JinkoSolar Holdings Company Ltd

JKS Details

JinkoSolar Holdings Company Ltd (NYSE: JKS) is a solar module manufacturer and sells its solutions and services to utility, commercial and residential customer base in China, the United States, Japan, Germany, the United Kingdom, Chile, South Africa, India, Mexico, Brazil, the United Arab Emirates, Italy, Spain, France, Belgium, and other countries and regions. It has an integrated annual capacity of 20 GW for mono wafers, 11 GW for solar cells, and 25 GW for solar modules, as of September 30, 2020. Further, it has 9 productions facilities, 21 overseas subsidiaries. The company has a market capitalization of ~US$1.8 billion as on 5^th April 2021.

Result Performance – For the Third Quarter Ended 30 September 2020 – (Q3FY20)

For the third quarter ended 30 September 2020, the revenue increased by 17.2% to $1,292 million versus $1,047 million in Q3FY19 led by increase in shipment of solar modules. In line with this, gross margin stood at 17.0% in Q3FY20 versus 21.3% in Q3FY19. EBITDA jumped by 36.8% to $144 million versus $100 million in Q3FY19. Finally, Non-GAAP net income increased by 6.7% to $47 million versus $42 million in Q3FY19. The company reported net income of US$1.0 million, on the back of $46.1 million loss of change in fair value of convertible senior notes and call option, given the significant rise in the stock price for Q3FY20.

Key Data (Source: Company Reports)

Recent Updates

As per the release dated 29 March 2021, the company has launched new series of ultra-efficient Tiger Pro modules amid higher power capacity for distributed generation market. The module is based on the Tiger Pro 182mm, 54-cell design that delivers the maximum power of 415W and an ultra-high efficiency of 21.3%

On 26 March 2021, the company stated that it plans to release its unaudited financial results for Q4FY20 and FY20 before the open of the US markets on April 9, 2021.

On 15 March 2021, the company has been ranked "Overall High Achiever" in the 2020 PV Module Index Report published by the Renewable Energy Testing Center.

On 8 March 2021, the company’s R&D Center module laboratory obtained satisfactory results in the latest national assessment of PV Modules Testing Accuracy.

On 26 February 2021, the company stated that it is the first international solar company to sign the Global Framework Principles for Decarbonizing Heavy Industry.

On 22 February 2021, the company has won the Green Builder Media's 2021 Green Innovation award.

On 19 February 2021, the company stated that it plans to sign a "strategic cooperation agreement" with Tongwei Co., Ltd. ("Tongwei") to jointly invest in a high-purity crystalline silicon project that will have annual capacity of 45,000 metric tons and a silicon wafer project with an annual production capacity of 15GW, as well as develop a more extensive industrial chain cooperation.

On 18 February 2021, the company and its subsidiaries have signed a solar glass procurement contract with Flat Glass Group Co. Ltd., locking ~338 million square meters of rolled glass to support the production of 59GW of JinkoSolar's high-efficient solar modules for three years from 2021 to 2023.

 Outlook:

The company has completed the technological transformation for high-efficiency product portfolio. The company expects total solar module shipments between 5.5 GW to 6.0 GW in Q4FY20 and total revenue in the range of $1.31 billion to US$1.43 billion with gross margin between 13% and 15%. For FY20, the company estimates total solar module shipments to be in the range of 18.5 GW to 19 GW.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation (Illustrative)

Stock Recommendation:

The stock has witnessed a fall of ~37.2% in 3 months and over the last 6 months, it has decreased by ~16.7%. However, the stock reported an increase of ~87.5% in 9 months and an increase of triple digit ~186.1% in 1 year. The stock has a 52-week low and high of US$13.67 and US$90.20, respectively and is currently trading below the average of 52-week high-low range.

Considering the aforesaid facts, we have valued the stock using an EV/EBITDA multiple-based illustrative relative valuation and have arrived at a target price which reflects a rise of low double-digit (in % terms). We have applied a slight discount to EV/EBITDA Multiple (NTM) (Peer Median) considering its lower liquidity position and higher Debt/Equity ratio.

Considering the aforesaid facts, we give a “Buy” recommendation on the stock at the current market price of US$40.25 per share, down ~5.41% on 5^th April 2021.

JKS Daily Technical Chart (Source: Refinitiv (Thomson Reuters))

(Source: Refinitiv (Thomson Reuters))

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