(JinkoSolar, 30.Oct.2023) — JinkoSolar Holding Co., Ltd. (NYSE: JKS) announced its unaudited financial results for the third quarter ended 30 September 2023.
Third Quarter 2023 Business Highlights
- Leveraging our outstanding N-type technology, extensive global operation network, and advanced integrated capacity structure, module shipments in the third quarter increased 20.4% sequentially and 107.9% year-over-year.
- At the end of the third quarter, we became the first module manufacturer in the world to have delivered a total of 190 GW solar modules, covering over 190 countries and regions.
- Demand for N-type products continued to grow globally. N-type module shipments accounted for more than 60% of all module shipments globally in the third quarter. N-type modules retained their competitive premium over P-type modules and the premium continued to exceed the market average.
- The mass production efficiency of N-type TOPCon cells reached 25.6% and the power output of N-type modules was 25-30wp higher than that of similar P-type modules.
- We continued to make progress in sustainability and, recently, scored high in the Ecovadis Ratings, leading the mainstream PV companies.
Third Quarter 2023 Operational and Financial Highlights
- Quarterly shipments were 22,597 MW (21,384 MW for solar modules, and 1,213 MW for cells and wafers), up 21.4% sequentially, and up 108.2% year-over-year.
- Total revenues were RMB31.83bn (US$4.36bn), up 3.7% sequentially and up 63.1% year-over-year.
- Gross profit was RMB6.13 billion (US$840.6mn), up 28.2% sequentially and up 99.7% year-over-year.
- Gross margin was 19.3%, compared with 15.6% in Q2 2023 and 15.7% in Q3 2022.
- Net income attributable to JinkoSolar Holding Co., Ltd.’s ordinary shareholders was RMB1.32 billion (US$181.4mn), compared with RMB1.31bn in Q2 2023 and RMB549.8mn in Q3 2022.
- Adjusted net income attributable to JinkoSolar Holding Co., Ltd.’s ordinary shareholders, which excludes the impact from (i) a change in fair value of the convertible senior notes (the “Notes”), (ii) a change in fair value of long-term investment and (iii) the share based compensation expenses, was RMB1.35bn (US$184.6 million), compared with RMB1.43bn in Q2 2023 and RMB427.5mn in Q3 2022.
- Basic and diluted earnings per ordinary share were RMB6.42 (US$0.88) and RMB4.61 (US$0.63), respectively. This translates into basic and diluted earnings per ADS of RMB25.66 (US$3.52) and RMB18.46 (US$2.53), respectively.
Mr. Xiande Li, JinkoSolar’s Chairman and Chief Executive Officer, commented, “Despite market volatility, we delivered strong results in the third quarter leveraging our advantages in N-type TOPCon technology, extensive global operation network and advanced integrated capacity structure. Our module shipments, gross margin and net income all increased significantly year-over-year. Total module shipments were approximately 21.4 GW, an increase of 107.9% year-over-year. The cost of polysilicon decreased sequentially. Our premium high-efficient N-type products accounted for over 60% of total shipments, and shipments to the U.S. recorded sequential growth. Year-over-year, net income increased by 140.7% to US$181.4mn, and adjusted net income increased by 215.1% to US$184.6mn, diluted earnings per ordinary share increased by 188.7% to US$0.63, and gross margin increased from 15.7% to 19.3%.
Since the third quarter, price declines in the supply chain have stimulated end demand. For the first nine months of 2023, newly-added installations of PV in China reached 128.9 GW, nearly 50% more than full-year installations in 2022. Meanwhile, intensified competition brought by changes in supply and demand, accelerated technical iteration, high interest rates in some regions, and geopolitical tensions caused some volatility in the global PV market, and posed challenges on all industry players. We believe that we, as the industry leader, will become even stronger as the competition intensifies. At the end of the third quarter, we became the first module manufacturer in the world to have delivered a total of 190 GW solar modules, covering over 190 countries and regions. Our capabilities in global sales, operations and management, together with continuous R&D accumulation and innovation, help us build an all-round competition barrier. We are confident in our ability to navigate through cyclical volatility, achieve healthy and sustainable profitability, and increase shareholder value.
By the end of the third quarter, the mass production efficiency for our N-type TOPCon cells reached 25.6%, and our N-type modules power output was 25-30wp higher than that of similar P-type modules. Demand for these products continued to increase globally as the levelized cost of energy is lower. N-type modules still retained a premium over similar P-type modules, and the premium continued to exceed the market average.
