JinkoSolar (NYSE:JKS): Evaluating Valuation After Major Subsidiary Share Sale to Boost Financial Flexibility

JinkoSolar Holding (NYSE:JKS) has caught the attention of many investors after announcing plans to sell up to 300.2 million A shares in its primary operating subsidiary, Jiangxi Jinko. The company aims to raise funds for ongoing business operations by reducing its ownership stake from 58.59% to about 55.59%. Moves like this often indicate a focus on liquidity and an effort to strengthen the balance sheet, especially if conditions are volatile or if there are emerging opportunities that require financial flexibility. This announcement follows a year in which JinkoSolar Holding’s share price has increased by 38% and risen 31% over the past three months. The long-term track record shows a modest 13% five-year return, along with a setback over the last three years as investors have considered both external challenges and internal changes. Recent momentum suggests renewed optimism, potentially related to rapid growth in annual revenue and net income, and the market is assessing how this new fundraise fits into the overall outlook for the company. Investors are watching closely to determine whether this corporate action signals a new opportunity, or if JinkoSolar's future growth potential is already reflected in the current market price.

Most Popular Narrative: 30% Undervalued

According to the prevailing narrative, JinkoSolar Holding is seen as significantly undervalued, with analysts assigning a discount to fair value of 30%. This view hinges on the expectation of sharply improved forward earnings, even as recent profit margins remain thin.

"JinkoSolar is expanding its energy storage systems (ESS) business, with a significant increase in shipments and a strategic priority on overseas markets. This is forecasted to contribute to revenue growth and potentially improve earnings as this market segment develops."

Want to know what’s fueling this impressive undervaluation? Here’s a hint: analysts project an ambitious turnaround that depends on both rapid revenue acceleration and a financial metric more commonly seen in market darlings. Curious about how this narrative builds its bullish case on specific future performance assumptions? Dive in to discover the core estimates behind JinkoSolar’s rising star status in the solar industry.

Result: Fair Value of $37.22 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, shifts in international trade policies or pricing pressures from lower shipments to major markets could quickly undermine JinkoSolar’s improving outlook.

Find out about the key risks to this JinkoSolar Holding narrative.

Another View: What Does the SWS DCF Model Say?

Looking beyond market multiples, our SWS DCF model offers a different way to value JinkoSolar. This approach also points to undervaluation and examines cash flow expectations and long-term fundamentals. Could this method change how you see the company's potential?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out JinkoSolar Holding for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own JinkoSolar Holding Narrative

If you have your own perspective or want to test different scenarios, you can build a personalized narrative in under three minutes. Do it your way

A great starting point for your JinkoSolar Holding research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

Looking for More Investment Ideas?

Stay ahead of the curve and unlock your next opportunity by searching beyond the usual suspects. The Simply Wall Street Screener is packed with handpicked ideas you simply don’t want to overlook.

• Tap into tomorrow’s tech trends by checking out quantum computing stocks, which is leading the revolution in next-gen computing and transforming the possibilities of data.
• Level up your income strategy and secure steady returns by investigating dividend stocks with yields > 3%, designed to offer more than just price growth.
• Embrace the future of medicine and artificial intelligence with healthcare AI stocks, ushering in breakthroughs for smarter, healthier lives.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com