JinkoSolar Holding Co., Ltd. (JKS) Earnings Call Transcript & Summary

Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co. Limited's First Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to your host for today's call, Ms. Stella Wang, JinkoSolar's Investor Relations. Please proceed, Stella.

Thank you, operator. Thank you, everyone, for joining us today for JinkoSolar's First Quarter 2025 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 JinkoSolar are Mr. Xiande, Chairman and CEO of JinkoSolar Holding Company Limited; Mr. Gener Miao, CMO of JinkoSolar Company Limited; Mr. Pan Li, CFO of JinkoSolar Holding Company Limited; and Mr. Charlie Cao, CFO of JinkoSolar Company Limited. Mr. Li will discuss JinkoSolar'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 the financials. They will be available to answer your questions during the Q&A session that follows. Please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.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 JinkoSolar's public filings with the Securities and Exchange Commission. JinkoSolar 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. Xiande, Chairman and CEO of JinkoSolar Holdings. Mr. Li will speak in Mandarin, and I will translate his comments into English. Please go ahead, Mr. Li.

[Foreign Language]

[Interpreted] Module shipments reached 17.5 gigawatts with revenues of USD 1.91 billion for the first quarter of 2025. Prices across the main solar industrial chain were low in the first quarter. This, combined with disruptions in demand caused by changes in international trade policies, pressured profit margins in each segment of the integrated solar supply chain. Despite this challenging market environment, we fulfilled our delivery commitment to our customers and reduced the cost through supply chain optimization, adjustments in production and operation plans and other measures. Due to a year-over-year decline in shipments to the U.S. market and a continued decline in higher-price overseas orders, our module prices and profitability decreased both year-over-year and sequentially in the first quarter. Net loss was approximately USD 180 million for the first quarter.

[Foreign Language]

[Interpreted] According to data from the NEA, new installations in China in the first quarter amounted to 59.7 gigawatts, an increase of 31% year-over-year. Resilience was seen in domestic demand despite of the higher comparison base in 2024. Market self-regulation and high-quality development initiatives by manufacturers were gradually effective. From January to March, average monthly bidding prices for solar modules steadily recovered in the domestic market and bidding prices returned to a more rational level. Recently, as the policy cutoff deadlines for distributed solar regulations and market-based renewable price reform on April 30 and May 31 approach, market sentiment has cooled down to some extent and the distributed module prices have fallen back from their previous highs. At the same time, changes in international trade policies, such as reciprocal tariffs in the United States, have continued to bring certain disruptions to the PV industry. In response to these challenges, we have flexibly adjusted our supply chain strategy and regional shipment mix while maintaining close communication and negotiation with our customers. Relying on our extensive market insights and efficient execution, we remain committed to meeting customer demand for our high efficient and reliable products, maintaining operations continuously while adapting to market dynamics. Currently, visibility of our order book stands at 60% to 70% with Indo-Pacific and the Middle East and Africa exceeding 80%.

[Foreign Language]

[Interpreted] Cost reduction and increasing efficiency remain the main theme in the development of the PV industry. And customers' demand for high-power products is growing rapidly to further reduce LCOE. Due to limitations in the upgrading and transformation of most conventional TOPCon capacity in the industry, differences between manufacturers in TOPCon cell efficiency, product performance and costs are gradually widening. We believe that companies with high-efficiency cell capacity and high-power products will have a competitive advantage in the market.

[Foreign Language]

[Interpreted] By the end of the first quarter, the mass produced cell efficiency for our third-generation TOPCon products exceeded 26.6%. We continued to upgrade existing TOPCon capacity with the introduction of technologies such as half-cell passivation, MAX, and 20 busbar. We expect the power of our third-generation TOPCon products to have a 20 to 30 wp advantage compared to previous generation TOPCon products in the industry. Meanwhile, we kept making breakthroughs in our R&D. By the end of the first quarter, our laboratory efficiency for perovskite tandem solar cell based on TOPCon reached 34.22%, once again setting a new record.

