Jinko Energy, a photovoltaic giant, is caught in a financing loop with nearly 300 billion yuan in proposed fundraising in less than two years after going p

Less than two years after going public, with a proposed financing amount close to 30 billion, the photovoltaic module giant Jinko Energy seems to have entered a "vicious cycle" of financing-expansion-refinancing. As a large amount of hot money arrives, Jinko Energy's ambitions are gradually revealed.

Holding an excellent report card in one hand and asking the market for "money" in the other, the photovoltaic module giant with a valuation of over 100 billion, Jinko Energy, is racing on the road of financing.

On the evening of August 14, Jinko Energy released its semi-annual report. The report shows that Jinko Energy's revenue for the first half of the year was approximately 53.624 billion yuan, a year-on-year increase of 60.52%; the net profit attributable to the parent company was approximately 3.843 billion yuan, a significant year-on-year increase of more than three times, reaching 324.58%, mainly due to the pull of photovoltaic installation demand.

While the market was amazed by Jinko Energy's impressive performance, Jinko Energy also announced the launch of a 9.7 billion yuan private placement plan, with the investment project being part of the 56 billion yuan photovoltaic integrated project it announced in May.

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The huge financing was also voted against by the market with its feet. As of the close on August 15, Jinko Energy fell by 11.99%, closing at 10.42 yuan per share, with a total market value of approximately 104.2 billion yuan.

In fact, this is not the first time Jinko Energy has raised a large amount of financing. Three months ago, Jinko Energy just completed a convertible bond issuance of 10 billion yuan, and during its IPO last year, it also raised 10 billion yuan.

It should be noted that as a peer, Longi Green Energy has been listed on the A-share market for more than 11 years, and the direct financing amount is only 26.384 billion yuan. Jinko Energy's large financing is indeed frequent.

For the internal competition in the photovoltaic industry, companies must spend a lot of money to stand out, and Jinko Energy is no exception. However, limited by financial strength, a large amount of capital investment has put great financial pressure on Jinko Energy, and this situation has only improved after it went public on the A-share market.

Perhaps it is for this reason that Jinko Energy has started a big gamble, seizing the current good market conditions and financing environment, and financing and expanding production on a large scale.

Another 9.7 billion yuan financing is thrown out.In the past two years, Jinko Energy has shown a steady growth trend in its performance. In terms of net profit, the company achieved a net profit of 1.141 billion yuan in 2021, with a year-on-year growth rate of 9.59%; in 2022, it achieved a net profit of 2.936 billion yuan, with a year-on-year growth rate of 157.24%; this year, the growth has been even more rapid, with a net profit of 3.843 billion yuan in the first half of the year alone, which is 30% higher than the net profit for the whole of last year.

Compared with its peers, among the four leading enterprises in the photovoltaic module track, Jinko Energy's net profit increase in the first half of the year is also the largest. According to the data released by each company, the highest net profit increases for Jinko Energy, Longi Green Energy, Jinko Technology, and Trina Solar in the first half of the year are approximately 324.58%, 41.63%, 187.95%, and 195.61%, respectively, with Jinko Energy far ahead.

Data shows that one of the key factors for the rapid growth of Jinko Energy's operating performance in the first half of the year is the company's N-type TOPCon cells entering the stage of large-scale mass production. Jinko Energy stated that due to the cost-performance advantage of N-type TOPCon cells, the product is in short supply in the global market and enjoys a certain premium, with the proportion of shipments increasing.

N-type TOPCon is a tunnel oxide passivated contact solar cell technology based on the principle of selective carriers, which can better integrate with the PERC production line, yet has lower costs and strong commercial value.

At present, Jinko Energy has the largest N-type capacity in the world. As of the end of June this year, its production capacity of N-type TOPCon cells is about 55 GW. In the first half of this year, the company sold a total of 33.1 GW of photovoltaic products globally, of which about 30.8 GW were modules, and about 16.4 GW were N-type modules, accounting for more than half.

According to its plan, by the end of 2023, Jinko Energy's wafer, cell, and module production capacities are expected to reach 85 GW, 90 GW, and 110 GW, respectively, with the proportion of N-type cell production capacity expected to exceed 75%.

In addition, Jinko Energy's good performance is also inseparable from the industry's explosion.

According to data from the National Energy Administration, China's new photovoltaic installations in the first half of 2023 were 78.4 GW, a year-on-year increase of 154%, a figure close to the new installations for the whole of 2022. In addition, data from the China Photovoltaic Industry Association (CIPA) shows that China's photovoltaic module export volume in the first half of 2023 exceeded 29 billion US dollars, and Jinko Energy has also benefited greatly from the large-scale mass production of N-type TOPCon cells.

Data shows that from the sales situation of Jinko Energy's module products in the first half of the year, the overseas proportion exceeded 60%. Jinko Energy also stated that the main reason for the growth in performance is the strong global market demand, the company's strategic advantages of global layout and localized operation, and the significant increase in the shipment of photovoltaic modules.

A large layout means a lot of money is being spent. Perhaps having had enough of the tight belt days before, this photovoltaic giant, which has been listed on the A-share market for only a year and a half, chose to refinance again with 24.855 billion yuan left in its pocket.The company plans to raise a total of no more than 9.7 billion yuan by issuing shares to specific objects. It is reported that this financing is related to the 56 billion yuan Shanxi Jingke integrated base investment plan announced in May this year.

Less than two years after going public, the company has raised nearly 30 billion yuan.

The net proceeds of the 9.7 billion yuan raised this time, after deducting related issuance expenses, are intended to be used for projects such as "Shanxi Jingke Integrated Base Annual Production of 28GW High-Efficiency Component Intelligent Production Line Project", "Shanxi Jingke Integrated Base Annual Production of 28GW Wafer and High-Efficiency Cell Intelligent Production Line Project", "Shanxi Jingke Integrated Base Annual Production of 28GW Single-Crystal Pulling and Cutting Intelligent Production Line Project", and "Supplementing Working Capital or Repaying Bank Loans".

