JinkoSolar (JKS)

[SCSolar 83]

What no comments on Jinko's ER. They fell 100MW below their low end guidance.

You remove a $6M tax reversals  and the $10MCVD reversals and they are at zero profits.

Their belnded ASP looks to be around just over $0.30 with costs around $0.265. Mono is set to pull down further.

Their 2019 guidance is 14-15GW. That is an increase of 22-32% over the past year. That is similar to last years increases that they fell short of. 

 

This is a company that is operationally profitless after standard expenses and interest. Yet they are pushing volumes over profits.  They are basically using accounting gimicks to show profits.

 

Atleast CSIQ actually made a profit from their own operations last year and not from check book accounting gimicks.

[Klothilde 85]

They keep expanding recklessly and spending way more in CAPEX than what they're producing in cash.  This quarter $160M in Capex vs. $56M in EBITDA.  And craaazy expansion planned for 2019.  Not going to end well.  Looks like the CEO has lost it just like Peng, Shi, Miao.

[pg6solar 113]

Jinko will ship upto 15GW in 2019!!! How much will FSLR? (Does AMZN ring the bell? How long were they profitless before they dominated? Look at hem now.) No, I do not have position in Jinko nor in any other solar (although I should have).  

[stolypin 0]

7 minutes ago, pg6solar said:

Jinko will ship upto 15GW in 2019!!! How much will FSLR? (Does AMZN ring the bell? How long were they profitless before they dominated? Look at hem now.) No, I do not have position in Jinko nor in any other solar (although I should have).  

It is all fun and games until suddenly it isn't. Reckless expansion is what brought Yingli down.

[pg6solar 113]

Thanks for reminding me of that.

[Klothilde 85]

Ok so what did we learn today?  That 15% gross margin is no longer enough in PV manufacturing?

[Klothilde 85]

20-F out:
http://ir.jinkosolar.com/sec-filings

Let me know if you find something fishy.

[MVA 24]

JinkoSolar Announces Proposed Follow-on Offering of 3,750,000 American Depositary Shares...

https://finance.yahoo.com/news/jinkosolar-announces-proposed-offering-3-202900817.html

[Klothilde 85]

Oh, just realized I'm out of cash.  Wait here while I hit the ATM.

[Klothilde 85]

Falling like a stone you guys.

[SCSolar 83]

13 hours ago, MVA said:

JinkoSolar Announces Proposed Follow-on Offering of 3,750,000 American Depositary Shares...

https://finance.yahoo.com/news/jinkosolar-announces-proposed-offering-3-202900817.html

Let just say that secondary was telegraphed from the other side of the sun. The line of questioning from the con call regarding funds needed for expansion, then the back to back PR's to try and push positive news was a dead giveaway.

 

What is interesting is that the stock is not down 10% yet when they are diluting some 15%.

 

Are they looking at getting this placement done before the ER? If so that is real shady to me and would suggest that the full year earnings will not be great.

[Mark 45]

2 hours ago, SCSolar said:

What is interesting is that the stock is not down 10% yet when they are diluting some 15%.

Only down 3% at the moment on nearly 3M shares is strange indeed.  When's the flush coming?

[Mark 45]

Hmmmm, ok then.  Flush tomorrow?  Odd.  Someone has their back or someone is ready to yank the rug in a big way.  

[Mark 45]

Just now seeing this from yesterday, but Shen at Roth put a buy and $24 target on this?  Some of his recent FSLR calls over the last year and now this make me wonder.  I hope he's right and knows who has been holding the stock price up and knows their future intent, as I still own shares from 2014 I'd love to get break even on.

[Klothilde 85]

SC and others, what is your estimate for Q1?  I have them at an of EPS -$0.26 and Rev of $907.70M on estimize and am worried big time because I'm the only one forecasting a loss there and if I'm wrong I will lose many points.

[SCSolar 83]

I expect gross coming in around $130M+/- at 15% margins.

I have Opex and interest at $130M +/-

 

Thus I  have them breakeven to  slight loss or profit from operations. It really depends on margins and other impacts.

 

I am not certain about their hedging on forex. CSIQ had a big Forex loss from appreciation of the RMB.

 

The 15% margins presumes some CVD reversal again as they and CSIQ have been claiming to pad earnings.

 

If you believe margins is closer to 14% then that is $8-$9M lower gross which could push them to a loss that you are looking at.

 

They are cryptic in guidance as they suggested that they need 30-40% of their product outsourced and the rising costs of those outsourced parts  of upstream and modules. This  will offset some of the believed ASP increases from more Mono Perc production. Thus the flat margin guidance they gave

 

These solars are not predictable anymore due to many adjustments. At current price levels they are to rich for the risk reward levels.

