JinkoSolar Holding Co., Ltd. — FY2021 Form 20-F
Period clarification: This is an audited annual report for the fiscal year ended December 31, 2021, not a standalone 2021 Q4 filing. Financial statements are prepared under U.S. GAAP and reported primarily in RMB; U.S. dollar conversions are for convenience.
Business context
JinkoSolar is a Cayman Islands holding company whose operations are principally conducted through subsidiaries in China. It manufactures photovoltaic products across wafers, cells and modules. Solar modules generated 92.4% of 2021 revenue. At year-end, annual production capacity was 32.5 GW of mono wafers, 24 GW of cells and 45 GW of modules. The company reported module shipments of 22.2 GW, up 18.3% year over year.
Key financial metrics
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | RMB40.83 billion (US$6.41 billion) | RMB35.13 billion |
| Gross profit / margin | RMB6.66 billion / 16.3% | RMB6.17 billion / 17.6% |
| Operating income / margin | RMB1.10 billion / 2.7% | RMB1.78 billion / 5.1% |
| Net income | RMB955.6 million | RMB335.3 million |
| Net income attributable to JinkoSolar shareholders | RMB721.0 million (US$113.1 million) | RMB230.4 million |
| Operating cash flow | RMB430.6 million | RMB591.5 million |
| Cash and cash equivalents | RMB8.32 billion | RMB7.48 billion |
| Short-term borrowings, including current maturities and failed sale-leaseback financing | RMB13.34 billion | RMB8.24 billion |
| Long-term borrowings, excluding current portion | RMB9.90 billion | RMB7.30 billion |
Capital expenditures were RMB8.69 billion, compared with RMB4.31 billion in 2020. Net cash used in investing activities was RMB11.31 billion, while financing activities provided RMB12.02 billion. Cash, cash equivalents and restricted cash totaled RMB9.10 billion; this includes restricted cash of RMB602.0 million and does not include RMB9.26 billion of restricted short-term investments. The company reported working capital of RMB64.6 million and total available bank credit facilities of RMB30.28 billion, of which RMB21.48 billion was drawn.
Changes versus FY2020
- Revenue rose 16.2%, primarily on higher module shipments. Module revenue increased 15.9% to RMB37.74 billion.
- Gross profit increased 7.9%, but gross margin fell to 16.3%, which management attributed mainly to higher raw-material costs. Operating expenses rose 26.6%, and operating income declined 38.2%.
- Net income attributable to shareholders increased to RMB721.0 million from RMB230.4 million. The comparison reflects substantial fair-value swings: FY2021 included a RMB191.6 million gain on convertible notes and call option, versus a RMB725.8 million loss in FY2020.
- Net interest expense rose to RMB624.0 million. The company recorded a RMB355.5 million foreign-exchange loss, partly offset by gains on foreign-exchange forwards and higher government subsidy income.
- Operating cash flow declined to RMB430.6 million, with significant working-capital use, including increases in inventories and third-party accounts receivable.
Outlook, risks and unusual items
- Management outlook: Management expected 2022 year-end capacity of 50 GW of mono wafers, 40 GW of cells (including 16.9 GW of N-type cells) and 60 GW of modules. It reported that 50% of expected 2022 module shipments were secured as of March 31, 2022. These are forward-looking expectations, not reported results.
- Funding and investment: Capital commitments were RMB7.81 billion, including RMB7.03 billion due in 2022. Management said available cash, operating cash generation and borrowing capacity should cover working-capital and capital needs for at least 12 months from the financial statements’ issuance date. This assessment sits alongside low reported working capital, increased debt and heavy planned investment.
- Supply chain and margins: Polysilicon prices and availability are volatile. The five largest supplier groups represented 78.7% of silicon purchases by value in 2021; supplier advances were RMB1.83 billion. Inventory provisions/write-downs are also material. The filing reports RMB823.3 million of inventory write-downs in its cash-flow reconciliation, while MD&A cites RMB701.7 million of inventory provisions; the filing text does not clearly reconcile these amounts.
- Trade and forced-labor restrictions: U.S. tariffs and trade reviews remain material risks. Some imports were detained under a U.S. Customs order concerning Hoshine-related silica products; some detained shipments were later admitted. The company warned that U.S. restrictions under the Uyghur Forced Labor Prevention Act could affect imports, noting that it has a manufacturing facility in Xinjiang. Direct U.S. sales were 15.7% of 2021 revenue.
- Regulatory and listing risk: The company said its auditor was subject to a PCAOB determination that it could not be fully inspected. The filing described possible U.S. trading prohibition or delisting under the HFCA Act if the relevant conditions persisted. It also highlighted evolving PRC oversight, overseas-offering, data-security and foreign-exchange rules.
- Debt, guarantees and liquidity: Total short- and long-term borrowings were approximately RMB23.24 billion. JinkoSolar guaranteed RMB401.4 million of JinkoPower financing obligations; guarantee liabilities to related parties were reported at RMB12.1 million in the related-party disclosure. PRC restrictions on subsidiary distributions and currency conversion may limit cash transfers to the Cayman holding company.
- Contingencies and other exposures: A Singapore customer arbitration and a Spanish customer arbitration remained unresolved, with potential losses not considered probable or reasonably estimable by the company. Patent disputes continued in Germany and Australia; a U.S. patent matter had favorable ITC and appellate outcomes. The company also reported RMB740.5 million of estimated unpaid employee social-insurance and housing-fund contributions and accrued warranty costs of about RMB1.01 billion.
- Post-year-end event: In January 2022, principal subsidiary Jiangxi Jinko completed its STAR Market listing, raising gross proceeds of approximately RMB10.0 billion. JinkoSolar’s ownership fell to approximately 58.62%, while it retained control.
Important facts for investors to verify
- Reconcile the RMB701.7 million inventory-provision figure in MD&A with the RMB823.3 million inventory write-down in the cash-flow reconciliation, and assess inventory levels and valuation.
- Review debt maturities, collateral, borrowing availability and cash accessibility, including the distinction between unrestricted cash, restricted cash and restricted investments.
- Track whether higher polysilicon and freight costs can be passed through to customers and whether margins recover as capacity and N-type production expand.
- Monitor U.S. tariff and forced-labor enforcement developments, including shipment admissibility and exposure through overseas manufacturing and sourcing.
- Assess the status and possible financial impact of customer arbitrations, patent proceedings, guarantees and unpaid employee-benefit contributions.
- Confirm the progress and funding of 2022 capacity plans, capital commitments and the effect of Jiangxi Jinko’s STAR listing on JinkoSolar’s cash flows and ownership.