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 third quarter ended September 30, 2022.
Third Quarter 2022 Business Highlights
- Demand for module shipments is strong globally. Quarterly module shipments globally doubled year-over-year, and shipments to China increased 5 times year-over-year.
- Our high-efficiency N-Type monocrystalline silicon solar cell achieved a new record with maximum conversion efficiency of 26.1%, compared with the record of 25.7% we set this April.
- The mass production efficiency of N-type TOPCon cells reached 25%, and the integrated cost difference between N-type and P-type modules has further narrowed.
- N-type module shipments were approximately 3GW, up 160% sequentially.
Third Quarter 2022 Operational and Financial Highlights
- Quarterly shipments were 10,856 MW (10,286 MW for solar modules, and 570 MW for cells and wafers), up 3.1% sequentially, and up 117.4% year-over-year.
- Total revenues were RMB19.52 billion (US$2.74 billion), up 3.6% sequentially and up 127.8% year-over-year. The sequential and year-over-year increases were mainly attributable to an increase in the shipment of solar modules.
- Gross profit was RMB3.07 billion (US$431.8 million), up 10.8% sequentially and up 137.0% year-over-year.
- Gross margin was 15.7%, compared with 14.7% in Q2 2022 and 15.1% in Q3 2021. The sequential and year-over-year increases were mainly due to an increase in the shipments of N-type module with higher gross margin.
- Net income attributable to JinkoSolar Holding Co., Ltd’s ordinary shareholders was RMB549.8 million (US$77.3 million), compared with net loss attributable to JinkoSolar Holding Co., Ltd’s ordinary shareholders of RMB623.3 million in Q2 2022 and net income attributable to JinkoSolar Holding Co., Ltd’s ordinary shareholders of RMB194.2 million in Q3 2021.
- Adjusted net income attributable to JinkoSolar Holding Co., Ltd’s ordinary shareholders, which excludes the impact from a change in fair value of the convertible senior notes (the “Notes”) and the share based compensation expenses, was RMB427.5 million (US$60.1 million), compared with adjusted net income attributable to JinkoSolar Holding Co., Ltd’s ordinary shareholders of RMB368.4 million in Q2 2022 and adjusted net loss attributable to JinkoSolar Holding Co., Ltd’s ordinary shareholders of RMB1.5 million in Q3 2021.
- Basic and diluted earnings per ordinary share were RMB2.74 (US$0.39) and RMB1.60 (US$0.23), respectively. This translates into basic and diluted earnings per ADS of RMB10.97 (US$1.54) and RMB6.39 (US$0.90), respectively.
Mr. Xiande Li, JinkoSolar’s Chairman of the Board of Directors and Chief Executive Officer, commented, “We are pleased to announce better-than-expected results for this quarter despite continued rises in raw material prices, power rationing measures imposed on our manufacturing facilities and an earthquake in Sichuan Province, where one of our manufacturing facilities is based. Total solar shipments in the third quarter were 10.9 GW, doubling year-over-year. Total revenues were US$2.74 billion, an increase of 127.8% year-over-year. With the release of additional N-type cell capacity, we further optimized our integrated cost structure. As the shipments of more competitive N-type products increased significantly compared with the previous quarter, our profitability improved sequentially with gross margin at 15.7%, compared with 14.7% in the second quarter. Net income was US$77.3 million, an increase of 183.1% year-over-year. Excluding the impact of the convertible senior notes and share based compensation expenses, adjusted net income was US$60.1 million, improving 16.1% as compared with last quarter.
Since the start of the fourth quarter, polysilicon capacity in China has been gradually released. There is strong demand for modules in China. Including the demand in the distribution generation market, we expect total installation in the Chinese market to exceed 40 GW in the fourth quarter. Despite the supply has increased recently, the strong demand is keeping polysilicon prices stable at a high level and, currently, module prices remain stable. With substantial polysilicon capacity to be released in 2023, we expect prices of raw materials to fall and stimulate pent-up demand. We will fully seize the growth opportunities in the market, execute our globalized footprint strategy and devote more resources in key markets. In addition, we will control inventory turnover at a reasonable level with our efficient supply chain management. Leveraging our superior and diversified global industrial chain as well as advantageous products, we are confident to achieve increases in both shipments and market share next year.
We made further progress in efficiency improvement and cost reduction for N-type products due to the continuous efforts of our R&D team, our accumulated knowledge and our mass production experience. As our mass-produced production line for TOPCon cells reached full capacity of 16 GW, mass-produced efficiency for TOPCon cells reached 25% and we are narrowing down the gap in integrated costs between N-type and P-type. Recently, the maximum solar conversion efficiency for our 182 mm monocrystalline silicon TOPCon solar cell has reached 26.1%, breaking the record of 25.7% we set in April 2022. We expect our mass production efficiency to further improve next year.
