SHANGRAO, China : JinkoSolar Holding Co., Ltd. (“JinkoSolar” or the “Company”) (NYSE: JKS), one of the largest and most innovative solar module manufacturers in the world, today announced its unaudited financial results for the first quarter ended March 31, 2021.
First Quarter 2021 Business Highlights
- Sharp rise in the price of polysilicon has driven up the price of modules, which has affected the downstream demand in the short term.
- The lower demand has kept the materials’ prices from rising further; as the prices of polysilicon stabilize, downstream demand is expected to resume in the second half of the year.
- Our proportion of distributed generation market is gradually increasing, and we enjoy the price premium in this market, especially in regions where we have high brand awareness and reputation.
- We are providing system integration and technical services to energy storage clients in connection with their residential, industrial and commercial projects; we also provide utility-scale PV energy storage systems to these clients.
- We are technologically advanced in the development of N-type cell and has become the industry benchmark in terms of lab efficiency, mass production efficiency and cost control.
- We have entered into a strategic investment agreement with Inner Mongolia Xinte Silicon Materials Co.,Ltd. recently to secure our polysilicon material supply.
- We entered into a strategic cooperation agreement with China COSCO Shipping Corporation, which will help us provide customers with long-term, high-quality transportation solutions.
First Quarter 2021 Operational and Financial Highlights
- Quarterly shipments were 5,354 MW (4,562 MW for solar modules, 792 MW for cells and wafers), solar module shipments up 33.7% year over year.
- Total revenues were RMB7.94 billion (US$1.21 billion), down 6.4% (or up 9.0% excluding the impact from the disposal of solar power plants in Mexico in the first quarter of 2020) year over year.
- Gross profit was RMB1.36 billion (US$207.3 million), down 18.0% year over year.
- Gross margin was 17.1%, compared with 16.0% in Q4 2020 and 19.5% in Q1 2020.
- Net income was RMB221.1 million (US$33.7 million), down 21.7% year over year.
- Non-GAAP net income was RMB49.3 million (US$7.5 million), down 78.3% year over year.
- Basic and diluted earnings/(loss) per share were RMB1.16 (US$0.18) and RMB (0.90) (US$(0.14)), respectively. Basic and diluted earnings per ADS were RMB4.64 (US$0.71) and RMB (3.61) (US$ (0.55)), respectively.
- Non-GAAP basic and diluted earnings per share were RMB0.26 (US$0.04) and RMB0.24 (US$0.04), respectively. Non-GAAP basic and diluted earnings per ADS were RMB1.04 (US$0.16) and RMB0.96 (US$0.15), respectively.
Mr. Xiande Li, JinkoSolar’s Chairman of the Board of Directors and Chief Executive Officer, commented, “In the first quarter of 2021, our strategy was to carefully manage our supply chain as volatility continued to increase prices of raw materials quarter-over-quarter.
As macroeconomic conditions continued to raise commodity prices, we remained flexible and focused on manufacturing process improvements to ease pressure on costs. Gross margin for the second quarter is expected to be in the range of 12% to 15%.
Full year 2021 shipments (including solar wafers, cells and modules) are expected to be in the range of 25GW to 30GW. Taking into account this year’s supply chain and market conditions, we have adjusted our capacity expansion plan.
By the end of 2021, we expect our in-house annual production capacity of monocrystalline silicon wafers, high efficiency solar cells and modules to reach 30GW, 24 GW and 32 GW, respectively.”
“During the first quarter, the imbalance between polysilicon supply and strong downstream demand as well as many other factors continued to increase module prices on top of many factors, but we believe this the impact on downstream customers is temporary.
The lower demand has kept the prices from rising; as the prices of polysilicon stabilize, downstream demand is expected to resume in the second half of the year, with the present polysilicon supply chain sufficient to support 160GW of installations this year and 210GW of installations in 2022.”
“Recently, we have strategically invested in Xinte Energy to secure the stability of polysilicon material supply in anticipation of our future shipments growth.
At the same time, we signed a strategic cooperation agreement with China COSCO Shipping Corporation, which will enable us to provide customers with long-term, high-quality transportation solutions.”
“As an integrated manufacturer, we have the ability to adjust production volumes and shipment structure according to prevailing market conditions and reduce the impact of price volatility on our profitability.
Despite rising material costs, integrated production companies with advanced technologies have first-mover advantages and relatively stable economic benefits as the industry continues to consolidate globally.”
