JinkoSolar Holding (NYSE: JKS) is a China-based, vertically integrated solar manufacturer that had a tough time getting out of the IPO gate. But now that it's public, the company is bringing in strong showings and exceeding its guidance.
The firm announced its third quarter 2010 results early this morning, and the firm's stock jumped up 16 percent on the news to $35.14.
Highlights from the call:
- Total solar product shipments were a record 134.8 megawatts, exceeding previous guidance of 100 megawatts to 110 megawatts, compared to 99.9 megawatts in the second quarter of 2010 and 64.0 megawatts in the third quarter of 2009, representing an increase of 34.9 percent sequentially and 110.6 percent year-over-year.
- Solar product shipments in the third quarter of 2010 consisted of 33.7 megawatts of silicon wafers, 8.6 megawatts of solar cells and 92.5 megawatts of solar modules.
- In the third quarter of 2010, the firm expanded its in-house annual silicon wafer, solar cell and solar module production capacities from approximately 400 megawatts, 300 megawatts and 300 megawatts, respectively, as of June 30, to approximately 600 megawatts, 300 megawatts and 450 megawatts.
- Total revenues were a record $215.0 million, an increase of 59.7 percent sequentially and 260.5 percent year-over-year.
- Net income was a record $38.8 million, an increase of 43.6 percent sequentially and 1,766.9 percent year-over-year. Gross margin increased to 33.5 percent in the third quarter of 2010 from 26.9 percent in the second quarter of 2010 and 15.8 percent in the third quarter of 2009, mainly due to an increase in the ASP of the firm's solar modules and a further decrease in average non-silicon cost.
- As of September 30, 2010, JinkoSolar had $67.5 million in cash.
The firm had a flurry of positive business announcements in October:
- Jinko entered into a supply agreement with Enfinity to provide it with 100 megawatts of branded solar modules in 2011.
- Jinko entered into supply agreements with Saint-Gobain Building Distribution to supply it with 4 megawatts of solar modules in 2010 and 50 megawatts of solar modules in 2011.
- The firm extended a contract with IBC, a global PV distributor, to provide it with 130 megawatts of additional solar modules in 2011.
- The firm entered into a solar module sales agreement with Tozzi Sud, to supply it with 50 megawatts of solar modules from 2010 to 2011.
- During the quarter, several types of the Jinko's solar modules met the requirements of the California Energy Commission.
Fourth Quarter and 2010 Guidance
For the fourth quarter of 2010, JinkoSolar expects total solar product shipments to be in the range of 130 megawatts to 140 megawatts with module shipments expected to be between 100 megawatts to 110 megawatts. Total revenues are expected to be in the range of $210 million to $220 million.
Jinko raised its full year 2010 total solar product shipments guidance to an estimated range of 448 megawatts to 458 megawatts, from its earlier guidance of 395 megawatts to 415 megawatts, with module shipments expected to be in an estimated range of 257 megawatts to 267 megawatts for the full year 2010, as compared to its earlier guidance of 195 megawatts to 205 megawatts. The firm also raised its full year 2010 revenue guidance to an estimated range of $638 million to $648 million, as compared to its earlier guidance of $500 million to $525 million.
The firm expects to increase its in-house annual silicon wafer, solar cell and solar module production capacities to approximately 600 MW each, as compared to the original guidance of 500 MW each by the end of 2010.
As mentioned, the firm's stock jumped up 16 percent on the news to $35.14. Not many analysts cover JKS, but Auriga rated them as a buy.
The challenge ahead of Jinko and most any commodity-level solar firm is to drive manufacturing costs down. The solar market is expected to grow over the next quarter or two -- but most solar firms expect growth to slow, capacity to far exceed demand and ASPs to continue to fall in 2011. That's when the market could be a harsh judge of these commodity solar firms.