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JinkoSolar Announces Second Quarter 2010 Results

08/16/2010

Revenues, Gross Margin and Net Income Reached Historical Highs; Increased Vertical Integration Drove Down Average Cost  SHANGHAI, Aug 16, 2010 /PRNewswire via COMTEX/ --JinkoSolar Holding Co., Ltd. ("JinkoSolar" or the "Company") (NYSE: JKS), a fast-growing solar product manufacturer with low-cost operations based in China, today announced its unaudited financial results for the second quarter ended June 30, 2010.


    Second Quarter 2010 Highlights

    -- Total solar product shipments were a record 99.9 megawatts ("MW"),
       compared to 83.0 MW in the first quarter of 2010 and 34.4 MW in the
       second quarter of 2009, representing an increase of 20.4% sequentially
       and 190.4% year-over-year.

    -- Total revenues were a record RMB900.6 million (US$132.8 million), an
       increase of 64.1% sequentially and 307.1% year-over-year.

    -- Gross profit margin was a record 26.9%, compared to 23.7% for the first
       quarter of 2010 and 6.7% for the second quarter of 2009.

    -- Net income was a record RMB180.7 million (US$26.6 million) (including a
       gain of RMB74.6 million (US$11.0 million) as a result of a change in
       the fair value of foreign exchange forward contract derivatives), an
       increase of 146.2% sequentially and 4,202.4% year-over-year.

    -- Fully diluted earnings per share were RMB2.36 (US$0.35), compared to
       RMB0.84 in the first quarter of 2010, and a fully diluted loss per
       share of RMB0.63 in the second quarter of 2009.

    -- Fully diluted earnings per American depositary share ("ADS") were
       RMB9.42 (US$1.39), compared to RMB3.37 in the first quarter of 2010,
       and a fully diluted loss per ADS of RMB2.51 in the second quarter of
       2009.

    -- The Company increased the vertical integration of its production
       process with annual silicon ingot, silicon wafer, solar cell and solar
       module production capacities reaching approximately 400 MW, 400 MW, 300
       MW and 300 MW respectively.


"We are pleased to have delivered strong growth in the second quarter and are excited to report our financial results for the first time as a public company," said Mr. Kangping Chen, JinkoSolar's chief executive officer. "During the quarter we achieved record shipments of approximately 100 MW, expanded our annual silicon wafer production capacity to 400 MW and annual solar cell and solar module production capacities to 300 MW each and significantly increased the vertical integration of our production process, which will improve our control over our manufacturing processes and costs across the value chain. Furthermore, our listing on the New York Stock Exchange in May has enhanced our brand name and provided us with additional resources and the platform to strive toward becoming a leading global solar company. As we look forward into the second half of the year, we expect to continue our strong momentum and we are well positioned to meet our established objectives in 2010."

Mr. Longgen Zhang, JinkoSolar's chief financial officer, added, "We achieved excellent results this quarter across all financial metrics, with significant increases in total revenues and net income, as well as significantly improved margins across the board on sequential and year-over- year basis. With significantly increased vertical integration, we should be able to continue driving down our average non-silicon cost by capitalizing on economies of scale. Our competitive advantage in cost-effective manufacturing combined with the resources and proceeds from our IPO position us strongly as we look to become a leader in the solar industry."

Second Quarter 2010 Financial Results

Total Revenues

Total revenues in the second quarter of 2010 were RMB900.6 million (US$132.8 million), an increase of 64.1% from RMB548.9 million in the first quarter of 2010 and 307.1% from RMB221.2 million in the second quarter of 2009. The increase in revenues was primarily due to increased global demand for solar products and a significant increase in the shipments of solar modules attributable to the Company's enhanced sales and marketing campaigns.

Gross Profit and Gross Margin

Gross profit in the second quarter of 2010 was RMB242.1 million (US$35.7 million), an increase of 86.5% from RMB129.8 million in the first quarter of 2010 and 537.1% from RMB38.0 million in the second quarter of 2009. Despite a decline in the average selling price of the Company's solar modules, gross margin increased to 26.9% in the second quarter of 2010 from 23.7% in the first quarter of 2010 and 6.7% in the second quarter of 2009, mainly due to a decrease in average non-silicon cost as a result of the increased vertical integration of the Company's production process.

