Tiger Neo And US Saudi Arabia Facilities Will Boost Position

Key Takeaways

• Emphasis on R&D and innovative products indicates potential revenue growth and improved margins with higher product efficiency.
  
• Global expansion and strong market position support future revenue growth and enhanced market capture.
  
• Decreased module prices and high domestic reliance are squeezing profitability, while patent risks, debt, and industry volatility could further impact earnings and financial stability.

Catalysts

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

• JinkoSolar's emphasis on maintaining technology leadership through continuous R&D investments and the mass production of innovative products like the third-generation Tiger Neo suggests potential for future revenue growth and improved profit margins as these products reach higher efficiency levels.
  
• The stabilization and potential rebound in module prices, influenced by industry self-discipline and supportive policies from national authorities, could lead to improved revenues and gross margins in the future.
  
• The company's strategic expansion of manufacturing capabilities in key markets such as the U.S. and Saudi Arabia to operate at or near full capacity signals potential revenue growth and an improvement in earnings as demand in these regions stabilizes and grows.
  
• JinkoSolar's global market reach and ranking as the most bankable solar module company, supported by its strong patent portfolio, may enhance its ability to capture new markets and drive future revenue growth.
  
• The improving efficiency and optimization of their operational and asset-liability structure, along with a focus on reducing costs, suggest potential for enhancing net margins and earnings resilience, especially as market conditions stabilize.

JinkoSolar Holding Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming JinkoSolar Holding's revenue will grow by 9.8% annually over the next 3 years.
• Analysts assume that profit margins will increase from 0.1% today to 1.5% in 3 years time.
• Analysts expect earnings to reach CN¥1.8 billion (and earnings per share of CN¥18.74) by about April 2028, up from CN¥57.5 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 8.8x on those 2028 earnings, down from 124.3x today. This future PE is lower than the current PE for the US Semiconductor industry at 24.6x.
• Analysts expect the number of shares outstanding to decline by 4.87% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 13.29%, as per the Simply Wall St company report.

JinkoSolar Holding Future Earnings Per Share Growth

Risks

• The drop in module prices due to the ongoing supply and demand imbalance has led to a significant decrease in profitability, impacting gross margins and net income.
  
• High reliance on the domestic market with lower prices led to a decline in average selling prices and profit margins, affecting overall revenue and earnings.
  
• The industry may be entering a deep adjustment period with phased-out companies, indicating potential volatility and risk of financial losses, which could affect net margins.
  
• Patent infringement claims from competitors suggest potential legal and financial risks, potentially affecting earnings if not resolved favorably.
  
• Increased total debt compared to the previous year alongside significant financial losses from events such as the fire accident in Shanxi increases financial burdens, which could affect future net income and cash reserves.

Valuation

• The analysts have a consensus price target of $33.016 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 $18.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CN¥122.1 billion, earnings will come to CN¥1.8 billion, and it would be trading on a PE ratio of 8.8x, assuming you use a discount rate of 13.3%.
• Given the current share price of $18.51, the analyst price target of $33.02 is 43.9% 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.