JinkoSolar Holding Co., Ltd., a global leader in the solar PV industry, recently announced its unaudited financial results for the fourth quarter and full year ended December 31, 2016. In November 2016, the Company completed sale of JinkoSolar Power Engineering Group Limited (“Jinko Power”) downstream business in China to Shangrao Kangsheng Technology Co., Ltd. (the “Buyer”), a company incorporated with limited liability under the laws of the People’s Republic of China, formed by a buyer consortium led by Mr. Xiande Li, chairman of the board of directors of the Company. According to applicable accounting standards, assets and liabilities related to Jinko Power, including comparatives, are reclassified as assets/liabilities held for sale, while results of operations related to Jinko Power, including comparatives, are reported as income or loss from discontinued operations. Figures presented in this release are related to continuing operations only, and exclude results from Jinko Power unless indicated otherwise. The Company recognized the gain on disposal of discontinued operations of RMB1.01 billion (US$145.2 million) reported in the discontinued operations, and received cash of RMB1.73 billion (US$250.0 million) in the fourth quarter of 2016. The transaction between the related parties mainly includes the modules sales and financing obligation guarantee.
Fourth Quarter 2016 Highlights
Results presented herein exclude Jinko Power-related discontinued operations, unless specified otherwise
Total solar module shipments were 1,733 megawatts (“MW”), an increase of 7.9% from 1,606 MW in the third quarter of 2016 and an increase of 1.3% from 1,710 MW in the fourth quarter of 2015.
Total revenues were RMB5.12 billion (US$737.6 million), a decrease of 3.9% from the third quarter of 2016 and a decrease of 13.7% from the fourth quarter of 2015. Total revenues including electricity revenue from discontinued operations were RMB5.23 billion (US$753.0 million), a decrease of 8.3% from the third quarter of 2016 and a decrease of 13.9% from the fourth quarter of 2015.
Gross margin was 14.3%, compared with 19.2% in the third quarter of 2016 and 19.0% in the fourth quarter of 2015.
Income from operations was RMB77.9 million (US$11.2 million), compared with RMB433.3 million in the third quarter of 2016 and RMB465.9 million in the fourth quarter of 2015.
Net income attributable to the Company’s ordinary shareholders from continuing operations was RMB145.8 million (US$21.0 million) in the fourth quarter of 2016, compared with RMB212.2 million in the third quarter of 2016 and RMB429.7 million in the fourth quarter of 2015.
Net income attributable to the Company’s ordinary shareholders from continuing and discontinued operations was RMB999.6 million (US$144.0 million), compared with RMB233.7 million in the third quarter of 2016 and RMB349.4 million in the fourth quarter of 2015.
Diluted earnings per American depositary share (“ADS”) from continuing operations were RMB4.56 (US$0.64).
Total diluted earnings per ADS from continuing and discontinued operations were RMB31.28 (US$4.48), compared with RMB6.04 in the third quarter of 2016 and RMB10.88 in the fourth quarter of 2015.
Non-GAAP net income attributable to the Company’s ordinary shareholders from continuing operations in the fourth quarter of 2016 was RMB228.6 million (US$32.9 million), compared with RMB235.3 million in the third quarter of 2016 and RMB538.9 million in the fourth quarter of 2015.
Non-GAAP basic and diluted earnings per ADS from continuing operations were RMB7.24 (US$1.04) and RMB7.16 (US$1.04), respectively, in the fourth quarter of 2016.
Full Year 2016 Highlights
Results presented herein exclude Jinko Power-related discontinued operations, unless specified otherwise
Total solar module shipments were 6,656 MW, an increase of 47.5% from 4,512 MW for the full year 2015.
Total revenues for the full year 2016 were RMB21.40 billion (US$3.08 billion), an increase of 38.5% from RMB15.45 billion for the full year 2015. Total revenues including electricity revenue from discontinued operations were RMB22.35 billion (US$3.22 billion), an increase of 39.0% from RMB16.08 billion for the full year 2015.
Gross margin was 18.1% for the full year 2016, compared with 19.0% for the full year 2015.
