JinkoSolar Holding Co., Ltd. (JKS)
Q2 2012 Earnings Results Conference
August 23, 2012 08:00 AM ET
Kangping Chen - CEO
Longgen Zhang - CFO
Arturo Herrero - CMO
Sebastian Liu - Director, Investor Relations
Brandon Heiken - Credit Suisse Securities
Vishal Shah - Deutsche Bank Securities
Pranab Sarmah - Daiwa Capital Markets
Rob Stone - Cohen & Company
Ben Schuman - Pacific Crest Securities
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Thank you for standing by and welcome to the JinkoSolar Second Quarter 2012 Conference Call. All lines have been placed on listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] Please be advised that this conference is being recorded today August 23, 2012.
I’d now like to hand the conference over to your speaker today Sebastian Liu, JinkoSolar Investor Relations Director. Please go ahead.
Thank you, operator. Thank you everyone for joining us today for JinkoSolar’s second quarter 2012 earnings conference call. The Company’s results were released earlier today and available on the Company’s IR website at www.jinkosolor.com, as well as on the newswire services. We have also provided a supplemental presentation for today’s earnings call, which can also be found on the IR website.
On the call today from JinkoSolar are Mr. Chen Kangping, Chief Executive Officer, Mr. Arturo Herrero, Chief Marketing Officer, and Mr. Zhang Longgen, Chief Financial Officer.
Mr. Chen will discuss Jinko’s business operations and Company’s highlight, followed by Mr. Herrero, who will talk about the Company’s business strategies. And Mr. Zhang will go through the financials and guidance. They will all be available to answer your questions during the Q&A session that follows.
Please note that today’s discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve the inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding this and other risks is included in JinkoSolar’s public filings with the Securities and Exchange Commission, including its annual report on the Form 20-F for the fiscal year ended December 31, 2011 filed with the Securities and Exchange Commission on April 25, 2011 as amended on May 10, 2011 and other documents filed with the US Securities and Exchange Commission. JinkoSolar does not assume any obligation to update any forward-looking statements except as required under the applicable law.
Please be noted that to supplement its consolidated financial results presented in accordance with the United States Generally Accepted Accounting Principles, or GAAP, JinkoSolar uses certain non-GAAP financial measures, the Company believes that the use of non-GAAP information is useful for analysts and investors to evaluate Jinko’s current and future performances. Based on a more meaningful comparison of the net income and diluted net income per ADS, when compared with its peers and historical results from prior periods.
These measures are not intended to represent or substitute numbers as measures under GAAP. The submission of non-GAAP numbers is voluntary and should be viewed together with GAAP results.
It is now my pleasure to introduce Chen Kangping, CEO of JinkoSolar. Mr. Chen will speak in Mandarin and I will translate his comments into English. Please go ahead Mr. Chen.
Thank you, Sebastian. Good morning, good evening for everyone, and thank you for joining us today.
I’m pleased with the improvements we’ve made in our performance in the second quarter, as the market conditions remained increasingly difficult due to continued module over supply and global economic weakness. During these difficult times we remain focused on our core business and have worked to maintain the performance and the reliability as our high quality modules are known for across the globe.
As we compete globally, our result in the second quarter demonstrate the effectiveness of our strategy. Through this strategy reached total shipments of 302.1 megawatts of solar products during the second quarter of 2012, representing the sequential increase of 21.3% from 249 megawatts in the first quarter, of which 223 megawatt were solar modules, total revenue were $194.9 million or RMB1.2 billion.
We were able to maintain our industry leading position in terms of cost structure through efficiency improvement and our substantially reduced non-silicon costs, which are rapidly approaching our target for the end of the year. We have successfully managed to bring down blended silicon cost around $25 per kilo or $0.14 per watt, and reduced non-silicon costs to $0.62 per watt in the second quarter of 2012 from $0.58 in the first quarter. This is primarily due to the decrease of cost of consumable materials and increasing efficiency of our production. We are very confident that we can achieve our year-end target of less than $0.50 non-silicon costs per watt and keep improve our gross margin.
This allow gross margin to improve sequentially despite falling ASP. As we work to further strengthen our Company’s brand equity and quality of services, we anticipate that going forward the falling ASP will slow down and begin to stabilize. In-house gross margin improved to 11.2% in the second quarter of 2012 compared with 10.8% in the first quarter.
To support the strengthening of our brand equity and quality of services, we launched JinkoSolar Priority Solar Club partner program for our strategic customers in this past month with over 140 customers, we’re now active in 21 countries, which demonstrates our global rich and appeal for our brand as well as our reliability as a partner. We understand that brand image and price to a large extend driven by the quality of our products and services. The success of our partner is critical to our future [growth] by rewarding customer loyalty by providing our partners with strong marketing support, product training and technical services. Through this we hope to create a powerful partnership that will strengthen our brand and help us to expand geographically.