JinkoSolar Holding Co., Ltd. (NYSE: JKS), a global leader in the solar PV industry, today announced its Q3 2013 financial results for the period ending September 30, 2013. In this connection, JinkoSolar’s CEO hosted an earnings conference call today. Below is the full text of the commentary made by the CEO of JinkoSolar Holding, Mr. Kangping Chen.
I am extremely proud to report the JinkoSolar’s second consecutive quarter of profitability following robust quarter-over-quarter growth in revenue, module shipments, and net profits. We have picked up considerable momentum from the strategic investments we made during the downturn.
During that time we have successfully penetrated new markets, both in our geographic reach and expanded our downstreambusiness, which has already resulted in net profitability for the entire year, a goal we initially set for ourselves to complete by the end of 2013. We now look forward to closing out the year on an even stronger footing. JinkoSolar is now solidly among leading global solar PV companies with gross margins that have steadily improved to 22.3%, thanks toour leading cost structure, improving global ASPs and growing profits from solar projects.
I believe our strong operational and financial performance demonstrate the management’s effectiveness and ability to execute its strategy. Having regained profitability for the second quarter, and having achieved the net profitability for the entire year a quarter ahead of the schedule, we are now devoting our substantial resources and attention to expanding our downstream business as we continue our transformation from a traditional manufacturer to a one-stop energy solution provider.
The follow-on public offering of 4,370,000 ADSs we issued during the quarter is another vote of confidence by the markets in our future and the direction we are headed. We raised approximately US$67.8 million to further improve our working capital and cash reserves and are eager to put the cash to work. The capital will be used to supplement our working capital and invested into one of the most exciting business segments: our downstream projects.
Our transformation from a traditional manufacturer to a one-stop energy solution provider is truly an exciting business and I am very optimistic about the opportunities that it will bring. We have already connected 105 MW to the grid sofar and are focused on connecting another 108 MW during the fourth quarter of 2013. This will be followed by an additional 300 MW earmarked to be connected by the end of 2014 with the support of financial partners, such as China Development Bank, and we plan to be more focused on distributed PV systems.
The Chinese government recently increased its solar installation target for 2014 by 20% to 12 GW, a clear commitment towards renewable energy that is expected to result in increased demand for both solar farms and distributed PV systems.
Our pipeline now includes 700 MW in utility scale projects and more than 400 MW for distributed systems, putting JinkoSolar in a unique position to benefit greatly as this market grows. While still in its early stage, this growing revenue stream is currently generating revenues from power sales and services related to solar power projects.
This quarter we recognized approximately RMB14 million in revenue from our downstream business, whereas gross margins and net profit margins exceeded 60% and 30% respectively. With the number and scale of our projects growing rapidly, we expect that this revenue stream will contribute meaningfully to our profit in the future.
Our state-of-the-art products continue to lead the global PV industry in terms of technology and efficiency. During the quarter, we completed preliminary research on an advanced version of our Eagle series of modules, which we call ‘Eagle +’. These new modules continue the traditional set by earlier ‘Eagle’ modules by being certified PID free, but with higher power output and lighter in weight, making them ideal for rooftop installations and extreme weather geographies.
JinkoSolar’s multicrystalline cells have now achieved conversion efficiency of 18.5% in lab tests. With this technology expected to be utilized in mass production next year, these results have been confirmed by third party institutions, including TUV NORD and the National PV Product Quality Inspection Center. Our “smart modules” are currently in the process of internal reliability tests following the completion of function testing earlier this year. I am very excited about the potential these smart modules will provide to our customers and I believe they will revolutionize the way in which solar modules are managed and optimized.
With ASPs continuing to stabilize and demand for our solid portfolio of products growing, we are well situated to take full advantage of our strong relationships across the globe and constant investment into R&D to leverage our technological leadership in solar product development.
Our exposure globally has continued to grow as we leverage our reputation to diversify our geographic presence globally. As European markets slow, we continue to seek out new opportunities in exciting solar markets such as China, Japan, U.S., South Africa, and India.
JinkoSolar maintains leading market position in terms of shipments and market share in China with recent data showing China maintaining its position as a global leader in solar product shipments. We will continue to focus on securing our leading position with our strong brand and global reputation. China’s ASPs have recovered nicely during the quarter and contribute to the overall increase in the company’s ASPs. While the European market has slowed significantly, we expect a good percentage of the shipment quota assigned by the Chinese Chamber of Commerce machinery and electronic products.
Given our solid reputation and strong track record on the continent, our loyal customers continue to place orders withus when we move into [restarter] markets such as the UK where we recently signed a 18.5 MW contract with Lightsource,the UK’s largest solar energy generator.
Our share of the North American market continues to grow as there is deeper recognition of our brand. We consider North America to be a strategically important market and have thus sought out reputable partners there as we expect that it will account for 12% to 15% of our total shipments in 2014.
Shipments to Japan continue to grow steadily, thanks to a bull market and our investment today. The Japanese market isalso expected to account for approximately 12% of our total shipments in 2014. Our reputation continued to grow in South Africa following the 274 MW contract was signed with ACCIONA. Meanwhile we have continued our effort to penetrate new emerging market, Middle East and Latin America.
In summary, with another quarter of profitability behind us, I am optimistic about the opportunities ahead of us as weconfidently look towards the future. Even during the toughest times, we never lost the hope or the courage we needed to push forward as one of the industry leaders. We continue to manage our business prudently, and have thus been able to adjust our vision and hone our ability to strategically execute. I believe that our industry leading technology, cost structure, steady downstream expansions and brand recognition have yielded the formula for our robust, sustainable future growth.
Guidance for Q4 2013
With that, let me now turn to the guidance. For the fourth quarter of 2013, we expect total solar module shipments to be in the range of 500 MW to 530 MW. Full year 2013 total solar module shipments has been revised upwards and will now be in the range of 1.7 GW to 1.8 GW compared to the previous guidance of 1.5 GW to 1.7 GW. By the end of the year, total operational solar PV projects are expected to be in the range of 210 MW to 230 MW
JinkoSolar is a global leader in the solar PV industry with production operations in Jiangxi and Zhejiang Provinces in China and sales and marketing offices in Shanghai and Beijing, China; Munich, Germany; Bologna, Italy; Zug, Switzerland; San Francisco, the United States; Queensland, Australia; Ontario, Canada; Singapore; Tokyo, Japan; and Cape Town, South Africa.
JinkoSolar has built a vertically integrated solar product value chain, with an integrated annual capacity of approximately 1.5 GW each for silicon ingots, wafers, and solar PV cells, and approximately 1.8 MW for solar PV modules, as of September 30, 2013. JinkoSolar sells electricity in China and distributes its solar products to a diversified customer base in the global PV market, including Germany, Italy, Belgium, Spain, the United States, Eastern Europe, China, India, Japan, South Africa, and other countries and regions.