At the end of the third quarter, we already had over 55 GW of N-type cell production capacity, and by the end of the year, our N-type cell production capacity is expected to reach about 70 GW, leading the industry, and our integrated project in Shanxi, China has started construction recently. Phase I and Phase II of a project with a total of 28 GW wafer-cell-module integrated capacity are expected to start production in the first half of 2024.
Recently, our high-efficiency N-Type monocrystalline silicon solar cell set a new record with a maximum conversion efficiency of 26.89%, creating another important milestone in the innovation of our products and solutions. With higher conversion efficiency and lower industrialization cost, we strongly believe that the TOPCon technology will remain the mainstream technical path in the next 3-5 years. We are confident that we are ahead of the industry in terms of power output, cost efficiency and product competitiveness.
As a responsible global company, we continued to make progress in sustainability and, recently, scored high in the Ecovadis Ratings, leading the mainstream PV companies. We are dedicated to providing clean, high-efficient and reliable solar products and energy storage solutions to more and more countries and regions, and contributing to global energy transition.
We expect our module shipments to be approximately 23.0 GW for the fourth quarter of 2023 and are confident that our full-year module shipments will exceed our guidance of 70 to 75 GW, with N-type modules accounting for approximately 60%. We expect our annual production capacity for mono wafers, solar cells and solar modules to reach 85.0 GW, 90.0 GW and 110.0 GW, respectively, by the end of 2023, with N-type capacity accounting for over 75%. We are confident that we will continue to lead the industry with our advanced technology and premium high-efficient products. “
Third Quarter 2023 Financial Results
Total Revenues
Total revenues in the third quarter of 2023 were RMB31.83bn (US$4.36bn), an increase of 3.7% from RMB30.69bn in the second quarter of 2023 and an increase of 63.1% from RMB19.52bn in the third quarter of 2022. The sequential and year-over-year increases were mainly attributable to the increases in the shipment of solar modules due to the increasing demand in the global market.
Gross Profit and Gross Margin
Gross profit in the third quarter of 2023 was RMB6.13bn (US$840.6mn), compared with RMB4.78bn in the second quarter of 2023 and RMB3.07bn in the third quarter of 2022.
Gross margin was 19.3% in the third quarter of 2023, compared with 15.6% in the second quarter of 2023 and 15.7% in the third quarter of 2022. The sequential and year-over-year increases were mainly due to the decrease in the cost of raw materials.
Income from Operations and Operating Margin
Income from operations in the third quarter of 2023 was RMB2.99bn (US$409.8mn), compared with RMB1.54bn in the second quarter of 2023 and RMB63.1mn in the third quarter of 2022. The changes were primarily attributable to the increases in our revenues and gross margin in the third quarter of 2023.
Operating profit margin was 9.4% in the third quarter of 2023, compared with 5.0% in the second quarter of 2023 and 0.3% in the third quarter of 2022.
Total operating expenses in the third quarter of 2023 were RMB3.14bn (US$430.8mn), a decrease of 3.1% from RMB3.24bn in the second quarter of 2023 and an increase of 4.5% from RMB3.01bn in the third quarter of 2022. The sequential and year-over-year changes were relatively flat.
Total operating expenses accounted for 9.9% of total revenues in the third quarter of 2023, compared to 10.6% in the second quarter of 2023 and 15.4% in the third quarter of 2022. The sequential and year-over-year decreases were mainly due to the increases in the shipment of solar modules and the decreases in average shipment cost.
Interest Expenses, Net
Net interest expenses in the third quarter of 2023 were RMB148.2mn (US$20.3mn), a decrease of 28.9% from RMB208.5mn in the second quarter of 2023 and an increase of 15.1% from RMB128.7mn in the third quarter of 2022. The sequential decrease was mainly due to the increase in interest income and the year-over-year increase was mainly due to an increase in interest expense.
Subsidy Income
Subsidy income in the third quarter of 2023 was RMB64.5mn (US$8.8mn), compared with RMB292.4mn in the second quarter of 2023 and RMB225.3mn in the third quarter of 2022. The sequential and year-over-year changes were mainly attributable to the changes in the cash receipt of subsidies from local governments in China which are non-recurring, not refundable and with no conditions.
Exchange Gain/Loss and Change in Fair Value of Foreign Exchange Derivatives
The Company recorded a net exchange loss (including change in fair value of foreign exchange derivatives) of RMB295.8mn (US$40.5mn) in the third quarter of 2023, compared to a net exchange gain of RMB916.4mn in the second quarter of 2023 and a net exchange gain of RMB520.3mn in the third quarter of 2022. The sequential and year-over-year changes were mainly attributable to the exchange rate fluctuation of US dollars against RMB in the third quarter of 2023.
