JinkoSolar Holdings Co Ltd

JKS Details

JinkoSolar (NYSE: JKS) is a global leader in the solar industry and it is engaged in distributing its solar products and sells its solutions and services to a diversified international utility, commercial and residential customer base in China, the United States, Japan, Germany, the United Kingdom, Chile, South Africa, India, Mexico, Brazil, the United Arab Emirates, Italy, Spain, France, Belgium, and other countries and regions. The company has a market capitalization of ~$2.1 billion as on March 15, 2021.

Results Performance (Quarter Third Ended 30 September 2020)

The company’s revenue for the three-month period stood at $1,292 million, up 17.2% on $1,047 million in the previous corresponding period (pcp). EBITDA for the period stood at $144 million, up 36.8% on $100 million in the pcp. Operating income for the period stood at $80 million, up 27.9% on $89 million in the pcp. Cash and restricted cash at the end of the period stood at $943 million, as compared to $580 million in the pcp. Net debt stood at $1,592 million, as compared to $1,129 million in the pcp. The result reflects on a growing trend of industry consolidation and strong global solar demand, benefiting the company on being the key player in the industry.

Key Data (Source: Company Reports)

Outlook:

A challenging macro-economic environment has accelerated the trend of industry consolidation which might contribute to an increase in market share for the company from 12% in 2019 to 15% in 2020. The company has recently completed the task of technological transformation towards a high-efficiency work portfolio. Further, there is strong future solar demand prospect from major economies such as China and the US which will eventually be contributing to increased sales and profitability for the company.

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

Stock Recommendation:

The company successfully maintained stable margin performance despite the recent supply shortage of major raw materials underpinned by stringent cost control and resilient supply management.

We have applied EV/EBITDA based relative valuation (on an illustrative basis) and the target price reflects a rise of low double-digit (in % terms). We have applied a slight premium to EV/EBITDA Multiple (NTM) (Peer Average) considering the robust global solar demand as well as policy support from the major economies.

Considering the aforesaid facts, we give a “Buy” recommendation on the stock at the current market price of US$46.79 per share, down by 5.25% on March 15, 2021.

JKS Daily Technical Chart (Source: Refinitiv (Thomson Reuters))

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