It can be seen from the use of funds that this financing will mainly be used for the investment in the Shanxi Jingke integrated base.

On May 25th this year, Jingke Energy stated that it would plan and build an annual production of 56GW vertical integrated large base project in the Shanxi Transformation Comprehensive Reform Demonstration Zone. The project is divided into four phases, with a construction period of about two years. The construction scale of each phase is 14GW integrated project for pulling, slicing, cell, and component, with a total investment of about 56 billion yuan (including working capital).

Undoubtedly, the 9.7 billion yuan of funds planned to be raised this time will greatly alleviate the pressure of Jingke Energy's construction of the integrated base. However, the market is still buzzing about this because it is not the first time Jingke has raised a large amount of financing in recent years.

Looking back at the year and a half after Jingke Energy returned to the market, it has had three large-scale financings, with a financing scale of nearly 30 billion yuan.

At the beginning of 2022, Jingke Energy's IPO was originally planned to raise 6 billion yuan, of which 1.5 billion yuan was used to supplement working capital, 4 billion yuan was used for the construction of the annual production of 7.5GW high-efficiency cells and 5GW high-efficiency cell component projects, and 500 million yuan was invested in the Haining R&D center construction project.

However, after going public, the company's IPO fundraising amount reached 10 billion yuan. Among the excess, 1.117 billion yuan was permanently used to supplement working capital, and the rest was used in the second phase of the new-type solar high-efficiency cell project and the annual production of 20GW pulling and cutting project construction.

On July 28, 2022, Jingke Energy issued an announcement again, intending to issue no more than 10 billion yuan of convertible bonds, mainly for the annual production of 11GW high-efficiency cell production line project, Jingke Photovoltaic Manufacturing Co., Ltd.'s annual production of 8GW high-automation photovoltaic component production line project, and Shangrao City Jingke Photovoltaic Manufacturing Co., Ltd.'s new doubling phase I 8GW high-automation component project, until this transaction was just completed on May 16, 2023.Recently, news of financing has once again emerged from Jinko Energy, but such frequent and large-scale fundraising has put it in the spotlight.

Is it "money-grabbing" or a big gamble?

If such frantic fundraising was solely for expanding production, investors might still be able to accept it, but Jinko Energy was previously exposed for spending lavishly on buying buildings, which has once again raised market doubts.

In fact, because the photovoltaic (PV) track is too capital-intensive, most PV companies choose to rent office buildings, thereby being able to invest more funds into factories. However, Jinko Energy previously spent hundreds of millions to acquire three office buildings in first-tier cities, with a total construction area of up to 40,000 square meters.

Comparing with several other giants in the photovoltaic module track: LONGi Green Energy is located in the inland Shaanxi; Trina Solar has publicly disclosed four properties, two in Qinhuangdao, Hebei, and two in Xinjiang (for office use), with a total area of 1237.21 square meters. Jinko Energy undoubtedly appears more "wealthy and powerful"; Jinko Solar's Beijing headquarters, on the other hand, is rented.

It should be noted that in the past few years, Jinko Energy's cash flow from investment activities has been negative year after year. From 2019 to 2022, the cash flow from investment activities for Jinko Energy was -3.905 billion yuan, -3.867 billion yuan, -9.131 billion yuan, and -14.844 billion yuan, respectively, with its debt-to-asset ratios reaching as high as 79.94%, 75.24%, 81.4%, and 74.73%, respectively.

As of the end of June this year, Jinko Energy's cash flow from investment activities was -7.159 billion yuan, compared with -6.298 billion yuan in the same period last year. The company's current total debt stands at 89.983 billion yuan, with a debt-to-asset ratio already as high as 74.4%.

Comparing with other giants in the same industry, LONGi Green Energy has a total debt of 77.952 billion yuan with a debt ratio of 54.2%; Trina Solar has a total debt of 76.534 billion yuan with a debt ratio of 70.1%; Jinko Solar has a total debt of 41.202 billion yuan with a debt ratio of 55.6%, making Jinko Energy's debt-to-asset ratio the highest.

Although Jinko Energy has not used all the funds for expanding production, the main reason for multiple large-scale financing activities is still the internal competition within the photovoltaic industry.

It is reported that from 2016 to 2019, Jinko Energy had been holding the position of global champion in photovoltaic module shipments for four years. However, in 2020 and 2021, due to financing and other issues, its shipments were overtaken by LONGi Green Energy and others, and its ranking even fell out of the top three for a time. It was not until this year that Jinko Energy relied on the strong outbreak of N-type modules to return to the top of the list.In such an intensely competitive photovoltaic industry, it naturally implies a significant investment. However, since Jinko Energy has been listed on the US stock market, its financing channels have been limited. The company lacks sufficient financial support and can only rely on initial shareholder capital contributions, internal accumulation, and bank loans as sources of funding, which also puts immense financial pressure on it.

Under these circumstances, if Jinko Energy wants to regain its position as the leader in module shipment volume, a "grand gamble" is inevitable. This time, investing tens of billions of funds to build a large-scale integrated base project in Shanxi is part of its plan.

However, the overly competitive market and the continuous expansion of giants are likely to lead to an over-saturated industry capacity. Once this situation occurs, a new round of fierce competition will ensue, which also adds a hint of gunpowder to Jinko Energy's "grand gamble."

At present, the market has long been tired of hearing various stories. For Jinko Energy, if it wants to completely silence the voices of "raising funds," it still needs to produce impressive performance in the following period.