JinkoSolar Growing Margins, Making Huge Gains (JKS)

JinkoSolar Holding Co., Ltd. (NYSE: JKS) has reported an earnings blowout.  The Chinese solar wafer producer reported earnings of $1.75 EPS as revenue grew more than 200% to $215 million; Thomson Reuters estimates were only $0.96 EPS and $153.3 million in revenues.

The company also raised guidance for the fourth quarter to $210 to $220million, while Thomson Reuters estimates were only $162.44.  In the fourth quarter it also sees total solar shipments of 130 MW to 140 MW.  For the year it sees 448 MW to 458 MW shipments.

Gross margin increased to 33.5% in the third quarter, up from 26.9% in the second quarter of 2010 and up from 15.8% in the same quarter a year ago.  The standout note here is that most solar companies are seeing margins compress rather than expand.

The comments which stood out the most from management were that it secured additional solar module contracts for 2011 with both existing and new solar companies across a number of geographical regions and that it has significantly lowered its non-silicon cost ahead of its cost reduction plan.

Here is the only issue on the surface which may create an overhang.  JinkoSolar has filed a registration statement with the SEC for a follow-on public offering of 3,500,000 ADSs.  Of those shares, 2,000,000 will be from the company and 1,500,000 will be from selling shareholders.

Shares are surging this morning and hitting new 52-week highs.  JinkSolar is up 16% at $35.00 and that is above the old 52-week range of $8.23 to $33.53.

JON C. OGG