JinkoSolar Holding Co. Ltd. ( JKS ) reported third quarter 2013 results with adjusted earnings per American Depositary Share ("ADS") of $1.36 (adjusted earnings of 34 cents per share), much ahead of the Zacks Consensus Estimate of 35 cents. The company reversed its year-ago adjusted loss per ADS of $3.96 (adjusted loss 99 cents per share). Each "ADS" represents four ordinary shares.
The results reflect a diversified customer base and improvement in operational efficiency in a rapidly changing solar power environment.
JinkoSolar's revenues in the reported quarter were $320.7 million, beating the Zacks Consensus Estimate of $296.0 million. The top line increased 11.2% sequentially and 47.6% from the year-ago level.
The increase was mainly driven by a boost in shipments, improving average selling prices (ASPs) of solar modules and the increase in electricity revenues from solar projects.
Gross profit in the quarter was $71.5 million that corresponds to a gross margin of 22.3%. This compares favorably with the gross margin of 17.7% in the second quarter 2013 and 5.8% in the third quarter 2012. The significant improvement in the gross margin was backed by improving solar module ASPs and higher gross margins resulting from electricity revenues of solar projects. This was accompanied by continued cost reductions of polysilicon and auxiliary materials.
Total operating expenses in the quarter amounted to $31.6 million, up 24.1% sequentially and 2.3% year over year.
Total shipments in the third quarter of 2013 were 518.9 megawatts ("MW"). This represents a 6.1% increase from 489.2 MW in the second quarter of 2013 and a significant 54.8% rise from 335.2 MW in the third quarter of 2012. Of the total shipments, 489.3 MW were solar modules, 10.9 MW were silicon wafers and 18.7 MW were solar cells.
JinkoSolar at the end of the reported quarter had cash and cash equivalents and restricted cash of $218.7 million, up from $67.4 million at the end of Dec 31, 2012.
As of Sep 30, 2013, total short-term borrowings that included the current portion of long-term bank borrowings were $330.2 million compared with $360.4 million at the end of Dec 31, 2012. Total long-term borrowings were $62.6 million compared with $26.8 million at 2012 end.
JinkoSolar expects cell and module shipments in the range of 500 MW and 530 MW for the fourth quarter of 2013. The company raised its total solar module shipment expectations to the range of 1.7 GW to 1.8 GW for 2013 from its prior forecast of 1.5 GW to 1.7 GW. By the end of full year 2013, the company expects total operational solar PV projects in the range of 210 MW to 230 MW.
Recently, solar cell manufacturer Canadian Solar Inc. ( CSIQ ) reported earnings of 56 cents in the third quarter of 2013 versus a loss of $1.01 per share in the year-ago quarter. The strong performance in the reported quarter was driven by an increase in shipment volume and higher revenues. Canadian Solar swung into profit in the reported quarter on the back of higher shipments and revenues.
Following six money-losing quarters, this was the second quarter of profit for JinkoSolar. The company has successfully broadened its geographic reach and expanded its downstream business, which has ensured net profitability for the entire year.
JinkoSolar's string of large-scale solar photovoltaic (PV) supply orders from countries like Australia, South Africa and the U.K., effective project execution skills as well as favorable renewable policy adoption by the Chinese government have elevated its position in the market.
Its high-quality products at lower rates have attracted customers from around the globe. In addition, the company's lofty backlog of domestic utility-scale projects along with a steady rebound in solar panel prices is expected to boost its margins. The 50% tax break on solar panel production by the Chinese government will unlock increased growth prospects for JinkoSolar Holdings.
Additionally, it has transformed its operations from a traditional manufacturer to a one-stop energy solution provider. Recently, the Chinese government increased its solar installation target for 2014 by 20% to 12 GW. This focus on renewable energy development in China will see heightened demand for both solar farms and distributed PV systems.