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01/11 03:24
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights several concerns: financial instability in the industry, regulatory pressures, increased debt levels, and declining gross margins. The Q&A reveals management's uncertainty about future shipments and avoidance of direct answers, further adding to investor unease. Despite a strategic partnership announcement, the weak financial metrics, particularly the significant YoY revenue drop and gross margin decline, outweigh the positives. Given the market cap of $1.09 billion, these factors suggest a negative stock price movement of -2% to -8% over the next two weeks.
Total Revenue $3.5 billion, up 2% sequentially, down 23% year-over-year. The sequential increase was mainly due to the increase in module shipments, while the year-on-year decrease was due to a decrease in average selling price of solar modules.
Gross Margin 5.7%, compared to 11.1% in the second quarter and 19.3% in the third quarter last year. The sequential increase was mainly due to the increase in the average selling price of modules, while the year-on-year decrease was due to the decrease in ASP of modules.
Total Operating Expenses $539 million, down about 1% sequentially, up 20% year-over-year. The year-on-year increase was mainly due to the increase in shipping costs as the shipment of solar modules increased and an increase in impairment of loan-leave assets.
Net Income $3.2 million in the third quarter, adjusted net income attributed to ordinary shareholders was $14.8 million. The adjusted net income excludes impacts from changes in fair value of convertible notes, share-based compensation expenses, and impairment of capacity utilization.
Cash and Cash Equivalents $3.2 billion, compared to about $2 billion in the second quarter.
Total Debt $5.23 billion, compared to $3.86 billion in the second quarter.
Net Debt $2.05 billion, compared to $1.95 billion in the second quarter.
Accounts Receivable Turnover Days 98 days, compared to 89 days in the second quarter.
Inventory Turnover Days 66 days, compared to 82 days in the second quarter.
CapEx Estimated around RMB9 billion for the full year 2024.
Operating Cash Flow Roughly RMB5 billion, with free cash flow being negative RMB4 billion.
New Product Launch: Launched the next generation top-con technology solar panel named the Tiger Neo 3.0, manufactured in a zero-carbon factory.
Market Expansion: Shipments to the U.S. market increased significantly quarter-over-quarter, accounting for roughly 15% to 18% of total shipments in Q3.
Market Positioning: Maintained global leading position in module shipments, with around 60% of modules shipped overseas.
Operational Efficiency: Gross margin improved to 15.7% and net income was $3.2 million, significantly improved sequentially.
Cost Management: Optimized integrated costs through technical advancement and supply chain management.
Production Efficiency: Mass-produced efficiency for N-type TOPCon cells improved to approximately 26.2%.
Strategic Shift: Focus on balancing market structure and profits, with expectations of module share between 90 gigawatts to 100 gigawatts for 2024.
R&D Investment: Continued investment in R&D and gradual adoption of new technologies into mass production.
Supply and Demand Imbalance: Imbalance between supply and demand led to continuous price decline in the end market, causing losses across the industrial chain.
Bankruptcy Risks: Companies with insufficient cash flow and poor risk resistance have gone bankrupt, reorganized, or been acquired.
Regulatory Risks: Potential changes in U.S. trade policies and tariffs, particularly regarding ADCBD decisions, pose risks to market stability.
Price Volatility: Demand volatility in overseas markets has led to decreased module exports and potential price declines.
Economic Factors: Economic downturns and geopolitical tensions, such as those in the Middle East, have impacted logistics and shipping costs.
Operational Risks: Increased shipping costs and operational expenses due to rising logistics costs and impairment of loan-leave assets.
Market Competition: Competitive pressures from other manufacturers and the need for self-discipline in pricing strategies may affect profitability.
Cash Flow Management: The company emphasizes the importance of effective cash flow management to navigate through market cycles.
N-type TOPCon Technology: JinkoSolar achieved a mass-produced efficiency for N-type TOPCon cells of approximately 26.2% and continues to invest in R&D for technology upgrades.
Smart Production Capabilities: The company built the Jinko 360 Smart Platform to enhance digital transformation and improve production efficiency.
ESG Management: JinkoSolar has completed third-party ESG audits for most key suppliers and has improved ESG management in its supply chain.
New Product Launch: Launched the next generation Tiger Neo 3.0 solar panel, manufactured in a zero-carbon factory.
Market Share and Shipments: Total shipments were 25.9 gigawatts in Q3, with expectations of 90 to 100 gigawatts for 2024.
Revenue Expectations: Total revenue for Q3 was approximately $3.5 billion, with a forecast for Q4 module shipments between 22.3 gigawatts to 32.3 gigawatts.
Gross Margin: Gross margin was reported at 15.7% for Q3, with expectations of stabilization in pricing.
CapEx: Estimated CapEx for the full year 2024 is around RMB 9 billion.
Operating Cash Flow: Estimated operating cash flow for the full year is roughly RMB 5 billion.
Debt Levels: Total debt at the end of Q3 was $5.23 billion, with net debt at $2.05 billion.
Net Income: Net income attributed to ordinary shareholders was $3.2 million in Q3.
Adjusted Net Income: Adjusted net income attributed to ordinary shareholders was $14.8 million.
Cash and Cash Equivalents: At the end of Q3, cash and cash equivalents were approximately $3.2 billion.
Total Debt: Total debt was $5.23 billion at the end of Q3.
Free Cash Flow: Free cash flow for the full year 2024 is estimated to be negative RMB 4 billion.
CapEx: CapEx for the full year 2024 is estimated to be around RMB 9 billion.
GDR Proceeds: The GDR announced is expected to raise approximately RMB 4.5 billion.
Dilution from GDR: Dilution from the GDR is expected to be around 5% to 6%.
The earnings call reveals strong financial metrics, optimistic guidance, and strategic initiatives like reshaping the supply chain and exploring new markets. The company plans significant share buybacks, which is generally positive for stock prices. Despite some uncertainties and management's reluctance to provide specific future pricing, the overall sentiment is positive with expected growth in ESS demand and improved margins.
The earnings call reveals several concerning factors: a significant EPS miss, a 40% revenue drop, declining gross margins, and increased net debt. Although cash reserves have grown, the operating loss margin widened significantly. The Q&A section highlights uncertainties in U.S. market operations and vague responses on key strategic issues, reflecting management's struggle with current challenges. Despite a positive note on cash and a slight improvement in gross margins expected, these are overshadowed by the broader negative financial performance and strategic uncertainties, leading to a negative sentiment.
The earnings call highlighted several negative factors: a significant revenue drop, increased debt, and a high operating loss margin. The lack of a shareholder return plan further dampens sentiment. The Q&A session revealed uncertainties in U.S. manufacturing plans and unclear responses on buyback timing, adding to concerns. Despite improved cash reserves, these issues, coupled with weak guidance on margins, suggest a likely negative stock reaction. The market cap indicates a small-cap stock, which may amplify the negative response.
The earnings call reveals significant financial challenges: a 37% revenue drop, a drastic decline in net income, and increased debt levels. The gross margin and operating profit margin have sharply decreased, raising concerns about profitability. Although there are some operational efficiencies, the lack of clear guidance on U.S. shipments and management's vague responses in the Q&A add uncertainty. The absence of a current buyback plan, despite future intentions, further weighs negatively. Given the small-cap nature of the stock, these factors suggest a negative stock price reaction in the short term.
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