SHANGRAO, China : JinkoSolar Holding Co., Ltd. (“JinkoSolar” or the “Company”) (NYSE: JKS), one of the largest and most innovative solar module manufacturers in the world, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2021.
Fourth Quarter and Full Year 2021 Business Highlights
- Despite supply chain challenges in the fourth quarter of 2021, we achieved significant growth in both shipments and revenues compared to the third quarter of 2021.
- The proportion of shipments in the Chinese market increased to approximately 34% in the fourth quarter of 2021. We actively participated in the distribution market while enhancing our competitiveness in the utility sector.
- The mass production efficiency of approximately 900MW N-type Topcon Cells in our Haining production facility has reached 24.5% in the fourth quarter of 2021, with the yield rate close to that of the passivated emitter rear cell (“PERC”).
- The next-generation N-type Ultra-efficiency Tiger Neo Module with better power generation performance remains popular in the market since its launch in the fourth quarter of 2021, giving the Company a competitive advantage with premium pricing.
- Jinko Solar Co., Ltd. (“Jiangxi Jinko”), the Company’s principal operating subsidiary, completed its initial public offering (“IPO”) process in the first quarter of 2022. Access to this new source of growth capital, combined with the Company’s competitiveness accumulated over the years, will further strengthen its leading position in the industry.
Fourth Quarter 2021 Operational and Financial Highlights
- Quarterly shipments were 9,693 MW (9,024 MW for solar modules, 669 MW for cells and wafers), total shipments up 94.1% sequentially, and up 67.9% year over year.
- Total revenues were RMB16.39 billion (US$2.57 billion), up 91.2% sequentially and up 73.9% year over year. The sequential increase was mainly attributable to an increase in the shipment of solar modules.
- Gross profit was RMB2.64 billion (US$414.9 million), up 104.0% sequentially and up 75.5% year over year.
- Gross margin was 16.1%, compared with 15.1% in Q3 2021 and 16.0% in Q4 2020.
- Net income was RMB239.5 million (US$37.6 million), compared with RMB194.2 million sequentially and net loss RMB377.0 million year over year.
- Non-GAAP net income was RMB218.6 million (US$34.3 million), up 12.8 times sequentially and up 5.5 times year over year.
- Basic and diluted earnings per ordinary share were RMB1.26 (US$0.20) and RMB1.04 (US$0.16), respectively. This translates into basic and diluted earnings per ADS of RMB5.02 (US$0.79) and RMB4.16 (US$0.65), respectively.
- Non-GAAP basic and diluted earnings per share were RMB1.15 (US$0.18) and RMB1.06 (US$0.17), respectively. Non-GAAP basic and diluted earnings per ADS were RMB4.58 (US$0.72) and RMB4.25 (US$0.67), respectively.
Full Year 2021 Operational and Financial Highlights
- Annual shipments were 25,242 MW (including 22,233 MW for solar modules), up 18.4% year over year for solar modules shipments.
- Total revenues were RMB40.83 billion (US$6.41 billion), up 16.2% year over year.
- Gross profit was RMB6.66 billion (US$1.04 billion), up 7.9% year over year (or RMB6.66 billion, up 10.7% year over year[1] if excluding the reversal benefit of the Countervailing Duty (“CVD”) and Anti-dumping Duty (“ADD”)).
- Gross margin of 16.3%, compared with 17.6% in full year of 2020 (or 16.3% compared with 17.1% in full year 2020 if excluding the reversal benefit of CVD and ADD).
- Income from operations of RMB1.10 billion (US$173.0 million), down 38.2% year over year (or RMB1.10 billion down 32.2% if excluding the reversal benefit of CVD and ADD).
- Net income of RMB721.0 million (US$113.1 million), up 2.1 times year over year.
- Non-GAAP net income of RMB558.4 million (US$87.6 million), down 41.7% year over year.
