces Second Quarter 2018 Financial Results

Published on 16 Aug 2018
Jinko Solar 
JinkoSolar Holding Co., Ltd. announced its unaudited financial results for the second quarter ended June 30, 2018.

Second Quarter 2018 Highlights

- Total solar module shipments were 2,794MW (including 200MW to the Company's overseas downstream segment for which no revenue has been recognized), an increase of 38.7% from 2,015MW in the first quarter of 2018 and a decrease of 3.1% from 2,884MW in the second quarter of 2017.

- Total revenues were RMB6.06 billion (US$915.9 million), an increase of 32.7% from the first quarter of 2018 and a decrease of 23.5% from the second quarter of 2017.

- Gross margin was 12.0%, compared with 14.4% in the first quarter of 2018 and 10.5% in the second quarter of 2017.

- Income from operations was RMB94.6 million (US$14.3 million), compared with RMB125.0 million in the first quarter of 2018 and RMB85.3 million in the second quarter of 2017.

- Net income attributable to the Company's ordinary shareholders was RMB99.0 million (US$15.0 million) in the second quarter of 2018, compared with RMB3.6 million in the first quarter of 2018 and RMB47.4 million in the second quarter of 2017.

- Diluted earnings per American depositary share ("ADS") were RMB2.512(US$0.408) in the second quarter of 2018.

- Non-GAAP net income attributable to the Company's ordinary shareholders in the second quarter of 2018 was RMB106.7 million (US$16.1 million), compared with RMB11.0 million in the first quarter of 2018 and RMB61.2 million in the second quarter of 2017.

- Non-GAAP basic and diluted earnings per ADS were RMB2.728(US$0.412) and RMB2.708(US$0.408) in the second quarter of 2018, compared with RMB0.300 and RMB0.296 in the first quarter of 2018 and RMB1.908 and RMB1.892 in the second quarter of 2017.

Mr. Kangping Chen, JinkoSolar's Chief Executive Officer commented, "We delivered a strong quarter with module shipments hitting 2,794 MW while generating total revenue of US$915.9 million. Leveraging our cutting-edge technologies, strong global sales network, and industry leading cost structure, I'm confident in our ability to generate sustainable profits and growth going forward."

"Growth during the quarter was strong and we expect this momentum to continue into the second half of the year despite the impact from the new policies issued by the Chinese government on May 31 as shipments to overseas markets are expected to continue growing and account for an increasing proportion of our shipments. We believe these new policies will have a relatively limited impact on our operations over the short-term and are optimistic about our future prospects. We expect demand from Top Runner Program, poverty alleviation projects, local government subsidies, and self-contained DG projects to continue to drive the growth in the Chinese market, especially in regions with ample sunlight and high commercial power prices."

"We already have good visibility of our order book for the entire year which is predominantly made up of overseas orders to markets which are growing rapidly and will generate significant opportunities ahead. We are taking full advantage of our market leading position and production facility in Florida to expand our presence in the US market. Demand in emerging markets continues to grow, especially in Latin American and the Middle East and North Africa. We are devoting our resources there towards securing large long-term orders through our mature sales network which spans a number of markets there. We believe the Indian solar sector will maintain its long-term growth trajectory despite the short-term impact of recently announced tariffs and will continue to explore opportunities there."

"We continued to develop high-efficiency technologies while optimizing the cost structure of our products. We made significant progress in improving wafer efficiency and reducing both oxygen content and light induced degradation. We are increasing our mono PREC cell capacity which will reach 4.2GW by the end of year. We are also investing in N type technology, especially HOT double sided cell technology. The falling cost of raw materials and our deep experience in rapidly rolling out new technologies will allow us to further optimize our cost structure going forward and help us increase market share by providing clients with high-efficiency products at cost effective prices."

"Despite some industry headwinds, we believe those challenges also create opportunities for us to further strengthen our position as a global leader in the solar PV industry. On one hand they will push the industrial upgrading and accelerate the industry's consolidation by phasing out outdated production capacities and replacing them with high efficiency ones; On the other hand, it will push the rapidly falling cost of solar, making solar more competitive and stimulating the global demand. We are now in a good position and are fully prepared for these new opportunities to continue to expand our market share and further consolidate our leading position in the industry."

