Jinko reports growing Q3 shipments, falling Y/Y profits

Q3 2015 continues to set records with Jinko the latest to announce burgeoning shipments. The company shipped 1.1077 GW of solar products including modules, wafers and cells to third parties in Q3, including a record of 1.064 GW of module sales. These external shipments represent 21.1% M/M and 56.4% Y/Y increases.

Jinko acknowledged in its Q3 results that its strategy to hold back inventory for Q3 and Q4 shipments is bearing fruit. The strategy allowed the company to balance shipments between third party buyers and its own projects, according to management.

The company’s revenues grew in line with shipment volume increases. “Total revenues during the third quarter reached US$637.6 million, representing an increase of 58.2% over the same period in 2014 and 26.6% sequentially,” commented JinkoSolar CEO Kangping Chen.

However despite this growth, Jinko has reported relatively modest net income growth sequentially, and a significant decline Y/Y. Income for the quarter totaled RMB195.1 million ($30.6 miilion), compared with Q2 income of RMB76.4 ($12 million) and RMB280.6 million Y/Y ($44 million).

A number of factors may be behind the fall in profits on a Y/Y basis, including increased interest expenses from RMB73,055 ($11.45 million) in Q3 2014 to RMB146.235 ($22.9 million), an exchange loss in the quarter of RMB121.6 million ($19.2 million), compared to a net exchange gain of RMB15.2 million ($2.4 million) in Q2 2015 and RMB1.3 million ($200,00) in Q3 2014. Jinko also registered an income tax expense of RMB34.2 million ($5.4 million) in Q3 this year, compared to a benefit RMB1.8 million ($280,000) in Q2 and RMB153.8 million ($24 million) in Q3 2014.

Growing project portfolio

Jinko’s project business has continued to grow and generate income for the company in Q3. With projects generating 233.7 GWh, up 15.1% sequentially and 207.6% Y/Y, its revenues from projects came in at RMB205.8 million ($32.4 million), up 15.7% and 205.8% M/M and Y/Y respectively. Jinko grid connected 121 MW of PV power plants in the quarter.

On the manufacturing front the Chinese company, which has reported the lowest production costs of the tier-1 manufacturers in recent times, reported capacities of 3 GW in wafer production, 2.5 GW in cell and 4 GW of modules. With capacities between water, cell and module more aligned than some competitors, Jinko may be between insolated from a reported wafer supply squeeze currently looming

Further indicating the end-of-year boom being experienced by a number of Chinese suppliers, Jinko expects further shipment growth in Q4. Jinko forecasts shipments of between 1.4 GW – 1.7 GW in the last quarter of 2015. Full year guidance is for module shipments of 4.2 GW – 4.5 GW, of which 3.8 GW – 4.0 GW will be to third parties. Total completed PV power plant projects is forecast to be between 600 MW – 800 MW for the year.

“This quarter’s performance along with what we expect will be a strong fourth quarter, leave me very confident in our ability to deliver strong full-year results and further grow our sustainable business,” said CEO Kangping Chen.

Jinko secured a credit line of up to RMB10 billion ($1.57 billion) in Q3, with the Commercial Bank of China Jiangxi Branch, primarily to continue to grow its downstream business. It finished the quarter with RMB3.7 billion ($584.2 million) in cash an equivalents, up from RMB2.3 billion sequentially. Short term debt stood at RMB4.7 billion ($744 million) up from RMB4.1 billion ($640 million) sequentially, with long term borrowings of RMB3.5 billion ($544.6 million), up from RMB2.1 billion sequentially.