[Foreign Language]

[Interpreted] Our investments in R&D, manufacturing and after-sale service capabilities in energy storage are gradually showing results. In the first quarter, shipments of our ESS exceeded 300 megawatt hours, a large increase compared to the same period last year. We expect our ESS to be -- shipments of our ESS to be around 6 gigawatt hours for the full year 2025, with the overseas market as our strategic priority. So far, confirmed orders for energy storage systems accounted for 50% to 60%, with another 20% to 30%, showing strong potential for signing. Leveraging our leading position in the PV industry, we will proactively explore the innovative business models that integrate solar and storage solutions, providing high efficiency and smart green energy solutions to global clients and contributing to the sustainable development of the global energy.

[Foreign Language]

[Interpreted] Before turning over to Gener, I would like to go over our guidance for the second quarter and the full year 2025. We expect our annual production capacity for mono wafers, solar cells and solar modules to reach 120, 95 and 130 gigawatts, respectively, with annual production capacity of our third-generation TOPCon modules to reach 40 gigawatts to 50 gigawatts by the end of 2025. We expect module shipments to be between 20 to 25 gigawatts in the second quarter of 2025 and between 85 to 100 gigawatts for the full year 2025. And we will actively respond to changes in market demand and policy, continuously optimize market strategies and supply chain management, and consistently improve technology and product competitiveness, to maintain a leading position in the industry.

Thank you, Ms. Li. First quarter total shipments were 19.1 gigawatts with module shipments accounting for approximately 90%. Although demand was impacted by the off-season, we sustained the industry's highest shipment levels by leveraging our global sales network and the strength of our products. Shipments to overseas markets accounted for around 70%. We proactively embraced the surge in the demand in the Indo-Pacific and the North Asia market. Shipments to Indo-Pacific market grew by nearly 10% year-over-year and 150% sequentially, while shipments to North Asia increased by nearly 20% year-over-year. U.S. shipment accounted for approximately 5%, in line with our guidance. On the product side, customer demand for our third-generation high-power TOPCon products continue to grow. Our third-generation high-power TOPCon is expected to have a mainstream output over 650 watt with a maximum of 670 watt. Thanks to lower degradation, lower temperature coefficient, higher bifaciality and enhanced reliability, it can deliver better power generation yields for end customers. Currently, customers are willing to pay a premium for such high-power generation. Recently, we were once again recognized as a Tier 1 energy storage provider by Bloomberg. We have been listed in the BNEF ranking for four consecutive quarters, a strong recognition from a third-party and customers of our safe and reliable energy storage solution as well as our timely delivery and deployment capabilities. With the increasing economic of integrated solar and storage solutions and the continued expansion in the application scenarios, particularly against the backdrop of high energy consumption driven by AI, integrated solar and the storage solutions are increasingly become feasible. The overseas market has always been one of our strengths. In 2025, we will further expand the energy storage business globally while continuing to focus on and explore technological innovation and application in specific application scenarios. We believe that the synergy between our solar and storage business will further increase our market competitiveness. On the demand side, we expect the global module demand to remain above 700 gigawatts in 2025 with strong growth in Asia Pacific, Europe and Middle East. Following the recent rush installation in China with initiation of utility scale projects in August and September, the overall demand is expected to continue to be in line with module supply and the industry high-quality development initiatives. In U.S., due to current shortage in local cell production capacity and the impact of reciprocal tariffs, there is likely to be a wave of early purchases of solar modules. We remain optimistic about the long-term demand in the U.S. market. In addition to the announced Saudi projects and existing U.S. domestic operations, we are actively pursuing diverse solutions to strengthen our position in this market to enhance our long-term competitiveness. We are confident that our extensive sales network and deeply localized customer service system will help us respond to the market dynamics, make flexible adjustments and continue to satisfy customers' demand for more high efficient, reliable and sustainable products.

