JinkoSolar Holding Co Ltd DR

Hello, ladies and gentlemen, and thank you for standing by for JNCO Solar Holding Co. Limited's first quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question-and-answer session. As a reminder, today's conference call is being recorded. I would now like to turn the meeting over to your host for today's call, Estella Wang, JNCO Solar's Investor Relations. Please proceed, Estella.

Thank you, operator. Thank you, everyone, for joining us today for Zinco Solar's first quarter 2025 earnings conference call. The company's results were released earlier today and available on the company's IR website at www.zincosolar.com, as well as on New Survival Services. We have also provided a supplemental presentation for today's earnings call, which can also be found on the IR website. On the call today from Zinco Solar are Mr. Lee Sander, Chairman and CEO of Zinco Solar Holding Company Limited, Mr. Jenner Myung, CMO of Zinco Solar Company Limited, Mr. Pan Lee, CFO of Zinco Solar Holding Company Limited, and Mr. Charlie Chao, CFO of Zinco Solar Company Limited. Mr. Lee will discuss Zinco Solar's business operations and company highlights. followed by Mr. Miao, who will talk about the sales and marketing, and then Mr. Pan, who will go through the financials. They will be available to answer your questions during the Q&A session that follows. Please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding this and other risks is included in Zinco Solar's public filings with the Securities and Exchange Commission. Zinco Solar does not assume any obligation to update any forward-looking statements except as required under the applicable law. It's now my pleasure to introduce Mr. Li Xiange, Chairman and CEO of Jingkou Solar Holding. Mr. Li will speak in Mandarin and I will translate his comments into English.

Please go ahead, Mr. Li. Mr. Li. Model shipments reached 17.5 gigawatts, with revenues of US dollars $1.91 billion.

for the first quarter of 2025. Prices across the non-solar industrial chain were low in the first quarter. This combined disruption in demand caused by changes in international trade policies, pressured profit margins in each segment of the integrated solar supply chain. Despite this challenging market environment, we fulfilled our delivery commitment to our customers and reduced the cost through supply chain optimization adjustments in production and operation plans, and other measures. Due to a year-over-year decline in payments to the U.S. market and a continued decline in higher price overseas orders, our model prices and profit ability decreased both year-over-year and essentially in the first quarter. Net loss was approximately U.S. dollars 180 million for the first quarter.

According to the National Energy Bureau statistics, in January to March of 2025, the domestic new generation of 59.7GW will increase by 31%. The demand for domestic light service will continue to grow. In the past year, high-tech back-to-back production, man-made performance, self-regulation of the market, and high-quality development of the enterprise have gradually shown results. In January to March, domestic light service will gradually attract more and more military, military, military, military, military, military, military, military. In recent years, as the policy of distribution and the policy of electric marketization has been strengthened to 10 points, the market sentiment has eased, and the price of distributed components has returned to its previous high point. At the same time, the change in international trade policy, such as the US tax on energy, continues to recover, and the industry has brought some movement. Facing this major challenge, we flexibly stimulated the distribution and supply strategy, and maintained close communication and coordination with customers. According to data from the NEA, new installations in China in the first quarter amounted to 59.7 gigawatts.

an increase of 31% year-over-year. Resilience was seen in domestic demand despite the higher comparison in 2024. Market self-regulation and high-quality development initiatives by manufacturers were gradually effective. From January to March, average monthly bidding prices for solar modules steadily recovered in the domestic market, and bidding prices returned to a more rational level. Recently, as the policy cut off deadlines for distributed solar regulations and the market-based renewable price reform on April 30 and May 31 approach, market sentiment has cooled down to some extent, and the distributed module prices have fallen back from their previous highs. At the same time, changes in international trade policies, such as reciprocal tariffs in the United States, have continued to bring certain disruptions to the PV industry. In response to these challenges, we have flexibly adjusted our supply chain strategy and regional shipment mix, while maintaining close communication and negotiation with other customers. Relying on our extensive marketing insights and efficient execution, we remain committed to meeting customer demands for our high-efficient and reliable products, maintaining operations continually while adapting to market dynamics. Currently, visibility of our order book stands at 60% to 70%, with Indo-Pacific and Middle East and Africa exceeding 80%.

