JinkoSolar Technology Plans to List on Hong Kong Stock Exchange: A Dual Strategy of Deleveraging and Globalization
JinkoSolar Technology is set to pursue a listing on the Hong Kong Stock Exchange as part of its strategy to promote global development and accelerate the integration of market, supply chain, and research and development efforts.
However, due to insufficient demand and adjustments in the global supply chain, JinkoSolar’s revenue for the first three quarters of 2024 saw a year-on-year decline of 9.39%, marking the first loss in net profit since 2016.
To optimize its capital structure and reduce its debt-to-asset ratio, JinkoSolar is implementing measures such as asset sales and issuing innovative financing tools, including publicly offered infrastructure REITs.
Additionally, JinkoSolar plans to gradually transfer equity stakes in some of its subsidiaries to external shareholders as part of a market-oriented debt-to-equity swap.
Brokerage analysts are optimistic about JinkoSolar’s future performance, projecting a net profit attributable to shareholders of 2.7 billion yuan in 2025, with a target price of up to 14.95 yuan.
If successful in this upcoming listing, JinkoSolar’s cash flow and debt-to-asset ratio will see significant improvements. On February 21, the company held its 34th meeting of the 6th Board of Directors and the 19th meeting of the 6th Board of Supervisors, where it approved the proposals for issuing H-shares and listing on the Hong Kong Stock Exchange.
JinkoSolar stated that the purpose of issuing H-shares is to further advance its global development strategy, enhance its capital operations platform, and improve its international brand image and overall competitiveness.
Following the China Securities Regulatory Commission’s announcement of five measures to support qualified mainland industry leaders in listing in Hong Kong, the Hong Kong regulatory authorities have also optimized the listing review process for A-share companies. The Hong Kong Stock Exchange has implemented fast-track approvals for A-share companies with an expected market capitalization of over 10 billion Hong Kong dollars. In this context, many A-share companies are actively pursuing listings in Hong Kong.
In January, Heng Rui Medicine officially submitted its listing application, while Ningde Times followed suit in February. The latest development involves JinkoSolar, a leader in photovoltaic silicon wafers, announcing its plan to issue H-shares and apply for listing on the main board of the Hong Kong Stock Exchange.
JinkoSolar is a global leader in solar power solutions, creating a vertically integrated supply chain that includes silicon wafers, cells, modules, and solar power plants. The company’s sales and service network spans over 100 countries and regions, consistently ranking among the top in global module shipments.
According to the financial reports, JinkoSolar’s total revenue grew continuously from 25.84 billion yuan in 2020 to 81.55 billion yuan in 2023. However, due to insufficient demand, adjustments in the global supply chain, and gradual capacity release, the revenue growth trend experienced a shift in 2024.
Data from Wind indicates that JinkoSolar’s total revenue for the first three quarters of 2024 was 54.348 billion yuan, a decline of 9.39% year-on-year. The company also recorded its first net loss since 2016, amounting to 857 million yuan. Furthermore, JinkoSolar’s latest earnings forecast for 2024 suggests a potential loss of between 4.5 billion and 5.2 billion yuan.
JinkoSolar attributed this significant anticipated loss to three main factors: a sharp decline in the prices of its primary products, a deteriorating international trade environment, and the need for impairment testing and provision for long-term assets showing signs of impairment.
In a December 2024 interview, JinkoSolar’s Deputy General Manager and Secretary of the Board, Wu Tingdong, acknowledged the severe mismatch between capacity and demand in the photovoltaic industry, which affected not only the main supply chain but also ancillary materials and components. Consequently, product prices in the market have been continuously decreasing, with module prices dropping to about one-third of last year’s levels, significantly impacting the company’s stock price.
Regarding future growth expectations in the photovoltaic industry, Wu expressed caution, noting that after experiencing annual growth rates of 40%-50% in recent years, the growth rate has significantly slowed. He forecasted a growth rate of 10%-20% over the next 3-5 years, hoping that by the second half of 2025, supply and demand could reach a balance in certain segments, gradually returning the industry to a normal operational level.
With the launch of self-regulatory actions in the photovoltaic industry in the second half of 2024, and a gradual recovery in downstream demand, reports on February 26 indicated that leading photovoltaic companies have begun raising module prices. For instance, Longi Green Energy increased its module price by 0.05 yuan per watt, while JinkoSolar and Trina Solar raised theirs by 0.03 yuan per watt. In response to this trend, a representative from Longi Green Energy mentioned that there have indeed been slight price increases, but whether this overall supply-demand change will establish a trend remains to be observed.