[Klothilde 85]

On 6/15/2019 at 8:24 PM, SCSolar said:

I expect gross coming in around $130M+/- at 15% margins.

I have Opex and interest at $130M +/-

Thanks for your views.

I have GP at $114M at 12.5% margin and OPEX&int at $123M.

They guided "stable" margins excluding the CVD impact in Q4 (i.e. thus 13.8%), however experience shows they are not that strict with this wording and that "stable" for them may also include a 10-15% drop in margin.  However what has me wondering about margins is the fact they mentioned twice in the con call that rising mono-PERC cell prices would "impact" the margin in Q1,  but that they expected improving margins in H2, suggesting to me they expect a drop in overall margin in Q1 despite rising in-house margins.  This is admittedly based largely on vibes I get from their wording.

Regarding CVD reversals they mentioned in Q3 that they expected a further reversal in Q4 and then no further in 2019.

On 6/15/2019 at 8:24 PM, SCSolar said:

I am not certain about their hedging on forex. CSIQ had a big Forex loss from appreciation of the RMB.

I looked at the exchange rate impact in previous quarters and they do seem to suffer when the RMB appreciates, thus I factored in a sizable loss for Q1.

But I do agree with you in that these guys have ways to pad their earnings when required with accounting gimmicks, thus I will up my estimate on estimize to barely break-even ($0.01) though I continue to expect a small operating loss.

[SCSolar 83]

Earnings tomorrow AM? Any ideas on outlook? My guess is things may not be as bright as hoped which is why they pushed to get the secondary before earnings. The way I read it is if earnings and outlook was to be very good, then why the rush? We shall see.

[Klothilde 85]

9 hours ago, SCSolar said:

Earnings tomorrow AM? Any ideas on outlook? My guess is things may not be as bright as hoped which is why they pushed to get the secondary before earnings. The way I read it is if earnings and outlook was to be very good, then why the rush? We shall see.

I think they rushed the secondary (and scheduled the Q1 con call extremely late) because they knew Q1 earnings would suck. In terms of outlook I think they will keep painting a rosy picture just to be consistent with their recent pre-secondary stock-pumping PR about the 11GW of bookings.  Imho they probably already know that it will be a struggle to meet the FY shipments guidance but they still have time until the Q3 con call to pretend everything is just fine.

[Klothilde 85]

So what's the thinking?

They basically guided Q2 at around break-even (14-15% margin, stable ASP, slightly higher OPEX & Interest) and said that the China demand spike will be mostly in Q4 (suggesting a softer Q3 than expected).

Looks to me  like EPS consensus for Q2 ($0.25) and more importantly for the FY ($1.86) are up for a revision downwards.

Others?

[solarpete 101]

I think they have a decent shot at those $0.25 for Q2.  They guided 10% increase in shipments, and I did not see any guidance for decreasing margins.  Quite the contrary, the press release said the factors causing the recent increase in margin (greater percentage of sales from higher-efficiency, therefore higher-priced products and reduction in cost to manufacture) are still ongoing.  They made $0.15 this quarter, beating expectations.  If they made money this quarter, expect to ship more next quarter, and don't expect margins to decrease, I certainly don't see them backsliding in EPS.  Are we ever going to get back to $1/quarter?  We're certainly still a long way from that.

[Klothilde 85]

32 minutes ago, solarpete said:

...and I did not see any guidance for decreasing margins...

That's because they said it in the con call, check the transcript later.

[SCSolar 83]

3 hours ago, Klothilde said:

That's because they said it in the con call, check the transcript later.

Here are 11 points I  have from  the con call gudiance and market dynamics as of now.

 

1:  The ASP will drop significantly in the second half due to some 3-4GW or 40-45% of their guided second half shipments being to China where high efficiency mono PERC is running 10% lower than average high efficiency mono PERC prices.

 

2: The CN demand is going to cause around a 1.5-2.5% lower GM due to the lower ASP even with cost reductions due to production ramps and increased high efficiency modules as a percentage.

 

3: The U.S. tariff ruling making double sided modules as exempt is going to create a problem for single sided modules and the ASP. It will cause the price to drop on those modules. The market is about 4GW for these double sided modules when you take away the tariff free quantity and the FSLR quantity and the SPWR exemptions. This is going to make the modules ASP drop in the US from $0.40 to low $0.30 or even upper $0.20's effectively killing and single sided module sales that are not tariff free.  This is going to create issues with cost to manufacture in the new 400MW facility in the U.S as well.

 

4: Any swapping of single sided for double sided modules will most likely impact the ASP in renegotiated lower prices to entice the swap out of dissimilar modules.