Shipments for N-type modules were approximately 3 GW in the third quarter, an increase of nearly 160% sequentially as a result of capacity release and higher client acceptance. As our N-type products continue to be well received in the market, we are confident to lead the industry with our cost-effective N-type products as our market penetration increases.
The second phase of 8 GW TOPCon cell capacity in our manufacturing facility in Hefei, which commenced production in the third quarter, is ramping up smoothly. The second phase of 11 GW TOPCon cell capacity in our manufacturing facility in Jianshan, which commenced construction in the third quarter, is expected to start production by the end of this year. These will continue to optimize our integrated capacity structure and drive down blended costs. Based on our business strategy and market demand, we adjusted the pace of capacity expansion for wafers, cells and modules, and expect our annual production capacity for mono wafers, solar cells and solar modules to reach 65 GW, 55 GW and 70 GW, respectively, by the end of 2022.
We see strong demand growth in the global market and expect module shipments to be in the range of 13.0 GW to 15.0 GW for the fourth quarter and 41.5 GW to 43.5 GW for full year 2022. “
Third Quarter 2022 Financial Results
Total Revenues
Total revenues in the third quarter of 2022 were RMB19.52 billion (US$2.74 billion), an increase of 3.6% from RMB18.84 billion in the second quarter of 2022 and an increase of 127.8% from RMB8.57 billion in the third quarter of 2021. The sequential and year-over-year increases were mainly attributable to an increase in the shipment of solar modules due to increasing demand in the global market.
Gross Profit and Gross Margin
Gross profit in the third quarter of 2022 was RMB3.07 billion (US$431.8 million), compared with RMB2.77 billion in the second quarter of 2022 and RMB1.30 billion in the third quarter of 2021.
Gross margin was 15.7% in the third quarter of 2022, compared with 14.7% in the second quarter of 2022 and 15.1% in the third quarter of 2021. The sequential and year-over-year increases were mainly due to an increase in the shipments of N-type module with higher gross margin.
Income/ (Loss) from Operations and Operating Margin
Income from operations in the third quarter of 2022 was RMB63.1 million (US$8.9 million), compared with loss from operations of RMB289.1 million in the second quarter of 2022 and income from operations of RMB111.2 million in the third quarter of 2021.
Operating profit margin was 0.3% in the third quarter of 2022, compared with operating loss margin of 1.5% in the second quarter of 2022 and operating profit margin of 1.3% in the third quarter of 2021.
Total operating expenses in the third quarter of 2022 were RMB3.01 billion (US$422.9 million), a decrease of 1.7% from RMB3.06 billion in the second quarter of 2022 and an increase of 153.9% from RMB1.18 billion in the third quarter of 2021. The sequential change was relatively flat and the year-over-year increase was mainly attributable to an increase in shipping costs for solar modules in the third quarter of 2022.
Total operating expenses accounted for 15.4% of total revenues in the third quarter of 2022, compared to 16.2% in the second quarter of 2022 and 13.8% in the third quarter of 2021.
Interest Expenses, Net
Net interest expenses in the third quarter of 2022 were RMB128.7 million (US$18.1 million), an increase of 46.2% from RMB88.0 million in the second quarter of 2022 and a decrease of 22.2% from RMB165.6 million in the third quarter of 2021. The sequential increase was mainly due to an increase in the Company’s interest-bearing debts and the year-over-year decrease was mainly due to an increase in interest income of bank deposits.
Subsidy Income
Subsidy income in the third quarter of 2022 was RMB225.3 million (US$31.7 million), compared with RMB464.8 million in the second quarter of 2022 and RMB63.5 million in the third quarter of 2021. The sequential and year over year changes were mainly attributable to 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 gain (including change in fair value of foreign exchange derivatives) of RMB520.3 million (US$73.1 million) in the third quarter of 2022, compared to a net exchange gain of RMB225.7 million in the second quarter of 2022 and a net exchange loss of RMB6.2 million in the third quarter of 2021. 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 2022.
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 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 RMB233.0 million (US$32.7 million) in the third quarter of 2022, compared to a loss of RMB536.9 million in the second quarter of 2022 and a gain of RMB239.0 million in the third quarter of 2021. The changes were primarily due to a decrease in the Company’s stock price in the third quarter of 2022.
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 a 9% equity interest in Xinte Ltd, a domestic silicon material supplier, and both account for its investment using the equity method. The Company recorded equity in gain of affiliated companies of RMB38.9 million in the third quarter of 2022, compared with loss of RMB0.1 million in the second quarter of 2022 and gain of RMB13.2 million in the third quarter of 2021. The fluctuation of equity in gain of affiliated companies primarily arose from the net gain incurred by an affiliate company.
Income Tax Expense/ (Benefit)
The Company recorded an income tax expense of RMB150.8 million (US$21.2 million) in the third quarter of 2022, compared with an income tax expense of RMB118.1 million in the second quarter of 2022 and an income tax expense of RMB22.0 million in the third quarter of 2021. The sequential and year-over-year increases in income tax expense were mainly due to higher profit (excluding the impact of a gain from change in fair value of the Notes of RMB233.0 million in the third quarter of 2022, compared with a loss of RMB536.9 million in the second quarter of 2022) generated in the third quarter of 2022.
