Business context and reporting period
JinkoSolar Holding Co., Ltd. filed this Form 20-F on April 28, 2021, reporting its fiscal year ended December 31, 2020, with comparisons to 2019 and 2018. This is an annual report, not a standalone 2020 fourth-quarter filing; the supplied filing does not provide a clear set of Q4-only financial results. The company manufactures solar products across a vertically integrated value chain, with modules as its principal product. Financial statements are prepared under U.S. GAAP and reported primarily in RMB.
Financial performance and position
| Metric | 2020 | 2019 |
|---|---|---|
| Revenue | RMB35.13bn (US$5.38bn), +18.1% | RMB29.75bn |
| Gross profit / margin | RMB6.17bn / 17.6% | RMB5.43bn / 18.3% |
| Operating income / margin | RMB1.78bn / 5.1% | RMB1.73bn / 5.8% |
| Net income | RMB335.3m | RMB924.4m |
| Net income attributable to JinkoSolar shareholders | RMB230.4m (US$35.3m); basic EPS RMB1.29 per share (RMB5.15 per ADS) | RMB898.7m; basic EPS RMB5.31 per share |
| Operating cash flow | RMB591.5m | RMB1.41bn |
| Cash and cash equivalents | RMB7.48bn | RMB5.65bn |
| Short-term borrowings | RMB8.24bn | RMB9.05bn |
| Long-term borrowings | RMB7.30bn | RMB1.59bn |
Solar-module revenue was RMB32.56bn, 92.7% of total revenue. Module shipments rose 32.2% to 18.8 GW, while the average selling price declined. The filing reports RMB6.40bn of restricted short-term investments and RMB593.1m of restricted cash at year-end, so these balances are not equivalent to freely available cash. Current assets were RMB33.68bn and current liabilities RMB31.22bn, implying working capital of approximately RMB2.47bn and a current ratio of about 1.08.
Net cash used in investing activities was RMB4.92bn and net cash provided by financing activities was RMB6.30bn. Capital expenditures were RMB4.31bn. The filing’s liquidity discussion also states working capital was RMB24.3m, which conflicts with the balance-sheet figures and another disclosure of RMB2.47bn; the filing text does not provide a clear reconciliation.
Material changes versus 2019
- Revenue increased 18.1%, primarily on higher module shipments, but gross margin fell 0.7 percentage points and operating margin fell 0.7 percentage points.
- Shareholder-attributable net income declined to RMB230.4m from RMB898.7m. The 2020 result included a RMB725.8m net loss from fair-value changes in convertible notes and the call option; this accounting item was driven largely by the rise in JinkoSolar’s share price. Diluted EPS was a loss of RMB1.36 per share, despite positive basic EPS.
- Operating cash flow fell to RMB591.5m from RMB1.41bn. Higher inventories and other working-capital movements weighed on cash generation.
- Short-term borrowings declined, while long-term borrowings rose substantially. Total reported borrowings were approximately RMB15.54bn, in addition to the convertible-note liability reported at RMB1.83bn fair value at year-end.
- Module sales volume rose, but silicon-wafer sales revenue fell 50.5%. The company also recognized RMB1.20bn in solar-project sales from completing the sale of two Mexican plants.
Outlook, commentary, risks and unusual items
- Outlook: Management expected annual capacity by the end of 2021 to reach 33 GW for mono wafers, 27 GW for cells and 37 GW for modules. As of March 31, 2021, about 50% of expected 2021 module shipments were secured. Management anticipated global solar demand growth, while warning of continued polysilicon price volatility and a tightly balanced supply-demand market.
- Funding and commitments: Capital commitments totaled RMB3.63bn, of which RMB3.24bn was due in 2021. Holders of the US$85m 2024 convertible notes could require cash repurchase on June 1, 2021; the company disclosed that US$15.75m had converted by the annual-report date. The company said cash, expected operating cash flow and available credit facilities should cover working capital and capital expenditure for at least 12 months, but also highlighted substantial debt and near-term repayment risk.
- Market and operating risks: Competition and falling module prices, rising polysilicon costs, subsidy reductions, customer credit exposure, foreign-exchange volatility and COVID-related logistics disruptions could pressure margins, cash flow and demand. Overseas markets generated 81.9% of revenue; North America alone accounted for 28.7%.
- Trade and supply-chain exposure: The filing describes U.S. trade duties and pending administrative reviews, including a 95.5% anti-dumping deposit rate from the sixth review for certain covered imports, subject to applicable product scope and further review. It also identifies potential U.S. import restrictions concerning forced-labor allegations and Xinjiang supply chains; the company states it does not tolerate forced labor.
- Guarantees and related parties: JinkoSolar guaranteed JinkoPower financing obligations of RMB2.32bn. At year-end, RMB300m of the RMB377m receivable from JinkoPower was overdue more than one year. These exposures warrant attention alongside the company’s other related-party balances.
- Litigation and contingencies: A German court ruled against a subsidiary in a Hanwha patent case; the company appealed. Related U.S. and Australian proceedings remained ongoing, while the U.S. ITC had found non-infringement on a challenged patent claim and that decision was appealed. Management said it could not reasonably estimate possible losses for the unresolved claims. A separate Portuguese arbitration was settled after year-end for a €750,000 payment.
- Other exposures: The company estimated RMB605.8m of unpaid statutory social-insurance and housing-fund contributions in China. It reported no probable and reasonably estimable liability for certain unresolved legal claims. Auditors issued an unqualified opinion and concluded internal control over financial reporting was effective; the filing nevertheless notes that the PCAOB could not inspect the China-based auditor at that time.
- Post-year-end financing: The company completed its US$100m ATM program in January 2021, receiving US$98.25m net, and said proceeds would support capacity expansion and general corporate purposes.
Most important facts for investors to verify
- Reconcile the conflicting working-capital disclosures and assess how much reported cash and investment balances are restricted or otherwise unavailable.
- Review debt maturities, the June 2021 note repurchase right, credit-facility availability, collateral requirements and the financing of 2021 capital commitments.
- Assess whether module shipment growth can offset selling-price pressure, higher raw-material costs and falling margins.
- Confirm the scope and final outcomes of U.S. trade-duty reviews, and monitor the potential effects of import restrictions on Xinjiang-linked supply chains and U.S. sales.
- Track JinkoPower’s overdue receivables and guaranteed debt, the outcome of patent disputes, and progress in resolving unpaid employee-benefit contributions.
- Distinguish recurring operating performance from non-cash fair-value changes, government grants, duty refunds and solar-project disposals when evaluating earnings quality.