Income from operations was RMB1.35 billion (US$194.3 million), compared with RMB1.12 billion in the full year 2015.
Net income attribute to the Company’s ordinary shareholders from continuing operations was RMB990.7 million (US$142.7 million) for the full year 2016, compared with RMB766.6 million for the full year 2015.
Net income attributable to the Company’s ordinary shareholders from continuing and discontinued operation was RMB1.83 billion (US$263.1 million) for the full year 2016, compared with RMB683.8 million for the full year 2015.
Diluted earnings per ADS from continuing operations for the full year 2016 were RMB29.04 (US$4.20), compared with RMB24.00 for the full year 2015.
Total diluted earnings per ADS from continuing and discontinued operations for the full year 2016 were RMB53.40 (US$7.72), compared with RMB21.36 for the full year 2015.
Non-GAAP net income attributable to the Company’s ordinary shareholders from continuing operations for the full year 2016 was RMB1.25 billion (US$179.4 million), compared with RMB1.06 billion for the full year 2015.
Non-GAAP basic and diluted earnings per ADS from continuing operations for the full year 2016 were RMB39.60 (US$5.72) and RMB36.28 (US$5.24), respectively.
Mr. Kangping Chen, JinkoSolar’s Chief Executive Officer commented, “I am pleased to announce a strong quarter to finish out the year with module shipments hitting 1,733 MW and 6,656 MW in the fourth quarter and full year 2016, respectively. I am proud to say that this puts us firmly in the position as the largest module supplier globally. Total revenues during the quarter hit US$737.6 million and US$3.08 billion for the whole year. While market sentiment is gloomy overall, we remain optimistic about the global demand in 2017.”
“We successfully complete the spin-off process of Jinko Power’s project business which generated US$145.2 million in investment gain for JinkoSolar and strengthened our balance sheet by cutting debt to US$892 million from US$2.1 billion. In January 2017, we further cut our debt by repurchasing almost all of our convertible notes due in 2019 at holders’ put option. These initiatives have increased our corporate flexibility and reinforced our financial position which will allow us to take advantage of more opportunities in 2017.”
“We further consolidated our leading position across a number of key and emerging markets during the quarter. China remains our largest market where we expect growth momentum to continue during the first half of 2017 as rush orders come in before the FiT cut in June 2017. Demand during the second half of 2017 may soften, but distributed generation and Top Runner projects are expected to make up for the demand. After a sharp decline during the quarter, ASPs in the US have begun to stabilize. While uncertainties remain, we believe that the growth trajectory of the US market won’t deviate significantly, especially with ITC still valid. India, with its abundant sunlight and increasing demand for power, has created ideal market conditions for rapid growth. We are very optimistic about our potential in this market and have been rapidly expanding our team there. We will also reinforce our leading position in Latin America and the Middle East, two markets that remain full of opportunities.”
“We remain focused on high-efficiency technologies and stringent quality controls. Demand for our PERC products continues to be strong and as a result, we have been adjusting our production capacity to accommodate this market trend since the first half of 2016.”
“In conclusion, I am proud of what we have achieved throughout the past quarter and year. We have extensive experience having faced similar market headwinds before, leaving us confident in our strategy and our ability to focus on developing technology, building our brand equity, keeping a lid on costs and improving our financial strength to further drive shareholder value.”
Fourth Quarter 2016 Financial Results
Results presented herein exclude Jinko Power-related discontinued operations, unless specified otherwise
Total Revenues
Total revenues in the fourth quarter of 2016 were RMB5.12 billion (US$737.6 million), a decrease of 3.9% from RMB5.33 billion in the third quarter of 2016 and a decrease of 13.7% from RMB5.94 billion in the fourth quarter of 2015. The sequential and year-over-year decreases were mainly attributable to a decline in average selling prices of solar modules in the fourth quarter of 2016.
Gross Profit and Gross Margin
Gross profit in the fourth quarter of 2016 was RMB730.0 million (US$105.1 million), compared with RMB1,026.1 million in the third quarter of 2016 and RMB1,129.8 million in the fourth quarter of 2015. The sequential and year-over-year decreases were mainly attributable to a decline in average selling prices of solar modules in the fourth quarter of 2016.
