Revenues, Gross Margin and Net Income Reached Historical Highs;
Increased Vertical Integration Drove Down Average Cost
SHANGHAI, Aug. 16 /PRNewswire-Asia/ -- JinkoSolar Holding Co., Ltd. ("JinkoSolar" or the "Company") (NYSE: JKS), a fast-growing solar product manufacturer with low-cost operations based in China, today announced its unaudited financial results for the second quarter ended June 30, 2010.
Second Quarter 2010 Highlights
-- Total solar product shipments were a record 99.9 megawatts ("MW"),
compared to 83.0 MW in the first quarter of 2010 and 34.4 MW in the
second quarter of 2009, representing an increase of 20.4% sequentially
and 190.4% year-over-year.
-- Total revenues were a record RMB900.6 million (US$132.8 million), an
increase of 64.1% sequentially and 307.1% year-over-year.
-- Gross profit margin was a record 26.9%, compared to 23.7% for the first
quarter of 2010 and 6.7% for the second quarter of 2009.
-- Net income was a record RMB180.7 million (US$26.6 million) (including a
gain of RMB74.6 million (US$11.0 million) as a result of a change in
the fair value of foreign exchange forward contract derivatives), an
increase of 146.2% sequentially and 4,202.4% year-over-year.
-- Fully diluted earnings per share were RMB2.36 (US$0.35), compared to
RMB0.84 in the first quarter of 2010, and a fully diluted loss per
share of RMB0.63 in the second quarter of 2009.
-- Fully diluted earnings per American depositary share ("ADS") were
RMB9.42 (US$1.39), compared to RMB3.37 in the first quarter of 2010,
and a fully diluted loss per ADS of RMB2.51 in the second quarter of
2009.
-- The Company increased the vertical integration of its production
process with annual silicon ingot, silicon wafer, solar cell and solar
module production capacities reaching approximately 400 MW, 400 MW, 300
MW and 300 MW respectively.
"We are pleased to have delivered strong growth in the second quarter and are excited to report our financial results for the first time as a public company," said Mr. Kangping Chen, JinkoSolar's chief executive officer. "During the quarter we achieved record shipments of approximately 100 MW, expanded our annual silicon wafer production capacity to 400 MW and annual solar cell and solar module production capacities to 300 MW each and significantly increased the vertical integration of our production process, which will improve our control over our manufacturing processes and costs across the value chain. Furthermore, our listing on the New York Stock Exchange in May has enhanced our brand name and provided us with additional resources and the platform to strive toward becoming a leading global solar company. As we look forward into the second half of the year, we expect to continue our strong momentum and we are well positioned to meet our established objectives in 2010."
Mr. Longgen Zhang, JinkoSolar's chief financial officer, added, "We achieved excellent results this quarter across all financial metrics, with significant increases in total revenues and net income, as well as significantly improved margins across the board on sequential and year-over-year basis. With significantly increased vertical integration, we should be able to continue driving down our average non-silicon cost by capitalizing on economies of scale. Our competitive advantage in cost-effective manufacturing combined with the resources and proceeds from our IPO position us strongly as we look to become a leader in the solar industry."
Second Quarter 2010 Financial Results
Total Revenues
Total revenues in the second quarter of 2010 were RMB900.6 million (US$132.8 million), an increase of 64.1% from RMB548.9 million in the first quarter of 2010 and 307.1% from RMB221.2 million in the second quarter of 2009. The increase in revenues was primarily due to increased global demand for solar products and a significant increase in the shipments of solar modules attributable to the Company's enhanced sales and marketing campaigns.
Gross Profit and Gross Margin
Gross profit in the second quarter of 2010 was RMB242.1 million (US$35.7 million), an increase of 86.5% from RMB129.8 million in the first quarter of 2010 and 537.1% from RMB38.0 million in the second quarter of 2009. Despite a decline in the average selling price of the Company's solar modules, gross margin increased to 26.9% in the second quarter of 2010 from 23.7% in the first quarter of 2010 and 6.7% in the second quarter of 2009, mainly due to a decrease in average non-silicon cost as a result of the increased vertical integration of the Company's production process.
