JinkoSolar (JKS) Misses Q2 Earnings And Revenue Estimates

JinkoSolar Holding Co., Ltd. (NYSE:JKS) reported second-quarter 2016 non-GAAP earnings per American Depositary Share (ADS) of $1.86, missing the Zacks Consensus Estimate of $2.00 by 7%. However, the reported figure increased from earnings of $1.04 per ADS reported in the year-ago quarter.

Total Revenue

In the quarter under review, JinkoSolar’s total revenue of $896.1 million missed the Zacks Consensus Estimate of $930 million by 3.6%. However, on a year-over-year basis, the top line surged 86.1% primarily on the back of higher shipments and an increase in electricity revenues from solar projects.

Quarterly Highlights

In the second quarter of 2016, total solar product shipments were 1,716 megawatts (MW), up 87.9% year over year primarily due to higher shipments of solar modules, silicon wafers and solar cells. Out of the total shipment, nearly 204 MW were used in downstream projects.

Gross margin contracted to 20.4% from 20.7% in second-quarter 2015. Margin contraction was primarily due to an increase in tariffs paid for solar modules manufactured in the company's Chinese production facilities, which are thereafter shipped to the U.S. markets.

JinkoSolar’s total operating expenses shot up 79.8% year over year to $115.4 million primarily due to higher shipping and warranty costs, provisions of accounts receivable, and impairment of property, plant and equipment.

The company incurred $18.3 million as interest expenses, up 53% mainly due to an increase in loans used for solar power projects.

Financial Condition

As of Jun 30, 2016, JinkoSolar had cash and cash equivalents of $556.8 million, down from $654.4 million as of Dec 31, 2015.

Total interest bearing debts as of Jun 30, 2016, were $1.81 billion, compared with $1.59 billion as of Dec 31, 2015.

Guidance

JinkoSolar expects third-quarter 2016 total solar module shipment in the range of 1.5–1.7 gigawatts (GW). For 2016, the company reiterated its total solar module shipments expectation in the band of 6–6.5 GW.

JinkoSolar expects 600 MW to 800 MW of total project development in 2016, which will be supported by its downstream business.

Peer Releases

JA Solar Holdings Co. Ltd. (NASDAQ:JASO) posted second-quarter 2016 adjusted earnings of 30 cents per diluted American Depositary Share (ADS), missing the Zacks Consensus Estimate of 59 cents by a wide 49.2%. Earnings, however, improved from the year-ago figure of 27 cents by 11.1%.

Yingli Green Energy Holding Company Ltd. (NYSE:YGE) , also known as Yingli Solar, reported operating income of 90 cents per ADS in second-quarter 2016. The Zacks Consensus Estimate was a loss of 30 cents. Moreover, in the year-ago quarter, the company had reported a loss of $5.30 per ADS.

Trina Solar Ltd. (NYSE:TSL) reported earnings of 42 cents per ADS in the second quarter of 2016, beating the Zacks Consensus Estimate of 34 cents by 23.5%. Earnings were, however, flat with the year-ago level.

Zacks Rank

JinkoSolar currently carries a Zacks Rank #5 (Strong Sell).