Non-Controlling Interests
Net income attributable to non-controlling interests amounted to RMB247.8 million (US$34.8 million) in the third quarter of 2022, compared with RMB276.8 million in the second quarter of 2022 and RMB0.8 million in the third quarter of 2021. The sequential decrease was mainly attributable to the decrease of net income of the Company’s major subsidiary, Jinko Solar Co., Ltd (“Jiangxi Jinko”), and the year-over-year increase was mainly attributable to the increase of non-controlling interests after Jiangxi Jinko completed its initial public offering (“IPO”) and started trading on Shanghai Stock Exchange’s Sci-Tech innovation board on January 26, 2022. After the IPO, the Company holds approximately 58.62% equity interest in Jiangxi Jinko. Ownership of non-controlling interests in Jiangxi Jinko increased from 26.72% to 41.38% due to the IPO.
Net Income/ (loss) and Earnings per Share
Net income attributable to the Company’s ordinary shareholders was RMB549.8 million (US$77.3 million) in the third quarter of 2022, compared with net loss attributable to the Company’s ordinary shareholders of RMB623.3 million in the second quarter of 2022 and net income attributable to the Company’s ordinary shareholders of RMB194.2 million in the third quarter of 2021. Excluding the impact from a change in fair value of the Notes and the share based compensation expenses, the adjusted net income attributable to JinkoSolar Holding Co., Ltd’s ordinary shareholders was RMB427.5 million (US$60.1 million), compared with adjusted net income attributable to JinkoSolar Holding Co., Ltd’s ordinary shareholders of RMB368.4 million in the second quarter of 2022 and adjusted net loss attributable to JinkoSolar Holding Co., Ltd’s ordinary shareholders of RMB1.5 million in the third quarter of 2021.
Basic and diluted earnings/(loss) per ordinary share were RMB2.74(US$0.39) and RMB1.60 (US$0.23), respectively, during the third quarter of 2022, compared to RMB(3.15) and RMB(3.15), respectively, in the second quarter of 2022, and RMB1.02 and RMB(0.12), respectively, in the third quarter of 2021. As each ADS represents four ordinary shares, this translates into basic and diluted earnings/(loss) per ADS of RMB10.97 (US$1.54) and RMB6.39 (US$0.90), respectively in the third quarter of 2022; RMB(12.60) and RMB(12.60), respectively, in the second quarter of 2022; and RMB4.07 and RMB(0.49), respectively, in the third quarter of 2021.
Financial Position
As of September 30, 2022, the Company had RMB14.94 billion (US$2.10 billion) in cash and cash equivalents and restricted cash, compared with RMB14.39 billion as of June 30, 2022.
As of September 30, 2022, the Company’s accounts receivables due from third parties were RMB11.32 billion (US$1.59 billion), compared with RMB11.13 billion as of June 30, 2022.
As of September 30, 2022, the Company’s inventories were RMB21.43 billion (US$3.01 billion), compared with RMB18.50 billion as of June 30, 2022.
As of September 30, 2022, the Company’s total interest-bearing debts were RMB29.61 billion (US$4.16 billion), compared with RMB25.70 billion as of June 30, 2022.
Third Quarter 2022 Operational Highlights
Solar Module, Cell and Wafer Shipments
Total shipments were 10,856 MW in the third quarter of 2022, including 10,286 MW for solar module shipments and 570 MW for cell and wafer shipments.
Operations and Business Outlook Highlights
With continuous investments in R&D and technological innovation, we expect to continuously improve the mass production efficiency of N-type cells and narrow the integrated cost difference between N-type and P-type modules.
With more N-type production capacity being released in 2023 and the penetration ratio of N-type products increasing across the industry, we expect the proportion of N-type shipments in our total shipments to further increase.
Fourth Quarter and Full Year 2022 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 2022, the Company expects its module shipments to be in the range of 13.0 GW to 15.0 GW.
For full year 2022, the Company estimates its module shipments to be in the range of 41.5 GW to 43.5 GW.
Solar Products Production Capacity
JinkoSolar expects its annual production capacity for mono wafer, solar cell and solar module to reach 65.0 GW, 55.0 GW and 70.0 GW, respectively, by the end of 2022.
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, Netherlands, Poland, Austria, Switzerland, Greece and other countries and regions.
JinkoSolar has 14 productions facilities globally, 21 overseas subsidiaries in Japan, South Korea, Vietnam, India, Turkey, Germany, Italy, Switzerland, the United States, Mexico, Brazil, Chile, Australia, Canada, Malaysia, UAE, and Denmark, and global sales teams in China, the United States, Canada, Germany, Switzerland, Italy, Japan, Australia, Korea, India, Turkey, Chile, Brazil, Mexico and Hong Kong, as of September 30, 2022.