JinkoSolar’s debt ratio has been steadily increasing, rising from 58.3% at the end of 2022 to 64.3% by the end of 2023. By the end of September 2024, the debt ratio further increased to 72.2%. Among the top ten companies in the Wind photovoltaic sector by market capitalization, JinkoSolar has the highest debt ratio, followed closely by Jinko Power at 71.9%. In comparison, leading companies in the industry, such as Sungrow Power and Longi Green Energy, have debt ratios of 65.8% and 59.2%, respectively.
Reports indicate that JinkoSolar’s interest-bearing liabilities have grown rapidly, with short-term loans increasing from 979 million yuan at the end of 2023 to 10 billion yuan by the end of September 2024. Concurrently, long-term loans rose from 1.48 billion yuan to 13.64 billion yuan. The high level of interest-bearing debt has increased JinkoSolar’s financial costs, with interest expenses amounting to 440 million yuan in 2022, 510 million yuan in 2023, and reaching 730 million yuan by the end of the third quarter of 2024.
In response to this situation, credit rating agency Dongfang Jincheng stated in JinkoSolar’s 2024 annual tracking rating report that due to capacity expansion and business growth, the company’s total debt has significantly increased. It is expected that future debt levels will continue to rise due to substantial investment in ongoing and planned projects.
In 2023, JinkoSolar issued convertible bonds to raise 9 billion yuan for expansion, but due to fierce market competition and significant adjustments, the original investment projects were delayed. The company announced that the construction period for the “Baotou Jinko (Phase III) 20GW Pulling and Wafer Project” would be extended by one year, from June 2024 to June 2025.
Moreover, JinkoSolar’s asset scale has consistently increased, growing from 106.589 billion yuan at the beginning of 2024 to 116.288 billion yuan by the end of September 2024. However, the equity attributable to shareholders has experienced its first decline in recent years, dropping from 38.004 billion yuan at the beginning of the year to 32.385 billion yuan by the end of September, a decrease of 7%.
If the upcoming Hong Kong listing is successful, it is expected to significantly improve the company’s liquidity and help reduce the excessively high debt-to-asset ratio.
To further optimize its capital structure and reduce its debt ratio, JinkoSolar has also transferred equity stakes in some of its subsidiaries to external shareholders. In 2022, the company transferred part of its stake in Jinko (Yangzhou) Solar Technology Co., Ltd. to external investors such as Dongfang Asset and Agricultural Bank’s Agricultural Bank Financial Assets, implementing a market-oriented debt-to-equity swap. In July 2024, JinkoSolar repurchased the shares held by Dongfang Asset.
According to corporate records, JinkoSolar’s Deputy General Manager, Yang Aiqing, is currently the Chairman of Jinko Yangzhou. Initial reports indicated a reduction in Jinko Yangzhou’s debt ratio following the transfer, but it has since increased again. By the end of June 2021, Jinko Yangzhou’s debt ratio was 51%, but by the end of March 2024, after its total assets expanded nearly sixfold, the debt ratio rose to 76.7%, with total debt increasing from 2.9 billion yuan to 27.9 billion yuan.
To further lower the debt ratio and improve the debt structure, JinkoSolar has also employed asset off-balance-sheet strategies and issued innovative financing tools. For example, the company initiated the application for publicly offered infrastructure REITs in 2023, utilizing some of its photovoltaic power generation projects as underlying infrastructure assets to enhance asset turnover and reduce leverage. According to JinkoSolar’s 2023 annual report, its REITs application has been submitted to the National Development and Reform Commission and is currently in the feedback phase.
The latest update indicates that JinkoSolar responded to investor inquiries on February 18, stating that the REIT project is currently under review by the National Development and Reform Commission.
As the photovoltaic industry gradually recovers, JinkoSolar’s stock price and performance forecasts have garnered attention from several brokerage analysts. For instance, analysts from Huatai Securities expressed in their research report at the end of January that the industry’s self-regulatory effects are becoming evident, with prices for silicon materials, silicon wafers, and solar cells all rising since the beginning of the year. As an integrated module leader, JinkoSolar is well-positioned to benefit from the profitability recovery in the industry, with a projected net profit of 2.7 billion yuan in 2025 and a target price of 14.6 yuan. Similarly, Haitong Securities analysts believe that JinkoSolar’s brand and channel advantages in overseas markets will help it increase its market share and profitability, estimating a turnaround in 2025 with a net profit of approximately 2.911 billion yuan and a target price of up to 14.95 yuan.
Table: Debt-to-Asset Ratios of Major A-Share Photovoltaic Companies
Data Source: Wind (The mentioned stocks are for illustrative analysis only and do not constitute investment advice.)
