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JinkoSolar Holding: Good GARP Gambit

Motek Moyen profile picture
Motek Moyen


  • JinkoSolar Holding Co., Ltd. deserves a buy recommendation. This is contrary to the consensus hold ratings of SA authors and Seeking Alpha Quant AI.
  • Jinko’s TTM revenue CAGR of more than 140% makes it a growth stock. The 3-year average revenue CAGR of Jinko is 35.31%.
  • A non-GAAP Forward P/E of 16.05x makes JinkoSolar a growth-at-a-reasonable-price stock.
  • The solar panel market is worth $78.5 billion and is growing at 25.6% CAGR.
  • Low profit margins are worthy if they contribute to high double-digit revenue growth rate.

measuring solar panels installation on a roof

Eloi_Omella/E+ via Getty Images

The high price of coal and oil is why the $78.5 billion solar panel market is growing fast. I suggest you should go long on JinkoSolar Holding Co., Ltd. (NYSE:JKS). My thesis

This article was written by

Motek Moyen profile picture
Motek Moyen is a financial analyst, technician, and Adobe multimedia content creator. He studied Mathematics, Commercial Advertising, and Computer Science in the 1990s. He does not trade stocks.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (12)

i_am_seeker_2 profile picture
I think that this likely bodes well for Jinko as well as other Chinese companies--
Motek Moyen profile picture
@i_am_seeker_2 thanks for this link. good morning. jks is now +8.98% wow
In 2023 JKS will have revenue of $15bil and earn 3% on rev or $450 mil
which is $9 EPS
Motek Moyen profile picture
@solarstorage thanks. i share your optimism.
engineeringeddie profile picture
The price point of panels from this company is tightly coupled with the leading-edge efficiency and quality of its TOPCon product lines. Among commercial quantity providers, they are only slightly surpassed in efficiency by the most expensive IBC panels that money can buy. taiyangnews.info/...
... and the company has just demonstrated a scalable path to matching even the IBC panels' performance -- at a massively lower production cost.

That said, Jinko is going to remain aggressive in securing its global market share (likely 16% for 2022) and it is obviously balancing its product performance premium against its profit margins for the sake of carving out a larger long-term footprint.

On a more fundamental level, the intrinsic economic value of any panel manufacturer is strictly a matter of the amount of energy the company's overall output can convert at a given price point. So I **always pay attention to the equity market price of energy production capacity** (i.e., what amount of energy production capacity am I buying when I purchase a panel manufacturer's shares?).

Right now, a single JKS ADR (underlying 4 common shares Jinko Holding) buys the voting rights and profit claims on 500 Wp of integrated panel production every year (based on lowball estimated 60% of 42.5 GWp expected 2022 shipments that includes JKS' 58.6% Jiangxi Jinko stake). Other publicly traded PV plays, MAXN, FSLR and CSIQ are expected to ship 2.3 GWp, 9.3 GWp and 21 GWp, respectively. If these numbers hold up, you get, based on current market valuation and production guidance:

$100k USD of JKS = 1 MWp 2022 production
$100k of MAXN = 0.22 MWp 2022 production
$100k of FSLR = 0.052 MWp 2022 production
$100k of CSIQ = 0.91 MWp 2022 production

There are, of course, subtle differences between these companies' focus on panel manufacturing so that the numbers can skew (a little bit) in terms of valuation based on energy production capacity (e.g., JKS and CSIQ are also battery storage providers/distributors and CSIQ also has a project development business -- none of which is taken into account in the above numbers).

While the production-ownership approach to valuation does not speak to day-to-day market sentiment, I argue that it is a sound long-term framework of analysis since these are still energy companies after all, and their value is ultimately governed by the amount of electrical energy their products can convert at a given price point.
Motek Moyen profile picture
@engineeringeddie hi. good morning. I'm very grateful for your updates and comparative investment valuation of JKS against its peers.

Canadian Solar brand is also popular here in my country. its a more pricey brand that caters to corporate and residential customers. I will write about CSIQ soon.
@engineeringeddie Hey Eddie - thanks for your always intelligent and informed takes.

A general question here. Do you know, or do you know how one could calculate the impact of improvements in efficiency on overall LCOE of solar panels?

I'm looking for a number along the lines of: with LCOE at index 100, how much will a 1% improvement in efficiency (e.g. 25.5% to 25.755%) improve the overall LCOE of a utility scale solar setup? Or maybe it makes more sense to talk about how each incremental 0.1% improvement in efficiency (e.g. 25.5% to 25.6%) impacts LCOE?

I have the feeling that the past couple of years' improvements in efficiency have a real impact on the LCOE. Obviously, supply chain management and manufacturing efficiency are also major factors. I'm just not sure whether one of these factors is much more significant than the others.

Any idea?
engineeringeddie profile picture
@MB4302 While the individual use cases are all over the map, PV conversion efficiency gains broadly reduce LCOEs through the Initial cost (I_t) and operations cost (M_t) of the system (a simplified version of LCOE equation with the M_t and I_t variables linked below).
While it's true that efficiency gains should drive down I_t whenever they drive down the material-input cost per Watt, this relationship is usually complicated by market premiums assigned to high-efficiency devices. One of the key things people really should think about here is the impact of efficiency gains on the I_t contribution from balance of system costs (e.g., racking, tracking, connectors, install labour, etc.), where increasing efficiency drives this number down a lot. Imagine two separate 4.5 MWp installations, Installation A uses 10,000 lower-efficiency 450 Wp panels weighing 40 kg apiece*. And installation B uses 7,500 higher-efficiency 600 Wp panels weighing 30 kg apiece. Even if the B panels sell for a 33% premium over the A panels, there is still a 25% savings on (typically) two-thirds of the overall installation cost ... if you imagine a base rate of 24 cents per Wp for panel A with a fixed cost of 66 cents per Wp for panel A BOS, the net result is that I_t ends up 9.5% cheaper for the panel B installation, all other factors being equal.
Likewise, the reduction in panels/racks/trackers required for higher-efficiency panels also reduces the maintenance and operations factor, M_t -- This is actually where I see the biggest LCOE impact of higher efficiency panels, especially with panel lifetimes regularly exceeding 40 years duration. Under the PPA model, it's the M_t that contains most of the economic risk, so the financing cost of higher-efficiency installation is likely to be significantly lower than a lower-efficiency installation in an unfettered marketplace.


* - the panel weight factors aren't important to this back-of-napkin calculation, but they will (likely) impact both the install costs and the O&M costs for tracking devices.
The Opportunist profile picture
You missed theost important consideration: you could wake up one day and china invades taiwan and your jks goes the way if every russian stock, to zero
Motek Moyen profile picture
@The Opportunist hi. thank you for reading and commenting. i respect your opinion. JinkoSolar products have invaded most countries including america, canada, europe, latin america, asia, australia... i don't think china will invade taiwan anytime soon... there are too many filipino factory workers and domestic helpers in taiwan. chinese military knows filipinos could be ill-tempered and ruthless warriors...
i_am_seeker_2 profile picture
@The Opportunist Good grief, the whole market will go down if that happens. The probability of it is not high.
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