Shares of solar manufacturer JinkoSolar Holdings (NYSE:JKS) jumped as much as 19.2% in early trading Tuesday, after the company reported third-quarter 2019 results. Shares ended the day up 10.6%, after trading steady for most of the afternoon.
Total shipments were down 1.8% to 3,386 megawatts (MW) in the quarter, but revenue was up 8.2% to $1.05 billion. Gross margin was also up from 14.9% a year ago to 21.3%, driving net income of $50.9 million for the quarter.
The financial improvement has been driven by the upgrade of equipment to mono wafer capacity, which is expected to drive nearly 100% mono-based solar module shipments in 2020. Higher-efficiency products are commanding higher prices, and that's what's leading to better results.
Solar manufacturers see ups and downs in their performance depending on how commodity component and panel prices trend, and last quarter the trends worked in JinkoSolar's favor. The only worry investors should have is that other manufacturers are also upgrading capacity to produce mono wafers and mono PERC solar panels, which are becoming the industry standard. This could eventually put pressure on pricing and margins, eating into any surprise profit that investors saw today.