Mr. Xiande Li, JinkoSolar’s Chairman of the Board of Directors and Chief Executive Officer, commented, “We were very pleased to close a very challenging year of 2021 with excellent results. We were able to swiftly respond to supply chain volatility and logistic challenges thanks to our competitive advantages in supply chain management and global network. We continued to improve our in-house production capabilities and further strengthened our global supply chain to reduce costs, while increasing resilience to risks by leveraging our global network. As a result, our shipments, revenues, and profitability grew significantly in the fourth quarter of 2021 compared to the previous quarter. In the fourth quarter of 2021,our gross profit doubled, operating profit quadrupled and non-GAAP net profit increased by approximately 13 times sequentially.”
“In the first quarter of 2022, our principal operating subsidiary, Jiangxi Jinko successfully listed on the Shanghai Stock Exchange Science and Technology Innovation Board, raising RMB10 billion. We believe this historic milestone will create greater momentum for the advancement of our state-of-the-art technology and business expansion.
We are optimistic about the growth prospects in distributed generation markets and will continue to grow our brand influence in these markets. In China, as installation capacity reached 55 GW for the full year of 2021, distributed generation made up more than half of newly-added installations due to its higher returns.”
In light of the industry transition from P-type to N-type, and growing demand for higher efficiency products, we have launched the next-generation of N-type ultra-efficiency Tiger Neo modules. These modules have received worldwide acclaim for better power generation performance. We will reinforce the leadership position of our N-Type modules in both domestic and overseas markets. We have roughly 16 GW of N-type cell capacity operational in the first quarter of 2022 and currently are steadily ramping up our production capacity. With integrated capacity structure constantly improving, our integrated cost is expected to further decrease.
“In Vietnam, our 7GW monocrystalline silicon wafer plant commenced production in the first quarter of 2022. This nearly 7 GW of integrated mono wafer-cell-module manufacturing capacity overseas is significantly improving our global supply chain advantage. At the same time, we have been strategically cooperating with our supply chain partners to combine our complementary resources and build integrated industrial ecosystems. All these advantages will allow us to mitigate raw material shortages and respond to production challenges in the long term, further strengthen the competitiveness of our core products, and bring greater value to our global customers with high-quality, reliable modules and premium services.”
Fourth Quarter 2021 Financial Results
Total Revenues
Total revenues in the fourth quarter of 2021 were RMB16.39 billion (US$2.57 billion), an increase of 91.2% from RMB8.57 billion in the third quarter of 2021 and an increase of 73.9% from RMB9.42 billion in the fourth quarter of 2020. The sequential and year-over-year increases were mainly attributable to an increase in the shipment of solar modules, especially in the domestic market attributable to China’s favorable policies on renewable energy
Gross Profit and Gross Margin
Gross profit in the fourth quarter of 2021 was RMB2.64 billion (US$414.9 million), compared with RMB1.30 billion in the third quarter of 2021 and RMB1.51 billion in the fourth quarter of 2020 (or RMB1.35 billion if excluding the impact from the reversal benefit of CVD and ADD).
Gross margin was 16.1% in the fourth quarter of 2021, compared with 15.1% in the third quarter of 2021 and 16.0% in the fourth quarter of 2020 (or 14.3% if excluding the impact from the reversal benefit of CVD and ADD). The sequential and year-over-year increases were mainly attributable to (i) a continued reduction of integrated production cost resulting from the Company’s industry-leading cost structure, and (ii) an increase in the average selling price of solar modules.
Income from Operations and Operating Margin
Income from operations in the fourth quarter of 2021 was RMB485.8 million (US$76.2 million), compared with RMB111.2 million in the third quarter of 2021 and RMB71.6 million in the fourth quarter of 2020 (or loss from operations of RMB88.4 million if excluding the impact from the reversal benefit of CVD and ADD).
Operating profit margin was 3.0% in the fourth quarter of 2021, compared with 1.3% in the third quarter of 2021 and 0.8% (or operating loss margin of 0.9% if excluding the impact from the reversal benefit of CVD and ADD) in the fourth quarter of 2020.
Total operating expenses in the fourth quarter of 2021 were RMB2.16 billion (US$338.7 million), an increase of 82.2% from RMB1.18 billion in the third quarter of 2021 and an increase of 50.4% from RMB1.44 billion in the fourth quarter of 2020. The sequential and year-over-year increases were mainly attributable to increases in shipping costs of solar modules in the fourth quarter of 2021.
