For the fourth quarter 2014, Chinese Export Data Report (CEDR) disclosed 451.33MW delivered by JinkoSolar Holding Co., Ltd. (NYSE: JKS). Global allocation for the quarter exhibited top three continental destinations: Europe at 179MW, Asia with 114MW and the US with 87MW.
The largest country destination for the indicated period was Holland with 100MW and UK with 76MW. CEDR showed 69MW delivered to the US, followed by 53MW to Japan. Fourth quarter global declaration prices showed $0.62 in comparison to $0.64 per watt during the third quarter. Volume recorded in the fourth quarter was 91% higher year over year and 64% higher sequentially. At 451.3MW, the company`s global shipments reached the new record.
The CEDR “Guidance Watch” the fourth quarter published in February 2014 had following comments:
“Q4 Guidance: 1,030-1,120MW inc. 300-350MW own projects,
Objective: 770MW top end
Q4 CEDR Final: 451MW
Overseas Estimate: 32MW South Africa
Total Estimate: 483MW
China Estimate: 287MW or 37%
The company has added quite a substantial amount of module deliveries in December, at 223MW. The overall figure from Q4 CEDR is 451MW. We add around 32MW from South Africa, and we have total exports at 483MW. An estimate of sales in China currently looks like 287MW, which is 193MW lower than what the company shipped in Q3. This certainly supports delivery to its projects but does not explain whether connections have been obtained for them. Lack of connection news remains the biggest concern prior to reporting of the quarter. Theoretically, the company could have an opportunity to beat volume guidance, but perhaps caution should be advised, as the capacity level for Q4 is not fully understood. While dominant export numbers improve margins, the drop in the GADP may not suggest this. Still, gross margin should remain flat versus Q3. Chinese ASP in Q3 seemed unchanged in Q4, but lower volume of shipments domestically should have a lesser impact on overall ASP in the quarter, keeping in line with Q3. CEDR Q4 deliveries are a record for the company.”
The company has reported its fourth quarter and full year 2014 results on March 5th, 2015.
The company reported 838.3MW shipped, consisting of 739.2MW of modules shipped to third parties. In addition, the company delivered 339.1MW of modules for own solar plants. The company’s presentation disclosed following volumes and destinations: 251.6MW to China, 123.1MW to APAC, 205.6MW shipped to EU, 66MW for emerging markets and 92.9MW for the US, in total 738.9MW. Extracting volume for China, exports were 487.3MW.
Referring to CEDR, the overall volume was 451M, but we indicated 32MW from South Africa to estimate the total volume as 483M. Therefore, CEDR commentary accuracy is rated .09% discrepancy.
We indicated that that overall shipment to meet the guidance would have to reach 770MW, and we speculated that third-party sales to China would reach 287MW. The company shipped 31MW less than original guidance for third party sales. If we reduce 287MW by this amount we arrive at 256MW, which is within 5MW from the actual number.
Individual locations from CEDR versus actual locations reported by the company had following results: The US in CEDR had 69MW versus 93MW recorded by the company. In the EU, CEDR recorded 179MW, while the company recorded 206MW, For APAC, CEDR recorded 130MW while the company published 126MW. The combined discrepancy for the US and EU is around 51MW. We estimated 32MW to come from the South African operation and can be considered a contributing factor to the discrepancy.
The fourth quarter`s gross margin of 22.8% beat our expectations. The reason for this outcome was a larger energy revenue, recognition of retainage and the decrease in the production costs. Jinko achieved one cent reduction, down to $0.45 per watt, which is currently the lowest cost in the industry. The company indicated $0.60 per watt as an average selling price during the quarter, which was the same as ASP in the third quarter. At the $0.62 per watt for the exports and having average price of $0.60 overall, shipments to China would average $0.56 per watt. Our analysis of volume in the third quarter indicated 275MW of global shipments with GADP of $0.64 per watt. During the third quarter, JinkoSolar reported 277.06MW shipped globally and 480.94MW shipped to China, including 100MW to own projects. Third party shipments to China at 380.94MW would have an ASP of $0.57 per watt during third quarter based on our data.
At the high end of the range, the 2015 first quarter guidance sees shipment of 780MW of modules including 180MW destined for own projects. The euro has dropped 10% during the first quarter while the yen dropped by 1%. The RMB appreciated by 1.6% in the same timeframe. All mentioned currency movements could decrease global ASP by 5% sequentially for the peer group represented by top four Chinese companies, including JinkoSolar. However, iIn the case of Jinko, the company should be able to compensate with the increase in the revenue from energy generation, now from 503MW connected to the grid. We also suspect that volume shipped by the company to the US will increase during Q1, having another positive influence on forthcoming quarter.
