JinkoSolar Holding Co. Ltd.

JinkoSolar Holding Co., Ltd. (NYSE: JKS) is one of the leading as well as most innovative solar module manufacturers in the world.

Q1FY21 Result Performance (For the Quarter Ended 31 March 2021)

The company has reported quarterly shipments of 5,354 MW (4,562 MW for solar modules, 792 MW for cells and wafers). Notably, its solar module shipments increased by 33.7% YoY. However, the total revenues reduced by 6.4% YoY to RMB7.94 billion (US$1.21 billion). Finally, net income reduced by 21.7% YoY to RMB221.1 million (US$33.7 million).

Financial Snapshot (Source: Company Report)

Filed Application for IPO

The company, on 28 June 2021, declared that its principal operating subsidiary, Jinko Solar Co. Ltd. ("Jiangxi Jinko"), has submitted the application documents for a potential initial public offering and listing of the shares. In the month of September 2020, JinkoSolar made an announcement about the intention to list the shares of Jiangxi Jinko on Shanghai Stock Exchange's Sci-Tech innovation board (the "STAR Market").

The proceeds would be utilised for: 1) Construction of the company's production lines in Haining for 7.5 GW high efficiency solar cells as well as 5 GW high efficiency solar modules. The total capital expenditure is anticipated to be ~RMB5.6 Bn and Jiangxi Jinko intends to allocate ~RMB4.0 Bn for this project from the proceeds, 2) Construction of the company's R&D center in Haining. The total capital expenditure is anticipated to be ~RMB749.8 Mn and Jiangxi Jinko intends to allocate ~RMB500.0 Mn from the proceeds and 3) Additional working capital of ~RMB1.5 billion.

Recent Update

JKS announced that its holding subsidiary, Shangrao JinkoSolar Industry Development Co., Ltd. intends to deploy RMB315 Mn of the monetary capital in order to increase capital as well as shares in Inner Mongolia Xinte Silicon Materials Co., Ltd., a wholly-owned subsidiary of Xinte Energy Co., Ltd.

Outlook

The company has guided of achieving total shipments between 5.1 GW to 5.3 GW (solar module shipments to stay in the range of 4.0 GW to 4.2 GW) in Q2FY21. Further, it expects total revenue to remain between US$1.2 billion to US$1.25 billion in Q2FY21 and also estimates gross margin to be between 12% and 15%.

For FY21, it projects of achieving total shipments (including solar modules, cells and wafers) in the range of 25 GW to 30 GW.

Key Risks

Its growth plans and profitability hinges on the demand for and the prices of solar power products and the development of the photovoltaic technologies. Also, shortage or disruption of the electricity supply could adversely impact the business.

Valuation Methodology: EV/EBITDA Based Relative Valuation (Illustrative)

Technical Chart:

Weekly Chart

Note: The yellow color line in the chart shows the trend line and the purple color line represents RSI (14-period).

JKS prices are trading in a symmetrical triangle pattern on a weekly chart. Prices have witnessed significant rally in the ongoing week. Prices are now finding stiff resistance at the upper band of the symmetrical triangle pattern that indicates that prices might take downward correction from the resistance levels. RSI (14-period) is hovering near to ~57 levels that indicates positive price momentum for the stock. Immediate support levels are $43.71 and $37.80 while immediate resistance levels are $56.55 and $76.47.

Stock Recommendation

The stock of the company rose by ~39.9% in 9 months and by ~36.1% in 3 months. It has made a 52-week low and high of $17.03 and $90.2, respectively.

We have applied EV/EBITDA multiple based relative valuation (on an illustrative basis) and the target price reflects a fall of low double-digit (in % terms). We have applied a slight discount to EV/EBITDA Multiple (NTM) (Peer Average) considering the risks associated as well as lower ROE and ROIC.

Considering the aforementioned factors and the associated business risks, we recommend a ‘Sell’ rating on the stock at the current market price of $52.85, up by 22.91% on 28^th June 2021.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine do not hold interests in any of the securities or other financial products covered on the Kalkine website.