Total operating expenses accounted for 13.2% of total revenues in the fourth quarter of 2021, compared to 13.8% in the third quarter of 2021 and 15.2% in the fourth quarter of 2020.
Interest Expense, Net
Net interest expense in the fourth quarter of 2021 was RMB144.4 million (US$22.7 million), a decrease of 12.8% from RMB165.6 million in the third quarter of 2021 and an increase of 25.4% from RMB115.2 million in the fourth quarter of 2020. The sequential decrease was mainly due to a decrease of bank acceptance notes discount expense. The year-over-year increase was mainly due to an increase in the Company’s interest-bearing debts.
Subsidy Income
Subsidy income in the fourth quarter of 2021 was RMB109.6 million (US$17.2 million), compared with RMB63.5 million in the third quarter of 2021 and RMB109.7 million in the fourth quarter of 2020. The sequential increase was mainly attributable to an increase in the cash receipt of subsidies from local governments in China which are non-recurring, not refundable and with no conditions.
Exchange Loss and Change in Fair Value of Foreign Exchange Derivatives
The Company recorded a net exchange loss (including change in fair value of foreign exchange derivatives) of RMB10.5 million (US$1.6 million) in the fourth quarter of 2021, compared to a net exchange loss of RMB6.2 million in the third quarter of 2021 and a net exchange loss of RMB47.9 million in the fourth quarter of 2020. The net exchange loss was mainly due to the exchange rate depreciation of the US dollars against the RMB in the fourth quarter of 2021.
Change in Fair Value of Convertible Senior Notes and Call Option
The Company issued US$85.0 million of 4.5% convertible senior notes due 2024 (the “Notes”) in May 2019 and has elected to measure the Notes at fair value derived by valuation model, i.e. Binomial Model. The Company recognized a gain from a change in fair value of the Notes of RMB9.5 million (US$1.5 million) in the fourth quarter of 2021, compared to a gain of RMB239.0 million in the third quarter of 2021 and a loss of RMB685.4 million in the fourth quarter of 2020. The change was primarily due to an increase in the Company’s stock price in the fourth quarter of 2021.
Concurrent with the issuance of the Notes in May 2019, the Company entered into a call option transaction with an affiliate of Credit Suisse Securities (USA) LLC. The Company accounted for the call option transaction as freestanding derivative assets in its consolidated balance sheets, which is marked to market during each reporting period. The Company recorded nil in the fourth quarter of 2021, compared to a loss of RMB38.2 million in the third quarter of 2021 and a gain of RMB257.8 million in the fourth quarter of 2020. The change was primarily due to the Company exercised all the remaining call option using cash settlement in the third quarter of 2021.
Equity in Earnings/(loss)of Affiliated Companies
The Company indirectly holds a 20% equity interest in Sweihan PV Power Company P.J.S.C, a developer and operator of solar power projects in Dubai, and accounts for its investment using the equity method. The Company also holds a 30% equity interest in Jiangsu Jinko-Tiansheng Co., Ltd, which processes and assembles PV modules as an OEM manufacturer, and accounts for its investments using the equity method. The Company recorded equity in earnings of affiliated companies of RMB3.5 million (US$0.5 million) in the fourth quarter of 2021, compared with earnings of RMB13.2 million in the third quarter of 2021 and earnings of RMB19.9 million in the fourth quarter of 2020. The gain primarily arose from interest rate swap recorded by the equity affiliate due to an increase in long-term interest rates in the fourth quarter of 2021. Hedge accounting was not applied for the derivative.
Income Tax Expense/(Benefit)
The Company recorded an income tax expense of RMB126.9 million (US$19.9 million) in the fourth quarter of 2021, compared with an income tax expense of RMB22.0 million in the third quarter of 2021 and an income tax benefit of RMB23.1 million in the fourth quarter of 2020. The sequential increase of tax expense was mainly due to higher profit generated compared to the third quarter of 2021.
