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HomeBusinessInvestmentJinkoSolar Holding Firm (JKS) This fall 2021 Earnings Name Transcript

JinkoSolar Holding Firm (JKS) This fall 2021 Earnings Name Transcript


Picture supply: The Motley Idiot.

JinkoSolar Holding Firm ( JKS -4.18% )
This fall 2021 Earnings Name
Mar 23, 2022, 8:00 a.m. ET

Contents:

  • Ready Remarks
  • Questions and Solutions
  • Name Contributors

Ready Remarks:

Operator

Hi there, girls and gents, and thanks for standing by for JinkoSolar Holding Co., Ltd. fourth quarter 2021 earnings convention name. [Operator instructions] As a reminder, as we speak’s convention name is being recorded. I’d now like to show the assembly over to your host for as we speak, Ms.

Stella Wang, JinkoSolar’s investor relations. Please proceed, Stella.

Stella WangInvestor Relations

Thanks, operator. Hello, everybody. Thanks for becoming a member of us as we speak for JinkoSolar’s fourth quarter 2021 earnings convention name. The corporate’s outcomes have been launched earlier as we speak and obtainable on the corporate’s IR web site at www.jinkosolar.com, in addition to on Newswire companies.

We’ve additionally offered a supplemental presentation for as we speak’s earnings name which will also be discovered on the IR web site. On the decision as we speak from JinkoSolar are Mr. Li Xiande, chairman of the board of administrators and chief government officer of JinkoSolar Holding Firm, Restricted.; Mr. Gener Miao, chief advertising and marketing officer of JinkoSolar Firm, Restricted.; Mr.

Pan Li, chief monetary officer of JinkoSolar Holding Firm, Restricted.; and Mr. Charlie Cao, chief monetary officer of JinkoSolar Firm, Restricted. Mr. Li will talk about JinkoSolar’s enterprise operations and the corporate highlights; adopted by Mr.

Miao, who will discuss concerning the gross sales and advertising and marketing; after which Mr. Pan Li, who will undergo the financials. They will additionally — they may all be obtainable to reply your questions in the course of the Q&A session that follows. Please observe that as we speak’s dialogue will comprise forward-looking statements made beneath the secure harbor provisions of the U.S.

Personal Securities Litigation Reform Act of 1995. Ahead-looking statements contain inherent dangers and uncertainties. As such, our future outcomes could also be materially totally different from the views expressed as we speak. Additional info relating to this and different dangers is included in JinkoSolar’s public filings with the Securities and Trade Fee.

JinkoSolar doesn’t assume any obligation to replace any forward-looking statements, besides as required beneath relevant regulation. It’s now my pleasure to introduce Mr. Li Xiande, chairman and CEO of JinkoSolar Holding. Mr.

Li will communicate in Mandarin, and I’ll translate his feedback into English. Please go forward, Mr. Li. 

Li Xiande

[Foreign language]

Stella WangInvestor Relations

We have been more than happy to shut a really difficult 2021 with glorious outcomes. We have been in a position to swiftly reply to produce chain volatility and logistic challenges, because of our aggressive benefits in provide chain administration and the excellent benefits of our world community. Revenues and shipments grew considerably within the fourth quarter because of the growing proportion of the in-house large-sized manufacturing capability and large-sized product gross sales. Our built-in prices declined additional, and our profitability additional improved.

Sequentially, working revenue quadrupled and non-GAAP web revenue elevated by roughly 13 occasions. Within the first quarter of 2022, our principal working subsidiary, Jiangxi Jinko accomplished its itemizing on the Shanghai Inventory Trade Science and Know-how Innovation Board. The capital threat offered larger momentum for the event of our state-of-the-art expertise and enterprise. Our potential to efficiently compete sooner or later relaxation on our complete energy.

We’ll proceed to extend our competitiveness in expertise, world advertising and marketing community, and likewise the excellent measurement scales. 

Li Xiande

[Foreign language]

Stella WangInvestor Relations

Regardless of a difficult 2021, the demand from finish customers hold growing in contrast with 2020, extra versatile enterprise fashions and a cheaper price sensitivity are serving to the distributed era enterprise achieved fast development. China’s set up capability reached to 55 gigawatts for the complete yr of 2021, with DG contributing greater than half of latest installations because of its larger financial returns. We hope this pattern to stay the driving power for newly added installations in 2022. We’re extremely optimistic concerning the growth prospects in distributed era market, and we proceed to develop our model affect on this market.

With the strategic wants for vitality transformation and vitality safety in main world economies, we anticipate that PV {industry} to proceed its robust development momentum within the coming years. Superior and excessive environment friendly on-time merchandise will help the continued development of the worldwide PV {industry}.