Gross margin was 14.3% in the fourth quarter of 2016 compared with 19.2% in the third quarter of 2016 and 19.0% in the fourth quarter of 2015.
Income from Operations and Operating Margin
Income from operations in the fourth quarter of 2016 was RMB77.9 million (US$11.2 million), compared with RMB433.3 million in the third quarter of 2016 and RMB465.9 million in the fourth quarter of 2015. Operating margin in the fourth quarter of 2016 was 1.5%, compared with 8.1% in the third quarter of 2016 and 7.8% in the fourth quarter of 2015.
Total operating expenses in the fourth quarter of 2016 were RMB652.1 million (US$93.9 million), an increase of 10.0% from RMB592.8 million in the third quarter of 2016 and a decrease of 1.8% from RMB663.9 million in the fourth quarter of 2015. The sequential increase was mainly due to the increase of the shipping cost, and the provision for impairment and disposal of property, plant and equipment, partially offset by the impact of the reversal of warranty expense during the fourth quarter. We made downward adjustments to our accrued warranty expense in the fourth quarter, to reflect the general declining trend of the average selling price of solar modules, which is a primary input into the estimated warranty expense. Based on the updated warranty estimation, we reversed the warranty expense related to prior years and the first nine months of 2016 by RMB92.1 million (US$13.3 million) and RMB6.0 million (US$0.9 million) respectively.
Total operating expenses accounted for 12.7% of total revenues in the fourth quarter of 2016, compared to 11.1% in the third quarter of 2016 and 11.2% in the fourth quarter of 2015.
Interest Expense, Net
Net interest expense in the fourth quarter of 2016 was RMB74.5 million (US$10.7 million), a decrease of 43.9% from RMB132.9 million in the third quarter of 2016 and a decrease of 15.2% from RMB87.9 million in the fourth quarter of 2015.
Exchange Gain / (Loss), Net
The Company recorded a net exchange gain of RMB17.7 million (US$2.6 million) including change in fair value of forward contracts in the fourth quarter of 2016, compared to a net exchange loss of RMB7.2 million in the third quarter of 2016 and a net exchange gain of RMB89.8 million in the fourth quarter of 2015.
Change in Fair Value of Convertible Senior Notes and Capped Call Options
The Company recognized a loss from a change in fair value of convertible senior notes and capped call options of RMB14.7 million (US$2.1 million) in the fourth quarter of 2016. The Company repurchased substantially all the outstanding convertible senior notes in January 2017.
Income Tax Expense / (Benefit), Net
The Company recorded an income tax benefit of RMB49.2 million (US$7.1 million) from continuing operations in the fourth quarter of 2016, compared with an income tax expense of RMB116.0 million in the third quarter of 2016 and an income tax expense of RMB48.6 million during the fourth quarter of 2015. The sequential change was mainly due to the successful renewal of ‘National High and New Technology Enterprise’ license for a significant subsidiary and its entitlement to a preferential tax rate.
Income / (loss) from Discontinued Operations, Net of Tax
Income from discontinued operations, net of tax in the fourth quarter of 2016 was RMB 857.5 million (US$123.5 million), compared with an income of RMB82.3 million in the third quarter of 2016 and a loss of RMB34.5 million in the fourth quarter of 2015.
Net Income and Earnings per Share
Net income attributable to the Company’s ordinary shareholders in the fourth quarter of 2016 was RMB999.6 million (US$144.0 million), compared with RMB233.7 million in the third quarter of 2016 and RMB349.4 million in the fourth quarter of 2015.
Basic and diluted earnings per ordinary share from continuing operations were RMB1.15 (US$0.17) and RMB1.14 (US$0.16), respectively, during the fourth quarter of 2016. This translates into basic and diluted earnings per ADS of RMB4.60 (US$0.68) and RMB4.56 (US$0.64), respectively.