Net Income/(loss) and Earnings/(loss) per Share
Net income attributable to the Company’s ordinary shareholders was RMB239.5 million (US$37.6 million) in the fourth quarter of 2021, compared with net income attributable to the Company’s ordinary shareholders of RMB194.2 million in the third quarter of 2021 and net loss attributable to the Company’s ordinary shareholders of RMB377.0 million in the fourth quarter of 2020.
Net income attributable to non-controlling interests increased in the fourth quarter of 2021 mainly attributable to higher profit generated from the Company’s certain subsidiary of which non-controlling shareholders own equity interests.
Basic and diluted earnings/(loss) per ordinary share were RMB1.26 (US$0.20) and RMB1.04 (US$0.16), respectively, during the fourth quarter of 2021, compared to RMB1.02 and RMB(0.12), respectively, in the third quarter of 2021, and RMB(2.08) and RMB(3.60), respectively, in the fourth quarter of 2020. As each ADS represents four ordinary shares, this translates into basic and diluted earning/(loss) per ADS of RMB5.02 (US$0.79) and RMB4.16 (US$0.65), respectively in the fourth quarter of 2021; RMB4.07 and RMB(0.49), respectively, in the third quarter of 2021; and RMB (8.32) and RMB(14.40), respectively, in the fourth quarter of 2020. The difference between basic earning and diluted loss per share in the fourth quarter of 2021 was mainly due to the dilutive impact of convertible senior notes.
Non-GAAP net income attributable to the Company’s ordinary shareholders in the fourth quarter of 2021 was RMB218.6 million (US$34.3 million), compared with RMB15.9 million in the third quarter of 2021 and RMB33.4 million in the fourth quarter of 2020.
Non-GAAP basic and diluted earnings per ordinary share were RMB1.15 (US$0.18) and RMB1.06 (US$0.17) during the fourth quarter of 2021; both RMB0.08 in the third quarter of 2021 and both RMB0.19 in the fourth quarter of 2020. This translates into non-GAAP basic and diluted earnings per ADS of RMB4.58 (US$0.72) and RMB4.25(US$0.67), respectively, in the fourth quarter of 2021; RMB0.33 and RMB0.31, respectively, in the third quarter of 2021, and both RMB0.74 in the fourth quarter of 2020.
Financial Position
As of December 31, 2021, the Company had RMB8.92 billion (US$1.40 billion) in cash and cash equivalents and restricted cash, compared with RMB8.07 billion as of December 31, 2020.
As of December 31, 2021, the Company’s accounts receivables due from third parties were RMB7.47 billion (US$1.17 billion), compared with RMB 4.53 billion as of December 31, 2020.
As of December 31, 2021, the Company’s inventories were RMB13.25 billion (US$2.08 billion), compared with RMB8.38 billion as of December 31, 2020.
As of December 31, 2021, the Company’s total interest-bearing debts were RMB25.63 billion (US$4.02 billion), of which RMB419.0 million(US$65.8 million) was related to the Company’s overseas downstream solar projects, compared with RMB18.28 billion, of which RMB748.8 million was related to the Company’s overseas downstream solar projects as of December 31, 2020.
As of December 31, 2021, the Company’s Investments in equity securities were RMB 95.0 million (US$14.9 million), including minority equity investments in two equipment manufacturers of solar modules and N-Type cells.
Full Year 2021 Financial Results
Total Revenues
Total revenues for full year 2021 were RMB40.83 billion (US$6.41 billion), an increase of 16.2% from RMB35.13 billion for full year 2020. The increase in total revenues was mainly attributable to an increase in the shipment of solar modules which was mainly attributable to China’s favorable policies on renewable energy and the growth of global market demand.
Gross Profit and Gross Margin
Gross profit for full year 2021 was RMB6.66 billion (US$1.04 billion), an increase of 7.9% from RMB6.17 billion for full year 2020. The year-over-year increase in gross profit was mainly attributable to (i) an increase in the shipment of solar modules in 2021, and (ii) the continued reduction of integrated production costs resulting from the Company’s industry-leading integrated cost structure.
Gross margin was 16.3% for the full year 2021, compared with 17.6% for the full year 2020 (17.1% if excluding the impact from the reversal benefit of CVD and ADD). The year-over-year decrease was mainly attributable to the rising cost of raw materials.
