JinkoSolar Holding Co., Ltd. (NYSE:JKS) Q1 2025 Earnings Call Transcript

JinkoSolar Holding Co., Ltd. (NYSE:JKS) Q1 2025 Earnings Call Transcript April 29, 2025

JinkoSolar Holding Co., Ltd. misses on earnings expectations. Reported EPS is $-2.85 EPS, expectations were $-1.45.

Operator: Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co., Ltd.’s First Quarter 2025 Earnings Conference Call. At this time, all participants are in 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. I would now like to turn the meeting over to your host for today’s call, Stella Wang, JinkoSolar’s Investor Relations. Please proceed, Stella.

Stella Wang: 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 our 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. Li Xiande, Chairman and CEO of JinkoSolar Holding Co., Ltd.; Mr. Gener Miao, CMO of JinkoSolar Holding Co., Ltd.; Mr. Pan Li, CFO of JinkoSolar Holding Co., Ltd.; and Mr. Charlie Cao, CFO of JinkoSolar Holding Co., Ltd. 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 Li, 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. Li 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.

Li Xiande: [Foreign language] Module shipments with 17.5 gigawatts, were US$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 commitments to customers and reduced costs 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 [US$180 million] (ph) for the first quarter. [Foreign language] 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 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 cut off deadlines for distributed solar regulations and the 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 demands for our highly efficient and reliable products, maintaining operational continuity while adapting to market dynamics. Currently, the visibility of our order book stands at 60% to 70%, with Indo-Pacific and Middle East and Africa exceeding 80%. [Foreign language] Cost reduction and increasing efficiency remained a main theme in the development of the PV industry, and the customers’ demand for high power products is growing rapidly to further reduce LCOE.

Due to limitations in the upgrading and the transformation of most conventional TOPCon capacity in the industry, differences between manufacturers in TOPCon cell efficiency, product performance and cost 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] 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 20BB. We expect the power of our third-generation TOPCon products to have a 20 watt peak to 30 watt peak 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] 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 megawatts hours, a large increase compared to the same period last year. We expect shipments of our ESS to be around 6 gigawatts 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 the 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] Before I turn you 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 gigawatts, 95 gigawatts 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 gigawatts to 25 gigawatts in the second quarter of 2025 and between 85 gigawatts to 100 gigawatts for the full-year 2025.

And, we will actively respond to changes in market demand and the policy continuously optimize market strategies and supply chain management and consistently improve technology and product competitiveness to maintain a leading position in the industry. [Foreign language]

Gener Miao: Thank you, Mr. Li. First quarter total shipments were 19.1 gigawatts, with module shipment 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 markets. 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 the 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 peak with maximum of 670 watt peak. 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 capability. 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 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 the storage business will further increase our market competitiveness. On the demand side, we expect global module demand to remain above 700 gigawatts in 2025 with strong growth in Asia Pacific, Europe and The 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 supplies 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 cell and 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 services 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. Pan?

Pan Li: Thank you, Gener. Here is 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 were US$3.77 billion, a significant increase from US$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 US$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 were [$350 million] (ph) 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 our 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 end of first quarter, our cash and cash equivalents were US$3.77 billion compared with US$3.8 billion at the end of the fourth quarter and US$2.44 billion at the end of first quarter last year. AR turnover days were [111] (ph) days compared with 80 days in the fourth quarter and 100 days in the first quarter both 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 US$6.4 billion compared to US$5.5 at the end of the fourth quarter. Net debt was US$2.6 billion compared to US$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.

Q&A Session

Operator: Thank you. [Operator Instructions] Your first question comes from Brian Lee with Goldman Sachs and Co.

Tyler Bisset: Hey, guys. This is Tyler Bisset on for Brian. Thanks for taking our questions. 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?

Gener Miao: It’s mainly dominant, the ESS shipment mix is mainly dominated by Asia Pacific region, Europe region and emerging markets. Those together with China, those four regions are our main target in terms of 2025, so which is slightly different from what we have for modules, but for the key market, let’s say, it’s very light to each other, but in terms of geographic mix, because of the trade barrier in U.S., etcetera, it’s difficult to extend the ESS business in U.S. right now.

Tyler Bisset: Thank you. And, given the final determination on ADCBD, 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?

Gener Miao: Well, I think ADCBD is only preliminary tariffs. So, there’s still have the cell termination after 12 months custom clearance. So, we’re in 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 that for the short-term because the recent hike or change on the ADCBD 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 joint venture factories in Middle East together with our local operation in U.S., we are still fully committed.

Tyler Bisset: All right. Thank you very much.

Gener Miao: Thank you.

Operator: Your next question comes from Philip Shen with Roth Capital Partners.

Philip Shen: Hi, everyone. Thanks for taking my questions. So, you guys had negative gross margins for the first time in a long time in Q1 and 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? Thanks.

Charlie Cao: Yes, Philip, the gross margin and the risk to negative is very extreme cases in the last five years and reflecting the supply and the demand imbalance and the throughout last year. And on top of that, the first quarter is the slack sales and we have more exposures to the China market. And we expect in short-term, we expect the gross margin and to improve and slightly in the second quarter given the module price reaching upward trend with the push demand from China and other regions. And in the second half of the year, and we expect it to be stable, maybe have the chance to improve. And we believe and the current situation is not sustainable even for the top tier companies. And from supply side, we are seeing more and more companies and phase out in the solar industries. On top of that, there’s uncertainty to international trade. And, we believe by the end of this year, we’ll be having more clarifications. Thank you.

Philip Shen: Okay. Thank you, Charlie. So shifting to the U.S. market, there is the 145% tariff. I wanted to understand what’s your, the updates on your plans to ramp up U.S. cell manufacturing, in Florida or wherever that might be. 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? Thanks.

