JinkoSolar Q4 2024 Earnings Call Transcript

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Provided by Quartr
March 26, 2025

There are 10 speakers on the call.

Operator

Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co. Limited's Fourth Quarter twenty twenty four Earnings Conference Call. At this time, all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded.

Operator

I would now like to turn the meeting over to your host for today's call, Ms. Stella Wang, JinkoSolar's Investor Relations. Please go ahead.

Speaker 1

Thank you, operator. Thank you, everyone, for joining us today for JinkoSolar's fourth quarter twenty twenty four earnings conference call. The company's results were released earlier today and available on the company's IR website at www.jinkosolar.com as well as on newswire services. We have also provided a supplemental presentation for today's earnings call, which can also be found on the IR website. On the call today from Xinkosolar are Mr.

Speaker 1

Li Zhende, Chairman and CEO of Xingco Solar Holdings Company Limited Mr. Zhenap Liang, CMO of Xingco Solar Company Limited Mr. Pen, CFO of Xingco Solar Holdings Company Limited and Mr. Charlie Cao, CFO of Xingco Solar Company Limited. Mr.

Speaker 1

Li will discuss XinkoSolar's business operations and company highlights, followed by Mr. Miao, who will talk about the sales and marketing, and then Mr. Pan, who will go through his financials. They will all be available to answer your questions during the Q and A session that follows. Please note that today's discussion will contain forward looking statements made under the Safe Harbor provisions of The U.

Speaker 1

S. Private Securities Litigation Reform Act of 1995. Forward looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding this and other risks is included in Xincosolar's public filings with the Securities and Exchange Commission.

Speaker 1

Xincosolar does not assume any obligation to update any forward looking statements except as required under the applicable law. It's now my pleasure to introduce Mr. Li Xiande, Chairman and CEO of XinkoSolar Holdings. Mr. Li will speak in Mandarin and I will translate his comments into English.

Speaker 1

Please go ahead, Mr. Li. We delivered more resilient operating results in a challenging year of 2024 with our leading position in n type Topcon technology and the patent portfolio, competitive products as well as global sales and manufacturing networks. Our annual module shipments increased by 18.3% year over year to about 93 megawatts, ranking first in the industry. The ongoing imbalance between supply and demand led to a decline in the module prices in 2024 combined with the impact of short term factors such as the elimination of obsolete production capacity, our profitability dropped significantly year over year.

Speaker 1

Gross margin was 10.9% in 2024 compared to 16% in 2023. Net income was US7.9 million dollars down 98% year over year. Module shipments were 25.2 gigawatts in the fourth quarter, in line with our guidance. As over 50% of modules were shipped to the domestic markets, where the price were lower and the proportion of higher price overseas orders declined sequentially. Both module ASP and profits decreased sequentially.

Speaker 1

Gross margin was 3.6% in the fourth quarter compared to 15.7 in the third quarter. Net loss was US64.9 million dollars compared to net income of US3.2 million dollars in the third quarter. In 2024, the global PV industry maintained faster growth momentum according to NEA data. Newly added installation in China was two seventy seven gigawatts in 2024, an increase of 28% year over year, setting a record high. According to InfoLink Consulting, China's module exports reached two thirty six gigawatts in 2024, an increase of 13% year over year.

Speaker 1

Intensify the supply and demand imbalances led to a downward trend in end product prices, putting profits under pressure in all segments of the industrial chain. In order to return the industry to healthy development, the national authorities took steps to resolve the to resolve the structural imbalance between supply and demand with the participation of industry associations and manufacturers. In November, state departments announced the policies to raise entry barrier for new manufacturing capacities, reduce export tax rebates and other matters. In December, leading TV enterprises signed a self discipline pledge aimed to limit low price competition and reducing production. Recently, the NDRC and NEA announced a policy on market based reforms for on grade renewable energy pricing aimed at promoting high quality industry development.

