JinkoSolar Top Solar-Panel Maker Reports Dismal Profits

The world’s top solar panel manufacturer Jinko Solar Co. Ltd. reported its worst financial turnaround since 2017, as the surging price of raw materials ate away at profits.

The New York-listed company reported a 31% drop in profit to 437 million yuan ($67 million) in the first half of 2021.

Its decline in quarterly profits was even steeper — down 51.6% from last year to 167 million yuan in the second quarter.

According to solar PV market intelligence PV InfoLink, the key raw material for solar panels now costs about 145% more than in early 2021, while the prices of solar panels have only increased by an average 19%.Jinko Solar blamed the price of polysilicon, which rose rapidly in the second quarter.

The China Nonferrous Metals Industry Association attributes (link in Chinese) the soaring price of polysilicon to high demand.

Polysilicon is a key raw material for solar panels, which have received ongoing policy support in China as the nation seeks cleaner energy sources.

PV InfoLink estimates that polysilicon prices will start falling after October as raw materials inventories pile up due to excessive supply outpacing demand.

Jinko Solar said that high prices also drove it to “proactively” lower its production volume in the second quarter.

Between 2016 and 2019, Jinko Solar ranked the first in the world for the solar panel shipment volume. However, in the first half of 2021, it fell to the fourth behind three domestic peers, PV InfoLink data shows.

The three China solar panel firms are Shanghai-listed Longi Green Energy Technology Co. Ltd. (601012.SH -1.00%), Trina Solar Co. Ltd. (688599.SH -1.11%), and Shenzhen-listed JA Solar Technology Co. Ltd. (002549.SZ +0.31%). Their shipment volumes increased between 80% and 152% yearly in the first half of 2021 while Jinko Solar’s only grew 8%, according to companies’ financial reports.

The trio all posted a gain in profit between 2% and 43%.

Unlike Jinko Solar, the other three major producers all have cooperation deals with upstream polysilicon producers, reducing the pressure caused by high prices to some extent.

Jinko Solar is currently seeking a secondary listing on Shanghai’s tech-heavy STAR Market bourse. In its prospectus (link in Chinese), the company said that a shortage of capital has hurt its business expansion and profitability.

It plans to raise 6 billion yuan, of which 4 billion yuan will be used for battery development, 500 million yuan for the contruction of a research center in Zhejiang province, and the remaining 150 million for supplementing cash flow. The Shanghai bourse received its IPO application on June 28.

Authors: Zhao Xuan and Manyun Zou, Caixin Global