Charlie Cao: I think it’s more become of the Board questions, but from the long-term belief, we believe local production in the U.S. for local customers in United States is a trend that is consistent with, I think, the long-term policies from the current Trump administrations. And for the short-term, there’s a lot of uncertainties. There’s, and the budget cut, there’s IRA incentive. There is maybe what we are interested in the [FEL] (ph) all saying kind of, this kind of things. And so, while we take our projects, we consistently evaluate the policies from different angles. And as long as there is some kind of uncertainties and we strongly believe the U.S. store market will rebound next year. And specifically for the, if we want to build the solar cell facilities and we input the increment from China, and now the recurring new tariff, it’s a crazy rate, right.

It’s not makes sense to make the decisions even from that specific angles. So, back to your questions, and then we don’t have the plan in the short-term, solar cell we build in the US, but we have, the plan consistently evaluating the policies, the potential side, the potential, the tariff situations.

Philip Shen: Okay. Thank you very much. I’ll pass it on.

Charlie Cao: Welcome.

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

Alan Lau: Thank you for taking my question. This is Alan. And, my first question is on, it is the first time I think the company have provided the guidance on ESS. We’d 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.

Charlie Cao: Oh, you mean the margin, right?

Alan Lau: Yes. The gross margin,

Charlie Cao: Yes. Yes. Gross margin, I think we target 5% to 10%. It’s not very big target. And, given the business we developed and starting from the kind of the very small scale last year, we achieved 1 gigawatts, but this year, and we have the confidence and to finish with the market, particularly in Asia Pacific, Latin America, some emerging markets. So, the preferability is not the first priorities. But in terms of gross margin, we expect in kind of the range of 5% to 10%.

Alan Lau: 5% to 7%, right?

Charlie Cao: 5% to 10%.

Alan Lau: Okay. Thank you. 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 45 credits already?

Charlie Cao: Last year, I think we filed the filings, and it’s a 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.

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

Charlie Cao: Yes. This year, we plan, because we have two gigawatts in full operations and there’s a lot of potential investors who are interested to prop out the credit from the facilities. And so we are in the process of communication and negotiation.

Alan Lau: Thank you. So 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 U.S. to support that shipment?

Charlie Cao: The range is 5% to 10%, but you’re right. Uncertainty, I think, is the big headwind. But I think we are if the headwind and uncertainty will not be, let’s say, clear in the short-term, it will have the impact on the shipments of U.S. But I think 5% it’s kind of the case and, let’s say, the low case, but we are confident and we can achieve at least 5%. And if the uncertainty is, it’s kind of to have more clarity than the available supply chain to U.S. and we can achieve more.

Alan Lau: So, 5% of total shipment, right, like, so if it’s 85 to 100 gigawatt for this year, it’s around 45 gigawatt.

Charlie Cao: Yes, roughly, yes.

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

Charlie Cao: Yes. After under the release of the first quarter, we plan to buy back from the market. We think that the timing given the valuation is very low. And on top of that, we plan to declare dividend, which is subject for the full, but it’s I think, on our schedule.

Alan Lau: So, the to my understanding, the dividends will be approximately like $15 million right, if it’s around $1 per share, say, for example. So, would the buyback will be look like $150 million then?

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

Alan Lau: I see. So, before that happens, actually, you can already start and there’s at least $100 million which is like 10% of the outstanding shares, right?

Charlie Cao: Yes. $100 million I think it’s kind of included dividend plus repurchase here. That’s a plan.

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

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

Alan Lau: Thanks a lot. I will pass on. Thank you, Charlie.

Operator: Your next question comes from Rajiv Chaudhri with Sunsara Capital.

Rajiv Chaudhri: Hello, 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 a 100 gigawatts, your market share looks like it might be lower than last year and lower than 2023. Could you clarify that discrepancy?

Charlie Cao: I think last time we talked about, our strategy is not to increase competitors in more markets here 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 near total shipments and which we guided 85 to 100 gigawatts. And what it means is we want to balance the utilization, shipment and profitability and as well as the cash flow perspective. And on top of that, we need to quite 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, I think last time we talked about we target at least 20% the market share for the module business. But it’s not a well-known target, and we need to be focused, that we need to focus on our product competitiveness. We continue to invest in R&D and penetrate the key end market with some kind of premium, make sure the business is sustainable.

Rajiv Chaudhri: Okay. Thanks. Along the same lines on the market growth, can you talk about where which regions, 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?

Gener Miao: Sure. I have roughly talked about it. So, in the top level, so we are looking at the global demand at roughly 700 gigawatts, of which the largest market is believed to be China, same as last year. But the volume side, the China is expected to grow roughly 10% to 15%, which will accounted 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 gigawatts level. So, I think that’s the only two markets past the 100 gigawatts threshold in 2025. But for sure there are other markets, it’s very interesting and sizable such like U.S. we are roughly looking at 50 to 55 gigawatt level. And in India, we are looking at around 30 to 35 gigawatt level.

So, yes, that’s the 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 regions 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 gigawatts, definitely the top four market, which I just mentioned, is still the key focus.

Rajiv Chaudhri: So just to clarify, so you are expecting that China will grow by 10% to 15% this year?

Gener Miao: 10% to 15%, yes.

Rajiv Chaudhri: I see. Okay. And final question, are you still getting a premium pricing for your top one products based on the technology?

Gener Miao: 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, customer are more than happy to pay premium on such kind of product.

Rajiv Chaudhri: I see. Can you also give the breakdown you expect between DG and the utility scale for this year for Jinko?

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

Rajiv Chaudhri: I see. Okay. Thank you.

Gener Miao: Yes. Thank you.

Operator: [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.