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China's Thriving Photovoltaic Market Accelerates JinkoSolar Growth

Mar. 09, 2021 8:43 AM ETJinkoSolar Holding Co., Ltd. (JKS)6 Comments
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  • The intense price competition among photovoltaic firms decreased the solar module prices, which have been affecting JinkoSolar's operating margin since 2018.
  • JinkoSolar's efforts in developing its components, including expansion of the production of monocrystalline silicon pieces, played an important role in improving its efficiency and profitability.
  • The firm is facing risks due to the rising raw material price, the public's uncertain demand and volatility.

A 20-GW manufacturing base for large battery pieces is under construction by JinkoSolar (NYSE:JKS) in Yunnan province, occupying 1,000 acres at the end of 2020. This will become the largest manufacturing base for battery pieces globally once completed. Furthermore, it will expand JinkoSolar's capacity to 30 GW by 2021.

JinkoSolar focuses on providing clean energy solutions. By the end of 2020, it was the only firm that had achieved 65 GW accumulative shipment quantity worldwide. In the domestic market, it was awarded as ''Excellent Photovoltaic Module'' in 2020's list prepared by OFweek.

Strong profitability & module shipment numbers

Although JinkoSolar's total revenue decreased 11.72% to USD 3.64 billion in 2018, it started to present a rising trend from 2018 to 3Q 2020. Specifically, there was a 3.8% increase from over USD 1.19 billion in the second quarter of 2020 and a 17.2% increase from more than USD 1.04 billion in the third quarter of 2019. This was mainly a result of the rise in solar module shipments, which offset the decrease in average selling prices of solar modules. The massive decline in 2018 was led by solar modules' decreasing selling prices and declining government grants. For instance, module production's overcapacity intensified pricing competition and JinkoSolar only received CNY 52.2 million government grants in 2018, a 183% drop from 2017. Nevertheless, the decline in solar modules' average selling price still led to a 25.3% decrease in the photovoltaic module manufacturer's operating margin compared with the third quarter of 2019.

When it comes to its module shipments, JinkoSolar was ranked first globally for four years, with an about-15% market share. Over half of its module shipments were from markets abroad, indicating the firm's good reputation globally.

Vast photovoltaic market

In terms of the global market, the module shipment reached 120 GW in 2020, and

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EqualOcean is an investment research firm and information service provider focusing on China's Technology, Automotive and Consumer Internet sectors. With unique research and due diligence methodology, we provide tailored insights into a wide range of Chinese equities, empowering our clients' value-added decisions. Founded in 2014, EqualOcean is headquartered in Beijing and has offices in Shanghai, Shenzhen and New York.For more information, contact us at contact@equalocean.com.

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