JKS: Policy Headwinds Will Limit Benefits From Rising Energy Storage Margins

Analysts have lifted their fair value estimate for JinkoSolar Holding from $17.00 to $20.00 per share, citing improving gross margins driven by lower unit costs and a stronger long term outlook for higher margin energy storage systems, despite ongoing policy related risks.

Analyst Commentary

Recent Street research reflects a cautiously constructive but still guarded stance on JinkoSolar, with price targets moving higher but ratings generally remaining restrained. Bearish analysts acknowledge the meaningful rebound in gross margins, yet they emphasize that execution risks, policy uncertainty, and margin sustainability continue to cap upside in the valuation.

JinkoSolar has shown tangible progress on profitability, lifting gross margins from negative territory in Q1 to mid single digits by Q3, largely on the back of lower unit costs. However, the mixed nature of Q2 and Q3 results and a flat margin outlook into Q4 are reinforcing concerns that earnings power may remain volatile and highly sensitive to both pricing and policy developments.

Energy storage systems stand out as a key growth driver, with shipment guidance reiterated for the current year and management signaling that volumes could at least double by 2026. This could potentially contribute a low to mid teens percentage of total revenue. While this supports the long term growth narrative, some market participants question whether this higher margin opportunity will be sufficient to offset ongoing pressure in core module markets and an increasingly complex policy backdrop.

Bearish Takeaways

• Bearish analysts are raising price targets from previously depressed levels but maintaining cautious ratings. This signals that valuation upside is constrained by execution risk and policy headwinds rather than improving fundamentals alone.
• Mixed Q2 and Q3 performance, coupled with expectations for flat Q4 margins, reinforces concerns about earnings quality and the durability of recent gross margin gains. This limits confidence in a sustained rerating of the shares.
• Policy risk tied to FEOC rules, Solar 4, and potential Section 232 actions remains a central overhang. Bearish analysts warn that adverse outcomes could erode profitability and compress multiples even if shipment volumes hold up.
• Although energy storage growth and a rising revenue contribution are viewed positively, skeptics question whether this segment can scale quickly enough to offset cyclical margin pressure in modules. This leaves medium term growth and return profiles vulnerable.

Goldman Sachs, while lifting its target price modestly, continues to highlight these valuation and policy risks. The firm underscores the view that near term upside is limited despite operational improvements and a more compelling long term storage story.

What's in the News

• The White House is reportedly weighing canceling an additional $12 billion in U.S. clean energy funding, a move that could pressure solar developers and manufacturers including JinkoSolar by dampening project demand in a key market (Semafor).
• JinkoSolar reported a sharp increase in impairment charges on long lived assets in the third quarter of 2025, with write downs more than doubling year over year to RMB 555,439,000, highlighting ongoing balance sheet and asset utilization pressures (company filing).
• The company issued shipment guidance for the fourth quarter of 2025 of 18.0 GW to 33.0 GW and for full year 2025 of 85.0 GW to 100.0 GW, indicating continued high shipment volumes despite pricing and policy uncertainty (company guidance).
• JinkoSolar supplied roughly 1,000 EAGLE G6 modules to Trinity Energy for a Costco warehouse project in Richland, Washington, which is enrolled in the company’s EAGLE Preserve program, Washington State’s first approved solar sustainability initiative, underscoring its focus on circularity and recycling commitments (company announcement).

Valuation Changes

• The fair value estimate has risen moderately from $17.00 to $20.00 per share, reflecting improved margin assumptions and a more constructive view on energy storage earnings.
• The discount rate has increased slightly from 13.58 percent to 13.76 percent, indicating a marginally higher perceived risk profile or required return.
• The revenue growth forecast has fallen meaningfully from approximately 15.8 percent to 13.1 percent, signaling a more conservative outlook on top line expansion.
• The net profit margin expectation has improved notably from about 2.17 percent to 3.38 percent, driven by anticipated efficiency gains and a richer mix from higher margin offerings.
• The future P/E multiple has edged up slightly from 3.30x to 3.35x, implying a modestly higher valuation being applied to forward earnings.