降并增效仍是光复行业的主旋, 发展的主旋利, 终端客户对高功率产品的需求在快速增长, 以进一步降低度电成本, 由于行业大部分常规TopCom产能在升级改造方面存在限制,

Cost reduction and increasing efficiency remain the main themes in the development of the PV industry, and customers' demand for high-power products is growing rapidly to further reduce LCOE. Due to limitations in upgrading and transformation of most conventional top-con capacity in the industry, differences between manufacturers in top-con cell efficiency, product performance, and cost are gradually widening. We believe that companies with high-efficiency cell capacity and high-power products will have a competitive advantage in the market.

In conclusion, our top-con 3-generation product's battery capacity has exceeded 26.6%. We continue to promote the upgrade and transformation of the existing topo.com. By introducing software animation, 5G3 and other technologies, it is estimated that topo.com's three-generation products are 20W to 30W ahead in terms of industry-standard topo.com products. At the same time, we continue to break through along the 8-point line. At the end of the first quarter, the efficiency of the topo.com technology's carrier steel-layer battery laboratory reached 34.2. We refresh the record again.

By the end of the first quarter, the mass-produced cell efficiency for our third-generation TopCon products exceeded 26.6%. We continued to upgrade existing TopCon capacity with the introduction of technologies such as the half-cell preservation max and the 20 busbar. We expect the power of our third-generation TopCon products to have a 20 to 30 Watt-per-feet advantage compared to previous-generation TopCon products in the industry. Meanwhile, we kept making breakthroughs in our R&D. By the end of the first quarter, our laboratory efficiency for perovskite tandem solar cells based on TopCon reached 34.22%. Once again, setting a new record.

Our investment in the manufacturing and sales services in the energy field has also gradually shown results. This year, the output of the energy system has exceeded 300 MW. In addition, there is a significant growth in the same period last year. It is estimated that in 2025, the output of the energy system will be around 6 gigawatts. The Taiwan project will be our strategic center. So far, the order of the energy system has reached more than 50% to 60%. In addition, there are 20% to 30% of projects that have been signed and established. Ito Company has an advantage in the recovery field. We will actively explore and focus on the integrated innovation business model.

Our investments in R&D, manufacturing, and after-sales service capabilities in energy storage are gradually showing results. In the first quarter, shipments of our ESS exceeded 300 MWh, a large increase compared to the same period last year. We expect our ESS to be, shipments of our ESS to be around six gigawatt hours for the full year 2025, with the overseas market as our strategic priority. So far, confirmed orders for energy storage systems accounted for 50% to 60%, with another 20% to 30% showing strong potential for signing. Leveraging our leading position in the TV industry We will proactively explore the innovative business models that integrate solar and the storage solutions, providing high-efficiency and smart green energy solutions to global clients and contributing to the sustainable development of the global energy.

Before I hand over the topic to Jenna, I would like to introduce Yeqi Ziyin. At the end of 2025, Yeqi Ziyin is expected to achieve 120 GW of high-efficiency electronics and home appliances. 95GW and 130GW. 3-Datacom's high efficiency capacity will reach 40GW to 50GW. In the second quarter of 2025, the total output will be between 20GW to 25GW. In the whole year of 2025, the total output will be between 85GW to 100GW. We will actively respond to industry needs and policy changes, continue to optimize market strategy and supply chain management, and continue to enhance the competitiveness of technology and products.

