JinkoSolar's Third Quarter Earnings, Gross Profit Hit Record High

Key Business Features to Focus on

SHANGHAI, Dec. 23, 2019 /PRNewswire/ -- JinkoSolar released its third quarter earnings report on Nov. 19. For the first three quarters of this year, JinkoSolar's revenue growth has succeeded expectations, particularly record high gross profit and income from operations in the third quarter of 2019.

1) Record high gross margin and its upward trend

The gross margins are what drive investor returns long-term. In Q3, JinkoSolar's gross margin was 21.3%, compared with 16.5% in the second quarter of 2019, and 14.9% in the third quarter of 2018, hitting a record high. The gross margin reset, driven by increasing shift towards upgraded mono capacity, industry leading integrated production cost, new premium products and global footprint.

Gross margins are particularly important because JinkoSolar is in the middle of a maneuver. As the company is shifting focus from the lower-cost, lower efficiency and lower profit poly, whose sales have declined sharply, to the highly efficient and highly profitable mono base, for example, Cheetah has provided a modest boost to gross margin. 

2) Mono capacity ramping up

JinkoSolar leadership will answer questions from analysts, providing an opportunity for them to discuss bigger-picture matters than quarterly numbers. One topic that's nearly certain to come up is what the company is doing to speed up its vertical integration, panel manufacturing and delivery.

JinkoSolar says its Cheetah and Swan bifacial order backlog increased in the third quarter, reaching to 9GW and 1GW respectively, and investors would love to hear about the company's plans to get new models to customers more quickly. The company is also considering adding more logistic centers to make deliveries faster by keeping inventory closer to customers, for instance, JinkoSolar has signed an agreement with COSCO SHIPPING Lines (Greece) S.A. to use the Greek Port of Piraeus as its European distribution hub. Any insight into plans to overhaul the delivery process would be very significant.

3) 18GW wafer capacity

While production is accelerating this year at its wafer factories in Leshan, Sichuan province, JinkoSolar's next big increase in strengthened vertical integration extent, output, and potential future profitability will come from its new wafer factories in Leshan. It is expected the total mono wafer capacity will reach 18GW by Q2 2020. Turning those wafers into module and sales would bring a meaningful change to key 2020 metrics.

4) New models of 460wp Tiger

Even more important for JinkoSolar now is its next panel, the 460wp Tiger. Since 400wp Cheetah has been already extremely lucrative and popular for established customers of JinkoSolar, if Tiger can deliver as scheduled and hit the price point with a decent product, that matters a lot. The Model Tiger is expected to reach the market in 2020.

Like any business growth, JinkoSolar's stock price is based as much on future expectations than current reality. That's why the price of the company's stock has increased about more than 20% after Q3 release.