Speaker 1

Guided by industry self discipline and supportive policies, price in the industry as well as other module prices have stabilized and started to rebound. We are committed to maintaining technology leadership through continuous R and D investments and mass production of innovative products. By the end of the fourth quarter, the average mass produced N type cell efficiency reached nearly 26.5% and the efficiency on the highest performing production lines, our golden area reached over 26.7%. In addition, we have recently initiated production of third generation Tiger Newberg products with large scale production expected by the end of this year. We continue to phase out outdated production capacity, while further enhancing our global manufacturing capabilities.

Speaker 1

At our Shaanxi N type super factory, we take ongoing efforts to reduce costs and improve efficiency through the introduction of automated equipment and the process optimization. Our two gigawatts N type module production capacity in The U. S. Is operating at nearly full capacity, while our Saudi Arabia project is progressing steadily. As we continue to strengthen our localized supply chain, we are confident in our ability to meet customer demand for locally produced high quality and a stable product supply and services.

Speaker 1

Recently, we were included in the S and P Global twenty twenty five Sustainability Yearbook as the only solar module company. In the latest corporate sustainability assessments, CSA results released by the S and P Global, we scored 69 points ranking first among the top five PV module companies. In addition, we received a BBB rating for the second consecutive year in the MSCI ESG ratings. These recognitions are a strong testament to our continuous efforts in ESG. We place great importance on intellectual property protection and are committed to maintaining our global technological leadership through an extensive IP portfolio.

Speaker 1

By the end of the fourth quarter, we had built a strong patent portfolio including four sixty two granted Topcon patents making us one of the world's leading holders of Topcon related patents. Our Topcon patent portfolio covers a substantial number of countries and regions, including The United States, Europe, Japan, Australia, China. Recently, we received the patent infringement claims from some competitors. After a preliminary review, we believe these allegations lack both factual and legal merits. We are actively responding in collaboration with legal advisors and technical experts.

Speaker 1

As an industry leader in innovation, we fully respect intellectual property rights and advocate for fair competition, while firmly defending our legitimate rights and interests. We believe that upholding these principles is essential for the healthy development of the industry. In the short term, as some leading PV companies face significant financial losses, the industry may have entered deep adjustments period. Companies lacking competitive costs and efficiency, product and technology iteration capabilities and global expansion capabilities are likely to be phased out, helping restore supply and demand balance to the industry. In the medium to long term, according to IEA data, renewable energy is expected to supply half of global electricity demand by 02/1930 with wind and solar PV generation doubling their share to 30%.

Speaker 1

This highlights the vast growth potential of the PV industry With our extensive marketing sites and strong execution capabilities, we have successfully navigated industry cycles several times. We are confident these strengths will continue to help us overcome future challenges and position us strongly for emerging opportunities. Before turning over to Jenner, I would like to go over our guidance for the first quarter and the full year of 2025. By the end of twenty twenty five, we expect the mass produced n type cell efficiency to reach approximately 27%. We are taking a more cautious approach to capacity expansion in this year.

Speaker 1

Besides upgrades to top count technology, there is no newly added capacity. We expect our new production capacity for mono wafers, solar cells and solar modules to reach 120, 90 five and one hundred and 30 gigawatts respectively by the end of this year. We expect the module shipments to be between 16 to 18 gigawatts for the first quarter of twenty twenty five and between 85 gigawatts and 100 gigawatts for the full year 2025. We will also continue to optimize our assets and the liability structure while maintaining a healthy cash reserve, further strengthening our resilience to risks.

Speaker 2

Thank you, Ms. Li. We are proud to have reached the historical high quarterly and annual module shipments leveraging our global sales network and product strength. Total shipments were approximately 26.5 gigawatt in the fourth quarter with module shipment accounting for 95%. Annual module shipments were 93 gigawatt, ranking first in the industry.

Speaker 2

This marks the sixth year in the past decade that we have won the Global Module Shipment Championship. We continue to improve our product efficiency and quality and expand our client service network as our brand influence continue to grow. By the end of fourth quarter, we were leading the industry as the first PV enterprise to reach the milestone of accumulative module shipment over 300 gigawatts, covering nearly 200 countries and regions. In terms of geographic mix, for the full year, 60 of our modules were shipped overseas, primarily Europe, India and Pacific and The Middle East Africa. Shipments to North America accounted for around 8%, in line with our expectations.