Before turning over to Jenna, I would like to go over our guidance for the second quarter and the four-year 2025. We set our annual production capacity for mono-wafers, solar cells, and solar modules to reach 120, 95, and 130 gigawatts, respectively. This annual production capacity of our third-generation top-con modules to reach 40 gigawatts to 50 gigawatts by the end of 2025. We expect module shipment to be between 20 to 25 gigawatts in the second quarter of 2025, and between 85 to 100 gigawatts for the four year 2025. And we will actively respond to changes in market demand and policy, continuously optimize market strategies and supply chain management. and consistently improve technology and product competitiveness to maintain a leading position in the industry.

Thank you, Ms. Li. First quarter total shipments were 19.1 gigawatts, with module shipment accounting for approximately 90%. Although demand was impacted by the off-season, we sustained the industry's highest shipment levels by leveraging our global sales network and the strength of our products. Shipments to overseas markets accounted for around 70%. We have proactively embraced the surge in the demand in the Indo-Pacific and the North Asia markets. Shipments to Indo-Pacific markets grew by nearly 10% year-over-year and 150% sequentially, while shipments to North Asia increased by nearly 20% year-over-year. U.S. shipment accounted for approximately 5% in line with our guidance. On the product side, customer demand for our third generation high power TopCon products continue to grow. Our third generation high power TopCon is expected to have a mainstream output over 650 watt peak with maximum of 670 watt peak. Thanks to lower degradation, lower temperature coefficient, higher bifacial energy, and enhanced reliability, It can deliver better power generation use for end customers. Currently, customers are willing to pay a premium for such high power generation. Recently, we were once again recognized as a Tier 1 energy storage provider by Bloomberg. We have been listed in the BNEF rankings for four consecutive quarters. a strong recognition from a third party and the customers of our safe and reliable energy storage solution, as well as our timely delivery and deployment capabilities. With the increasing economic of integrated solar and storage solutions and the continued expansion in the application scenarios, particularly against the backdrop of high energy consumption driven by AI, integrated solar and storage solutions increasingly become feasible. The overseas market has always been one of our strengths. In 2025, we will further expand the energy storage business globally while continuing to focus on and explore technological innovation and application in specific application scenarios. We believe that the synergy between our solar and the storage business will further increase our market competitiveness. On the demand side, we expect a global module demand to remain about 700 gigawatts in 2025, with strong growth in Asia Pacific, Europe, and the Middle East. Following the recent rush installation in China with initiation of utility scale projects in August and September, The overall demand is expected to continue to be in line with module supplies under the industry high-quality development initiatives in U.S. Due to current shortage in local cell production capacity and the impact of reciprocal tariffs, there is likely to be a wave of early purchases of cell and modules. We remain optimistic about the long-term demand in the U.S. market. In addition to the announced Saudi projects and existing U.S. domestic operations, we are actively pursuing diverse solutions to strengthen our position in this market to enhance our long-term competitiveness. We are confident that our extensive sales network and deeply localized customer services system will help us respond to the market dynamics, make flexible adjustments, and continue to satisfy customers' demand for more high-efficient, reliable, and sustainable products.

Thank you, General. Here is the challenging first quarter. We continue to control costs and expenses, leading to a significant year-over-year decrease in comprehensive costs and operating expenses. In addition, we continue to optimize our asset and liability structure as well as cash reserves. By the end of the first quarter, our asset liability ratio was approximately 74%, lower from nearly 75% at the end of the first quarter last year. By the end of the first quarter, our cash and cash equivalent for 3.77 billion, a significant increase from 2.44 billion at the end of the first quarter last year. We will continue to optimize our asset and liability structure and maintain healthy cash reserves in 2025, further strengthening our resilience to risk. Let me go into more details now. Total revenue. was $1.9 billion, down 33% sequentially and down 40% year-over-year. The sequential decrease was probably due to a decrease in shipments of solar modules. And the year-over-year decrease was also due to a decrease in average selling price of modules. Gross margin decreased both sequentially and year-over-year, mainly due to the decrease in ASP of solar modules. Total operating expenses were $350 million, down 8% sequentially and down 18% year-on-year. The sequential decrease was mainly due to the decrease in the impairment of long-lived assets and a decrease in the losses resulting from disposal of long-lived assets. The year-to-year decrease was primarily due to the decrease in shipping costs as we shipped fewer solar modules. Total operating expenses accounted for 18% of total revenues compared to 13% in the fourth quarter last year and 13% in the first quarter last year. Operating loss margin was about 20%. compared with 9% in the fourth quarter last year and 1.5% in the first quarter last year. Moving to the balance sheet. At the end of the first quarter, our cash and cash equivalent was $3.77 billion compared with $3.8 billion at the end of the fourth quarter and $2.44 billion at the end of the first quarter last year. AR turnover days. were 111 days compared with 80 days in the fourth quarter and 100 days in the first quarter of last year. Inventory turnover days were 84 days compared with 57 days in the fourth quarter and 89 days in the first quarter of last year. At the end of the first quarter, total debt was $6.4 billion compared to $5.5 billion at the end of the fourth quarter. NASDAQ was $2.6 billion compared to $1.7 billion at the end of the fourth quarter last year. This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. Your first question comes from Brian Lee with Goldman Sachs & Co.

