Shares of solar manufacturer JinkoSolar Holding Co (JKS -1.54%) jumped as much as 24.9% in trading on Monday after announcing the application for an IPO of one of its subsidiaries. Shares were still up 22.4% at 1:20 p.m. EDT.
JinkoSolar Holding announced that a subsidiary called Jinko Solar Co, also known as Jiangxi Jinko, has submitted an application for an initial public offering (IPO) on China's STAR market. The company plans to sell up to 2.67 billion shares, or up to 25% of its shares outstanding. Prior to the IPO, JinkoSolar Holding owned 73.28% of the company and will hold 54.96% of the company if it sells 2.67 billion shares.
Proceeds of the IPO will be used to build additional production lines, including 7.5 gigawatts (GW) of high-efficiency solar cells and 5 GW of high-efficiency solar modules. The company also plans to build an R&D center in Hianing.
This offering could help monetize part of JinkoSolar's supply chain and bring a new funding source for the company. But what the value of the company will be remains unknown, so investors will want to see how the market values the stock.
Today's move could also have some momentum from JinkoSolar's earnings report on Friday, which showed a 15.7% decline in revenue to $1.21 billion and a net loss of $33.7 million per share. But investors were focused on the fact that rising prices of polysilicon, a key input, have started to stabilize, which should help demand and margins long term. If you look hard enough, solar market financials could improve in the coming years, although the recovery from the pandemic and high commodity costs that have resulted could hamper operations for some time. And solar energy stocks could be volatile as a result.