Li Xiande

[Foreign language]

Stella WangInvestor Relations

We proceed to steer the {industry} with our revolutionary expertise and in-depth market information. In our Haining facility, our mass-produced N-type cell reached an ultra-high conversion effectivity of as much as 24.5% within the fourth quarter final yr, an vitality yield just like that of PERC. We’ve roughly 16 gigawatts of on-time cell capability operational within the first quarter of 2022 and presently are steadily ramping up our manufacturing capability. Our built-in value is anticipated to additional lower as our built-in manufacturing capability construction constantly improved. 

Li Xiande

[Foreign language]

Stella WangInvestor Relations

In mild of the fast {industry} transition from P-type to N-type and rising demand for larger effectivity merchandise, we’ve got launched the following era of N-type ultra-efficiency Tiger Neo modules. These fashions have acquired a worldwide declare from our clients for higher energy era efficiency and obtained premium. In the long term, our steady provide and localized after-sales service community will proceed to ensure the reliability and the consistency of our services and products. These core qualities have turn into our aggressive mode.

We’ll reinforce the management place of our N-type modules globally and additional improve our world market share and profitability. 

Li Xiande

[Foreign language]

Stella WangInvestor Relations

Our seven-gigawatt mono wafer plant in Vietnam turn into formally operational within the first quarter this yr. This built-in mono wafer cell module manufacturing capability of roughly seven gigawatts abroad additional consolidates our world provide chain benefit. We’re coordinating with our upstream and downstream companions to faucet into all different complementary sources and improve our strategic cooperation. This can assist us mitigate uncooked materials shortages and manufacturing weak hyperlinks.

On the similar time, we’re dedicated to constructing a cluster of business ecosystems to solidify our provide chain. Vertical integration is crucial to compete within the world PV market. By repeatedly consolidating our diversified industrial chain infrastructure, we consider we are going to proceed to strengthen the competitiveness of our core merchandise and bringing nice worth to our world clients with high-quality, dependable modules and premium companies.

Li Xiande

[Foreign language]

Stella WangInvestor Relations

Earlier than I flip it over to Gener, I wish to go over our steering for the primary quarter and full yr 2022. We anticipate complete shipments to be within the vary of seven.5 to eight gigawatts for the primary quarter of 2022. The annual mono wafer, photo voltaic cell, and photo voltaic module manufacturing capability is anticipated to succeed in 50, 40, and 60 gigawatts, respectively, by the top of 2022. We anticipate our full yr 2022 shipments, together with wafer gross sales and modules, to be within the vary of 35 to 40 gigawatts.

Gener MiaoChief Advertising Officer, JinkoSolar Holding Firm Restricted

Thank You, Ms. Li. Complete shipments within the fourth quarter have been 9.7 gigawatts, of which module shipments have been 9 gigawatts, a major enhance in contrast with the third quarter of 2021 and the identical interval of 2020. ASP outdoors the North America improved sequentially, because of the gross sales of high-efficiency merchandise in high-end market.

By way of areas, module shipments in Asia Pacific and rising markets elevated sequentially and yr over yr. China outpaced all different international locations by contributing the biggest portion within the fourth quarter from lower than 10% within the first half of the yr to just about 34%. As distributed era progressively turns into the principle driving power for newly added installations in China, the sector is anticipated to more and more contribute to incremental market quantity, inspired by incentives from the 1+N coverage framework that guides the nation’s local weather motion and motion plan on peak emission and different insurance policies. We’re optimistic about China demand will exceed 100 gigawatt in 2022, and we anticipate the shipments in China’s market to additional enhance within the 2022.

In Europe, probably the most developed PV market, purchasers have accrued matured consciousness for PV and have the next acceptance of latest merchandise resembling Tiger Neo modules. By finish of 2021, we had shipped our merchandise to greater than 30 international locations throughout Europe. Europe turn into one among our high contributors for complete shipments in 2021. With growing electrical energy costs making photo voltaic vitality extra economical and strategic necessarity of vitality transformation and vitality safety, Europe is anticipated to take care of robust development momentum.

We’re assured in sustaining our competitiveness in European market by leveraging our native community and the next-generation N-type ultra-efficiency module, Tiger Neo. We launched the following era N-type Tiger Neo module within the fourth quarter of 2021 and elevated the worldwide promotion and the gross sales, delivering excessive vitality density, excessive bifacial issue, and the decrease linear degradation, Tiger Neo module convey purchasers higher energy era efficiency and acquire aggressive premium. In the meantime, we’re closely invested in the way forward for distributed era sector. The proportion of distributed era in our cargo is anticipated to succeed in round 40% this yr.