Operating Profit and Operating Margin

Operating profit in the second quarter of 2010 was RMB150.7 million (US$22.2 million), an increase of 55.2% from RMB97.1 million in the first quarter of 2010 and 680.8% from RMB19.3 million in the second quarter of 2009. Operating margin in the second quarter of 2010 was 16.7%, compared to 17.7% in the first quarter of 2010 and 8.7% in the second quarter of 2009. Total operating expenses in the second quarter of 2010 were RMB91.5 million (US$13.5 million), an increase of 179.8% from RMB32.7 million in the first quarter of 2010 and 386.7% from RMB18.8 million in the second quarter of 2009. The sequential increase in operating expenses was primarily due to share-based compensation expense of RMB16.1 million (US$2.4 million), which included accumulative expenses recognized upon the Company's initial public offering ("IPO") and the expenses recognized in the second quarter of 2010. In addition, a specific provision for bad debt of RMB8.1 million (US$1.2 million) recognized for amounts due from a certain solar module customer, a significant increase in shipping and handling costs of RMB11.9 million and an increase of RMB11.0 million in materials used for research and development purposes in the second quarter as compared to the first quarter of 2010 contributed to the increase in the operating expenses.

Change in Fair Value of Derivatives

The Company entered into foreign currency forward contracts with local banks to hedge its exposure to foreign currency risks. In the second quarter of 2010, the Company recorded a gain of RMB74.6 million (US$11.0 million) from a change in the fair value of forward contract derivatives resulting from the depreciation of the Euro and U.S. dollar against Renminbi.

Income Tax Expense

The Company recognized a tax expense of RMB29.9 million (US$4.4 million) in the second quarter of 2010, compared to a tax expense of RMB12.0 million in the first quarter of 2010 and nil tax expense in the second quarter of 2009. The Company estimates a 14.2% tax rate for the full year of 2010.

Preferred Shares Accretion

Series A redeemable convertible preferred shares accretion and series B redeemable convertible preferred shares accretion were RMB10.4 million (US$1.5 million) in the second quarter of 2010, a decrease of 49.5% from RMB20.5 million in the first quarter of 2010 and 41.9% from RMB17.9 million in the second quarter of 2009. The Company incurred series A redeemable convertible preferred shares accretion and series B redeemable convertible preferred shares accretion before the completion of its IPO. Upon the completion of the Company's IPO, all the series A redeemable convertible preferred shares and series B redeemable convertible preferred shares were converted into ordinary shares. As a result, the Company does not expect to incur such preferred shares accretion in the future.

Allocation to Preferred Shareholders

Allocation of net income to preferred shareholders was RMB5.1 million (US$0.7 million) in the second quarter of 2010, a decrease of 49.9% from RMB10.1 million in both the first quarter of 2010 and second quarter of 2009. The Company allocated net income to preferred shareholders before the completion of its IPO. Upon the completion of the Company's IPO, all the series A redeemable convertible preferred shares and series B redeemable convertible preferred shares were converted into ordinary shares. As a result, the Company does not expect to allocate net income to preferred shareholders in the future.

Net Income Attributable to Ordinary Shareholders and Earnings Per Share

Net income attributable to holders of ordinary shares in the second quarter of 2010 was RMB165.2 million (US$24.4 million), an increase of 286.0% from RMB42.8 million in the first quarter of 2010 and compared to a net loss attributable to holders of ordinary shares of RMB31.8 million in the second quarter of 2009.

Basic and diluted earnings per share in the second quarter of 2010 were RMB2.38(US$0.35) and RMB2.36(US$0.35), respectively, and basic and diluted earnings per ADS were RMB9.52(US$1.40) and RMB9.42(US$1.39), respectively. Each ADS represents four ordinary shares.

Financial Position

As of June 30, 2010, JinkoSolar had RMB553.1 million (US$81.6 million) in cash and restricted cash, compared to RMB225.3 million as of December 31, 2009. The significant increase in cash and restricted cash was primarily due to the Company's IPO proceeds of approximately RMB400.6 million (US$59.1 million). The Company generated positive operating cash flows of RMB25.9 million (US$3.8 million) in the second quarter of 2010.

As of June 30, 2010, the Company's working capital balance was RMB281.6 million (US$41.5 million) and total short-term bank borrowings including the current portion of long-term bank borrowings were RMB756.5 million (US$111.6 million), as compared to RMB576.1 million of total short-term borrowings as of December 31, 2009. As of June 30, 2010, the Company had total long-term borrowings of RMB349.0 million (US$51.5 million). The Company's long-term bank borrowings are to be repaid in instalments until their maturities in 2011, 2012 and 2013.