Hey, guys. This is Tyler Bissett on for Brian. Thanks for taking our questions. Appreciate the ESS guidance of 6 gigawatt hours. And wondering if you can give a little bit more details on kind of where these shipments are going. Is this more in line with your module shipments? And I'm also curious where you guys are sourcing your battery cells.

It's mainly a dominant ESF shipment mix. It's mainly dominated by Asia Pacific region, Europe region, and emerging markets, together with China. Those four regions are our main target in terms of 2025. which is slightly different from what we have for modules. But for the key markets, it's very light to each other. But in terms of geographic mix, because of the trade barrier in the U.S., etc., it's difficult to extend the ESS business in the U.S. right now.

Thank you. And Given the final determination on ADCBD, which was, I guess, relatively more favorable for Malaysia, how are you thinking about your future imports to the U.S.? Could you see that potentially increasing at all, or do you think it's more likely to stay in the 5% range?

Well, I think ADCBD is only a preliminary tariffs, so they still have what they call sunset termination after 12 months of customer clearance, which brings the company a lot of uncertainty. So in that case, we are trying to look into the different options we have in order to provide more certainty and providing more competitive in terms of the cost as well. So right now, we are still working hard on that for the short term because the recent hype or change on the ADCVD together with trade barriers is pretty new. But in long term, we still have our commitment to the U.S. market with our strategy in the joint venture factories in the Middle East together with our local operation in the U.S. We are still fully committed.

All right. Thank you very much.

Your next question comes from Philip Shen with Roth Capital Partners.

Hi, everyone. Thanks for taking my questions. So you guys had negative gross margins for the first time in a long time in Q1 and was wondering if you can talk through what you expect for margins for Q2 and Q3. And then when do you expect the margins to go back positive? Thanks.

In fact, the gross margin and the risk to negative is very extreme, you know, cases in the last five years and reflecting, you know, the supply and the demand imbalance and, you know, throughout, you know, last year. And on top of that, the first quarter is the snack season and we have more exposures to the China markets and the weeks back, you know the short-term we find a close money and To improve and the slide page in second quarter given the module price is in up for trend, you know with the push demand from China and other regions and In second half year and they were expected to be stable maybe have the chance to improve and we believe and the current situation is not sustainable even for the top tier companies. And from the supply side, we are seeing more and more companies and, you know, based off in the solar industries. On top of that, there's uncertainties on international trade. And we believe, you know, by the end of this year, we'll have more clarifications.

Thank you. Okay. Thank you, Charlie. So, Shifting to the U.S. market, there is the 145% tariff. I wanted to understand, what's the update on your plans to ramp up U.S. cell manufacturing in Florida or wherever that might be? And also, with the 145% tariff, are you able to import solar cell tools without, like, is there an exemption for the tools, or is there no exemption for the tools? So it makes the ramping of US cell manufacturing more difficult.