Total basic and diluted earnings per ordinary share from both continuing and discontinued operations were RMB7.90 (US$1.14) and RMB7.82 (US$1.12), respectively, during the fourth quarter of 2016. This translates into basic and diluted earnings per ADS of RMB31.60 (US$4.56) and RMB31.28 (US$4.48), respectively.
Non-GAAP net income from continuing operations in the fourth quarter of 2016 was RMB228.6 million (US$32.9 million), compared with RMB235.3 million in the third quarter of 2016 and RMB538.9 million in the fourth quarter of 2015.
Non-GAAP basic and diluted earnings from continuing operation per ordinary share were RMB1.81 (US$0.26) and RMB1.79 (US$0.26), respectively during the fourth quarter of 2016. This translates into non-GAAP basic and diluted earnings per ADS of RMB7.24 (US$1.04) and RMB7.16 (US$1.04), respectively.
Financial Position
As of December 31, 2016, the Company had RMB2.82 billion (US$406.2 million) in cash and cash equivalents and restricted cash, compared with RMB2.95 billion as of December 31, 2015.
As of December 31, 2016, the Company’s accounts receivables due from third parties were RMB4.75 billion (US$684.7 million), compared with RMB2.69 billion as of December 31, 2015.
As of December 31, 2016, the Company’s inventories were RMB4.47 billion (US$644.3 million) due to large demand in 2017 Q1, compared with RMB3.20 billion as of December 31, 2015.
As of December 31, 2016, the Company’s total interest-bearing debts were RMB6.19 billion (US$891.7 million), compared with RMB6.27 billion as of December 31, 2015.
Full Year 2016 Financial Results
Results presented herein exclude Jinko Power-related discontinued operations, unless specified otherwise
Total Revenues
Total revenues for the full year 2016 were RMB21.4 billion (US$3.08 billion), an increase of 38.5% from RMB15.45 billion for the full year 2015. The increase in total revenues was mainly attributable to the increase in shipments of solar modules.
Gross Profit and Gross Margin
Gross profit for the full year 2016 was RMB3.87 billion (US$557.3 million), an increase of 32.0% from RMB2.93 billion for the full year 2015. Gross margin was 18.1% for the full year 2016, compared with 19.0% for the full year 2015.
Income from Operations and Operating Margin
Income from operations for the full year 2016 was RMB1.35 billion (US$194.3 million), compared with RMB1.12 billion for the full year 2015. Operating margin for the full year 2016 was 6.3%, compared with 7.3% for the full year 2015.
Total operating expenses for the full year 2016 were RMB2.52 billion (US$363.0 million), an increase of 39.3% from RMB1.81 billion for the full year 2015. Operating expenses represented 11.8% of total revenues for the full year 2016, compared with 11.7% for the full year 2015. The increase in total operating expense was primarily due to the increase of shipping cost, the provision for impairment of property, plant and equipment, partially offset by the impact of warranty expense reversals. The provision for impairment of property, and plant and equipment was due to replacement of the old machines to upgrade production automation.
Interest Expense, Net
Net interest expense for the full year 2016 was RMB359.3 million (US$51.7 million), an increase of 15.5% from RMB311.0 million in 2015.
Exchange Gain / (Loss), Net
The Company recorded an exchange gain of RMB156.2 million (US$22.5 million) in the full year 2016. The Company had net exchange loss of RMB30.0 million in 2015.
Change in Fair Value of Convertible Senior Notes and Capped Call Options
The Company recognized a loss from a change in fair value of convertible senior notes and capped call options of RMB110.2 million (US$15.9 million) for the full year 2016, compared with a loss of RMB14.6 million in 2015. The Company repurchased substantially all the convertible senior notes in January 2017.
Income Tax Expense, Net
The Company recognized an income tax expense of RMB257.5 million (US$37.1 million) for the full year 2016, compared with an income tax expense of RMB100.5 million in 2015.
Income / (Loss) from Discontinued Operations, Net of Tax
Income from discontinued operations, net of tax, in 2016 was RMB1,001.6 million (US$144.3 million), compared with an income of RMB93.8 million in 2015.