Capital expenditures in the second quarter of 2010 were RMB227.8 million (US$33.6 million), primarily for the addition of new silicon ingot, silicon wafer, solar cell and solar module manufacturing equipments.

    Second Quarter 2010 Operational Results

    Recent Business Highlights

    -- In July 2010, the Company signed an agreement with Enfinity Asia
       Pacific Limited to supply 24 MW of solar modules in the second half of
       2010.

    -- During the quarter, the Company became the exclusive module supplier to
       Tozzi Renewable Energy for its 35 MW ground-mounted solar power plant
       in Emilia Romagna, Italy.

    -- During the quarter, the Company entered into agreements with two blue-
       chip customers in Germany to deliver 60 MW of solar modules in 2010.

Solar Product Shipments

Total solar product shipments in the second quarter of 2010 increased by 20.4% from the first quarter of 2010 and 190.4% from the second quarter of 2009. Total solar product shipments in the second quarter of 2010 were 99.9 MW, consisting of 29.6 MW of silicon wafers, 16.0 MW of solar cells and 54.3 MW of solar modules. By comparison, total shipments for the first quarter of 2010 were 83.0 MW, consisting of 53.4 MW of silicon wafers, 19.4 MW of solar cells, and 10.2 MW of solar modules. The significant increase in solar module shipments and decrease in silicon wafer shipments in the second quarter of 2010 reflected the implementation of the Company's strategy to transition from a silicon wafer manufacturer to a leading vertically integrated solar module manufacturer.

Increased Integration and Capacity Expansion of Solar Products

In the second quarter of 2010, the Company expanded annual solar cell and solar module manufacturing capacities from approximately 200 MW each as of March 31, 2010 to approximately 300 MW each as of June 30, 2010 and increased its vertical integration.

New Overseas Subsidiaries

On April 1, 2010, the Company established a subsidiary, JinkoSolar GmbH, in Munich, Germany, to facilitate the development of JinkoSolar's European business. The Company expects to establish a new subsidiary in San Francisco, California, USA, during the third quarter of 2010 to facilitate the development of its business in the United States.

Operations and Business Outlook

Third Quarter 2010 Guidance

For the third quarter of 2010, JinkoSolar expects total solar product shipments to be in the range of 100 MW to 110 MW with module shipments expected to be between 65 MW to 70 MW. Total revenues are expected to be in the range of US$145 million to US$155 million.

The Company expects to increase its in-house annual silicon ingot, silicon wafer, solar cell and solar module production capacities to approximately 400 MW, 400 MW, 300 MW and 400 MW, respectively, by the end of the third quarter of 2010.

Full Year 2010 Guidance

The Company expects its full year 2010 total solar product shipments to be in the range of 395 MW to 415 MW with module shipments expected to be between 195 MW to 205 MW. The Company expects full year 2010 revenues to be in the range of US$500 million to US$525 million.

The Company expects to expand its annual silicon ingot, silicon wafer, solar cell and solar module production capacities to approximately 500 MW each by the end of 2010.

Conference Call Information

JinkoSolar's management will host an earnings conference call on Monday, August 16, 2010 at 8:00 a.m. U.S. Eastern Daylight Time (8:00 p.m.Beijing/Hong Kong time).

    Dial-in details for the earnings conference call are as follows:

    Hong Kong / International:  +852-2598-7556
    U.S. Toll Free:             +1-866-839-8029
    Passcode:                   jinkosolar


Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call.

A replay of the conference call may be accessed by phone at the following number until August 23, 2010:

    International:  +852-3018-0000
    Passcode:       1092198


Additionally, a live and archived webcast of the conference call will be available on the Investor Relations section of JinkoSolar's website at http://www.jinkosolar.com .

About JinkoSolar

JinkoSolar Holding Co., Ltd. (NYSE: JKS) is a fast-growing solar product manufacturer with low-cost operations based in Jiangxi Province and Zhejiang Province in China. JinkoSolar has built a vertically integrated solar product value chain from recovered silicon materials to solar modules. JinkoSolar's principal products are silicon wafers, solar cells and solar modules. As of December 31, 2009, JinkoSolar had an aggregate of more than 440 silicon wafer, solar cell and solar module customers from China, Hong Kong, Taiwan, the Netherlands, Germany, the United States, India, Belgium, Singapore, Korea, France, Spain and Israel and other countries or regions. For more information about JinkoSolar, please visit http://www.jinkosolar.com .