 

5: The drop in the ASP from what appears to be a blended $0.28 will likely fall to mid $0.25 to $0.26 in the second half due to these dynamics above.

 

6: The margins should be falling from mid 16% to mid 14% due to the dynamics mentioned above will imapct earnins by some $60-$70M in gross income. It will fall from estimated $380M down to an estimated $320M+/-.

 

7: Opex is going to jump to some $130M+ per quarter with the 1-1.25GW of increased modules per quarter

 

8: Interest is going to increase by some $5-7M in the second half over the first half due to the increased debts.

 

9: Income before taxes is likely to drop from nearly $70M down to around $20M in the second half.

 

10: Q2 should flip the hedging numbers impacting earnings from Q1. That would suggest upwards increase of $0.50 per share increase  in Q2 earnings over Q1.

 

11: the target of 40GW is down from earlier suggestions of 45GW to possiby 50GW. A 10-15% market share by JKS built into guidance would have suggested 4GW-6GW of guidance was to be from China. Right now they are probably looking at 600MW-1GW of that in the first half of 2019. The second half would have 3-5GW from the initial guidance. This new  40GW China target would suggest that the lower end of shipments being 14GW is more likely than the upside. If GCL 35GW suggestion of demand in China for 2019 is realized, then there is minor  downside r

[Klothilde 85]

4 hours ago, solarpete said:

...and I did not see any guidance for decreasing margins...

Here you go, straight from the horse's mouth:

"...And for the Q2, the gross margin is at the mid range of 14% to 15%, it’s relatively lower than Q1. And Q1, the gross margin is pretty good and exceeding our guidance. And for the Q2, it's basically because our new capacity is still in the construction stage and will not have contributing to the profitability in second quarter..."
https://seekingalpha.com/article/4272691-jinkosolar-holding-co-ltd-jks-ceo-chen-kangping-q1-2019-results-earnings-call-transcript?part=single

That puts them around break-even before adjustments in Q2 on my books.   A forex gain may probably put some icing on the numbers.

[solarpete 101]

OK, thanks.  I wasn't able to listen to the call.

I wonder where the bottom is on ASP for the industry?  As long as it keeps going down, manufacturers are going to struggle to produce significant profits.  But with grid parity now either already reached (in sunny places) or within reach (elsewhere), I would think prices should stabilize, as we're no longer competing with fossil fuels.  (Or rather, we're winning that competition based on price alone--the lack of pollution is just an added bonus.)  And once prices stabilize, THEN increasing volumes should go straight to the bottom line.

Any prognostications on when that might be?

[SCSolar 83]

44 minutes ago, solarpete said:

OK, thanks.  I wasn't able to listen to the call.

I wonder where the bottom is on ASP for the industry?  As long as it keeps going down, manufacturers are going to struggle to produce significant profits.  But with grid parity now either already reached (in sunny places) or within reach (elsewhere), I would think prices should stabilize, as we're no longer competing with fossil fuels.  (Or rather, we're winning that competition based on price alone--the lack of pollution is just an added bonus.)  And once prices stabilize, THEN increasing volumes should go straight to the bottom line.

Any prognostications on when that might be?

True grid parity without subsidies with storage around 2023 in the cheapest labor countries with moderately good insolation. Target $0.60/watt installed. If $0.10 for storage, then that becomes  $0.50 without storage. At 35% module cost and 65% BOS, you have a module cost in projects at of $0.175 and a BOS of $0.325. The production costs will need to be around $0.13-$0.14 to achieve profits with Opex and shipping globally.  By the way those production costs are in the mid to upper range of Perovskite prices suggested by GCL($0.10-$0.15).

These are my rough numbers. but this article suggests 2020-2023 in China for the first subsidy free projects though they do get reduced land fees to free land use.

 

https://www.pv-magazine.com/2019/05/22/china-reveals-details-of-first-15-gw-of-grid-parity-solar/

 

 

[Klothilde 85]

Sweihan plant in Abu Dhabi got commissioned.  JKS owns 20% and we need to figure out when they will offload it cuz it sure will affect earnings then.  Any idea?  Is Q2 out of question?
https://renewablesnow.com/news/abu-dhabis-117-gw-solar-farm-is-fully-operational-659851/
 

[Mark 45]

Hobo speaks again.

https://seekingalpha.com/article/4272954-jinko-solars-first-quarter-earnings-reaffirm-potential-massive-earnings-year?app=1#alt1

[SCSolar 83]

2 hours ago, Mark said:

Hobo speaks again.

https://seekingalpha.com/article/4272954-jinko-solars-first-quarter-earnings-reaffirm-potential-massive-earnings-year?app=1#alt1

Good read, I agree with much of the theories. He must have read my post from Friday. Especially bullet 1 and 10.