Thanks. I think it's more because of the board, you know, questions about long-term belief. We believe, you know, local production in the U.S. for local customers in the United States is a trend. That is consistent with, I think, you know, the long-term policies from the current, you know, Trump administration. And for the short term, there's a lot of uncertainties. There's, you know, the budget cuts. There's the IRA, you know, incentive. There is maybe, you know, what we are, you know, interested in the F-E-L-O-C, you know, this kind of things. And so what we take our approach is we consistently evaluate the policies from the different angles. And as long as there is some kind of certainty, and we strongly believe the U.S. solar market will boom, you know, next year. And specifically, for the, you know, if we want to build the solar cell facilities, and we import the equipment from China, under the current tariff, it's a crazy rate, right? It's not make sense to make the decisions, even from that specific angle. So, back to your question, we don't have the plan in the short term, you know, solar cell will be built in the US, but we have, you know, consistent in evaluating the policies, the potential signs, and the potential target situations.

Okay. Thank you very much. I'll pass it on.

Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. Your next question comes from Alan Lau with Jefferies.

Thank you for taking my question. My first question is on, it is the first time I think the company has provided the guidance on ESS. I would like to know if there's any indication on the margins on ESS, like some ballpark range, because ESS has been quite competitive in the Middle East as well.

You mean the margin, right? Yeah, the market-wise... Yeah, yeah, ghost market. I think we target 5% to 10%. It's not a big target. And given the business we develop, starting from the very small scale. Last year, we achieved 1 gigawatt. But this year, we have confidence to finish with the market. and particularly, you know, Eastern Pacific, you know, North America, some emerging markets. And so the profitability is not the first priority. But in terms of gross margin, we, you know, we expect, you know, in kind of a range of 5% to 10%.

Five to 7%, right?

Five to 10%.

Okay, okay. Thank you. And my next question is about, so did the company receive IRA credits for the production last year at this point in time? Or if the company has sold any of the IRA 45X credits already?

Last year, I think we filed the filings and it's kind of the... the deduction of the tax payable for the facilities. And this year, we are exploring the opportunities and to sell the credit to the outside investors, and it's in the process.

So you managed to get the credits already, just managing to sell it to financial institutions, right, for this year?

Yeah, this year we plan, you know, it's because, you know, we have two gigawatts in four operations, and there's a lot of potential investors who are interested to, you know, to propel the credit from the facilities. And so we are in the process of communication and negotiation.

Thank you. So another question is, So what is the U.S. shipment target approximately for this year? Because there's a lot of changes since last time we talked. And is there already some inventory in the U.S. to support that shipment?

You know, the range is 5% to 10%, but you're right. Uncertainty, I think, is the big element. So... But I think we are, you know, certainly it's, you know, will not be, let's say, clear in the short term. It will be having an impact on the payments to the U.S. But I think 5%, you know, it's kind of the face and let's say the low case, but we're confident and we can achieve on this 5%. And if the uncertainty is, you know, it's kind of the, you know, to be, you know, to have more clarity and if the supply chain is, you know, available supply chain to the U.S. and we can ship more.

But again... So 5% of total shipment, right, like, so if it's 85 to 100 giga for this year, it's around 45 giga.

Yes, largely, yes.

I see, I see. Thank you. So my last question is on the shareholder's return program. So I think after the announcement of 4Q results and first Q result now, so I wonder if the company can start buying back the shares given the shares actually have also went down quite a bit and what the pace of the buyback will look like.

After the release of the first quarter, we plan to buy back from the market. We think it's a good timing, given the valuation is very low. On top of that, we plan to defer dividends, which is subject to a full-up pool. It's on our schedule.

So, to my understanding, the dividends will be approximately like $50 million, right? If it's around $1 per share, say, for example. So, would the buyback look like $150 million then?

We have not decided, you know. It's roughly, I think, at least $100 million. We split it into the dividend plus the purchase. This is the first step, but I think we communicate favorably. We like to monetize financial investment for some companies, which was listed in recent years. And on top of that, we may explore other options to monetize some assets from the U.S. holding perspective.