Speaker 2

We further optimized our product with the portion of N type Techno series exceeding 95% in fourth quarter and nearly 90% for the full year. Recently, we ranked number one in the Global Solar Module Manufacturers Ranking 2025 report published by Ruth Mackenzie. In addition, we were ranked as the most bankable solar module company in the 2024 PV module bankability survey by Bloomberg. We were also only a solar module company to receive 100% bankability rating in this year's survey. All these are strong evidence of recognizing our stable financial conditions as well as high efficiency and reliable products and services by our global customer, financial institutions and other industry stakeholders.

Speaker 2

In 2024, the newly added two seventy seven gigawatt in domestic installation exceeded expectations with 70 gigawatt in December, all historical highs. Looking forward to 2025, newly added installations in China are expected to be two seventy gigawatts or higher, and the global PV demand is expected to be around 700 gigawatts. We will continue to leverage our advantage in products, brands, patent portfolios and global channels to provide better products and services to our global clients. With that, I will turn the call over to Pan.

Speaker 3

We are pleased to report that our total motor shipments increased 18.3% year over year in a challenging year. As motor prices declined in fourth quarter, we enhanced control over cost and expenses, reducing operating expenses by about 27% sequentially. In addition, we improved operating efficiency by optimizing our asset and liability structure as well as operating cash flow. By the end of fourth quarter, our asset liability ratio was 72%, a significant improvement from 75% at the beginning of the year. Our cash and cash equivalents were RMB3.8 billion.

Speaker 3

We will continue to optimize our asset and liability structure and maintain healthy cash reserves in the New Year, further strengthening our resilience to risks. Let me go into more details now. Total revenue was $2,830,000,000 down 15.7% sequentially and down 37% year over year. Gross margin was 3.6% compared with 15.7% in the third quarter of twenty twenty four and twelve point five percent in the fourth quarter of twenty twenty three. The sequential and year over year decreases were mainly due to the decrease in average selling price of solar modules.

Speaker 3

Total operating expenses were about $380,000,000 down about 26 percentage sequentially and same year over year. The sequential and year over year decreases were mainly due to the decrease in shipping costs. Total freighting expenses accounted for 13% of total revenues in the fourth quarter of 24% compared to 15% in the third quarter. Operating loss margin was 9.8% in the fourth quarter compared with operating profit margin of 0.3% in the third quarter. Now I'll brief you on our twenty four full year financial results.

Speaker 3

Total module shipments

Speaker 2

were

Speaker 3

92.87 gigawatts, up 18.3% year over year. Total revenues were RMB12.64 billion, down 22% year over year. For the full year 2024, gross profit was RMB1.4 billion, a decrease of RMB47 million year over year. Gross margin was about 11% compared to 16% in the 23%. The year over year decrease was mainly attributed to the decrease in the average selling price of modules.

Speaker 3

Total pricing expenses were RMB1.84 billion, up about 4% year over year. The increase was mainly attributed to the write off of net book value of equipment resulting from the fire accident in Shanxi province, which was partially offset by the estimated insurance proceeds from the fire accident and also an increase in impairment loss of long lived assets. Operating loss margin for full year was 3.7% compared with operating profit margin of 5% for full year last year of 23%. Excluding the impact from a change in fair value of notes and a change in fair value of long term investment, also our share based compensation expenses the net loss resulting from a fire accident in Shanxi province in April 2024 and the impairment of loan leased assets adjusted net income attributable to JinkoSolar Holdings ordinary shareholders was about RMB78.3 million in 2024. Moving to the balance sheet.

Speaker 3

At the end of the fourth quarter, our cash and cash equivalents were CNY3.8 billion, and a significant increase compared with CNY3.2 billion at the end of third quarter of twenty twenty four and RMB2.7 billion at the end of fourth quarter of twenty twenty three. AR turnover days were eighty days compared with ninety days in third quarter of twenty four. Inventory turnover days were fifty seven days compared with sixty six days in the third quarter of twenty four as a result of improved operating efficiency. At the end of the fourth quarter, total debt was RMB5.56 billion compared to RMB4.38 billion at the end of the fourth quarter of 'twenty three. Net debt was RMB1.76 billion compared to RMB1.63 23.

