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JinkoSolar Holding Company: Jinkosolar Announces Third Quarter 2015 Financial Results

The following excerpt is from the company's SEC filing.

JinkoSolar Holding Co., Ltd. ("JinkoSolar" or the "Company") (NYSE: JKS), a global leader in the PV industry, today announced its unaudited financial results for the third quarter ended September 30, 2015.

Third Quarter 2015 Highlights

Total solar module shipments were 1,134.5 MW, which includes 70.6 MW earmarked for use in the Company’s downstream projects. Total solar product shipments to the third parties were 1,107.7 megawatts (“MW ”), consisting of 1,063.9 MW of solar modules, 10.4 MW of silicon wafers and 33.4 MW of solar cells. This represents an increase of 21.1% from 915.0 MW in the second quarter of 2015 and an increase of 56.4% from 708.2 MW in the third quarter of 2014.

As of September 30, 2015, the Company had connected 846 MW worth of solar projects.

Total revenues were RMB4.1 billion (US$637.6 million), representing an increase of 26.6% from the second quarter of 2015 and an increase of 58.2% from the third quarter of 2014.

Solar power projects generated electricity of 233.7 GWh, a 15.1% increase from the second quarter of 2015 and an increase of 207.6% from the third quarter of 2014. Revenues generated from solar power projects were RMB205.8 million (US$32.4 million), representing an increase of 15.7% from the second quarter of 2015 and an increase of 205.8% from the third quarter of 2014.

Gross margin was 21.3%, compared with 20.7% in the second quarter of 2015 and 20.6% in the third quarter of 2014.

Income from operations was RMB384.0 million (US$60.4 million), compared with RMB237.0 million in the second quarter of 2015 and RMB239.9 million in the third quarter of 2014.

Net income attributable to JinkoSolar Holding Co., Ltd.'s ordinary shareholders was RMB195.1 million (US$30.7 million), compared with RMB76.4 million in the second quarter of 2015 and RMB280.6 million in the third quarter of 2014.

Diluted earnings per American depositary share (“ADS”) was RMB3.12 (US$0.48), compared with RMB2.40 in the second quarter of 2015 and RMB8.00 in the third quarter of 2014.

Non-GAAP net income attributable to JinkoSolar Holding Co., Ltd.'s ordinary shareholders in the third quarter of 2015 was RMB253.3 million (US$39.8 million), compared with RMB206.8 million in the second quarter of 2015 and RMB342.0 million in the third quarter of 2014.

Non-GAAP basic and diluted earnings per ADS were RMB8.12 (US$1.28) and RMB6.52 (US$1.04), respectively, in the third quarter of 2015.

Mr. Kangping Chen, JinkoSolar’s Chief Executive Officer commented, “I am excited to report another strong quarter as our business gained considerable growth momentum. Total revenues during the third quarter reached US$637.6 million, representing an increase of 58.2% over the same period in 2014 and 26.6% sequentially. Module shipments to the third parties reached a record high of 1064 MW, which once again exceeds the high end of our third-partyshipment guidance. With increasing demand for our high-quality solar products, we are raising our full year 2015 third party module shipment guidance from the current 3.4 GW to 3.7 GW, to 3.8 GW to 4.0 GW.”

“During the third quarter, electricity output reached 2.4 GWh, up 15.1% sequentially. Electricity revenues generated RMB205.8 million. 121 MW of JinkoSolar projects were connected to the grid during the quarter which brings our total capacity of connected projects to 846 MW. This leaves us right on track to meet our 600-800 MW target for the year. This higher-margin downstream business increasingly generates a larger share of our revenues and profits as it develops in size and scale. The rapid growth of our downstream business is supported by diversified financing channels including the RMB10 billion strategic line of credit agreement JinkoPower recently signed with the Industrial and Commercial Bank of China, China’s largest commercial bank. This new line of credit will be used to provide us with working capital as well as bridge and project loans for future project development.”