Income from Operations and Operating Margin
Income from operations for full year 2021 was RMB1.10 billion (US$173.0 million), compared with RMB1.78 billion for full year 2020. Operating margin for full year 2021 was 2.7%, compared with 5.1% for full year 2020.
Total operating expenses for full year 2021 were RMB5.56 billion (US$871.8 million), an increase of 26.6% from RMB4.39 billion for full year 2020. As a percentage of total revenues, operating expenses accounted for 13.6% for full year 2021, compared with 12.5% for full year 2020. The increase in total operating expenses was primarily due to (i) an increase in shipping cost, (ii) an increase in disposal loss on property, plant and equipment as a result of the Company’s upgrade of production equipment, and (iii) an increase in impairment loss on property, plant and equipment.
Interest Expense, Net
Net interest expense for full year 2021 was RMB624.0 million (US$97.9 million), an increase of 35.9% from RMB459.2 million for full year 2020. The increase was mainly due to an increase in the interest-bearing debts.
Subsidy Income
Subsidy income for full year 2021 was RMB465.7million (US$73.1 million), compared with RMB192.0 million for full year 2020. The year over year increase was mainly attributable to an increase in the cash receipt of subsidies from local governments in China which are non-recurring, not refundable and with no conditions.
Exchange Loss and Change in Fair Value of Foreign Exchange Derivatives
The Company recorded a net exchange loss (including change in fair value of foreign exchange derivatives) of RMB47.8 million (US$7.5 million) for full year 2021 due primarily to depreciation of US dollars against RMB(exchange rate of U.S. dollars against RMB dropped from 6.5249 to 6.3757). The Company recorded a net exchange loss of RMB148.9 million for full year 2020. With the rapid increase in overseas orders, the Company increased its foreign currency hedge ratio to hedge against anticipated cash flow denominated in U.S. dollars over the next six months.
Change in Fair Value of Interest Rate Swap
The Company entered into Interest Rate Swap agreements with several banks for the purpose of reducing interest rate risk exposure. The Company recorded nil in change in fair value of the Interest Rate Swap agreements for full year 2021, compared to a loss of RMB78.9 million for full year 2020. The company applied hedge accounting for certain of its interest swap arrangement and recorded related change in fair value in other comprehensive income in 2021.
Change in Fair Value of Convertible Senior Notes and Call Option
The Company issued the Notes in May 2019 and has elected to measure them at fair value derived by valuation model, i.e. Binomial Model. The Company recognized a gain from a change in fair value of the Notes of RMB327.8 million (US$51.4 million) for full year 2021, compared to a loss of RMB1.20 billion for full year 2020. The change in 2021 was primarily due to a significant decrease in the Company’s stock price in 2021.
Concurrent with the issuance of the Notes in May 2019, the Company entered into a call option transaction with an affiliate of Credit Suisse Securities (USA) LLC. The Company accounted for the call option transaction as freestanding derivative assets in its consolidated balance sheets, which is marked to market at each reporting period. The Company recorded a loss from a change in fair value of the call option of RMB 136.1 million (US$21.4 million) for full year 2021, compared to a gain of RMB476.3 million for full year 2020. The change in 2021 was primarily due to a significant decrease in the Company’s stock price in 2021.The Company exercised all the remaining call option using cash settlement in the third quarter of 2021.
Equity in (Loss)/Income of Affiliated Companies
The Company indirectly holds a 20% equity interest of Sweihan PV Power Company P.J.S.C, a developer and operator of solar power projects in Dubai, and accounts for its investments using the equity method. The Company also holds a 30% equity interest in Jiangsu Jinko-Tiansheng Co., Ltd, which processes and assembles PV modules as an OEM manufacturer, and accounts for its investments using the equity method. The Company recorded equity in earing of affiliated companies of RMB59.8 million (US$9.4 million) for full year 2021, compared with a loss of RMB52.7 million in 2020. The gain primarily arose from interest rate swap recorded by the equity affiliate due to an increase in long-term interest rates in 2021. Hedge accounting was not applied for the derivative.
Income Tax Expense, Net
The Company recognized an income tax expense of RMB194.1 million (US$30.5 million) for full year 2021, compared with an income tax expense of RMB178.4 million in full year 2020.