Thank you, Gener. During a challenging first quarter, we continue to control costs and expenses, leading to a significant year-over-year decrease in comprehensive costs and operating expenses. In addition, we continue to optimize our asset and liability structure as well as cash reserves. By the end of the first quarter, our asset liability ratio was approximately 74%, lower from nearly 75% at the end of the first quarter last year. By the end of the first quarter, our cash and cash equivalents was $3.77 billion, a significant increase from $2.44 billion at the end of the first quarter last year. We will continue to optimize our asset and liability structure and maintain healthy cash reserves in '25, further strengthening our resilience to risks. Let me go into more details now. Total revenue was $1.9 billion, down 33% sequentially and down 40% year-over-year. The sequential decrease was primarily due to a decrease in shipments of solar modules and the year-over-year decrease was also due to a decrease in average selling price of modules. Gross margin decreased both sequentially and year-over-year, mainly due to the decrease in ASP of solar modules. Total operating expenses was $350 million, down 8% sequentially and down 18% year-over-year. The sequential decrease was mainly due to the decrease in the impairment of long-lived assets and a decrease in the losses resulting from disposal of long-lived assets. The year-on-year decrease was primarily due to the decrease in shipping costs as we shipped fewer solar modules. Total operating expenses accounted for 18% of total revenues compared to 13% in the fourth quarter last year and 13% in the first quarter last year. Operating loss margin was about 20% compared with 9% in the fourth quarter last year and 1.5% in the first quarter last year. Moving to the balance sheet. At the end of the first quarter, our cash and cash equivalents was $3.77 billion compared with $3.8 billion at the end of the fourth quarter and $2.44 billion at the end of first quarter last year. AR turnover days were 111 days compared with 80 days in the fourth quarter and 100 days in the first quarter of last year. Inventory turnover days were 84 days compared with 57 days in the fourth quarter and 89 days in the first quarter of last year. At the end of the first quarter, total debt was $6.4 billion compared to $5.5 billion at the end of the fourth quarter. Net debt was $2.6 billion compared to $1.7 billion at the end of the fourth quarter last year. This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed.

[Operator Instructions] Your first question comes from Brian Lee with Goldman Sachs & Co.

This is Tyler Bisset on for Brian. Appreciate the ESS guidance of 6 gigawatt hours and wondering if you can give a little bit more details on kind of where these shipments are going. Is this more in line with your module shipments today? And also curious where you guys are sourcing your battery cells?

It's mainly dominated -- the ESS shipment mix is mainly dominated by Asia Pacific region, Europe region and emerging markets. While those together with China, those 4 regions are our main target in terms of 2025, which is slightly different from what we have for modules. But for the key markets, it's very -- let's say, it's very light to each other. But in terms of geographic mix, because of the trade barrier in U.S., et cetera, so it's difficult to extend the ESS business in U.S. right now.

And given the final determination on AD/CVD, which was, I guess, relatively more favorable for Malaysia, how are you thinking about your future imports to the U.S.? Could you see that potentially increasing at all? Or do you think it's more likely to stay in the 5% range?

Well, I think the AD/CVD is only preliminary tariffs. So they still have because sunset termination after 12 months of custom clearance, which brings the company a lot of uncertainty. So in that case, we are trying to look into the different options we have in order to provide more certainties and providing more competitive in terms of the cost as well. So right now, we are still working hard on for the short term because the recent hike or change on the AD/CVD together with trade barriers is pretty new. But in long term, we still have our commitment to the U.S. market with our strategy in the joint venture factories in Middle East, together with our local operation in U.S., we are still fully committed.

Your next question comes from Philip Shen with ROTH Capital Partners.

So you guys had negative gross margins for the first time in a long time in Q1, and I was wondering if you can talk through what you expect for margins for Q2 and Q3? And then when do you expect the margins to go back positive?

