Jinko’s 2Q13 Financial Result Evaluation: Turning Around Losses, the Company Starts to Gain Profit

published: 2013-08-23 14:01 | editor: | category: Analysis
JinkoSolar Holding Co. Ltd. announced the 2Q13 financial results on August 14th. Total revenues were US$287.6 million, a 53.5% increase compared to 1Q13 and a 47.6% increase compared to 2Q12. Net income was US$7.98 million while net loss in 1Q13 was US$20.8 million and that in 2Q12 was US$48.87 million. Gross margin was 17.7%, a 5% rise compared with 1Q13 and a 9.3% rise compared with 2Q12. This is the first quarter for Jinko to turn around losses ever since 3Q11. According to EnergyTrend’s observation on the PV manufacturers that have released their financial results, certain manufacturers have also turned profitable in the second quarter, including SunPower, Gintech, NEO Solar Power, and Motech. It showed that the momentum in the PV market has started to warm up.
 
 
Source: Companies’ financial results/ collected by EnergyTrend (using 1TWD=0.033USD)
 
Jinko’s total amount of shipment in the 2Q13was 489.2MW, a 44% rise compared with 338.6MW in the 1Q13. Shipment breakdown is as follow – 282.4MW modules, 25.4MW silicon wafers, and 30.8MW cells for the first quarter; 460MW modules, 1.1MW silicon wafers, and 18.1MW cells for the second quarter. It showed that Jinko has significantly increased their module shipment. The company’s module shipment in the third quarter is estimated to be 460MW-500MW. Moreover, Jinko’s module shipment in the entire 2013 is estimated to reach 1.5GW-1.7GW, including shipment of 700MW-900MW in the second half year.
 
Judging from the shipment regions, Jinko has been trying to lower the dependence on the European market. By reducing shipments to Europe from 50% last year to 25%, Jinko has expanded shipments to China, Japan, USA, South Africa, India, and other emerging markets. Among all, China represented the most, reaching 44%. However, Jinko mentioned in the conference call that shipments to Japan should account for more proportions as Japan will be the foundation in the PV market in 2013. Jinko also increased shipments to Canada and Australia while began the shipments to South America for the first time. Looking at the 1H13, Jinko’s clients are now in 30 different countries. 
 
Jinko has started to expand the production capacity (wafer to module) from 1.2GW to 1.5GW through technology improvement and production line upgrade. While manufacturing cost of module was US$0.51/W in the first quarter, the company has cut the manufacturing cost down to US$0.5/W. Cost reduction was due to the decreasing silicon material price.
 
The PV guidance announced by State Council of the People's Republic of China clearly pointed out the target amount of 35GW solar system installations by 2015 and a 20-year subsidy which will be paid by month. This could be good news to downstream PV manufacturers. Like many other PV companies, Jinko has shifted their position from a conventional PV manufacturer to a solar energy solution provider. With the current pipeline reaching 700MW, the company is estimated to complete 200MW-300MW power plant projects by 2013. However, Jinko’s revenue generated from projects is only US$0.8 million so far. Since the revenue generated from projects has not been significant and debt-to-asset ratio remains high, the financial pressure still exists like the rest of Chinese PV companies.
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