We’ll proceed to discover the worldwide market demand for distributed era primarily based on market tendencies and buyer wants and proactively elevated our presence in China United States, Europe, Brazil, Australia and discover different potential markets. International locations around the globe have adopted numerous methods in response to COVID-19 provide chain disruptions and hovering family fuel and electrical energy payments because the vitality disaster chunk. Underneath this backdrop, the worldwide PV market has been pushed by inexperienced, low carbon, and long-term vitality safety funding, which can usher in a brand new interval of fast growth. Market demand in 2023 is anticipated to develop in extra of 20%.

We’ll proceed to trace market circumstances and alter our enterprise technique accordingly. We’re assured that we’ll contribute to the worldwide vitality transformation with our high-efficiency merchandise and help clients with our sound advertising and marketing and world service community. With that, I’ll flip it over to Pan. 

Pan LiChief Monetary Officer, JinkoSolar Holding Firm Restricted

Thanks, Gener. Our fourth quarter outcomes exceeds the expectations. Complete revenues grew considerably quarter over quarter. We continued relentlessly to take efficient administration of built-in manufacturing prices and working bills.

Sequentially, gross revenue doubled, working revenue greater than quadrupled and non-GAAP web revenue elevated by 13 occasions. Working effectivity improved because of our efforts to carefully align stock administration with market provide and demand dynamics. Let me go into extra particulars now. Complete income was $2.57 billion, a rise of 91% sequentially and 74% yr over yr.

Gross margin was 16.1 share, in contrast with 15.1% within the third quarter this yr and 16% within the fourth quarter final yr. Excluding anti-dumping and countervailing because of its reversal profit, gross margin was 14.3%. Complete working bills almost doubled yr over yr because of a considerable enhance in module shipments in the course of the fourth quarter, which elevated transport prices. On one hand, we elevated shipments to China to scale back the influence of transport prices on profitability.

And alternatively, we leveraged our long-term settlement with main transport corporations to acquire extra aggressive costs in contrast with the remainder of market. Generally, the influence from adjustments in transport prices on profitability was comparatively beneath management. Complete working bills accounted for 13% of complete revenues within the fourth quarter this yr, flat sequentially and barely improved, in contrast with 15% within the fourth quarter final yr. Working margin was represented within the fourth quarter of 2021 in contrast with 1.3% within the third quarter and 0.8% within the fourth quarter final yr.

EBITDA was $183 million doubled, in contrast with $89 million within the third quarter of 2021. Non-GAAP web revenue was $34 million, a rise of 13 occasions sequentially, leading to diluted earnings per ADS of $0.67. Now I am going to transient you on our 2021 full yr monetary outcomes. Complete module shipments have been 22.2 gigawatt, up 18% yr over yr.

Complete revenues have been $6.41 billion, up 16.2% yr over yr. Improve in module shipments, larger integrating manufacturing volumes, along with value discount from our industry-leading built-in value construction, ensuing improved profitability. For the complete yr of 2021, gross revenue was about $1 billion, a rise of about 8% yr over yr. Gross margin was 16.3%, in contrast with 17.6% final yr.

Working margin for the complete yr of 2021 was 2.7%, in comparison with 5.1% in 2020. Working bills have been 13.6% of the overall revenues in 2021, in comparison with 12.5 share final yr. EBITDA was $538 million in 2021, in comparison with $463.5 million final yr. Non-GAAP web revenue was about $88 million in 2021, in comparison with $147 million final yr.

This interprets into non-GAAP fundamental and diluted earnings per ADS of $1.84 and $1.7, respectively. Transferring to the steadiness sheet. On the finish of the fourth quarter, our money and money equivalents have been $1.4 billion, up from $1.14 billion on the finish of the third quarter and $1.24 billion on the finish of the fourth quarter final yr. Our working effectivity continues to enhance quarter over quarter.

AR turnover days have been 52 days within the fourth quarter, in contrast with 65 days within the third quarter of 2021. Stock turnover days have been decreased to 88 days within the fourth quarter, in contrast with 171 days within the third quarter of 2021. Complete debt was $4 billion on the finish of the fourth quarter, in comparison with $2.8 billion on the finish of fourth quarter final yr. Internet debt was $2.56 billion, in comparison with $1.56 billion on the finish of the fourth quarter final yr.

With the itemizing of Jiangxi Jinko earlier this yr, our monetary construction is anticipated to enhance with entry to aggressive financing. This concludes my ready remarks. We are actually completely satisfied to take your questions. Operator, please proceed. 