Change in Fair Value of Convertible Senior Notes
The company issued US$85mn of 4.5% convertible senior notes due 2024 in May 2019 and has elected to measure the Notes at fair value derived by valuation model, i.e. Binomial Model.
The company recognized a gain from a change in fair value of the Notes of RMB295.6mn (US$40.5mn) in the third quarter of 2023, compared to a gain of RMB89.7mn in the second quarter of 2023 and a gain of RMB233.0mn in the third quarter of 2022. The changes were primarily due to the changes in the company’s stock price in the third quarter of 2023.
Change in Fair Value of Long-term Investment
The company invested in certain equity interests in several solar technology companies engaged in photovoltaic industry chain, which are recorded as long-term investment and reported at fair value with changes in fair value recognized in earnings. As of 30 September 2023, the company had RMB956.2mn (US$131.1mn) in long-term investment, compared with RMB1.09bn as of 30 June 2023.
The company recognized a loss from change in fair value of RMB130.3mn (US$17.9mn) in the third quarter of 2023, compared with a gain of RMB2.3mn in the second quarter of 2023.
Equity in Earnings of Affiliated Companies
The company indirectly holds a 20% equity interest in Sweihan PV Power Company P.J.S.C, a developer and operator of solar power projects in Dubai, and a 9% equity interest in Xinte Ltd, a domestic silicon material supplier, and both are accounted for using the equity method. The company recorded equity in loss of affiliated companies of RMB22.9mn (US$3.1mn) in the third quarter of 2023, compared with gain of RMB63.3mn in the second quarter of 2023 and gain of RMB38.9mn in the third quarter of 2022. The fluctuation of equity in gain or loss of affiliated companies primarily arose from the net gain or loss incurred by an affiliate company.
Income Tax Expense
The Company recorded an income tax expense of RMB403.3mn (US$55.3mn) in the third quarter of 2023, compared with RMB341.1mn in the second quarter of 2023 and RMB150.8mn in the third quarter of 2022.
Non-Controlling Interests
Net income attributable to non-controlling interests amounted to RMB1.00bn (US$137.2mn) in the third quarter of 2023, compared with RMB1.11bn in the second quarter of 2023 and RMB247.8mn in the third quarter of 2022. The sequential and year-over-year changes were mainly attributable to the changes in net income of the company’s majority-owned principal operating subsidiary, Jinko Solar Co., Ltd. (“Jiangxi Jinko”).
Net Income and Earnings per Share
Net income attributable to the JinkoSolar Holding Co., Ltd.’s ordinary shareholders was RMB1.32bn (US$181.4mn) in the third quarter of 2023, compared with RMB1.31bn in the second quarter of 2023 and RMB549.8mn in the third quarter of 2022. Excluding the impact from (i) a change in fair value of the Notes (ii) a change in fair value of the long-term investment and (iii)the share based compensation expenses, the adjusted net income attributable to JinkoSolar Holding Co., Ltd.’s ordinary shareholders was RMB1.35bn (US$184.6mn), compared with RMB1.43bn in the second quarter of 2023 and RMB427.5mn in the third quarter of 2022.
Basic and diluted earnings per ordinary share were RMB6.42 (US$0.88) and RMB4.61 (US$0.63), respectively, in the third quarter of 2023, compared to RMB6.39 and RMB5.55, respectively, in the second quarter of 2023, and RMB2.74 and RMB1.60, respectively, in the third quarter of 2022. As each ADS represents four ordinary shares, this translates into basic and diluted earnings per ADS of RMB25.66 (US$3.52) and RMB18.46 (US$2.53), respectively in the third quarter of 2023; basic and diluted earnings per ADS of RMB25.54 and RMB22.20, respectively, in the second quarter of 2023; and basic and diluted earnings per ADS of RMB10.97 and RMB6.39, respectively, in the third quarter of 2022.
Financial Position
As of 30 September 2023, the company had RMB14.11bn (US$1.93bn) in cash and cash equivalents and restricted cash, compared with RMB17.03bn as of 30 June 2023.
As of 30 September 2023, the company’s accounts receivables due from third parties were RMB25.78 billion (US$3.53bn), compared with RMB21.59bn as of 30 June 2023.