Operating Profit and Operating Margin
Operating profit in the second quarter of 2010 was RMB150.7 million (US$22.2 million), an increase of 55.2% from RMB97.1 million in the first quarter of 2010 and 680.8% from RMB19.3 million in the second quarter of 2009. Operating margin in the second quarter of 2010 was 16.7%, compared to 17.7% in the first quarter of 2010 and 8.7% in the second quarter of 2009. Total operating expenses in the second quarter of 2010 were RMB91.5 million (US$13.5 million), an increase of 179.8% from RMB32.7 million in the first quarter of 2010 and 386.7% from RMB18.8 million in the second quarter of 2009. The sequential increase in operating expenses was primarily due to share-based compensation expense of RMB16.1 million (US$2.4 million), which included accumulative expenses recognized upon the Company's initial public offering ("IPO") and the expenses recognized in the second quarter of 2010. In addition, a specific provision for bad debt of RMB8.1 million (US$1.2 million) recognized for amounts due from a certain solar module customer, a significant increase in shipping and handling costs of RMB11.9 million and an increase of RMB11.0 million in materials used for research and development purposes in the second quarter as compared to the first quarter of 2010 contributed to the increase in the operating expenses.
Change in Fair Value of Derivatives
The Company entered into foreign currency forward contracts with local banks to hedge its exposure to foreign currency risks. In the second quarter of 2010, the Company recorded a gain of RMB74.6 million (US$11.0 million) from a change in the fair value of forward contract derivatives resulting from the depreciation of the Euro and U.S. dollar against Renminbi.
Income Tax Expense
The Company recognized a tax expense of RMB29.9 million (US$4.4 million) in the second quarter of 2010, compared to a tax expense of RMB12.0 million in the first quarter of 2010 and nil tax expense in the second quarter of 2009. The Company estimates a 14.2% tax rate for the full year of 2010.
Preferred Shares Accretion
Series A redeemable convertible preferred shares accretion and series B redeemable convertible preferred shares accretion were RMB10.4 million (US$1.5 million) in the second quarter of 2010, a decrease of 49.5% from RMB20.5 million in the first quarter of 2010 and 41.9% from RMB17.9 million in the second quarter of 2009. The Company incurred series A redeemable convertible preferred shares accretion and series B redeemable convertible preferred shares accretion before the completion of its IPO. Upon the completion of the Company's IPO, all the series A redeemable convertible preferred shares and series B redeemable convertible preferred shares were converted into ordinary shares. As a result, the Company does not expect to incur such preferred shares accretion in the future.
Allocation to Preferred Shareholders
Allocation of net income to preferred shareholders was RMB5.1 million (US$0.7 million) in the second quarter of 2010, a decrease of 49.9% from RMB10.1 million in both the first quarter of 2010 and second quarter of 2009. The Company allocated net income to preferred shareholders before the completion of its IPO. Upon the completion of the Company's IPO, all the series A redeemable convertible preferred shares and series B redeemable convertible preferred shares were converted into ordinary shares. As a result, the Company does not expect to allocate net income to preferred shareholders in the future.
Net Income Attributable to Ordinary Shareholders and Earnings Per Share
Net income attributable to holders of ordinary shares in the second quarter of 2010 was RMB165.2 million (US$24.4 million), an increase of 286.0% from RMB42.8 million in the first quarter of 2010 and compared to a net loss attributable to holders of ordinary shares of RMB31.8 million in the second quarter of 2009.
Basic and diluted earnings per share in the second quarter of 2010 were RMB2.38 (US$0.35) and RMB2.36 (US$0.35), respectively, and basic and diluted earnings per ADS were RMB9.52 (US$1.40) and RMB9.42 (US$1.39), respectively. Each ADS represents four ordinary shares.
Financial Position
As of June 30, 2010, JinkoSolar had RMB553.1 million (US$81.6 million) in cash and restricted cash, compared to RMB225.3 million as of December 31, 2009. The significant increase in cash and restricted cash was primarily due to the Company's IPO proceeds of approximately RMB400.6 million (US$59.1 million). The Company generated positive operating cash flows of RMB25.9 million (US$3.8 million) in the second quarter of 2010.