“JinkoSolar’s long-term commitment to R&D has enabled it to continue to launch industry leading products. We have also completed the construction of a high-efficiency laminated perovskite cell technology platform that is expected to reach a breakthrough cell conversion efficiency of over 30% within the year.
We will continue to innovate and develop solar-plus solutions and promote technical and process improvements to further increase our product competitiveness.”
“In the near term, we will continue to leverage our production flexibility to optimize orders according to project type and scale, as well as increase resources to meet the needs for distributed generation markets.
We remain optimistic about the overall market demand and are confident to increase our market share by continuously delivering clean energy solutions and sophisticated products and services to our clients worldwide.”
First Quarter 2021 Financial Results
Total Revenues
Total revenues in the first quarter of 2021 were RMB7.94 billion (US$1.21 billion), a decrease of 15.7% from RMB9.42 billion in the fourth quarter of 2020 and a decrease of 6.4% from RMB 8.48 billion in the first quarter of 2020 (an increase of 9.0% from RMB7.29 billion if excluding the impact from the disposal of two solar power plants in Mexico in the amount of RMB1.20 billion in the first quarter of 2020).
The sequential decrease was mainly attributable to a decrease in the shipment of solar modules partially offset by a rise in the average selling price of solar modules.
Excluding the impact from the disposal of two solar power plants in Mexico in the first quarter of 2020, the year-over-year increase was mainly attributable to an increase in the shipment of solar modules partially offset by a decrease in the average selling price of solar modules.
Gross Profit and Gross Margin
Gross profit in the first quarter of 2021 was RMB1.36 billion (US$207.3 million), compared with RMB1.51 billion in the fourth quarter of 2020 and RMB1.66 billion in the first quarter of 2020.
Gross margin was 17.1% in the first quarter of 2021, compared with 16.0% in the fourth quarter of 2020 and 19.5% in the first quarter of 2020. The sequential increase was mainly attributable to a rise in the average selling price of modules partially offset by an increase in the cost of raw materials.
The year-over-year decrease was mainly attributable to a decline in the average selling price of solar modules in response to the intensified market competition globally, partially offset by a decrease in the cost of raw materials due to the continued reduction of integrated production costs enabled by the Company’s industry-leading integrated cost structure.
Income from Operations and Operating Margin
Income from operations in the first quarter of 2021 was RMB149.1 million (US$22.8 million), compared with RMB71.6 million in the fourth quarter of 2020 and RMB732.7 million in the first quarter of 2020.
Operating margin was 1.9% in the first quarter of 2021, compared with 0.8% in the fourth quarter of 2020 and 8.6% in the first quarter of 2020.
Total operating expenses in the first quarter of 2021 were RMB1.21 billion (US$184.6 million), a decrease of 15.8% from RMB1.44 billion in the fourth quarter of 2020 and an increase of 30.9% from RMB924.2 million in the first quarter of 2020.
The sequential decrease was mainly attributable to a decrease in disposal and impairment loss on property, plant and equipment. The year-over-year increase was mainly attributable to (i) an increase of the impairment loss in the first quarter of 2021 on an overseas solar power project to be disposed in the amount of RMB123.4 million based on market quotation as a result of the Company’s non-compete commitment to JinkoPower Group to dispose its existing solar power projects, and (ii) reversal of a previous bad debt provision in the first quarter of 2020 upon cash receipt of RMB52.5 million (US$7.4 million) based on final judgement for the lawsuits with Wuxi Zhongcai.
Total operating expenses accounted for 15.2% (or 13.7% excluding impairment loss) of total revenues in the first quarter of 2021, compared to 15.2% (or 14.0% excluding impairment loss) in the fourth quarter of 2020 and 10.9% in the first quarter of 2020.
Interest Expense, Net
Net interest expense in the first quarter of 2021 was RMB156.5 million (US$23.9 million), an increase of 35.9% from RMB115.2 million in the fourth quarter of 2020 and an increase of 44.1% from RMB108.6 million in the first quarter of 2020.
The sequential increase was mainly due to a decrease in interest income. The year-over-year increase was mainly due to an increase in interest expense, as the Company’s interest-bearing debts increased.
Subsidy Income
Subsidy income in the first quarter of 2021 was RMB130.3 million (US$19.9 million), compared with RMB109.7 million in the fourth quarter of 2020 and RMB5.1 million in the first quarter of 2020.