The gross margin and reach to negative in the last 5 years and reflecting the supply and demand imbalance throughout last year. And on top of that, the first quarter is the snack season, and we have more exposures to the China market. And we expect in the short term, we expect the gross margin to improve slightly in the second quarter, given the module price is in upward trend with push demand from China and other regions. And in the second half year, we expect stable maybe have the chance to improve. And we believe the current situation is not sustainable even for the top-tier companies. And from supply side, we are seeing more and more companies based in the solar industries. On top of that, there are uncertainties on international trade. And we believe by the end of this year, we have more clarification.

Okay. Thank you, Charlie. So shifting to the U.S. market. There is the 145% tariff. I wanted to understand what's your -- the update on your plans to ramp up U.S. cell manufacturing in Florida or wherever that might be. And so -- and then also with the 145% tariff, are you able to import solar cell tools without -- like is there an exemption for the tools? Or is there no exemption for the tools? So it makes the ramping of U.S. cell manufacturing more difficult.

I think it's more kind of the questions. But from the long-term we see local production in the U.S. for local customers in the United States is a trend that is consistent with, I think, the long-term policies from the current Trump administration. And for the short term, there's a lot of uncertainties. There the budget cut, there's IRA incentive, there is maybe what we are interested in the kind of -- this kind of things. And so while we take our approach is we consistently evaluate the policies from different angles. And as long as there is some kind of uncertainties we strongly believe the U.S. solar market will rebound next year. And specifically for the -- if we want to build the solar cell facilities and we import the equipment from China under the current tariff, it's a crazy rate, right? It not makes sense to make the decisions even from that specific angle. So back to your question and we don't have the plan in the short term solar cell will be built in the U.S., but we have the plan and consistently evaluate the policies, the potential size of the potential tariff situation.

[Operator Instructions] Your next question comes from Alan Lau with Jefferies.

My first question is on, it is the first time I think the company has provided the guidance on ESS. I would like to know if there's any indication on the margins on ESS, like some ballpark range because ESS has been quite competitive in the Middle East as well.

You mean the margin, right?

Yes. Gross margin.

Yes, gross margin. I think we target 5% to 10% is not for -- a big target. And given the business we develop and starting from the kind of very small scale last year, we achieved 1 gigawatt. But this year, and we have the confidence to penetrate the market, particularly in Asia Pacific, North America, some emerging markets. And so the profitability is not the first priority. But in terms of gross margin, we expect in kind of the range of 5% to 10%.

5% to 7%, right?

5% to 10%.

Okay. Okay. And my next question is about, so did the company receive IRA credits for the production last year at this point in time? Or if the company has sold any of the IRA 45X credits already?

And last year, I think we filed the filings and it's kind of the deduction of the tax payable for the facilities. And this year, we are exploring the opportunities and to sell the credit to the outside investors and it's in the process.

So you managed to get the credits already, just managing to sell it to financial institutions, right, for this year?

Yes. This year, we plan, it's because we have 2 gigawatts in operations. And there's a lot of potential investors who are interested to propel the credit from the facilities. And so we are in the process of communication and negotiation.

So and another question is, so what is the U.S. shipment target approximately for this year because there's a lot of changes since last time we talked. And is there already some inventory in the U.S. to support that shipment?

The rate is 5% to 10%, but you're right, uncertainty, I think the big headwind. So -- but I think we are -- if the uncertainty will not be, let's say, clear in the short term, it will have the impact of shipment to the U.S. But I think 5% is kind of the base and let's say, the low case, but we are confident that we can achieve at least 5%. And if the uncertainty is kind of to be -- to have more clarity and if the supply chain is there is available supply chain to the U.S. and we can ship more. But again, yes.

So 5% of total shipment, right, like -- so if it's 85 to 100 gigawatt for this year is around 4 to 5 gigawatts.

Yes, roughly, yes.

I see. So my last question is on the shareholders' return program. So I think after the announcement of 4Q results and first Q results now, so I wonder if the company can start buying back the shares given the shares actually have also went down quite a bit. And what's the pace of the buyback will look like?