Okay, so before that happens, actually, you can already start and there's at least $100 million, which is like 10% of dollar spending shares, right?

Yeah, $100 million, I think it's kind of into, you know, dividend plus the purchase share, that's, you know, that's the plan.

I see. So after you liquidate some of your financial assets, there may be upside to this $100 million dividend plus buyback.

We may increase, but depending on the timing and how quick we can monetize the assets.

Thanks a lot. Thanks a lot. I will pass on. Thank you, Charlie.

Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. That's star one on your telephone, and wait for your name to be announced if you have any questions. Your next question comes from Rajiv Chandri with Samsara Capital.

Hello, Charlie. The first question is about market share. You mentioned that this year the market might go to about 700 gigawatts, and last year it was a little bit around 600-plus gigawatts. And I'm wondering, you know, even if you do the high end of your range, which is 100 gigawatts, your market share looks like it might be lower than last year and lower than 2023. Could you clarify that discrepancy?

I think last time we talked about, you know, our strategy is not to – increase on you know more markets here under the you know the imbalance of the supply and demand signs and particularly the industry is losing the money and what we are doing is we want to be flexible in the total shims and which we guided and 85 to 100 gigawatts and What it means is we want to balance utilization, shipment, and probabilities, as well as the cash flow perspective. And on top of that, we need to select customers. We have a lot of potential customers and interest orders, but we need to be more selective. But for the long-term, one long-term, I think last time we talked about we target at least 20% the market share for the module business. But it's not a one-night target. What is the focus? We need to focus on product competitiveness. We continue to invest in R&D. So, you know, penetrate the key market with some kind of premium, make sure, you know, the business is sustainable.

Okay. Uh, thanks. Uh, along the same lines on the market growth, um, can you talk about, you know, where, which regions, geographic regions are going to get the a hundred gigawatts of growth from last year? Uh, how much growth do you expect in China? And, uh, and the US, for example, and also in Europe and India?

Sure, I can roughly talk about it. In the top level, we are looking at the global demand at roughly 700 gigawatts, of which the largest market is believed to be China, same as last year. But the water side, China is expected to grow roughly 10% to 15%, which will account for around 45% of the global demand. And the second largest after China is believed to be, we say Europe, the pan-Europe region. So the whole Europe will be over 100 gigawatt level. So I think that's the only two markets past the 100 gigawatt threshold in 2025. But for sure, there are other markets that are very interesting and sizable, such as the US. We are roughly looking at 50 to 55 gigawatt level. And in India, we are looking at around 30 to 35 gigawatt level. So that's all the big numbers in our mind. But for sure, the attractive growth is mainly coming from the emerging markets, for example, the Asia-Pacific region and also the African regions. Because of the low basis from last year, the growth rate is pretty high. But if you look into the absolute growth numbers in terms of gigawatts, definitely the top four market, which I just mentioned, is still the key focus.

So just to clarify, so you're expecting that China will grow by 10 to 15% this year?

10 to 15, yes.

I see. Okay. And a final question. Are you still getting a premium pricing for your TopCon products based on the technology?

It depends on which technology or which product you are comparing with. Definitely from the customer end, as long as the product is generating more power output or technically yield more IRR returns, customers are more than happy to pay premium on such kind of product.

I see. Can you also give the breakdown you expect between the DG and the utility scale for this year for JNCO?

Yeah. Strategically, we lowered the DG numbers a little bit based on the price trend. So last year, the DG ratio is roughly high 40s, so close to 40, 50, but the high 40s, let's say 47, 46. This year, the number will go down to roughly 30 to 35 range.

I see. Okay. Thank you.

Yeah, thank you.

Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. That is one last call for questions. star 1 on your telephone and wait for your name to be announced. We are showing no further questions at this time. Thank you for your attendance today. That does conclude our conference. You may now disconnect.