Net Income and Earnings/(loss) per Share
Net income attributable to the Company’s ordinary shareholders for full year 2021 was RMB721.0 million (US$113.1 million), compared with a net income of RMB230.4 million in full year 2020.
Basic and diluted earnings/(loss) per share for full year 2021 were RMB3.78 (US$0.59) and RMB2.01 (US$0.32), respectively, compared to RMB1.29 and RMB(1.36) for full year 2020. This translates into basic and diluted earnings/(loss) per ADS of RMB15.12 (US$2.37) and RMB8.02(US$1.26), respectively for full year 2021, compared to RMB5.15 and RMB(5.42) for full year 2020.
Non-GAAP net income for full year 2021 was RMB558.4 million (US$87.6 million), compared with non-GAAP net income of RMB958.4 million in full year 2020.
Non-GAAP basic and diluted earnings per share for full year 2021 were RMB2.93 (US$0.46) and RMB2.72 (US$0.43), compared to both RMB5.36 for full year 2020, which translates into non-GAAP basic and diluted earnings per ADS were RMB11.72 (US$1.84) and RMB10.86 (US$1.70) for full year 2021, compared to both RMB21.42 for full year 2020.
Fourth Quarter and Full Year 2021 Operational Highlights
Solar Module, Cell and Wafer Shipments
Total shipments in the fourth quarter of 2021 were 9,693 MW, including 9,024 MW for solar module shipments and 669 MW for cell and wafer shipments.
Total shipments in the full year 2021 were 25,242 MW, including 22,232 MW for solar module shipments and 3,010 MW for cell and wafer shipments.
Solar Products Production Capacity
As of December 31, 2021, the Company’s annual mono wafer, solar cell and solar module production capacity was 32.5 GW, 24.0 GW (940 MW for N-type cells) and 45.0 GW, respectively.
Operations and Business Outlook Highlights
We have roughly 16 GW of N-type cell capacity operational in the first quarter of 2022, and currently are steadily ramping up our production capacity. With integrated capacity structure constantly improving, our integrated cost is expected to further decrease. Leveraging on continuous investments in R&D and technological innovation, we hope to continuously improve the mass production efficiency of N-type cells, solidifying our leading position in the industry. In light of growing demand for higher efficiency N-type products, we are committed to providing customers with the best solutions leveraging our technological innovation and product competitiveness, as well as further enhancing our global market share and profitability.
First Quarter and Full Year 2022 Guidance
The Company’s business outlook is based on management’s current views and estimates with respect to market conditions, production capacity, the Company’s order book and the global economic environment. This outlook is subject to uncertainty on final customer demand and sale schedules. Management’s views and estimates are subject to change without notice.
For the first quarter of 2022, the Company expects its total shipments to be in the range of 7.5 GW to 8.0 GW.
For full year 2022, the Company estimates its total shipments (including solar modules, cells and wafers) to be in the range of 35.0 GW to 40.0 GW.
Solar Products Production Capacity
JinkoSolar expects its annual mono wafer, solar cell and solar module production capacity to reach 50.0 GW, 40.0 GW (including 16.9 GW N-type cells) and 60.0 GW, respectively, by the end of 2022.
About JinkoSolar Holding Co., Ltd.
JinkoSolar (NYSE: JKS) is one of the largest and most innovative solar module manufacturers in the world. JinkoSolar distributes 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. JinkoSolar has built a vertically integrated solar product value chain, with an integrated annual capacity of 32.5 GW for mono wafers, 24 GW for solar cells, and 45 GW for solar modules, as of December 31, 2021.
JinkoSolar has 12 productions facilities globally, 22 overseas subsidiaries in Japan, South Korea, Vietnam, India, Turkey, Germany, Italy, Switzerland, the United States, Mexico, Brazil, Chile, Australia, Portugal, Canada, Malaysia, UAE, and Denmark, and global sales teams in China, the United States, Canada, Germany, Switzerland, Italy, Japan, Australia, Korea, India, Turkey, Chile, Brazil, Mexico and Hong Kong, as of December 31, 2021.