Questions & Solutions:

Operator

Thanks. [Operator instructions] Our first query comes from Brian Lee with Goldman Sachs. Please go forward.

Brian LeeGoldman Sachs — Analyst

Hey, guys. Thanks for taking the questions. I suppose perhaps simply to start out off on the steering. I recognize you giving the views for shipments right here in Q1 and for the complete yr.

I believe typically, you have given gross margin steering, not for the yr per se, however at the least for the out quarter. Any purpose, I may need missed this, however did you present the gross margin steering and income steering for Q1? And if not, form of what is the rationale? And I suppose, what are the places and takes across the outlook for these metrics in Q1?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

Brian, that is Charlie talking, and also you’re proper. By way of steering, we make some small adjustments in comparison with the couple of the quarters earlier than, and we plan to solely give the steering for shipments. And by way of gross margin income in vary and firstly, we wish to be constant as a result of our subsidiaries in China has been invested in Chinese language capital markets. So we wish to make a consistency with the rules in China, which the entities didn’t present any gross margin steering, in addition to the income vary.

Second one is by way of gross margin as a result of the provision chain is so risky, and we do not consider it is — at this stage, to provide the extent the gross margin vary remains to be in problem. 

Brian LeeGoldman Sachs — Analyst

OK. That is honest sufficient. Perhaps at a big-picture stage, gross margins got here in form of proper above the excessive finish of the vary for 4Q. So kudos to you for good execution on that.

Are you saying that the provision chain/margin setting is extra unsure in Q1 2022 than what you noticed in This fall ’21?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

The half remains to be — the polysilicon half remains to be nicely above our expectations. So by way of gross margin, we anticipate some pressures from that perspective. However from the long-term perspective, we predict most likely the worth will return to a extra rational stage, notably with extra provide manufacturing quantity from poly producers within the second-half yr.

Brian LeeGoldman Sachs — Analyst

After which for This fall, there was an excellent quantity of nonmodule shipments. What was your form of gross margin delta roughly between modules and non-modules? Had been they similar vary or larger on the non-modules? And if larger, what kind of share or foundation factors distinction?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

You imply the This fall final yr or Q1 of this yr? Sorry.

Brian LeeGoldman Sachs — Analyst

Asking about This fall after which I suppose the follow-up to that might be what’s embedded in your cargo steering for ’22 in Q1 by way of wafer and non-module versus module?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

OK. So for the 2022, the steering for Q1, in addition to the complete yr, the bulk partly is a module. So you may take the steering because the module shipments. And relating to the This fall final yr, we did have some 600 megawatts for the wafer and cell shipments.

However it’s for the low-efficiency wafer gross sales. So the margin is roughly very low. And I believe in the event you — excluding the wafer and the gross sales margins, the module margins might be a little bit bit higher than the overall quantity.

Brian LeeGoldman Sachs — Analyst

Final two housekeeping ones, and I am going to get again within the queue. The capex steering for 2022, I may need missed that, however do you might have a capex vary or a quantity for this yr? After which I observed the tax expense was a lot larger than traditional in This fall. Perhaps what was the motive force of that? And may we be modeling an identical tax fee in 2022? It looks like it was excessive 20%, form of near 30% in This fall?

Pan LiChief Monetary Officer, JinkoSolar Holding Firm Restricted

Sure. When it comes from —

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

Sure. Please go forward.

Pan LiChief Monetary Officer, JinkoSolar Holding Firm Restricted

Sure. For capex for final yr 2021, it is roughly $1.3 billion, and we anticipate some new capability on this yr. So it is likely to be in round $1.8 billion to $1.9 billion.

Brian LeeGoldman Sachs — Analyst

And simply lastly, on the tax fee?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

Sure. The tax fee. It is within the vary of 15% to twenty%.

Brian LeeGoldman Sachs — Analyst

OK. Thanks, guys. I am going to cross it on.

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

Thanks.

Operator

Our subsequent query comes from Philip Shen with ROTH Capital. Please go forward.

Philip ShenROTH Capital Companions — Analyst

Hello, everybody. Thanks for taking my questions. Simply needed to revisit the margin query for Q1. There are simply three days left within the quarter.

So that you guys most likely have a way for the place margins are? What do you assume may nonetheless drive or change? Be it materials form of influence versus your view, given how late within the quarter we’re? And what do you assume — are you able to give us a way for a way do you anticipate margins in Q1 to be flat versus This fall or doubtlessly weaker because of the upper poly worth? Thanks.