Currency Convenience Translation

The conversion of Renminbi into U.S. dollars in this release, made solely for the convenience of the readers, is based on the noon buying rate in the city of New York for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve Bank of New York as of June 30, 2010, which was RMB6.7815 to US$1.00. No representation is intended to imply that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollars at that rate on June 30, 2010, or at any other date. The percentages stated in this press release are calculated based on Renminbi.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Statements that are not historical facts, including statements concerning our beliefs, forecasts, estimates and expectations, are forward- looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including, but not limited to, JinkoSolar's ability to obtain additional capital to fund its operations and business expansion, its ability to obtain sufficient silicon raw materials in a timely manner, its ability to manage its expansion of operations effectively, the general economic and business environment and conditions, the volatility of JinkoSolar's operating results, its ability to attract and retain qualified employees, key technical personnel and executive officers, and other risks outlined in the Company's public filings with the Securities and Exchange Commission, including the Company's registration statement on Form F-1, as amended. All information provided in this press release is as of August 16, 2010. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

    For investor and media inquiries, please contact:

    In China:

     Yvonne Young
     JinkoSolar Holding Co., Ltd.
     Tel:   +86-21-6106-4018
     Email: ir@jinkosolar.com

     Derek Mitchell
     Ogilvy Financial, Beijing
     Tel:   +86-10-8520-6284
     Email: jks@ogilvy.com

    In the U.S.:

     Jessica Barist Cohen
     Ogilvy Financial, New York
     Phone: +1-646-460-9989
     Email: jks@ogilvy.com

 

                         JINKOSOLAR HOLDING CO., LTD.
             UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
                  (in thousands, except ADS and Share data)

                                           For the quarter ended
                                 June 30,    March 31,         June 30,
                                   2009        2010              2010
                                    RMB         RMB         RMB         USD

    Total revenues                221,232     548,868     900,615     132,805

    Cost of revenues             (183,198)   (419,028)   (658,466)    (97,097)

    Gross profit                   38,034     129,840     242,149      35,708

    Operating expenses:
      Selling and marketing        (3,204)     (9,954)    (28,019)     (4,132)
      General and administrative  (15,341)    (19,818)    (49,474)     (7,295)
      Research and development       (221)     (2,951)    (13,982)     (2,062)

    Total operating expenses      (18,766)    (32,723)    (91,475)    (13,489)

    Income from operations         19,268      97,117     150,674      22,219
    Interest expenses, net         (4,741)    (11,448)    (13,913)     (2,052)
    Subsidy income                  2,506       1,176       3,810         562
    Exchange (loss)/gain           (1,094)     (1,047)        235          35
    Other expenses, net              (495)       (397)     (4,837)       (713)
    Change in fair value of
     derivatives                  (11,243)         55      74,606      11,001
    Income before income taxes      4,201      85,456     210,575      31,052
    Income tax expense                 --     (12,049)    (29,925)     (4,413)

    Net income attributable to
     JinkoSolar Holding Co.,
     Ltd.                           4,201      73,407     180,650      26,639
    Series A redeemable
     convertible preferred
     shares accretion              (7,709)     (8,910)     (4,524)       (667)
    Series B redeemable
     convertible preferred
     shares accretion             (10,216)    (11,605)     (5,875)       (866)
    Allocation to preferred
     shareholders                 (10,105)    (10,103)     (5,054)       (745)
    Deemed dividend to a
     preferred share holder        (8,015)         --          --          --
    Net (loss)/income
     attributable to
     JinkoSolar Holding Co.,
     Ltd.'s ordinary
     shareholders                 (31,844)     42,789     165,197      24,361

    Net (loss)/income
     attributable to
     JinkoSolar Holding Co.,
     Ltd. 's ordinary
     shareholders per share -
    Basic                           (0.63)       0.84        2.38        0.35
    Diluted                         (0.63)       0.84        2.36        0.35

    Net (loss)/income
     attributable to
     JinkoSolar Holding Co.,
     Ltd. 's ordinary
     shareholders per ADS -
    Basic                           (2.51)       3.37        9.52        1.40
    Diluted                         (2.51)       3.37        9.42        1.39

    Weighted average ordinary
     shares outstanding -
    Basic                      50,731,450  50,731,450  69,426,294  69,426,294
    Diluted                    50,731,450  50,731,450  70,139,814  70,139,814

 

