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Yangtze Business Daily News●Changjiang Business Daily reporter Pan Ruidong

N-type module leader JinkoSolar (688223.SH, JKS.NYSE) is accelerating its overseas expansion.

On the evening of July 16, JinkoSolar issued an announcement stating that it will sign a "Shareholder Agreement" with the Public Investment Fund of the Kingdom of Saudi Arabia (hereinafter referred to as "PIF") and other parties to establish a joint venture in Saudi Arabia to build a 10GW high-efficiency battery and module project with a total investment of approximately US$985 million.

The Yangtze Business Daily reporter noted that JinkoSolar went public on the Nasdaq in May 2010, and was listed on the Science and Technology Innovation Board after returning to the A-share market in January 2022. From 2022 to 2023 and the first quarter of 2024, the company achieved a cumulative net profit attributable to the parent company of 11.555 billion yuan and a cumulative dividend of 3.125 billion yuan. The company's module shipments ranked first in the world.

At present, the competition in the photovoltaic industry is intensifying, and the profit space of industry companies is being squeezed. In addition to JinkoSolar, industry leaders such as TCL Zhonghuan and Envision Technology are also increasing their overseas market layout. "Going overseas" may become a breakthrough for the development of the photovoltaic industry chain.

The market share in the Middle East exceeds 40%.

JinkoSolar continues to advance its globalization process.

On the evening of July 16, JinkoSolar issued an announcement stating that its wholly-owned subsidiary Jinko Middle East, PIF's wholly-owned subsidiary RELC, Saudi local investors and developer VI signed a "Shareholder Agreement" to establish a joint venture in Saudi Arabia. The three parties hold 40%, 40% and 20% of the equity in the joint venture respectively.

It is understood that RELC is a leading company in the field of renewable and green energy technology manufacturing, and VI is a leading investor and developer of green energy industrial projects and local supply chains in Saudi Arabia. After the establishment of the joint venture, it will build a 10GW high-efficiency battery and component project with a total investment of approximately US$985 million, with the funding source being the joint venture's own or self-raised funds.

It is worth mentioning that this is JinkoSolar’s ​​largest overseas investment project to date, and it may also become the largest overseas manufacturing base for China’s photovoltaic cell and module industry.

Public data shows that JinkoSolar has a market share of over 40% in the Middle East, with a higher share in Saudi Arabia. In recent investor activities, the company said that it has signed many long-term orders with the Middle East. The Middle East market has great potential for long-term sustainable growth in photovoltaic installations due to good lighting conditions and its own energy transformation needs. The company is confident that it can maintain its competitive advantage in the region.

At present, as the internal competition in China's photovoltaic industry intensifies, in addition to JinkoSolar, other photovoltaic giants have also accelerated their pace of going overseas.

On the same day, TCL Zhonghuan also announced that it would join hands with PIF to invest in the construction of photovoltaic silicon wafers, battery cells and module production capacity in Saudi Arabia, with a total investment of US$2.08 billion. New energy system manufacturer Envision Technology announced that it would jointly establish a wind power equipment joint venture in Saudi Arabia with PIF and VI to carry out localized production and manufacturing of wind turbines and key components.

In addition, Sungrow, the world's leading inverter company, announced that it had won the world's largest energy storage project order in Saudi Arabia, with a capacity of 7.8GWh. Recently, Trina Solar and Junda Solar have also expanded into the Middle East.

The Yangtze Business Daily reporter noted that the acceleration of Chinese photovoltaic giants' expansion into the Middle East is closely related to the energy transformation plans proposed by Middle Eastern countries. Among them, Saudi Arabia's Vision 2030 shows that by 2030, the proportion of renewable energy in Saudi Arabia's energy structure will reach 50%, and the installed capacity will reach 58.7GW, mainly including new energy such as solar energy and wind energy. This has brought new opportunities for domestic new energy companies.

Shipments in the second quarter may exceed 24GW

According to information, JinkoSolar has established a vertically integrated production capacity from rod drawing, silicon wafer production, battery cell production to photovoltaic module production.

As the industry leader in N-type TOPCon technology, JinkoSolar currently has the world's largest N-type production capacity. At the same time, relying on its own production and channel advantages in the photovoltaic industry, the company has deployed in the field of energy storage, and has continuously explored the field of building integrated photovoltaics (BIPV), and is committed to becoming a comprehensive solution provider.

JinkoSolar has performed well in the past two years since returning to the A-share market. According to data from Tonghuashun, JinkoSolar has achieved a cumulative net profit of 11.555 billion yuan in 2022, 2023 and the first quarter of 2024. The company paid dividends for two consecutive years in 2022 and 2023, with a total cash dividend of 3.125 billion yuan.

Specifically, from 2022 to 2023, JinkoSolar achieved operating income of RMB 82.676 billion and RMB 118.682 billion, respectively, a year-on-year increase of 103.79% and 43.55%; the net profit attributable to the parent was RMB 2.936 billion and RMB 7.440 billion, a year-on-year increase of 157.24% and 153.41%.

However, since 2024, with the overcapacity in the upstream photovoltaic industry, profit pressure has gradually been transmitted to component companies. The overall prices of JinkoSolar's main industrial chain were at a low level in the first quarter, resulting in pressure on performance.

In the first quarter of this year, JinkoSolar achieved operating income of 23.084 billion yuan, a slight decrease of 0.3% year-on-year; net profit attributable to shareholders of the parent was 1.176 billion yuan, a year-on-year decrease of 29.09%.

The company's gross profit margin also declined. In the first quarter of 2024, JinkoSolar's gross profit margin fell below 10% to 9.58%. From 2019 to 2023, JinkoSolar's gross profit margin was relatively high, at 19.92%, 14.94%, 13.4%, 10.45% and 14.04% respectively.

In the context of gross profit margin pressure, JinkoSolar continues to be committed to promoting cost optimization through technological upgrades, and has put into production N-type TOPCon cells with an average mass production efficiency of more than 26%. In addition, JinkoSolar also plans to adopt partial outsourcing to reduce costs.

JinkoSolar's shipments continue to grow despite price pressure. From January to March 2024, the company's total shipments were 21,907MW, of which module shipments were 19,993MW, and silicon wafer and cell shipments were 1,914MW. Total shipments increased by 51.19% over the same period last year. As of the end of the first quarter, the company's cumulative global shipments of photovoltaic modules have exceeded 236GW.

JinkoSolar said that the company has a full order backlog and expects module shipments to reach 24GW to 26GW in the second quarter.

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