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

By way of margin first quarter, I believe it is roughly be flat quarter over quarter and perhaps barely decrease due to the polysilicon vegetation and in addition to the R&D, it is the appreciation numbers, notably in January and February.

Philip ShenROTH Capital Companions — Analyst

OK. Thanks, Charlie. And shifting again to some feedback I believe Gener made about Europe and the demand there, I used to be questioning in the event you may present a little bit bit extra shade on how demand has modified over the previous 4 weeks to the European market? Do you additionally serve the European market out of your Southeast Asia amenities? Any form of shade there can be actually useful. Thanks.

Gener MiaoChief Advertising Officer, JinkoSolar Holding Firm Restricted

Thanks, Philip. That is Gener. For the worldwide demand of ’22, we’re fairly optimistic concerning the world demand, particularly what occurred within the final, say, three, 4 weeks’ time in Europe. We’ve noticed fairly a — as an example, we observe a stronger-than-expected demand coming from Europe plus the push in India and likewise the current robust push from China facet.

So including all the things collectively, we’re wanting on the world demand on the vary of round 240 to 250-gigawatt vary. And for the — relating to Europe, we consider European market will beat 30 our gigawatts fairly quickly as an entire. And presently, we nonetheless provide European market from China manufacturing base. Our non-China manufacturing unit base is especially the area for U.S.

market proper now. I hope that answered your query.

Philip ShenROTH Capital Companions — Analyst

Sure, Gener, that is nice. Thanks. Because it pertains to the capability growth, I believe final quarter, you guys have been anticipating wafer cell module to be 40, 40, and 50 gigawatts, respectively and now you are anticipating it to be 50, 40, and 60. And so I needed to see in the event you may assist us perceive what drove that that means — what’s driving that significant enhance in capability? It looks like it may very well be associated to the stronger demand, however I used to be questioning in the event you may be capable of share extra there.

After which — are you able to discuss in the event you anticipate 2022 to be, name it, 35 to 40 gigawatts, how a lot of that’s booked already for the yr? You usually have bookings nicely prematurely. And so do you assume that is 50% booked or presumably much more? Thanks. 

Gener MiaoChief Advertising Officer, JinkoSolar Holding Firm Restricted

Phil, I believe let me briefly discuss this subject. And for the capability growth, sure, we’ve got seen a stronger than anticipated demand. However primarily, we’re holding the convention concerning the long-term momentum of the stronger world demand. And that is essential, the rationale why we — one of many necessary the reason why we increase our capacities.

In the meantime, we observed that numerous capability we are going to launch within the second half, even yr finish. That may assist our — to satisfy the demand not solely in ’22 but in addition in ’23 and finish of ’24 even. And in addition for the reserving facet, I believe we’re our bookings. We’re kind of round half bookings primarily based on our plan, and we are attempting to guide extra.

And crucial to notice right here is that we’re seeing — we’re witnessing a stronger-than-expected demand for the anti product. In order that’s, I believe, the important thing highlights we attempt to increase our capability. The main focus will solely be the growth on the anti product. Thanks.

Philip ShenROTH Capital Companions — Analyst

OK, nice. Thanks. One final query for me. Because it pertains to the shipments from Vietnam and Southeast Asia into the U.S., have you ever guys been in a position to get new quantity of shipments into the U.S.? I believe you guys have non-China poly going into modules.

And if that’s the case, when do you anticipate these shipments to reach at U.S. shores with out being impacted by the Guangxin WRO? Thanks.

Gener MiaoChief Advertising Officer, JinkoSolar Holding Firm Restricted

For that, I believe we’ve got seen some optimistic suggestions within the final couple of weeks, and we’ve got seen some smaller quantity, let’s name it the samples are being accepted and handed by means of the CGP inspection. And we expect to construct a reliable monitoring system to guarantee that all of the shipments going to U.S. market might be absolutely compliant with the CGP and the general necessities. So with that we relaunch or we began our non-China manufacturing, I believe, within the one final month or two.

And again to your query, we have not received any huge, as an example, 100-megawatt stage of cargo arrival in U.S. border but, however we’re nonetheless holding the optimistic views concerning the future shipments to U.S. market. For positive, there are nonetheless some considerations on this current feeling about this anti stuff, however we are going to hold a detailed eye on it.

However on the whole, I believe we’ve got probably the greatest options within the {industry} with our vertical built-in non-China manufacturing foundation.

Philip ShenROTH Capital Companions — Analyst

OK. Thanks very a lot, Gener. I am going to cross it on. 

Gener MiaoChief Advertising Officer, JinkoSolar Holding Firm Restricted

Thanks, Phil. 