Speaker 3

This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed.

Operator

Thank you. Your first question comes from Brian Lee with Goldman Sachs. Please go ahead.

Speaker 4

Hey guys, this is Tyler Bisson on for Brian. Thanks for taking our questions. We saw the U. S. Department of Commerce recently increased import tariffs from Vietnam.

Speaker 4

So can you share what you are embedding in your guidance and the potential impact of these tariffs on your margins as well as any changes to your pricing strategy in The U. S. This year?

Speaker 2

So can you replace your which tariff you are mentioning? Is that just ADCD or something else you are referring to?

Speaker 5

Yes, the ADCD ones.

Speaker 2

Yes, the ADCD, I think we have prepared all the solutions on that. So currently, we are not suffering on the AD CVDs. So we are our current utilization of our U. S. Factories is full.

Speaker 2

And also we are utilizing the other supply chain to try to provide the solutions to U. S. Market without paying additional costs on the AD-seventy tariffs. So currently, we don't expect that, that will bring us a big negative impact on our margins. However, the demand in U.

Speaker 2

S. Is the key factors. If the demand in U. S. Market is weak, it probably will bring the whole market headwinds on the margin side, but it's not quite related to the ADCDs.

Speaker 4

Great. And then just on that topic, can you share your expectations for U. S. Shipments this year

Speaker 5

and whether you might potentially

Speaker 2

pull back from The U. S.

Speaker 5

Market given the higher tariffs?

Speaker 2

I don't think I got you the full picture of your questions, but I guess your question is more about the shipment to U. S. Now it's still early to defy our shipment volumes to U. S. Because the policies is still uncertain.

Speaker 2

So we have heard a lot of rumors, which regarding those trade barriers, regarding this IRAs, etcetera. So we are still expecting a reasonable range, but how far it goes, we will try to define that once the policy is clear and we can have more clarity on that. Thank you.

Operator

Your next question comes from Philip Shen with Roth Capital. Please go ahead.

Speaker 6

Yes, just following up on the recent import, recent CBD tariffs. So you mentioned just now, Jenner, that you could serve The U. S. With an alternative supply chain. Can you give us a little more clarity on that?

Speaker 6

Is it would you serve The U. S. From Saudi Arabia up and running yet? My sense is it might take a little more time. So just curious if you can share more color there.

Speaker 2

Thanks. Yes. Sure. I think there are still quite a lot of availability capacities outside the ADCVD scope, which is, I think, four countries in Southeast Asia. So looking to the map, definitely, I don't want to mention any particular countries or supplier names, but definitely we see quite several availabilities on the market, which can supply to The U.

Speaker 2

S. Market, which can be a short term solution. So for Genco's strategy, we don't plan to invest on that, but we probably will hire some OEMs to try to utilize the short term short time opportunity together with our IP strengths.

Speaker 6

Okay, got it. Thank you. And then shifting over to pricing, I was wondering if you could give well, actually, let's focus on margins. In terms of your Q4 margin, I heard it was the weakness was driven primarily by price and maybe greater mix to China. So can you share what your expectation is for Q1 margin?

Speaker 6

And then how you think that margin trends in Q2 and Q3?

Speaker 7

Philip, this is Tali. And in terms of the outlook for the gross margins and the Q4, the fourth quarter last year is a downward trend, right? And we have a lot of shipments in China. And the supply and with the demand imbalance and put the market price under pressure. And the first quarter is a slack season for the solar sectors.

Speaker 7

We expect the gross margin and will continue to be moderately declined. With the improvement in the outlook and gradually we expect gradually balance between the supply and demand side and as well as China's push demand. In the second quarter, the module price is gradually improved. So we expect the second quarter, there is high opportunities, the gross margin will improve moderately. But if you look for the long term perspective, we strongly believe the solar sector is at the bottom side and the top tier companies are very disciplined and in terms of output, in terms of pricing strategy, but it still takes time for the balance of particularly from supply side.

