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A Look at JinkoSolar's Earnings

Jay Yao
November 20, 2013

JinkoSolar (NYSE: JKS) released earnings on November 18 and soundly beat expectations.

Year to date, JinkoSolar shares are up an astounding 834%. During the same time period, fellow Chinese solar producers Canadian Solar (NASDAQ: CSIQ)  and Trina Solar (NYSE: TSL) are up 1,330% and 535% respectively.

One reason for the spectacular rally is due to the fact that most solar stocks have come off depressed stock prices. The low starting prices were caused by substantial industry oversupply and falling average selling prices. 

With most third quarter earning reports out, it seems that industry oversupply and falling average selling prices are now a thing of the past.

Leading Chinese solar companies JinkoSolar, Canadian Solar, and Trina Solar are all seeing growing margins and increasing visibility. 

The third quarter numbers
JinkoSolar earnings were $1.44 per share with revenues of $320.7 million. This beat expectations of $0.45 earnings per share and $302.2 million in revenue.

Revenue was up 11.2% sequentially and up 47.6% year over year.

The company shipped 518.9 megawatts, which was a 6.1% sequential increase and a 54.8% year-over-year increase. 

Guidance was upbeat, with 2013 module shipment guidance now at 1.7GW-1.8GW from a previous guidance of 1.5GW-1.7GW.

The conference call
JinkoSolar has an extremely low cost of production at $0.50 per watt.   

The low cost per watt allows the company strong margins. One takeaway from the conference call was that those margins are increasing. Third quarter gross margins increased to 22.3% from 17.7% in Q2 and 5.8% in the third quarter of 2012.

Management cited increasing solar module average selling prices, or ASP, as the primary reason for improving margins.

For Q3, JinkoSolar's solar module ASP was $0.63 per watt compared to $0.60 per watt in Q2.

In the conference call, management predicted that solar module ASP would continue to trend higher meaning that JinkoSolar superb gross margins may continue rising.

Another point of note is that JinkoSolar's pipeline now has 700 megawatts in utility-scale projects and 400 megawatts for distributed systems. The margins in the downstream bus