As of June 30, 2010, the Company's working capital balance was RMB281.6 million (US$41.5 million) and total short-term bank borrowings including the current portion of long-term bank borrowings were RMB756.5 million (US$111.6 million), as compared to RMB576.1 million of total short-term borrowings as of December 31, 2009. As of June 30, 2010, the Company had total long-term borrowings of RMB349.0 million (US$51.5 million). The Company's long-term bank borrowings are to be repaid in instalments until their maturities in 2011, 2012 and 2013.
Capital expenditures in the second quarter of 2010 were RMB227.8 million (US$33.6 million), primarily for the addition of new silicon ingot, silicon wafer, solar cell and solar module manufacturing equipments.
Second Quarter 2010 Operational Results
Recent Business Highlights
-- In July 2010, the Company signed an agreement with Enfinity Asia
Pacific Limited to supply 24 MW of solar modules in the second half of
2010.
-- During the quarter, the Company became the exclusive module supplier to
Tozzi Renewable Energy for its 35 MW ground-mounted solar power plant
in Emilia Romagna, Italy.
-- During the quarter, the Company entered into agreements with two blue-
chip customers in Germany to deliver 60 MW of solar modules in 2010.
Solar Product Shipments
Total solar product shipments in the second quarter of 2010 increased by 20.4% from the first quarter of 2010 and 190.4% from the second quarter of 2009. Total solar product shipments in the second quarter of 2010 were 99.9 MW, consisting of 29.6 MW of silicon wafers, 16.0 MW of solar cells and 54.3 MW of solar modules. By comparison, total shipments for the first quarter of 2010 were 83.0 MW, consisting of 53.4 MW of silicon wafers, 19.4 MW of solar cells, and 10.2 MW of solar modules. The significant increase in solar module shipments and decrease in silicon wafer shipments in the second quarter of 2010 reflected the implementation of the Company's strategy to transition from a silicon wafer manufacturer to a leading vertically integrated solar module manufacturer.
Increased Integration and Capacity Expansion of Solar Products
In the second quarter of 2010, the Company expanded annual solar cell and solar module manufacturing capacities from approximately 200 MW each as of March 31, 2010 to approximately 300 MW each as of June 30, 2010 and increased its vertical integration.
New Overseas Subsidiaries
On April 1, 2010, the Company established a subsidiary, JinkoSolar GmbH, in Munich, Germany, to facilitate the development of JinkoSolar's European business. The Company expects to establish a new subsidiary in San Francisco, California, USA, during the third quarter of 2010 to facilitate the development of its business in the United States.
Operations and Business Outlook
Third Quarter 2010 Guidance
For the third quarter of 2010, JinkoSolar expects total solar product shipments to be in the range of 100 MW to 110 MW with module shipments expected to be between 65 MW to 70 MW. Total revenues are expected to be in the range of US$145 million to US$155 million.
The Company expects to increase its in-house annual silicon ingot, silicon wafer, solar cell and solar module production capacities to approximately 400 MW, 400 MW, 300 MW and 400 MW, respectively, by the end of the third quarter of 2010.
Full Year 2010 Guidance
The Company expects its full year 2010 total solar product shipments to be in the range of 395 MW to 415 MW with module shipments expected to be between 195 MW to 205 MW. The Company expects full year 2010 revenues to be in the range of US$500 million to US$525 million.
The Company expects to expand its annual silicon ingot, silicon wafer, solar cell and solar module production capacities to approximately 500 MW each by the end of 2010.
Conference Call Information
JinkoSolar's management will host an earnings conference call on Monday, August 16, 2010 at 8:00 a.m. U.S. Eastern Daylight Time (8:00 p.m. Beijing/Hong Kong time).
Dial-in details for the earnings conference call are as follows:
Hong Kong / International: +852-2598-7556
U.S. Toll Free: +1-866-839-8029
Passcode: jinkosolar
Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call.
A replay of the conference call may be accessed by phone at the following number until August 23, 2010:
International: +852-3018-0000
Passcode: 1092198
Additionally, a live and archived webcast of the conference call will be available on the Investor Relations section of JinkoSolar's website at http://www.jinkosolar.com .