Exchange 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 RMB26.6 million (US$4.1 million) in the first quarter of 2021, compared to a net exchange loss of RMB47.9 million in the fourth quarter of 2020 and a net exchange loss of RMB106.8 million in the first quarter of 2020.
The net exchange loss was mainly due to the exchange rate fluctuation of the US dollars against the RMB in the first quarter of 2021.
Change in Fair Value of Convertible Senior Notes and Call Option
The Company issued US$85.0 million of 4.5% convertible senior notes due 2024 (the “Notes”) 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 RMB414.9 million (US$63.3 million) in the first quarter of 2021, compared to a loss of RMB685.4 million in the fourth quarter of 2020 and a gain of RMB166.2 million in the first quarter of 2020.
The change was primarily due to a decrease in the Company’s stock price in the first quarter of 2021. In the first quarter of 2021, 3,281,244 ordinary shares were converted with the principal amount of USD 15.8 million.
Concurrent with the issuance of the Notes in May 2019, the Company entered into a call option transaction with an affiliate of Credit Suisse Securities (USA) LLC. The Company accounted for the call option transaction as freestanding derivative assets in its consolidated balance sheets, which is marked to market during each reporting period.
The Company recorded a loss from a change in fair value of the call option of RMB235.8 million (US$36.0 million) in the first quarter of 2021, compared to a gain of RMB257.8 million in the fourth quarter of 2020 and a loss of RMB100.2 million in the first quarter of 2020. The change was primarily due to a decrease in the Company’s stock price in the first quarter of 2021.
Equity in Earnings/(loss) 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 accounts for its investment using the equity method.
The Company also holds a 30% equity interest in Jiangsu Jinko-Tiansheng Co., Ltd, which processes and assembles PV modules as an OEM manufacturer, and accounts for its investments using the equity method. The Company recorded equity in gain of affiliated companies of RMB43.4 million (US$6.6 million) in the first quarter of 2021, compared with a gain of RMB19.9 million in the fourth quarter of 2020 and a loss of RMB101.5 million in the first quarter of 2020.
The gain primarily arose from interest rate swap recorded by the equity affiliate due to an increase in long-term interest rates in the first quarter of 2021. Hedge accounting was not applied for the derivative.
Income Tax Benefit/(expenses)
The Company recorded an income tax expense of RMB52.2 million (US$8.0 million) in the first quarter of 2021, compared with an income tax benefit of RMB23.1 million in the fourth quarter of 2020 and an income tax expense of RMB109.5 million in the first quarter of 2020.
Net Income/(loss) and Earnings/(loss) per Share
Net income/(loss) attributable to the Company’s ordinary shareholders was RMB221.1 million (US$33.7 million) in the first quarter of 2021, compared with net income/(loss) attributable to the Company’s ordinary shareholders of RMB(377.0) million in the fourth quarter of 2020 and RMB282.4 million in the first quarter of 2020.
Basic and diluted earnings/(loss) per ordinary share were RMB1.16 (US$0.18) and RMB(0.90) (US$(0.14)), respectively, during the first quarter of 2021, compared to RMB(2.08) and RMB(3.60), respectively, in the fourth quarter of 2020, and RMB1.58 and RMB0.67, respectively, in the first quarter of 2020. As each ADS represents four ordinary shares, this translates into basic and diluted earnings/(loss) per ADS of RMB4.64 (US$0.71) and RMB(3.61) (US$(0.55)), respectively in the first quarter of 2021; RMB(8.32) and RMB(14.40), respectively, in the fourth quarter of 2020; and RMB6.32 and RMB2.67, respectively, in the first quarter of 2020. The difference between basic earning and diluted loss per share in the first quarter of 2021 was mainly due to the dilutive impact of convertible senior notes.
Non-GAAP net income attributable to the Company’s ordinary shareholders in the first quarter of 2021 was RMB49.3 million (US$7.5 million), compared with RMB33.4 million in the fourth quarter of 2020 and RMB227.5 million in the first quarter of 2020.
Non-GAAP basic and diluted earnings per ordinary share were RMB0.26 (US$0.04) and RMB0.24 (US$0.04), respectively, during the first quarter of 2021; both RMB0.19 in the fourth quarter of 2020, and RMB1.27 and RMB1.15 respectively, in the first quarter of 2020.
This translates into non-GAAP basic and diluted earnings per ADS of RMB1.04 (US$0.16) and RMB0.96 (US$0.15), respectively, in the first quarter of 2021; both RMB0.74 in the fourth quarter of 2020, and RMB5.09 and RMB4.59, respectively, in the first quarter of 2020.
