JinkoSolar steady on Q2 shipments and revenue, downstream activity surges

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China’s JinkoSolar, a Tier-1, vertically integrated solar company, today published second quarter (Q2) financials that reveal surging growth in the firm’s downstream activities.

While growth was apparent across the board, it was JinkoSolar’s PV power projects that enjoyed the strongest surge, increasing revenue 55.5% on Q1, and 62.1% year-over-year. Solar power projects generated 327 GWh of electricity in Q2, and revenue of RMB 288.5 million ($43.4 million), with JinkoSolar ending the quarter with 1.13 GW of connected solar PV projects.

JinkoSolar said that the reduced curtailment of electricity in China’s western regions – a problem that has existed for some while – helped to boost the firm’s downstream activity and, thus, revenues and margin, which reached 61.7% for the power projects business.

During Q2, JinkoSolar increased its module shipments by 7.3% on Q1 to 1,716 MW. This number represented a huge 87.9% increase on the 913 MW shipped in Q2 2015. Such high numbers reflect the first half rush in China for installers to develop and commission solar plants ahead of June 30 – the date at which financial support for solar was reduced.

Modules shipped for JinkoSolar’s own solar power projects reached 204 MW for the quarter.

This growth drove revenues to RMB 5.96 billion ($896.1 million) for Q2, which was a steady 8.9% increase on Q1 and a notable 86.1% increase on Q2 2015. Gross margin, however, contracted slightly to 20.4% compared with 21.3% in Q1 and 20.7% for the same period last year – a fall attributed to an increase in tariffs paid on U.S. imports. At RMB 1.21 billion ($182.4 million), gross profit came in higher than in Q1 and Q2 2015.

The company’s operating expenses as a percentage of revenue increased from 10.8% in Q1 to 12.9% in Q2 on account of an increase in shipping, warranty costs and an impairment of property, plant and equipment related to automated production upgrades, JinkoSolar noted.

By the end of Q2, JinkoSolar’s in-house annual silicon wafer, cell and module production capacity was 3.5 GW, 3.5 GW and 6.5 GW respectively. Guidance for year-end puts those numbers at 4.5 GW, 3.7 GE and 6.5GW – an increase attributed to ramped-up wafer production for use in JinkoSolar’s PERC-line products.

Company CEO Kangping Chen remarked that recent industry headwinds should not significantly dampen JinkoSolar’s growth momentum in H2, adding that the firm has built a strong book of orders for the second half of the year.

He did add, however, that demand in China is expected to soften in Q3 due to the June 30 FIT cut, but was confident that numbers would rise again in Q4. "In China we are actively participating in the Top Runner Program and PV Poverty Alleviation Program to counter the effects of the declining traditional utility-scale market," Chen said.

"We became the first PV company to receive the China Quality Certification Center’s level-one energy efficiency certification for both mono and multi-crystalline PV products for the Top Runner Program, another demonstration of the traction our products have in the market given their high-efficiency and reliability. We continue to expand our PERC production lines and have made solid progress in developing our black-silicon technology. We are also working to combine these two technologies to further increase the efficiency and reliability of our products."

Q2 ended with JinkoSolar possessing $556.8 million in cash and cash equivalents. Looking ahead to Q3, guidance projects module shipments to be in the range of 1.5 GW to 1.7 GW, while full year shipments should reach between 6 GW to 6.5 GW. Of that, around 600 – 800 MW will be modules delivered to JinkoSolar’s own downstream projects.

Speaking about JinkoSolar’s rise to the top of the global module market, Chairman Xiande Li said: "Jinko was the first company to recover from a negative margin in Q2 2013, and has secured the No.1 position in gross margin for 14 consecutive quarters.

"Then there is JinkoSolar’s actual performance. The market leader has climbed to the No.1 position among all module manufacturers worldwide in the first quarter of 2016 in terms of shipment (1600MW), revenue (RMB 5.47 billion), gross margin (21.3%), and net profit (RMB 313.3 million). Moreover, JinkoSolar has become the largest manufacturer with a capacity of 6.3-6.5GW in 2016."