About JinkoSolar
JinkoSolar Holding Co., Ltd. (NYSE: JKS) is a fast-growing solar product manufacturer with low-cost operations based in Jiangxi Province and Zhejiang Province in China. JinkoSolar has built a vertically integrated solar product value chain from recovered silicon materials to solar modules. JinkoSolar's principal products are silicon wafers, solar cells and solar modules. As of December 31, 2009, JinkoSolar had an aggregate of more than 440 silicon wafer, solar cell and solar module customers from China, Hong Kong, Taiwan, the Netherlands, Germany, the United States, India, Belgium, Singapore, Korea, France, Spain and Israel and other countries or regions. For more information about JinkoSolar, please visit http://www.jinkosolar.com .
Currency Convenience Translation
The conversion of Renminbi into U.S. dollars in this release, made solely for the convenience of the readers, is based on the noon buying rate in the city of New York for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve Bank of New York as of June 30, 2010, which was RMB6.7815 to US$1.00. No representation is intended to imply that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollars at that rate on June 30, 2010, or at any other date. The percentages stated in this press release are calculated based on Renminbi.
Safe Harbor Statement
This press release contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Statements that are not historical facts, including statements concerning our beliefs, forecasts, estimates and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including, but not limited to, JinkoSolar's ability to obtain additional capital to fund its operations and business expansion, its ability to obtain sufficient silicon raw materials in a timely manner, its ability to manage its expansion of operations effectively, the general economic and business environment and conditions, the volatility of JinkoSolar's operating results, its ability to attract and retain qualified employees, key technical personnel and executive officers, and other risks outlined in the Company's public filings with the Securities and Exchange Commission, including the Company's registration statement on Form F-1, as amended. All information provided in this press release is as of August 16, 2010. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
For investor and media inquiries, please contact:
In China:
Yvonne Young
JinkoSolar Holding Co., Ltd.
Tel: +86-21-6106-4018
Email: ir@jinkosolar.com
Derek Mitchell
Ogilvy Financial, Beijing
Tel: +86-10-8520-6284
Email: jks@ogilvy.com
In the U.S.:
Jessica Barist Cohen
Ogilvy Financial, New York
Phone: +1-646-460-9989
Email: jks@ogilvy.com
JINKOSOLAR HOLDING CO., LTD.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
(in thousands, except ADS and Share data)
For the quarter ended
June 30, March 31, June 30,
2009 2010 2010
RMB RMB RMB USD
Total revenues 221,232 548,868 900,615 132,805
Cost of revenues (183,198) (419,028) (658,466) (97,097)
Gross profit 38,034 129,840 242,149 35,708
Operating expenses:
Selling and marketing (3,204) (9,954) (28,019) (4,132)
General and administrative (15,341) (19,818) (49,474) (7,295)
Research and development (221) (2,951) (13,982) (2,062)
Total operating expenses (18,766) (32,723) (91,475) (13,489)
Income from operations 19,268 97,117 150,674 22,219
Interest expenses, net (4,741) (11,448) (13,913) (2,052)
Subsidy income 2,506 1,176 3,810 562
Exchange (loss)/gain (1,094) (1,047) 235 35
Other expenses, net (495) (397) (4,837) (713)
Change in fair value of
derivatives (11,243) 55 74,606 11,001
Income before income taxes 4,201 85,456 210,575 31,052
Income tax expense -- (12,049) (29,925) (4,413)
Net income attributable to
JinkoSolar Holding Co.,
Ltd. 4,201 73,407 180,650 26,639
Series A redeemable
convertible preferred
shares accretion (7,709) (8,910) (4,524) (667)
Series B redeemable
convertible preferred
shares accretion (10,216) (11,605) (5,875) (866)
Allocation to preferred
shareholders (10,105) (10,103) (5,054) (745)
Deemed dividend to a