Because of the dilutive impact of call option arrangement during the fourth quarter of 2020, potential shares underlying the call option arrangement were removed from weighted average number of ordinary shares outstanding since their issuance date, and changes in income of the assumed exercise of call option, including the change in fair value of the call option, foreign exchange gain /(loss) on the call option, and the issuance costs of the call option were also recorded as the adjustment to the Company’s consolidated net income to arrive at the diluted net income available to the Company’s ordinary shareholders. Under that situation, the Company implemented the same denominator for both non-GAAP basic and dilutive earnings per ordinary share.
Financial Position
As of March 31, 2021, the Company had RMB7.04 billion (US$1.07 billion) in cash and cash equivalents and restricted cash, compared with RMB8.07 billion as of December 31, 2020.
As of March 31, 2021, the Company’s accounts receivables due from third parties were RMB4.59 billion (US$700.3 million), compared with RMB4.53 billion as of December 31, 2020.
As of March 31, 2021, the Company’s inventories were RMB9.10 billion (US$1.39 billion), compared with RMB8.38 billion as of December 31, 2020.
As of March 31, 2021, the Company’s total interest-bearing debts were RMB17.48 billion (US$2.67 billion), of which RMB458.5 million (US$70.0 million) was related to the Company’s overseas downstream solar projects, compared with RMB18.28 billion, of which RMB748.8 million was related to the Company’s overseas downstream solar projects as of December 31, 2020.
First Quarter 2021 Operational Highlights
Solar Module, Cell and Wafer Shipments
Total shipments in the first quarter of 2021 were 5,354 MW, including 4,562 MW for solar module shipments and 792 MW for cell and wafer shipments.
Solar Products Production Capacity
As of March 31, 2021, the Company’s in-house annual mono wafer, solar cell and solar module production capacity was 22 GW, 11.5 GW (940 MW for N type cells) and 31 GW, respectively.
Operations and Business Outlook
We remain optimistic about global installation demand and expect the imbalance of upstream and downstream demand to stabilize in the second half of 2021, which will in turn drive up demand. We are well positioned to navigate through supply chain volatility and continue to manage market risks by fine-tuning our operations and shipment deliveries in 2021.
Second Quarter and Full Year 2021 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 second quarter of 2021, the Company expects total shipments to be in the range of 5.1 GW to 5.3 GW (solar module shipments to be in the range of 4.0 GW to 4.2 GW).
Total revenue for the second quarter is expected to be in the range of US$1.2 billion to US$1.25 billion. Gross margin for the second quarter is expected to be between 12% and 15%.
For full year 2021, the Company estimates total shipments (including solar modules, cells and wafers) to be in the range of 25 GW to 30 GW.
Solar Products Production Capacity
Taking into account this year’s supply chain and market conditions, Jinkosolar has adjusted its capacity expansion plan and currently expects its annual mono wafer, solar cell and solar module production capacity to reach 30 GW, 24 GW (including 940 MW N-type cells) and 33 GW, respectively, by the end of 2021, from previous guidance of 33 GW, 27 GW, 37 GW, respectively.
About JinkoSolar Holding Co., Ltd.
JinkoSolar (NYSE: JKS) is one of the largest and most innovative solar module manufacturers in the world. JinkoSolar distributes its solar products and sells its solutions and services to a diversified international utility, commercial and residential customer base in China, the United States, Japan, Germany, the United Kingdom, Chile, South Africa, India, Mexico, Brazil, the United Arab Emirates, Italy, Spain, France, Belgium, and other countries and regions.
JinkoSolar has built a vertically integrated solar product value chain, with an integrated annual capacity of 22 GW for mono wafers, 11.5 GW for solar cells, and 31 GW for solar modules, as of March 31, 2021.
JinkoSolar has 9 productions facilities globally, 22 overseas subsidiaries in Japan, South Korea, Vietnam, India, Turkey, Germany, Italy, Switzerland, United States, Mexico, Brazil, Chile, Australia, Portugal, Canada, Malaysia, UAE, Hong Kong, Denmark, and global sales teams in China, United Kingdom, France, Spain, Bulgaria, Greece, Ukraine, Jordan, Saudi Arabia, Tunisia, Morocco, South Africa, Costa Rica, Colombia, Panama, Kazakhstan, Malaysia, Myanmar, Sri Lanka, Thailand, Vietnam, Poland and Argentina, as of March 31, 2021.