Speaker 7

For the long term perspective, we are still optimistic.

Speaker 6

Okay. Thank you, Charlie. I want to make sure I heard you right. Did you say Q1 margins could be lower than Q4?

Speaker 7

Yes, you're right. And it's a select statement and we expect several orders we signed is in the first half of last year, the price is relatively lower and volume is lower and the gross margin we expect relatively lower in the first quarter.

Speaker 6

Got it. Should we have negative margins

Speaker 7

in the queue? Well, we improved by improved in the second quarter. What are you talking about net margin?

Speaker 6

No, we're talking about gross margins.

Speaker 7

Sorry. Gross margin, yes. And the Q1 is slightly lower than Q4 and improved and moderately in second quarter.

Speaker 6

Okay. Thank you. One last housekeeping question. What's your expectation for CapEx for 2025?

Speaker 3

Hello. For prepared remarks.

Speaker 6

Sorry, sorry.

Speaker 3

Yes. For CapEx in 2025, and we expected it will be much lower than this year. It's approximately RMB 4,000,000,000 to RMB 5,000,000,000.

Speaker 6

Okay, great. Thank you for taking my questions.

Operator

Your next question comes from Alan Lau with Jefferies. Please go ahead.

Speaker 8

Thanks for taking my question. So I would like to follow-up Phil's question on margin. So because the margin in 4Q was affected by a couple of things like higher China shipment and module prices was lower. So 2Q is expected to be better, but how about second half considering because before we were discussing there might be more U. S.

Speaker 8

Shipment in the second half and utilization rates are likely to be higher in second half as well. We'd like to know what's the view after 2Q in terms of margin?

Speaker 7

It depends on the market situation in second half year, but we expect maybe a little bit softer demand in third quarter after the push demand from China pick up in the fourth quarter. But the most important thing is the capacity phase out in industries and demand gradually pick up and including The U. S. U. S.

Speaker 7

Now the policy is uncertain. It's not only the ADCVD, it includes the tariffs, reciprocal tariffs, aluminum tariffs, a lot of uncertainties, but we expect after the policy to be finalized, The U. S. From a long term perspective, we are very optimistic given the AI innovations and the leading significant demand in accessories. For the short term, the first half year in U.

Speaker 7

S, and we expect a relatively soft, but it's highly possible it's going to improve after the finalization of the policies.

Speaker 3

Yes. Thank you. And

Speaker 8

following on the previous buyback share buyback plan, would like to know after the restorative announcement right now, will the company start buyback? And also would there be another period of blackout after March 31, which is a couple of days from now? So how does the management consider in terms of the buyback pay? And is it linked to the issuance of DDR of the Asia subsidiary?

Speaker 7

It's a long necessary link to the DDR timetables. And we plan to increase total shareholder returns this year after US200 million dollars and including a dividend and including the repurchase of shares. And we believe we have sufficient cash positions, including The U. S. As holding companies as cash.

Speaker 7

And for the ecosystem investment portfolio, financial investment, we have roughly, I think, US150 million dollars and we're trying to divest of the ecosystem, the investment. And in terms of timings, and it's a very short time window this quarter because it's going to be it's reaching to the end of the first quarter. So I don't believe we have sufficient days to start the pressures of the Sears this quarter. And after Q1 early release And I think we are thinking of both of the dividend and the repurchase of shares.

Speaker 8

Okay. So to confirm, first of all, it's not related to GDR, right?

Speaker 7

Yes, yes. And I don't we don't believe that's related to GDR. GDR is the Asia is planning to issue the ADR in Germany and by The U. S. And it's not I don't believe that is relevant because we're trying to divest the ecosystem investment.

Speaker 7

And it's we have some portfolio companies which has been invested in Asia and we take a minority interest so we can cash out the investment.

Speaker 8

Understood. So first of all, the company has already has RMB120 million in HoldCo. And secondly, would like to know is there any lockup period in terms of the minority financial investment in Asia because sometimes there may be lockup period etcetera?

Speaker 7

Yes. Some of the investments, it did have some lockup period, but some of the investment we tried to do the private sale. And we have completed two private one private sale and one private sale around US20 million dollars in the first quarter. But some of the investment we are not able to sell until the fourth quarter of this year, but it's under our schedule.

