Component leader Jinko Energy Holdings Co., Ltd. (hereinafter referred to as Jinke Energy, JKS.N) recently released an unaudited first quarter financial report for 2018. Shipments continued to remain the No. 1 in the industry, but sales in the first quarter fell to a new low since 2016 due to continued decline in component sales.
According to financial report data, in the first quarter of this year, Jinko Solar's component shipments of 2015MW decreased by approximately 18% quarter-on-quarter and decreased by approximately 3% year-on-year. Although shipments have declined, Jinkoo's shipments are still ranked first in the industry.
Shipment volume is one of the important indicators for PV module manufacturers to measure their operating conditions. As a photovoltaic manufacturer with a vertically integrated industrial chain, as of the first quarter of this year, Jinke Energy's silicon wafers, photovoltaic cells, and photovoltaic modules have production capacities of 9.0 GW, 5.0 GW, and 9.0 GW, respectively. After achieving component shipments that were essentially flat in the same period last year, Jinko Energy also forecast shipments of 2.4GW-2.5GW in the second quarter. For the full year, the company's estimated total shipments were 11.5GW to 12.0GW, an increase of at least 15% from 2017.
From the forecast data, Jinko Energy is optimistic about the annual component demand. Behind the optimistic expectations, thanks to the company's overseas orders have locked in most of the component capacity. Chen Kangping, CEO of Jinko Energy, said, “We have a lot of predictability in 2018, because more than 80% of our orders have been filled, and most of these orders are from overseas fixed prices for the whole year. The order is structured and we have received some advance payments. Currently, our production capacity has been fully utilized and is expected to continue in the second half of the year."
In fact, despite the optimism of management expectations and the volatility of prices caused by price fluctuations caused by changes in market demand through fixed prices, it is an indisputable fact that Jinkoo Energy suffered a two-year low in sales in the first quarter of this year.
According to financial data, Jingke Energy achieved total revenue of RMB 4.57 billion in the first quarter, down approximately 21% year-on-year. The company's net profit from continuing operations attributable to ordinary shareholders was 3.6 million yuan, down about 94% year-on-year. In the latest research report, CICC pointed out that Jingke Energy's net profit in the first quarter was much lower than its expected 33.3 million yuan.
The decline in component prices is an important reason for the decline in sales of Jingke Energy in the first quarter. According to Wind data, as of June 20, the lowest spot price of crystalline silicon photovoltaic modules is 0.25 US dollars / watt, the average weekly price is 0.28 US dollars / watt, the overall price is in a downward channel.
In terms of net profit, these factors have dragged down the company's overall net profit to some extent due to the increase in operating costs and interest expenses. According to financial data, during the reporting period, Jinke Energy's research and development expenses increased to 86 million yuan compared with the same period of last year, an increase of about 39%. The company's interest expense for the first quarter of this year was about 85 million yuan, an increase of about 49%. At the same time, Jinke Energy's first quarter net exchange income was -0.91 billion yuan, compared with -0.06 billion yuan in the same period last year.
Jinko Energy also needs to face the price risk caused by the continuous decline in global component prices in the second half of this year.
After the release of the "531 Photovoltaic New Deal" this year, Bloomberg New Energy Finance Corporation (BNEF), which has always been optimistic about new energy development, released a report in early June, predicting that global PV module prices will fall by 34% this year. Subsequent data from a number of institutional surveys show that recent single and polysilicon component prices have started to fall. Insiders pointed out that downstream developers and EPC companies may have a wait-and-see mood for future price declines, and this sentiment will continue to affect the price of component prices.
Taking into account the impact of some factors such as the decline in component prices, CICC in the latest research report downgraded Jingke Energy's earnings per share forecast for 2018 and 2019, respectively, to 1.67 yuan and 1.49 yuan, a 73% drop from the previous, 82%.
As of June 26, Jingke Energy's share price fell 17.14% this month.
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