JinkoSolar Holding Co., Ltd. Q2 FY2024 earnings call

• Module shipments grew 34.1% year-over-year to 23.8 GW in Q2, ranking first globally. By the end of Q2, total module shipments reached 260 GW. - Leveraged N-type TOPCon technology, with the lab efficiency of N-type TOPCon-based perovskite tandem solar cell reaching 33.24%, and mass-produced 182 TOPCon cells exceeding 26.1% efficiency. - Optimized the supply chain to meet global clients' demands for low-carbon, clean, high-efficient, and reliable products, with Neo Green panels from Zero Carbon Factory receiving positive feedback. - Entered a strategic partnership in Saudi Arabia to produce 10 GW of high-efficiency solar cells and modules, a milestone in globalization. - Accelerated the clearing of P-type capacity, expecting mono wafer, cell, and module annual production capacities to reach 195 GW, 130 GW respectively by the end of 2024.

In the second quarter, JinkoSolar's module shipments grew 34.1% year-over-year to 23.8 gigawatts, ranking first in the industry. Total revenue was approximately $3.3 billion, up 4.4% sequentially and down 21% year-over-year. Gross margin was 11.1% in the second quarter, nearly flat sequentially. Module shipments showed sequential growth despite challenging market conditions. The company's N-type TOPCon technology was a key driver, with N-type cell utilization rates nearly 100% by the end of the second quarter. Revenue from modules contributed significantly to the total revenue.

• Reiterated the module shipments guidance for 2024 at 100 - 110 GW. - Anticipated module shipments for Q3 2024 to be between 23 - 25 GW. - Aimed to have net produced N-type cell efficiency reach 26.5% by the end of 2024. - The order book visibility for 2024 exceeds 80%.

• Industry chain prices declined slightly sequentially in Q2, with prices in most segments falling below cash cost. - Capacity expansion projects were delayed, suspended, or terminated, with some manufacturers cutting or suspending production. - International trade policy changes may impact the overseas supply chain. - Patent litigation and IP risks related to TOPCon technology.

Q: Looking into the back half of the year and 2025, how do you see module pricing trending? And on gross margins, what is it going to take to return to the mid-teens margin levels? And do you think this could be achievable in 2025?

A: Gener Miao stated that market price will stay relatively low for a while due to oversupply, but cost reduction is ongoing, hoping the margin can return to a healthy level as early as possible.

Q: With module prices so low for so long, is that resulting in any demand elasticity? And which countries or regions could we see upside surprise in demand? And when do you think the oversupply situation across the supply chain gets resolved?

A: Gener Miao said demand still shows healthy growth in various markets, the supply side has seen some players drop their plans, and policy-wise China is controlling capacity expansion, expecting the supply side to move to a rational level in several quarters.

Q: What is the US shipment amount and expectation in the second half of this year? And view on policy risk in the US market?

A: Gener Miao said the US is a great market with strong demand and support from the IRA act, US shipment range is 5% - 10% of total, and the risk to Jinko is relatively low.

Q: Progress in the Middle East, estimated timeline of capacity in Saudi Arabia and related policy?

A: Charlie Cao said the Saudi Arabia project is strategic, aiming to localize production, modules for Saudi Arabia locally will have a premium, and the government supports local production.

Q: Usage of FBR polysilicon? Can you use 100% to save cost?

A: Charlie Cao said the utilization levels of FBR polysilicon are around 30% - 50%.

Q: Tandem cell efficiency development process and commercialization timeline?

A: Charlie Cao said tandem is in the early stage, optimistic for future commercialization, but likely to be in the laboratory stage for the next five years, possible commercialization after five years.

Q: TOPCon IP landscape, comfort with position and licensing discussions?

A: Charlie Cao said Jinko is a TOPCon promoter, confident in patents, and has granted patents to other companies.

Q: Depreciation and capital spending numbers for Q2 and full year targets?

A: Pan Li said Q2 CapEx was reduced compared to Q1, full year CapEx adjusted to about RMB9 billion, and Charlie Cao said 2025 CapEx will be less except for the Saudi Arabia project.

Q: Average selling prices decline, will shift away from China and DG provide a benign backdrop for pricing?

A: Charlie Cao said spot market price is expected to stabilize, the decline in ASPs will moderate, and gross margin will stabilize.

Q: Size of N-type market in 2024 and market share?

A: Charlie Cao said 2024 is a TOPCon dominance year, N-type TOPCon market penetration is around 70% - 75%, and Jinko's market share is around 90%