At the end of January, we argued that the rally in the shares of JinkoSolar (NYSE:JKS) wasn't done, and so it turned out as the shares are up 42% since.
We see reasons for some continued optimism after the Q1 figures:
- Solar demand is surging as ever more areas achieve grid parity.
- The markets are fairly tight with ASPs holding up pretty well.
- The big integrated companies like Jinko with bankable solutions have a market advantage.
- Jinko has diversified to become a truly global player.
- Jinko is still the market leader in China and demand is set to surge in H2.
- The company is shifting to premium products with capacity doubling this year.
However, our enthusiasm is somewhat dimmed by concerns about cash flow generation, which has struggled for years in the red leading to persistent debt and equity issuing.
Grid Parity
Since 2010, the cost of solar has declined by 85%, that has some important consequences. Let the following sink in (our emphasis):
A new study reveals just how stunningly rapid the clean energy transition is. Bloomberg New Energy Finance (BNEF) reported on Tuesday that renewables are now the cheapest form of new electricity generation across two thirds of the world — cheaper than both new coal and new natural gas power. Yet just five years ago, renewables were the cheapest source of new power in only 1% of the world, explains BNEF in its New Energy Outlook 2019. Equally remarkable, BNEF projects that by 2030, wind and solar will “undercut existing coal and gas almost everywhere.”
Or this (our emphasis):
Around three-quarters of US coal production is now more expensive than solar and wind energy in providing electricity to American households, according to a new study. “Even without major policy shift we will continue to see coal retire
