Release Date: August 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- JinkoSolar Holding Co Ltd (JKS, Financial) achieved a 34.1% year-over-year growth in module shipments, reaching 23.8 gigawatts in the second quarter.
- The company led the industry with a total module shipment of 260 gigawatts to nearly 200 countries and regions by the end of the second quarter.
- Gross margin remained relatively stable at 11.1% despite a challenging market environment.
- JinkoSolar Holding Co Ltd (JKS) maintained a strong order book visibility for 2024, exceeding 80% by the end of the second quarter.
- The company announced a cash dividend of $1.5 per ADS and repurchased a total of 5.6 million ADS, demonstrating a commitment to returning value to shareholders.
Negative Points
- Adjusted net income was $52.1 million, slightly down sequentially.
- Total operating expenses increased by 24% sequentially and 18% year-over-year, partly due to a fire accident in Shanxi Province.
- Net loss attributed to JinkoSolar Holding Co Ltd (JKS) ordinary shareholders was $13.9 million in the second quarter.
- The company faced low and volatile prices in the industry chain, with prices in most segments falling below cash costs.
- Total revenue decreased by 21% year-over-year, primarily due to a decrease in the average selling price of solar modules.
Q & A Highlights
Q: Looking into the back half of the year and 2025, how do you see module pricing trending? And then on gross margins, what is it going to take to return to the mid-teens margin levels? And do you think this could be achievable in 2025?
A: Gener Miao, Chief Marketing Officer: Market prices will stay relatively low for a while due to oversupply. Margin improvement depends on cost reduction. We are seeing cost reductions happening almost daily, and with continued improvements, margins could return to healthier levels as soon as possible.
Q: With module prices so low for so long, is that resulting in any demand elasticity? And if so, which countries or regions could we see upside surprise in demand? And on the supply side, when do you think this oversupply situation across the supply chain gets resolved?
A: Gener Miao, Chief Marketing Officer: Demand remains healthy in the US, Europe, China, and emerging markets. Supply side actions, including policy initiatives and capacity control, are gradually moving towards rational levels. It might take several quarters for the situation to stabilize.
Q: What is the US shipment amount and expectation in the second half of this year? And what is your view on the policy risk in the US market?
A: Gener Miao, Chief Marketing Officer: US shipments are gradually recovering, with Q4 expected to be around 5-6% of total shipments. Long-term, the US market remains strong due to high electricity demand and supportive policies. We are prepared to manage any trade policy turbulence.
Q: What is the progress in the Middle East, particularly the capacity expansion in Saudi Arabia?
A: Haiyun Cao, Director: The joint venture in Saudi Arabia is a strategic move, with operations expected to start in 2026. Local production will have a premium, supported by government policies. We aim to be the first qualified producer in the region.
Q: Can you provide details on the depreciation and capital spending numbers for the second quarter and targets for the full year?
A: Pan Li, CFO: CapEx in the first half was about RMB4 billion, with a full-year target of RMB9 billion. Depreciation is roughly RMB500-600 million per month. We have significantly cut CapEx for this year and next, focusing on maintaining cash flow and optimizing operations.
Q: What is the outlook for average selling prices (ASPs) and gross margins in the second half of the year?
A: Haiyun Cao, Director: ASPs have been declining but are expected to stabilize. Gross margins are expected to remain stable, with ongoing efforts to optimize costs and improve efficiencies.
Q: What is the current usage of FBR polysilicon, and can it be used 100% to save costs?
A: Haiyun Cao, Director: Utilization levels for FBR polysilicon are currently between 30-50%.
Q: Can you discuss the development process for tandem cell efficiency and its commercial availability?
A: Haiyun Cao, Director: Tandem cell technology is still in the early stages, with commercialization expected in the next five years.
Q: How comfortable are you with your position in the TOPCon IP landscape, and are there any discussions around licensing or legal actions?
A: Haiyun Cao, Director: We are confident in our TOPCon patents, having invested significantly in R&D. We have granted patents to other companies, demonstrating our strong position in the IP landscape.
Q: What is the expected size of the N-type market in 2024, and what will your market share be?
A: Haiyun Cao, Director: N-type TOPCon technology is expected to dominate, with market penetration around 70-75% and JinkoSolar's share at approximately 90%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