Operator

Our subsequent query comes from Alan Lau with Jefferies. Please go forward.

Alan LauJefferies — Analyst

Thanks lots for the administration for holding the assembly, and congratulations on the nice outcomes. So my first query is concerning the new TOPCon product. So on a per what foundation, what do you anticipate the premium of TOPCon merchandise versus PERC merchandise?

Gener MiaoChief Advertising Officer, JinkoSolar Holding Firm Restricted

Thanks on your query. That is Gener talking. And relating to the premium, it is onerous to justify a basic numbers, however we’re constructing the enterprise mannequin primarily based on revenue sharing enterprise mannequin with our clients. In some circumstances, we would share — we would have gotten an even bigger premium.

In some circumstances, we would get a smaller premium primarily based on totally different markets, totally different radiation circumstances, totally different system designing or and many others. So it’s extremely sluggish. However on the whole, we’re seeing the anti premium — within the present stage, we’re seeing anti premiums keep round $0.02 to $0.03, however we anticipate that will turn into up and down a little bit. So — however we nonetheless are fairly optimistic about this stronger-than-expected demand concerning the anti product.

Thanks. 

Alan LauJefferies — Analyst

Thanks. So it is round $0.02 to $0.03. And I’m wondering by way of the margin, would this be higher in comparison with PERC merchandise?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

Sure. That is Charlie talking. It’s, for positive. And the brand new product, in time, we are able to get the PERC premium, in addition to we’re within the progress to ramp up our capacities to make the fee — built-in manufacturing value is aggressive with conventional PERC product.

Alan LauJefferies — Analyst

Thanks. Subsequent query pertains to the European markets as a result of they have been formidable set up targets with the repower EU initiative, and many others. However on the similar time, really, euros are depreciating. So that means that most likely extra module costs is growing to them.

So I’m wondering if the corporate sees robust demand from the European market in second quarter versus the primary quarter? Do you see quarter-over-quarter development with most likely larger module costs? 

Gener MiaoChief Advertising Officer, JinkoSolar Holding Firm Restricted

OK. That is Gener. I am going to take this one. The European demand is stronger than anticipated, particularly within the current three, 4 weeks’ time.

We will really feel the stronger-than-expected demand primarily coming from the — not solely from the distributed era market phase but in addition coming from the utility facet as nicely. However we’ve got seen fairly a number of, as an example, headwinds across the stronger demand from Europe. One of many problem simply talked about by you is forex trade fee. However the different challenges are just like the logistics value.

The transport prices proceed to climb up, which is a big effect elements and in addition to simply the price of uncooked materials, like polysilicon, like aluminum frames, and many others. So — however having mentioned that, as a result of the native electrical energy value is larger, so we are able to anticipate that even with a barely higher-than-expected module or photo voltaic system value, the photo voltaic system or photo voltaic electrical energy from photo voltaic system is likely one of the best electrical energy contributors throughout the entire Europe. I believe we’re nonetheless — that is the rationale why we’re holding a really large confidence on the European demand not just for the following coming quarters but in addition for the following coming — even three and even 5 years’ time. Did that reply your query?

Alan LauJefferies — Analyst

Sure. That is very complete. Thanks for administration, and I am completed with my questions. Thanks lots.

Gener MiaoChief Advertising Officer, JinkoSolar Holding Firm Restricted

Thanks. 

Operator

[Operator instructions] Our subsequent query comes from Rajiv Chaudhri with Sunsara Capital. Please go forward.

Rajiv Chaudhri

Good morning. And initially, I wish to congratulate you on a tremendous fourth quarter, in addition to on a really profitable IPO. These are large recreation changers for JinkoSolar going ahead. The query I needed to ask you, I’ve a number of questions.

The primary query is about working bills. You had famous that the large change from quarter to quarter within the working bills, which was virtually $100 million was due to transport bills. And but once I have a look at the road objects, the G&A went up from $60 million in Q3 to $122 million in This fall. So is there any transport expense included within the G&A? Or what’s the — are you able to simply clarify why G&A went up a lot and what the elements are of that and the way sustainable that’s on a go-forward foundation as a result of G&A has been trending at $50 million to $60 million for a number of quarters now and swiftly, it has jumped up 100% in a single quarter? In order that’s my first query. 

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

Hi there. That is Charlie talking. And relating to the G&A bills, it is as a result of the rise within the fourth quarter is especially some G&A bills it is regarding the worker year-end bonus, in addition to we’ve got incurred extra bills regarding the main firm listings. So it is — a few of the elements should not recurring.