As of 30 September 2023, the company’s inventories were RMB19.15bn (US$2.63bn), compared with RMB20.09bn as of 30 June 2023.
As of September 30, 2023, the company’s total interest-bearing debts were RMB30.83bn (US$4.23 billion), compared with RMB34.31bn as of 30 June 2023.
Third Quarter 2023 Operational Highlights
Solar Module, Cell and Wafer Shipments
Total shipments were 22,597 MW in the third quarter of 2023, including 21,384 MW for solar module shipments and 1,213 MW for cell and wafer shipments.
Operations and Business Outlook Highlights
We are optimistic about global market demand and the opportunities brought by penetration of N-type technology. We will continue to maintain our leading position in N-type modules through technology iteration, improvement in mass production capability, and cost optimization. By the end of 2023, we expect mass-produced N-type cell efficiency to reach 25.8%, and the integrated cost of N-type modules to remain competitive with P-type modules. The proportion of N-type modules shipments of our total module shipments is expected to reach about 60% in 2023, as we expect there will be a strong demand for high-efficiency products from a growing number of markets and customers.
As we continue to invest in N-type capacity expansion overseas in the second half of 2023, we expect to reach an integrated capacity of over 12 GW overseas by the end of 2023, with the production capacity of N-type accounting for over 75%. We will continuously strengthen and expand our global industrial chain to provide premium and high-quality products and services to our global clients.
Fourth Quarter and Full Year 2023 Guidance
The Company’s business outlook is based on management’s current views and estimates with respect to market conditions, production capacity, the Company’s order book and the global economic environment. This outlook is subject to uncertainty on final customer demand and sale schedules. Management’s views and estimates are subject to change without notice.
For the fourth quarter of 2023, the Company expects its module shipments to be around 23 GW.
We are confident to exceed the full year module shipment target of 70 to 75 GW.
Solar Products Production Capacity
JinkoSolar expects its annual production capacity for mono wafer, solar cell and solar module to reach 85.0 GW, 90.0 GW and 110.0 GW, respectively, by the end of 2023.
Recent Business Developments
- In August 2023, JinkoSolar was appointed a co-chair of the Tech, Innovation, and R&D Taskforce of B20 India.
- In September 2023, JinkoSolar signed a Memorandum of Understanding with Failte Energy Solutions limited to supply Tiger Neo modules for a total capacity of 200 MW.
- In September 2023, JinkoSolar’s board of directors declared a cash dividend of US$0.375 per ordinary share of US$0.00002 each of the Company, or US$1.50 per ADS.
- In October 2023, Jiangxi Jinko announced that its module shipments exceeded 52 GW for the nine months ended September 30, 2023, with N-type modules accounting for about 57% of these shipments.
- In October 2023, Jiangxi Jinko published its estimates of certain preliminary unaudited financial results for the nine months ended September 30, 2023.
- In October 2023, JinkoSolar announced that its affiliate has signed the largest ever supply agreement with ACWA Power, to provide 3.8 GW N-type Tiger Neo modules for ACWA Power’s two projects, the 1,581MWp Al KAHFAH and the 2,257MWp AR RASS 2, in Saudi Arabia.
- In October 2023, JinkoSolar announced that its high-efficiency N-Type monocrystalline silicon solar cell sets new record with maximum conversion efficiency of 26.89%.
Conference Call Information
JinkoSolar’s management will host an earnings conference call on Monday, October 30, 2023 at 8:30 a.m. U.S. Eastern Time (8:30 p.m. Beijing / Hong Kong the same day).
Please register in advance of the conference using the link provided below. Upon registering, you will be provided with participant dial-in numbers, passcode and unique access PIN by a calendar invite.
Participant Online Registration: https://s1.c-conf.com/diamondpass/10034589-n7xtqc.html
It will automatically direct you to the registration page of “JinkoSolar Third Quarter 2023 Earnings Conference Call”, where you may fill in your details for RSVP.
In the 10 minutes prior to the call start time, you may use the conference access information (including dial-in number(s), passcode and unique access PIN) provided in the calendar invite that you have received following your pre-registration.
A telephone replay of the call will be available 2 hours after the conclusion of the conference call through 23:59 U.S. Eastern Time, 6 November 2023. The dial-in details for the replay are as follows:
| International: | +61 7 3107 6325 |
| U.S.: | +1 855 883 1031 |
| Passcode: | 10034589 |
Additionally, a live and archived webcast of the conference call will be available on the Investor Relations section of JinkoSolar’s website at http://www.jinkosolar.com.
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