JinkoSolar (JKS, Financial) closed the fiscal year 2014 on a strong note. It posted fourth-quarter revenue of $478.9 million, an uptick of 35.8% over the same period in 2013. The record module shipments of 1,078.3 MW coupled with 339.1 MW for its downstream business helped the company to display outstanding performance for the quarter. Its gross margin expanded to 22.8% from 20.6% in the third-quarter 2014. It shipped approximately 3 GW of solar products in 2014.
Better times ahead
Looking ahead, the Chinese solar panel producer plans to ramp up the production for PV modules that should earn the company gross margins of 25% to 30% this fiscal year. Jinko projects its module shipment to be in the range of 3.3 GW to 3.8 GW for 2015. This represents about 27% growth for its shipment over fiscal 2014, considering the lower end of the guidance. It is witnessing resilient growth for its downstream business. For the first-quarter 2015, its shipment is expected to be in the range of 710 MW to 780 MW, including 160 MW to 180 MW for its downstream projects.
Moreover, the company continues to strengthen its project pipeline with continuous emphasis on diversification. Jinko is better connecting its projects to the grid. It plans to connect about 360 MW of projects in the first-half of 2015.
This is definitely a good move by Jinko as it will provide the company with additional flexibility to effectively serve its key overseas solar markets. Also, it should solidify its position as a leading solar supplier in the key solar markets and opens up the opportunity to enter into other emerging and potential markets such as Middle East, Brazil, Latin America and Asia-Pacific markets. Jinko will gain from these diversifications as the global solar demand is expected to grow around 15% to 20% in fiscal 2015.
Additionally, the company is signing in new contracts and supporting its existing clients across China, United States and Europe due to its highly efficient and industry leading technologies. It is working on developing an integrated intelligent solution from smart modules to intelligent solar PV system. This should improve its cliental base going forward.
Apart from these moves, the company is planning to spin-off its downstream business. The growing project connection and pipeline expenses are leading for this spin-off. This is undeniably a good move that should create greater value for its shareholders in the future. At present, the company is working to move the spin-off process forward.
Conclusion
JinkoSolar is performing well against its strategies of developing its solar business. It has plenty of upside potential that will drive its growth in the future. Also, the world-wide solar market demand should assist the company to put forward better performance year by year. Analysts expect its earnings to grow 30.20% this year and 17.30% by next year respectively.
Moreover, the stock is cheap. It trades at the forward P/E of 7.15, which is below the trailing P/E of 10.87. Also, it has PEG ratio of 0.71 that continues to support its growth in the coming years. It has profit and operating profit margins of 6.75% and 9.40% respectively for the trailing twelve months. Its balance sheet carries total cash of $307.93 million and has total debt of $1.36 billion.