Second Quarter 2018 Financial Results

Total Revenues

Total revenues in the second quarter of 2018 were RMB6.06 billion (US$915.9 million), an increase of 32.7% from RMB4.57 billion in the first quarter of 2018 and a decrease of 23.5% from RMB7.92 billion in the second quarter of 2017. The sequential increase was mainly attributable to an increase in the shipment of solar modules in the second quarter of 2018. The year-over-year decrease was mainly attributable to a decline in the average selling price of solar modules and a slight decrease in the shipment of solar modules in the second quarter of 2018.

Gross Profit and Gross Margin

Gross profit in the second quarter of 2018 was RMB727.6 million (US$110.0 million), compared with RMB656.1 million in the first quarter of 2018 and RMB834.8 million in the second quarter of 2017. The sequential increase was mainly attributable to an increase in the shipment of solar modules in the second quarter of 2018. The year-over-year decrease was mainly attributable to a decline in the average selling price of solar modules and a slight decrease in the shipment of solar modules, which was partially offset by a decrease in solar module cost in the second quarter of 2018.

Gross margin was 12.0% in the second quarter of 2018, compared with 14.4% in the first quarter of 2018 and 10.5% in the second quarter of 2017. The sequential decrease was mainly attributable to a decline in the average selling price of solar modules. The year-over-year increase was mainly attributable to a decrease in solar module cost, which was partially offset by a decrease in solar module shipments and a decline in the average selling price of solar modules in the second quarter of 2018.

Income from Operations and Operating Margin

Income from operations in the second quarter of 2018 was RMB94.6 million (US$14.3 million), compared with RMB125.0 million in the first quarter of 2018 and RMB85.3 million in the second quarter of 2017. Operating margin in the second quarter of 2018 was 1.6%, compared with 2.7% in the first quarter of 2018 and 1.1% in the second quarter of 2017.

Total operating expenses in the second quarter of 2018 were RMB633.0 million (US$95.7 million), an increase of 19.2% from RMB531.1 million in the first quarter of 2018 and a decrease of 15.5% from RMB749.5 million in the second quarter of 2017. The sequential increase was mainly due to an increase in shipping cost as a result of an increase in solar module shipments, an increase in bad debt expenses and an occurrence of provision for impairment of property, plant and equipment for certain damaged equipment of South Africa manufacturing facilities. The year-over-year decrease was primarily due to a decrease in shipping costs.

Total operating expenses accounted for 10.4% of total revenues in the second quarter of 2018, compared to 11.6% in the first quarter of 2018 and 9.5% in the second quarter of 2017.

Interest Expense, Net

Net interest expense in the second quarter of 2018 was RMB80.6 million (US$12.2 million), a decrease of 5.6% from RMB85.4 million in the first quarter of 2018 and an increase of 0.1% from RMB80.6 million in the second quarter of 2017.

Exchange Gain / (Loss), Net and Change in Fair Value of Forward Contracts

The Company recorded a net exchange gain (including change in fair value of forward contracts) of RMB20.8 million (US$3.1 million) in the second quarter of 2018, compared to a net exchange loss of RMB90.8 million in the first quarter of 2018 and a net exchange loss of RMB34.2 million in the second quarter of 2017. The sequential gain was primarily due to the appreciation of the US dollar against the RMB during the quarter.

Change in Fair Value of Derivatives

The Company entered into Interest Rate Swap agreements with several banks for the purpose of reducing interest rate exposure. The Company recorded a gain of RMB14.3 million (US$2.2 million) in the second quarter of 2018, compared to a gain of RMB21.1 million in the first quarter of 2018 and a loss of RMB16.4 million in the second quarter of 2017. The sequential and year-over-year changes were primarily due to an increase in the LIBOR rate.

Equity in Income of Affiliated Companies

The Company indirectly holds 20% equity interest of Sweihan PV Power Company P.J.S.C, which develops and operates solar power projects in Dubai and accounts for its investments using the equity method. The Company also holds 30% equity interest in Jiangsu Jinko-Tiansheng Co., Ltd, which processes and assembles PV modules as OEM manufacturer and accounts for its investments using the equity method. The Company recorded equity in income of affiliated companies of RMB 28.0 million (US$ 4.2 million) in the second quarter of 2018, compared with a loss of RMB 5.2 million in the first quarter of 2018 and a loss of RMB 0.2 million in the second quarter of 2017.

