JinkoSolar Holding Company (JKS 1.93%)
Q2 2022 Earnings Call
Aug 26, 2022, 8:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Hello, ladies and gentlemen. Thank you for standing by for JinkoSolar Holding Company Limited’s second quarter 2022 earnings conference call. [Operator instructions] I would like to now turn the meeting over to your host for today’s call, Ms. Stella Wang, JinkoSolar’s investor relations.
Please proceed, Stella. Over to you.
Stella Wang — Investor Relations
Thank you, operator, and to everyone for joining us today for JinkoSolar’s second quarter 2022 earnings conference call. The company’s results were released earlier today and available on the company’s IR website at www.jinkosolar.com, as well as on Newswire services. We have also provided a supplemental presentation for today’s earnings call, which can also be found on the IR website. On the call today from JinkoSolar are Mr.
Li Xiande, chairman of the board of directors and chief executive officer of JinkoSolar Holding Company Limited; Mr. Gener Miao, chief marketing officer of JinkoSolar Company Limited; Mr. Pan Li, chief financial officer of JinkoSolar Holding Company Limited; and Mr. Charlie Cao, chief financial officer of JinkoSolar Company Limited.
Mr. Li will discuss JinkoSolar’s business operations and the 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 all be available to answer your questions during 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 is now my pleasure to introduce Mr.
Li Xiande, chairman and CEO of JinkoSolar Holding. Mr. Li will speak in Mandarin, and I will translate his comments into English. Please go ahead, Mr.
Li.
Li Xiande — Chief Executive Officer, JinkoSolar Holding Company Limited
[Foreign language]
Stella Wang — Investor Relations
We had a good quarter and a difficult market condition. Total solar shipments in the second quarter were 10.5 gigawatts. Module shipments in the second quarter were 10.2 gigawatts, up roughly 27% sequentially. And the total revenues were $2.81 billion, up 27.6% sequentially.
These upstream costs continue to rise. We actively work to control internal costs through technical advancement and process improvement, which partially affects the impact of higher upstream costs on our profitability. Gross margin was 14.7%, relatively flat compared with the first quarter, excluding the impact of the convertible senior notes and the share-based compensation expenses. Adjusted net income in the second quarter was $55 million, improving sequentially.
Li Xiande — Chief Executive Officer, JinkoSolar Holding Company Limited
[Foreign language]
Stella Wang — Investor Relations
Followed by accelerated energy condition in several countries in the business, as well as the energy supply crisis caused by the Russia-Ukraine conflict. demand for solar products has exploded in many markets. According to the statistics and analysis of China’s customs export data by China’s exports of modules in the first half of the year reached 78.7 gigawatts, a year-over-year increase of 2%. Exports to Europe reached a total of 42.4 gigawatts of PV modules, a year-over-year increase of 137%.
Demand in the China market was also strong. During the first half, solar PV installations in China reached 30.9 gigawatts, a year-over-year increase of 136%. Given this better-than-expected growth in demand, released polysilicon production came up short and it was further aggravated by annual maintenance problems and power rationing and anti-pandemic restrictions in certain regions of China. As a result, polysilicon prices rose to continuously and reached a recent high of RMB 310 per kilogram.
PV module price is higher. Regular discussions with other clients indicated that some of them found higher module prices to negatively affect project yields, and, as a result, some demand slowed down. We believe polysilicon prices will continue to increase and reach their peak in the third quarter. Then as polysilicon production ramps up in the fourth quarter, polysilicon price increase is expected to moderate, driving a recovery of downstream demand.
Li Xiande — Chief Executive Officer, JinkoSolar Holding Company Limited
[Foreign language]
Stella Wang — Investor Relations
Recently, the local government of Sichuan province has imposed a provincewide power rationing measures and the production capacity of our manufacturing facilities in Sichuan province has been temporarily affected. We are currently unable to evaluate the extent to which our business operations. And the financial performance for full year 2022 and will be affected by the power rationing measures in Sichuan province, as it remains uncertain how long the power rationing measures will persist and when our Sichuan manufacturing facilities can resume full production. We are actively monitoring the situation and have implemented various measures to minimize the adverse impact from the power rationing of our business operations and financial performance, including, but not limited to having our other manufacturing facilities assume more production and actively communicating with the local government about the power supply related matters.
We also flexibly adjusted the module production volumes and assume as planned in order to meet delivery to our clients.
Li Xiande — Chief Executive Officer, JinkoSolar Holding Company Limited
[Foreign language]
Stella Wang — Investor Relations
In the second quarter, the proportion of large-size capacity increased sequentially, further improving our integrated structure. The 16 gigawatt of TOPCon cell capacity that started the production at the beginning of the year reached the full production at the end of the second quarter with a mass production efficiency of over 24.8% and yield rate integrated costs in line with our expectation. We recently started the production of an additional 8 gigawatts of N-type cell capacity in Hefei and commenced construction of another production project with 11 gigawatt of N-type cell capacity in Haining. The increase in our in-house high-efficiency capacity ratio will continuously improve our competitiveness.
Li Xiande — Chief Executive Officer, JinkoSolar Holding Company Limited
[Foreign language]
Stella Wang — Investor Relations
As an industry pioneer embracing the TOPCon technology, we have recently achieved key technology breakthroughs in the currently selected TOPCon technology roles that we believe we have created an entry barrier related to core process and technology with industry-leading mass production efficiency, yield rate, and cost levels. We believe TOPCon is currently the high-efficiency cell with the greatest value for commercialization, mass production in the post-pandemic era, and has relatively ample development opportunities. We will continue to maintain our leading position through technical iterations.
Li Xiande — Chief Executive Officer, JinkoSolar Holding Company Limited
[Foreign language]
Stella Wang — Investor Relations
Our N-type modules continue to be well received by global customers. And so far, we have high visibility in our order books. Compared with P-type products, N-type products command a competitive premium as a result of improved technical parameters and additional power generation gain. We are confident that we will complete our four-year N-type shipment goal.
In addition, considering the release of new capacity in 2023 and the increase in marketing penetration, we expect the proportion of N-type shipments to further increase.
Li Xiande — Chief Executive Officer, JinkoSolar Holding Company Limited
[Foreign language]
Stella Wang — Investor Relations
In view of the current and expected supply chain and market conditions, we have adjusted our capacity expansion phase for wafer cell and modules for the rest of this year. And as a result, we are currently expecting the annual production capacity for mono wafer cells and modules to reach 55 and 65 gigawatts, respectively, by the end of 2022.
Li Xiande — Chief Executive Officer, JinkoSolar Holding Company Limited
[Foreign language]
Stella Wang — Investor Relations
Before turning over to Gener, I would like to go over our guidance for the first quarter of 2022. We expected that the total shipments to be in the range of 9 to 10 gigawatts for the third quarter this year, and we reiterate our total shipments of 35 to 40 gigawatts for the full year of 2022.
Gener Miao — Chief Marketing Officer, JinkoSolar Holding Company Limited
Thank you, Mr. Li. Total solar shipment in the second quarter was 10.5 gigawatts, of which over 97% were module shipments, up nearly 27% quarter over quarter and double year over year. Since the Russia-Ukraine conflict, global energy transformation accelerated and showed strong growth momentum, especially in Europe.
In the second quarter, our shipments to European market grew steadily and the proportion of shipments in Europe remains high, reaching 25% to 30% range. In China, the distributed generation business demonstrated strong momentum. Newly added installation in China in the first half grew remarkably by 136% year over year. In second quarter, our shipment to the Chinese market grew exceptionally year over year, more than…
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