preferred share holder (8,015) -- -- --
Net (loss)/income
attributable to
JinkoSolar Holding Co.,
Ltd.'s ordinary
shareholders (31,844) 42,789 165,197 24,361
Net (loss)/income
attributable to
JinkoSolar Holding Co.,
Ltd. 's ordinary
shareholders per share -
Basic (0.63) 0.84 2.38 0.35
Diluted (0.63) 0.84 2.36 0.35
Net (loss)/income
attributable to
JinkoSolar Holding Co.,
Ltd. 's ordinary
shareholders per ADS -
Basic (2.51) 3.37 9.52 1.40
Diluted (2.51) 3.37 9.42 1.39
Weighted average ordinary
shares outstanding -
Basic 50,731,450 50,731,450 69,426,294 69,426,294
Diluted 50,731,450 50,731,450 70,139,814 70,139,814
JINKOSOLAR HOLDING CO., LTD.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31 March 31, June 30,
2009 2010 2010
RMB RMB RMB USD
ASSETS
Current assets:
Cash and cash equivalent 152,480 159,600 369,016 54,415
Restricted cash 72,827 94,567 184,035 27,138
Short term investments 50,462 26,253 26,042 3,840
Accounts receivable, net - a
related party 100 100 100 15
Accounts receivable, net - third
parties 236,797 238,861 267,191 39,400
Notes receivable 13,302 33,632 14,349 2,116
Advances to supplier - a related
party -- -- 6,124 903
Advances to suppliers - third
party 93,324 159,765 213,622 31,501
Inventories 245,192 398,026 470,778 69,421
Forward contract derivative
assets -- -- 74,606 11,001
Deferred tax assets - current 1,342 1,619 10,051 1,482
Other receivables from related
parties -- 42 88 13
Prepayments and other current
assets 104,824 82,792 118,220 17,433
Total current assets 970,650 1,195,257 1,754,222 258,678
Property, plant and equipment,
net 741,481 814,866 1,048,496 154,611
Land use rights, net 228,378 227,434 226,503 33,400
Intangible assets, net 279 413 389 57
Advances to suppliers to be
utilized beyond one year 230,900 227,069 109,682 16,174
Goodwill 45,646 45,646 45,646 6,731
Other assets 25,315 76,829 223,313 32,930
Total assets 2,242,649 2,587,514 3,408,251 502,581
LIABILITIES
Current liabilities:
Accounts payable - third
parties 99,933 224,016 222,538 32,815
Notes payable 81,643 108,763 155,048 23,863
Accrued payroll and welfare
expenses 34,989 36,306 49,660 7,323
Advances from third party
customers 36,778 62,924 88,900 13,109
Other payables and accruals 116,750 87,529 160,471 22,663
Other payables due to a related
party 550 275 550 81
Income tax payable -- 12,315 22,924 3,380
Derivative liabilities 55 -- -- --
Deferred tax liabilities -- -- 16,038 2,365
Current portion of long-term
borrowings 60,000 90,000 60,000 8,848
Short-term borrowings from third
parties 516,084 615,984 696,472 102,702
Total current liabilities 946,782 1,238,112 1,472,601 217,149
Non-current liabilities:
Long-term borrowings 348,750 328,875 349,000 51,464
Guarantee liability 1,500 1,500 1,500 221
Deferred tax liability 2,779 2,791 2,802 413
Total long term liabilities 353,029 333,166 353,302 52,098
Total liabilities 1,299,811 1,571,278 1,825,903 269,247
Commitments and contingencies
Series A Redeemable Convertible
Preferred Shares (US$0.00002
par value, 5,375,150 shares
authorized; 5,375,150,
5,375,150 and nil shares issued
and outstanding as of December
31, 2009, March 31, 2010 and
June 30, 2010, respectively) 189,058 197,968 -- --
Series B Redeemable Convertible
Preferred Shares (US$0.00002
par value, 7,441,450 shares
authorized; 7,441,450,
7,441,450 and nil shares issued
and outstanding as of December
31, 2009, March 31, 2010 and
June 30, 2010, respectively) 287,704 299,309 -- --
Equity
Ordinary shares (US$0.00002 par
value, 487,183,400 shares
authorized; 50,731,450,
50,731,450 and 86,927,850
shares issued and outstanding
as of December 31, 2009, March
31, 2010 and June 30, 2010,
respectively) 8 8 13 2
Additional paid-in capital 193,929 193,929 1,087,273 160,329
Statutory reserves 38,435 38,435 38,435 5,668
Other comprehensive loss -- (9) (220) (32)
Retained earnings 233,704 286,596 456,847 67,367
Total JinkoSolar Holding Co.,
Ltd. Shareholders' equity 466,076 518,959 1,582,348 233,334
Total liabilities and equity 2,242,649 2,587,514 3,408,251 502,581
Source: JinkoSolar Holding Co., Ltd.