Yes. After the release of the first quarter, and we plan to buy back from the market, we think it's good timing given the valuation is very low. And on top of that, we plan to declare dividend, which is subject to approval, but it's, I think, on our schedule.

So the -- to my understanding, dividends will be approximately like $50 million, right, if it's around $1 per share, for example. So would the buyback will look like $150 million then?

We have not decided, but it's roughly, I think, at least $100 million, we split into the dividend plus the repurchase. This is the first step, but I think we communicated previously, we would like to monetize the financial investment for some companies, which was listed in recent years. And on top of that, we may explore other options to monetize some assets from the U.S. perspective.

But before that happens, actually, you can already start and there's at least $100 million, which is like 10% of the outstanding shares, right?

Yes, $100 million. I think it's kind of include dividend plus the repurchase that plan.

I see. So after you liquidate some of your financial assets, there may be upside to this $100 million dividend plus buyback?

We may increase, but depending on the timing and how quick we can monetize the assets.

[Operator Instructions] Your next question comes from Rajiv Chaudhri with Sunsara Capital.

Charlie, The first question is about market share. You mentioned that this year, the market might go to about 700 gigawatts. And last year, it was a little bit around 600 plus. And I'm wondering, even if you do the high end of your range, which is 100 gigawatts, your market share looks like it might be lower than last year and lower than 2023. Could you clarify that discrepancy?

I think last time we talked about our strategy is not to increase or penetrate more market share under the imbalance of the supply and demand side and particularly the industry is losing the money. And what we are doing is we want to be flexible in the total shipments and which we guided 85 to 100 gigawatts. And what it means is we want to balance the utilization shipment and profitabilities and as well as the cash flow perspective. And on top of that, we need to select customers. We have a lot of potential customers and interest orders, but we need to be more selective. But for the long term, long term, I think last time we talked about we target at least 20% market share for the module business. But it's not one night target, and we need to be -- what is the focus that we need to focus our product competitiveness. We continue to invest in R&D and penetrate the key market with some kind of premium to make sure the business is sustainable.

Okay. Along the same lines on the market growth, can you talk about where -- which region -- geographic regions are going to get the 100 gigawatts of growth from last year? How much growth do you expect in China and the U.S., for example, and also in Europe and India?

Sure. I talk about it. So in the top level, so we are looking at the global demand at roughly 700 gigawatts. So of which the largest market is believed to be China, same as last year. But the volume side, China is expected to grow roughly 10% to 15% so which will account for around 45% of the global demand. And the second largest after China is believed to be, we say Europe, the pan-Europe region. So the whole Europe will be over 100 gigawatt level. So I think that the only 2 markets past 100 gigawatt threshold in 2025. But for sure, there are other markets is very interesting and sizable such like U.S. we are roughly looking at 50 to 55-gigawatt level. And India, we are looking at around 30 to 35-gigawatt level. So yes, that's all the big numbers in our mind. But for sure, the attractive growth is mainly coming from the emerging markets, for example, the Asia Pacific region and also the African region because of the low basis from last year, the growth rate is pretty high. But if you look into the absolute growth numbers in terms of gigawatt, definitely the top 4 markets, which I just mentioned is still the key focus.

So just to clarify, so you're expecting that China will grow by 10% to 15% this year?

10% to 15%, yes.

I see. Okay. And final question. Are you still getting a premium pricing for your TOPCon products based on the technology?

It depends on which technology or which product you are comparing with, right? So definitely from the customer end as long as the product is generating more power output or technically more yield, more IRRs, returns, customers are more than happy to pay premium on such kind of products.

I see. Can you also give the breakdown you expect between DG and utility scale for this year for Go?

Yes. Strategically, we lowered the DG numbers a little bit based on the price trend. So last year, the DG ratio is roughly high 40s, so close to 40, 50, but high 40s, let's say 47%, 46%. This year, the number will go down to roughly 30% to 35% range.

[Operator Instructions] We are showing no further questions at this time. Thank you for your attendance today. That does conclude our conference. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]