Speaker 8

I see. That's right. I think the next question is about the China supply side reform policies because there has been a lot of discussions on government policies. We'd like to know the company's field given that Jinko is the leader in the self discipline initiative, I would like to know, do you see any policies coming out from the government as well?

Speaker 7

We are not in a position to comment on details. But again, I think the software sector, the EV sector is a key sector. I think the government keeps an eye. And I think in the last national NTC meetings, there is some kind of general release from the government and as we would expect some supply reform policies coming out.

Speaker 8

Thank you. My last question is about updates on the Saudi capacity. Like is it on schedule to be completed by first quarter twenty twenty six? And like how is the orders contracted in that plant?

Speaker 7

Saudi, the super factory is a strategic move for TinkoS to do the globalizations and we work with PIF and the racing industries. And now it's in the early preparation stage and there are a lot of work in progress. And we target to break the ground by the end of second quarter. And we expect the fully operational and ramp up will be the end of next year.

Speaker 8

Thank you. I'll pass on. Thanks a lot, Charlie.

Operator

Your next question comes from Rajeev Choudhary with Sansara Capital. Please go ahead.

Speaker 9

Good morning. I have a couple of questions. The first is about market share. If last year 2024 was around 600 gigawatts to six twenty five gigawatts, and you can confirm that number, and this year you are expecting 700 gigawatts, Then I'm curious why you think that your market share this year will actually be slightly down or not more than flat from last year? Actually, you are saying that your market share will be slightly down.

Speaker 9

So could you elaborate on that, please?

Speaker 7

Rajiv, I think we didn't look at from that perspective. We did expect the total market size will improve modestly, not significantly this year. And what we guide is kind of very broad range, 85 gigawatts to 100 gigawatts. And the industry is under the consolidation stage. The more important thing is we keep the investment on the technology and capabilities and to make Jinko has capabilities to go through the cycles.

Speaker 7

So we don't believe that is so important. We stick to some fixed numbers of market share. And after the consolidations, I think Jinko will be in a good position to increase the market share. So I think our marketing department has a long term vision and we are able to achieve 20% to 25% global market share from the long term perspective.

Speaker 9

Okay. So you're saying that even though in the near term your market share may not go up, but you are basically letting the people who have the highest costs and the highest losses to sell whatever they can produce this year and then you'll be back in subsequent years. Another question is on depreciation. Could you give the number for the fourth quarter and for 2025?

Speaker 7

Yes, maybe Pan will provide your numbers.

Speaker 3

Okay. Thank you. Yes. Thank you for the first question. We have the number would be approximately RMB1.6 billion to RMB1.7 billion in Q4.

Speaker 9

And can you give the number for the expectation for 2025?

Speaker 3

Rajiv, this number is still on is still pending for check for the 2025.

Speaker 9

Okay. Final question. Can you talk about free cash flow expectations for 2025?

Speaker 7

From the operating cash flow And from the operating cash flow perspective, we target to be positive. And this year, you understand, and it's still a challenge, particularly, we believe, the first half year. And from an operational perspective, we try to, let's say, improve the cash inflow and as well as cutting operating expenses and to achieve at least the policy operating cash flows. And for the CapEx, we estimate RMB 4,000,000,000 and which is focused on the up with top count technology and make sure Jinko is in the best position to lead from the product perspective as well as some automation upgrades and to further reduce our production cost. So back to your pricing, free cash flow may be negative but not so significant.

Speaker 7

And if the outlook and the supply demand balance situation improve significantly, we expect we will achieve better numbers. But now we've paid conservative approach. And if you look at last year, even we did deliver a very good operating cash flow of roughly RMB8.5 billion, which is roughly RMB9 billion CapEx. Free cash flow is neat and kind of near to zero. This year, 2025, I think we focus on the key operating metrics, operating cash flows.

Speaker 3

Thank you. Thank you.

Operator

There are no further questions at this time. And that does conclude our conference for today. Thank you for participating. You may now disconnect.

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