                         JINKOSOLAR HOLDING CO., LTD.
                     UNAUDITED CONSOLIDATED BALANCE SHEETS
                                   (in thousands)

                                     December 31  March 31,       June 30,
                                        2009        2010            2010
                                         RMB        RMB        RMB       USD

    ASSETS
    Current assets:
    Cash and cash equivalent           152,480    159,600    369,016   54,415
    Restricted cash                     72,827     94,567    184,035   27,138
    Short term investments              50,462     26,253     26,042    3,840
    Accounts receivable, net - a
     related party                         100        100        100       15
    Accounts receivable, net - third
     parties                           236,797    238,861    267,191   39,400
    Notes receivable                    13,302     33,632     14,349    2,116
    Advances to supplier - a related
     party                                  --         --      6,124      903
    Advances to suppliers - third
     party                              93,324    159,765    213,622   31,501
    Inventories                        245,192    398,026    470,778   69,421
    Forward contract derivative
     assets                                 --         --     74,606   11,001
    Deferred tax assets - current        1,342      1,619     10,051    1,482
    Other receivables from related
     parties                                --         42         88       13
    Prepayments and other current
     assets                            104,824     82,792    118,220   17,433
    Total current assets               970,650  1,195,257  1,754,222  258,678

    Property, plant and equipment,
     net                               741,481    814,866  1,048,496  154,611
    Land use rights, net               228,378    227,434    226,503   33,400
    Intangible assets, net                 279        413        389       57
    Advances to suppliers to be
     utilized beyond one year          230,900    227,069    109,682   16,174
    Goodwill                            45,646     45,646     45,646    6,731
    Other assets                        25,315     76,829    223,313   32,930

    Total assets                     2,242,649  2,587,514  3,408,251  502,581

    LIABILITIES
    Current liabilities:
    Accounts payable  - third
     parties                            99,933    224,016    222,538   32,815
    Notes payable                       81,643    108,763    155,048   23,863
    Accrued payroll and welfare
     expenses                           34,989     36,306     49,660    7,323
    Advances from third party
     customers                          36,778     62,924     88,900   13,109
    Other payables and accruals        116,750     87,529    160,471   22,663
    Other payables due to a related
     party                                 550        275        550       81
    Income tax payable                      --     12,315     22,924    3,380
    Derivative liabilities                  55         --         --       --
    Deferred tax liabilities                --         --     16,038    2,365
    Current portion of long-term
     borrowings                         60,000     90,000     60,000    8,848
    Short-term borrowings from third
     parties                           516,084    615,984    696,472  102,702

    Total current liabilities          946,782  1,238,112  1,472,601  217,149

    Non-current liabilities:
    Long-term borrowings               348,750    328,875    349,000   51,464
    Guarantee liability                  1,500      1,500      1,500      221
    Deferred tax liability               2,779      2,791      2,802      413

    Total long term liabilities        353,029    333,166    353,302   52,098

    Total liabilities                1,299,811  1,571,278  1,825,903  269,247

    Commitments and contingencies

    Series A Redeemable Convertible
     Preferred Shares (US$0.00002
     par value, 5,375,150 shares
     authorized; 5,375,150,
     5,375,150 and nil shares issued
     and outstanding as of December
     31, 2009, March 31, 2010 and
     June 30, 2010, respectively)      189,058    197,968         --       --
    Series B Redeemable Convertible
     Preferred Shares (US$0.00002
     par value, 7,441,450 shares
     authorized; 7,441,450,
     7,441,450 and nil shares issued
     and outstanding as of December
     31, 2009, March 31, 2010 and
     June 30, 2010, respectively)      287,704    299,309         --       --

    Equity
    Ordinary shares (US$0.00002 par
     value, 487,183,400 shares
     authorized; 50,731,450,
     50,731,450 and 86,927,850
     shares issued and outstanding
     as of December 31, 2009, March
     31, 2010 and June 30, 2010,
     respectively)                           8          8         13        2
    Additional paid-in capital         193,929    193,929  1,087,273  160,329
    Statutory reserves                  38,435     38,435     38,435    5,668
    Other comprehensive loss                --         (9)      (220)     (32)
    Retained earnings                  233,704    286,596    456,847   67,367

    Total JinkoSolar Holding Co.,
     Ltd. Shareholders' equity         466,076    518,959  1,582,348  233,334

    Total liabilities and equity     2,242,649  2,587,514  3,408,251  502,581

 

SOURCE JinkoSolar Holding Co., Ltd.

 

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