And searching — I believe it is crucial seeking to 2022, and we plan a major enhance of income shipments 35 to 40 gigawatts, which is 25 gigawatts. By way of working bills, together with all the things, we predict it is — we’re going to profit from the leverage of the big scale and working bills versus the overall income will proceed to drop quarter by quarter. 

Rajiv Chaudhri

So absent the worker bonuses, would you say that at the least within the first few quarters of the yr, G&A will drop again to the $60 million vary, after which the worker bonus will kick in on the finish of the yr, I assume?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

No. It is — I believe the main half is in fact — the bulk half is the IPO bills, in addition to the authorized bills. We’re doing lots of legal-related work, notably, for instance, the dumping within the U.S. and the litigation with the patent.

And for the year-end bonus, we did accrue quarter by quarter. And since we’ve got higher efficiency, notably within the fourth quarter and so the worker, the bonus is comparatively larger within the fourth quarter as a result of it is handed down higher than anticipated year-end efficiency.

Rajiv Chaudhri

OK. Charlie, my subsequent query is concerning the transport prices. Are you — at this level, it has turn into very clear that transport prices will keep larger for longer than it was initially thought, perhaps a yr in the past. Are you having any success in passing the transport prices and the danger of adjustments in transport prices to the ultimate client or you’re nonetheless having to observe that value and its volatility by yourselves?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

Positive, positive. Transport prices — first, the transport prices will proceed to take care of a excessive stage all through 2020 — 2022. However given the photo voltaic vitality could be very aggressive, lots of markets are extremely demanding for the photo voltaic modules. So we’re seeing flexibilities from the, as an example, the shopper acceptance for the upper module worth, together with the transport value.

So we — primarily based on our expertise with clients, we’re — I believe we’re in a position to cross by means of the bulk a part of the transport prices to our clients.

Rajiv Chaudhri

So, Charlie, as you are searching at — Q1 is nearly over, Q2 and past, it is clear that at the least for now, polysilicon prices have additionally been larger and will keep larger for longer, particularly within the second quarter. Does that imply that module costs will proceed to go up? Would you say that module costs in Q1 have been larger than This fall and Q2, they are going to be larger than Q1?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

Final yr in This fall, the module worth — market worth is reaching to extraordinarily excessive, virtually over RMB 2, in some circumstances. However it’s decrease a little bit bit within the first quarter. However given the excessive polysilicon worth, notably within the first-half yr, we expect robust demand and comparatively scarcity on polysilicon. We expect the module worth might be comparatively steady and will have upwards strain.

However within the second-half yr, given extra, I believe the polysilicon provide, we’re comparatively optimistic for the downward pattern for the polysilicon.

Rajiv Chaudhri

However are you giving your self some pricing flexibility in the way in which you are writing your long-term contracts? So in case silicon costs keep larger for longer, you aren’t squeezed by that?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

I see we’ve got totally different preparations for a few of our clients. Among the clients, the module costs they’ve one thing form of linkage for the spot market polysilicons. Among the contracts are mounted.

Rajiv Chaudhri

However the ones which might be variable, are these going up as a % of complete contracts?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

Excuse me. Are you able to communicate once more?

Rajiv Chaudhri

The variety of contracts the place module pricing is variable primarily based on the spot worth of polysilicon, is that form of contract gaining in reputation proper now?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

Simply relying on totally different areas, totally different clients. So it is onerous to say, however some clients wish to — primarily based on their estimations, they’re extra pessimistic or optimistic for the polysilicon worth. So a few of our clients, they’re extra assured on the projections of polysilicon worth, they might wish to have the variable preparations with us.

Rajiv Chaudhri

OK. And a last query is on the N-type. You talked about that you’ve got about 16 gigawatts of N-type operational proper now. However you additionally talked about that the goal for capability for N-type cells on the finish of 2022 can be 16 gigawatts.

So I do not perceive. You are not growing the N-type cell capability in any respect this yr?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

The N-type is16 gigawatts. 16 gigawatts is getting on-line within the first quarter, however it’s within the ramping upstage. So by the top of this yr, we did not have a plan up to now to extend our recreation. So that’s — the N-type 16 gigawatts is new for ’22, however it’s actually in first quarter.

So that’s the reason once we gave the steering by the top of the yr, the N-type capability is 16.9 gigawatts.

Rajiv Chaudhri

So that you’re saying proper now, it isn’t 4 gigawatts 1 / 4?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

Sorry, let me clarify. We get 16 gigawatts N-type TOPCon cell capability on-line within the first quarter. The 16 gigawatts is annual capability and it is in a ramping upstage, and we anticipate the capability will attain to full capability by, I believe, by the top of second quarter. To date, we already have 16 gigawatt capability for the N-type.

