Supply Chain Optimization And ESS Expansion Will Secure Future Competitiveness

Key Takeaways

• Focused cost reduction and efficiency drive profitability, with net margins expected to improve through supply chain optimization and regional shipment strategies.
  
• Strategic expansion in energy storage and high-efficiency products drives revenue, supported by R&D advancements and market adaptability.
  
• Changes in trade policies and competition have led to pressure on profit margins, decreased U.S. shipments, and risks to future profitability and market share.

Catalysts

Engages in the design, development, production, and marketing of photovoltaic products.

• JinkoSolar is focusing on cost reduction and efficiency improvements, including optimizing supply chain strategies and regional shipment mix, which is likely to positively impact net margins and improve profitability in the future.
  
• The company is capitalizing on the increasing demand for high-power products, particularly third-generation TOPCon products with enhanced efficiency and performance, expected to boost revenue through premium pricing opportunities and market share gains.
  
• JinkoSolar is expanding its energy storage systems (ESS) business, with a significant increase in shipments and a strategic priority on overseas markets, which is forecasted to contribute to revenue growth and potentially improve earnings as this market segment develops.
  
• Investments in R&D are leading to technological advancements, such as record-setting solar cell efficiency, positioning JinkoSolar competitively in the market, likely to drive future revenue and margin improvements through superior product offerings.
  
• The company's strategic flexibility to adapt to trade policy changes and optimize operations in key markets allows for sustained growth opportunities in Indo Pacific, Middle East, and other regions, anticipated to support revenue stability and growth.

JinkoSolar Holding Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming JinkoSolar Holding's revenue will grow by 14.6% annually over the next 3 years.
• Analysts assume that profit margins will increase from -2.3% today to 0.3% in 3 years time.
• Analysts expect earnings to reach CN¥382.9 million (and earnings per share of CN¥26.69) by about September 2028, up from CN¥-1.9 billion today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 52.9x on those 2028 earnings, up from -4.7x today. This future PE is greater than the current PE for the US Semiconductor industry at 30.1x.
• Analysts expect the number of shares outstanding to grow by 0.66% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 13.58%, as per the Simply Wall St company report.

JinkoSolar Holding Future Earnings Per Share Growth

Risks

• Disruptions in demand due to changes in international trade policies and low solar industrial chain prices have pressured profit margins, negatively impacting revenue and net margins.
  
• Declines in shipments to the U.S. market and decreasing higher-priced overseas orders have led to lower module prices and profitability, affecting overall earnings.
  
• Gross margin turned negative for the first time in years, reflecting supply-demand imbalances and increased exposure to the China market, which threatens future profitability and net margins.
  
• Reciprocal tariffs and policy uncertainties in the U.S. market present significant challenges, resulting in lower U.S. shipments and a potential impact on revenue from a major market.
  
• Increasing competition in the solar industry and imbalances in supply and demand could lead to decreased market share and pricing pressures, ultimately affecting revenue and profit margins.

Valuation

• The analysts have a consensus price target of $37.222 for JinkoSolar Holding based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $66.1, and the most bearish reporting a price target of just $17.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CN¥124.9 billion, earnings will come to CN¥382.9 million, and it would be trading on a PE ratio of 52.9x, assuming you use a discount rate of 13.6%.
• Given the current share price of $24.01, the analyst price target of $37.22 is 35.5% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.