Net Income and Earnings per Share
Net income attributable to the Company’s ordinary shareholders for the full year 2016 was RMB1.83 billion (US$263.1 million), compared with a net income of RMB683.8 million in 2015.
Basic and diluted income per share from continuing operations for the full year 2016 was RMB7.87 (US$1.13) and RMB7.26 (US$1.05), respectively. This translates into basic and diluted earnings per ADS of RMB31.48 (US$4.52) and RMB29.04 (US$4.20), respectively.
Total basic and diluted earnings per share from continuing and discontinued operations for the full year 2016 were RMB14.51 (US$2.09) and RMB13.35 (US$1.93), respectively. This translates into basic and diluted earnings per ADS of RMB58.04 (US$8.36) and RMB53.40 (US$7.72), respectively.
Non-GAAP net income from continuing operations for the full year 2016 was RMB1.25 billion (US$179.4 million), compared with non-GAAP net income of RMB1.06 billion in 2015.
Non-GAAP basic and diluted earnings per share from continuing operations for the full year 2016 were RMB9.90 (US$1.43) and RMB9.07 (US$1.31), respectively, which translates into non-GAAP basic and diluted earnings per ADS of RMB39.60 (US$5.72) and RMB36.28 (US$5.24), respectively.
Fourth Quarter and Full Year 2016 Operational Highlights
Solar Module Shipments
Total solar module shipments in the fourth quarter of 2016 amounted to 1,733 MW.
Total solar module shipments in 2016 amounted to 6,656 MW, compared to 4,512 MW in 2015.
Solar Products Production Capacity
As of December 31, 2016, the Company’s in-house annual silicon wafer, solar cell and solar module production capacity was 5.0 GW, 4.0 GW and 6.5 GW, respectively.
Recent Business Developments
In December 2016, JinkoSolar donated 14 kW to RE-volv, a solar non-profit and member of the White House National Community Solar Partnership.
In December 2016, JinkoSolar received the 2016 Chinese Excellent Corporate Citizen Award at the 12th Annual Chinese Excellent Corporate Citizen Conference held by the Corporate Citizenship Committee of the China Association of Social Workers, China Central Television and the Tencent Charity Foundation.
In November 2016, JinkoSolar announced that its Shangrao production facility received IEC TS 62941 photovoltaic industry technical specification certification.
In November 2016, JinkoSolar completed delivery on 140 MWdc of PV modules for the North Star project located in Chisago County, Minnesota, U.S.
In November 2016, JinkoSolar announced that its entire portfolio of PV modules passed the 96-hour Potential Induced Degradation (PID) resistance test under the conditions of 85℃ degrees and 85% relative humidity at +/-1,000V as required by IEC62804 standards with a degradation of less than 5%.
In November 2016, JinkoSolar announced the completion of the sale of Jinko Power downstream business in China.
In October 2016, JinkoSolar was appointed as one of the six co-chairs for the Business 20 (B20) Energy, Climate & Resource Efficiency Taskforce, under the leadership of the German G20 Presidency.
Operations and Business Outlook
First Quarter and Full Year 2017 Guidance
For the first quarter of 2017, the Company estimates total solar module shipments to be in the range of 1.9 GW to 2.0 GW.
For the full year 2017, the Company estimates total solar module shipments to be in the range of 8.5 GW and 9.0 GW.
Conference Call Information
JinkoSolar’s management will host an earnings conference call on Monday, February 27, 2017 at 8:00 a.m. U.S. Eastern Time (9:00 p.m. Beijing / Hong Kong the same day).
Dial-in details for the earnings conference call are as follows:
Hong Kong / International:
+852-5808-3202
U.S. Toll Free:
+1-855-298-3404
Passcode:
JinkoSolar
Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call.
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, March 6, 2017. The dial-in details for the replay are as follows:
International:
+61-2-9641-7900
U.S. Toll Free:
+1-866-846-0868
Passcode:
6221419
Additionally, a live and archived webcast of the conference call will be available on the Investor Relations section of JinkoSolar’s website at www.jinkosolar.com.