Income Tax Benefit, Net

The Company recorded an income tax benefit of RMB10.0 million (US$1.5 million) in the second quarter of 2018, increased from RMB3.3 million in the first quarter of 2018 and decreased from RMB32.5 million in the second quarter of 2017. The sequential increase was mainly due to the additional 2017 income tax deduction for R&D costs approved by the local tax bureau in the second quarter of 2018.

Net Income and Earnings per Share

Net income attributable to the Company's ordinary shareholders was RMB99.0 million (US$15.0 million) in the second quarter of 2018, compared with RMB3.6 million in the first quarter of 2018 and RMB47.4 million in the second quarter of 2017.

Basic and diluted earnings per ordinary share were RMB0.633(US$0.096) and RMB0.628(US$0.095), respectively during the second quarter of 2018. This translates into basic and diluted earnings per ADS of RMB2.532(US$0.384) and RMB2.512(US$0.380), respectively.

Non-GAAP net income in the second quarter of 2018 was RMB106.7 million (US$16.1 million), compared with RMB11.0 million in the first quarter of 2018 and RMB61.2 million in the second quarter of 2017.

Non-GAAP basic and diluted earnings per ordinary share were RMB0.682(US$0.103) and RMB0.677(US$0.102), respectively during the second quarter of 2018. This translates into non-GAAP basic and diluted earnings per ADS of RMB2.728(US$0.412) and RMB2.708(US$0.408), respectively.

Financial Position

As of June 30, 2018, the Company had RMB2.56 billion (US$386.5 million) in cash and cash equivalents and restricted cash, compared with RMB2.86 billion as of March 31, 2018.

As of June 30, 2018, the Company's accounts receivables due from third parties were RMB4.77 billion (US$720.7 million), compared with RMB4.18 billion as of March 31, 2018.

As of June 30, 2018, the Company's inventories were RMB5.89 billion (US$890.2 million), compared with RMB4.71 billion as of March 31, 2018.

As of June 30, 2018, the Company's total interest-bearing debts were RMB9.29 billion (US$1.40 billion), compared with RMB8.38 billion as of March 31, 2018.

Second Quarter 2018 Operational Highlights

Solar Module Shipments

Total solar module shipments in the second quarter of 2018 were 2,794MW, including 200MW to the Company's overseas downstream segment.

Solar Products Production Capacity

As of June 30, 2018, the Company's in-house annual silicon wafer, solar cell and solar module production capacity was 9.0GW, 5.0GW and 9.0GW, respectively.

Recent Business Developments

- In June 2018, JinkoSolar announced that its wholly owned subsidiary, JinkoSolar (U.S.) Inc. has entered into a three-year agreement to supply 1.43GW of high efficiency modules to sPower, a leading renewable energy independent power producer.

- In June 2018, JinkoSolar announced that it has supplied 275.4 MWdc of high efficiency modules to Green Light Contractors Pty Ltd for use in the Bungala Solar Farm near Port Augusta, South Australia, which is owned by a joint venture between Enel Green Power and Dutch Infrastructure Fund.

- In July 2018, JinkoSolar announced that JinkoSolar Japan K.K., a subsidiary of the Company, has signed a JPY5.3 billion syndicated loan agreement up to two years with a bank consortium led by Sumitomo Mitsui Banking Corporation.

- In July 2018, JinkoSolar announced that it will supply 86MW of solar modules for a PV Plant that will be located in the Cesar, northern Colombia.

- In July 2018, JinkoSolar announced that it is ranked 278th on the 2018 Fortune 500 Companies in China and 1st among solar manufacturers.

Operations and Business Outlook

Third Quarter and Full Year 2018 Guidance

For the third quarter of 2018, the Company estimates total solar module shipments to be in the range of 2.8GW to 3.0GW.

For the full year 2018, the Company estimates total solar module shipments to be in the range of 11.5GW to 12GW.


ENF Profiles For Companies Mentioned in This Article

Jinko Solar (Solar Materials): https://www.enfsolar.com/directory/material/4383
Jinko Solar (Solar Panels): https://www.enfsolar.com/directory/panel/4383
Jinko Solar (Solar Components): https://www.enfsolar.com/directory/component/4383
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