Rajiv Chaudhri

So — however the purpose for finish of the yr can be 16 gigawatts N-type? Out of the 40-gigawatt cell capability, the goal is just 16 gigawatts N-type or did I learn that incorrect?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

You are proper. You are proper. As a result of final yr, we had solely, I believe, 24 gigawatts cell capability. The extra new 16 gigawatts this yr.

So get complete quantity 40 gigawatts.

Rajiv Chaudhri

OK. I am going to take it up later, Charlie. Thanks. Congratulations once more. 

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

Thanks. 

Operator

Our subsequent query comes from Tony Fei with Financial institution of China. Please go forward.

Tony FeiFinancial institution of China Worldwide — Analyst

Hey, thanks, administration. Thanks on your time. That is Tony Fei from BOCI. I’ve two questions.

First one can be a follow-up on the N-type merchandise. So I perceive the brand new purchasers are nonetheless ramping up, and you might not have the ultimate shade on the fee facet. However perhaps are you able to communicate of the form of by design. These are new N-type merchandise, they’re wafers, are there issues to issues are in comparison with the per product in order that they devour that poly?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

So, Tony, are you able to repeat your query? Relating to the N-type poly, you imply the wafers, N-type wafer?

Tony FeiFinancial institution of China Worldwide — Analyst

The wafer and the cell, their thickness. Are there issues which might be in comparison with their product modules, in order that they devour form of much less polysilicon? So it would assist in your manufacturing value facet?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

Yeah, you are proper. And we’ve got the benefit for the N-type, not solely the TOPCon cell, photo voltaic cell manufacturing, in addition to we’re doing the N-type wafer, N-type modules for the N-type wafer, it is — have benefit of the wafer proper, in comparison with the P-type. And we predict it will — from the — I believe that perspective N-type wafer may get some benefit from the consumption — much less consumption of the polysilicon.

Tony FeiFinancial institution of China Worldwide — Analyst

Acquired it. So that you simply mentioned that you’re not going so as to add new N-type capability this yr. So within the coming quarters, we see the premium of the N-type product is actually sufficient. So do you assume that you’re going to proceed to speculate sooner or later and early retire your present P-type cell capacities?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

For the following stage, the capability growth plan, we’re nonetheless evaluating. If we are going to — as an example, if we plan to speculate extra extra, as an example, photo voltaic cell capacities, it is 100%. It is a TOPCon N-type cell capability. However at this stage, we’re nonetheless within the analysis stage.

Tony FeiFinancial institution of China Worldwide — Analyst

OK, received it. Thanks. So my final query is round your product combine. So I suppose your DG cargo must be round 30% to 35% of the overall market cargo.

So on this yr, do you assume the share of DG merchandise must be larger than final yr? And the way does it assist your margins as a result of a few of the new DG gross sales must be coming from China market? So do you continue to see larger perhaps nonetheless shrinking gross sales bills on the worth?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

I believe within the ready remarks by Gener, and we talked about the DG roughly will enhance round 40% versus 30% to 35% and it’ll — we are going to focus not solely within the abroad markets, in addition to China DG markets.

Tony FeiFinancial institution of China Worldwide — Analyst

OK. So do you assume the DG — form of within the margin facet, do you assume the DG undertaking has larger than the common utility-scale merchandise?

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

Yeah. It is useful. DG, the ASP, the shopper sensitivities for the worth is extra, is healthier. So we anticipate to get extra larger margin and from the DG perspective.

Tony FeiFinancial institution of China Worldwide — Analyst

OK. Thanks lots, Charlie. That is all for me. 

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

Thanks. 

Operator

[Operator signoff]

Period: 60 minutes

Name members:

Stella WangInvestor Relations

Li Xiande

Gener MiaoChief Advertising Officer, JinkoSolar Holding Firm Restricted

Pan LiChief Monetary Officer, JinkoSolar Holding Firm Restricted

Brian LeeGoldman Sachs — Analyst

Charlie CaoChief Monetary Officer, JinkoSolar Firm Restricted

Philip ShenROTH Capital Companions — Analyst

Alan LauJefferies — Analyst

Rajiv Chaudhri

Tony FeiFinancial institution of China Worldwide — Analyst

Extra JKS evaluation

All earnings name transcripts

This text represents the opinion of the author, who could disagree with the “official” suggestion place of a Motley Idiot premium advisory service. We’re motley! Questioning an investing thesis – even one among our personal – helps us all assume critically about investing and make choices that assist us turn into smarter, happier, and richer.





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