“Earlier this year, we made strategic plans for a surge in global demand during the second half year by pre-emptively increasing inventory levels. This strategy is now paying off as it provides us with flexibility to balance between shipments to third-party customers and our downstream business as well as good visibility on next year’s orders.”

“This quarter’s performance along with what we expect will be a strong fourth quarter, leave me very confident in our ability to deliver strong full-year results and further grow our sustainable business. With a large and geographically diverse customer base, industry-leading technology, long-lasting relationships with financial institutions and new growth drivers, we are building a foundation for sustainable growth in the years to come and will deliver long-term return to our shareholders.”

Third Quarter 2015 Financial Results

Total Revenues

Total revenues in the third quarter of 2015 were RMB4.1 billion (US$637.6 million), representing an increase of 26.6% from RMB3.2 billion in the second quarter of 2015 and an increase of 58.2% from RMB2.6 billion in the third quarter of 2014. The sequential and year-over-year increase in total revenues was mainly attributable to the increase in shipments of solar modules and electricity revenues from solar projects.

During the third quarter of 2015, revenues from downstream solar power projects were RMB205.8 million (US$32.4 million), representing an increase of 15.7% from RMB 177.9 million in the second quarter of 2015 and an increase of 205.8% from RMB67.3 million in the third quarter of 2014. The increase in solar power project revenues was primarily due to the increase in number and capacity of the Company’s solar projects. Gross profit for solar power project revenues was RMB126.1 million (US$19.8 million) during the third quarter of 2015, representing a gross margin of 61.3%.

The Company has entered into certain sales contracts with retainage terms (the "Retainage Contracts") since the second half of 2012, under which customers were allowed to withhold payment of 5% to 10% of the full contract price as retainage for the specified period which generally ranges from one year to two years (the "Retainage Period"). The Company does not recognize such retainage until the customers pay it after the Retainage Period expires. The total amounts of retainage under the Retainage Contracts that were not recognized as revenue were nil and RMB17.3 million for the third and the second quarter of 2015, respectively. During the third quarter of 2015, the Company received retainage payment of RMB23.8 million (US$3.7 million) and recognized it as revenue. As of September 30, 2015, the cumulative amount of retainage that had not yet been recognized as revenue was RMB180.7 million (US$28.4 million).

Gross Profit and Gross Margin

Gross profit in the third quarter of 2015 was RMB864.6 million (US$136.0 million), compared with RMB663.6 million in the second quarter of 2015 and RMB528.5 million in the third quarter of 2014.

Gross margin was 21.3% in the third quarter of 2015 compared with 20.7% in the second quarter of 2015 and 20.6% in the third quarter of 2014. The sequential and year-over-year increases were mainly due to the continued reduction in cost of solar modules and the increase of electricity revenues.

Income from Operations and Operating Margin

Income from operations in the third quarter of 2015 was RMB384.0 million (US$60.4 million), compared with RMB237.0 million in the second quarter of 2015 and RMB239.9 million in the third quarter of 2014. Operating margin in the third quarter of 2015 was 9.5%, compared with 7.4% in the second quarter of 2015 and 9.4% in the third quarter of 2014.

Total operating expenses in the third quarter of 2015 were RMB480.6 million (US$75.6 million), an increase of 12.7% from RMB426.6 million in the second quarter of 2015 and an increase of 66.5% from RMB288.6 million in the third quarter of 2014. The sequential increase in operating expenses was mainly due to increases in shipping and warranty costs and stock-based compensation expenses. The year-over-year increase in operating expenses was mainly due to increases in shipping and warranty costs and stock-based compensation expenses.

Total operating expenses excluding non-cash charges, including stock-based compensation and changes in allowance for doubtful accounts were RMB495.3 million (US$77.9 million) in the third quarter of 2015, compared to RMB422.8 million in the second quarter of 2015 and RMB295.2 million in the third quarter of 2014.

Total operating expenses...


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