Against the backdrop of a slowdown in domestic non-public issuance refinancing, overcapacity new energy photovoltaic companies still plan to refinancing through GDR. On October 21st, JinkoSolar (688223) announced a plan to issue GDRs to raise no more than 4.5 billion yuan. Apart from deducting issuance expenses, supplementing working capital, and repaying bank loans of 1.26 billion yuan, the rest will be used for capacity construction.
This is the third refinancing of Jinko Solar after its IPO in January 2022 and issuance of convertible bonds in April 2023. In the first two rounds of fundraising, Jinko Solar has already raised nearly 20 billion yuan. Despite the huge amount of funds raised from convertible bonds invested in N-type photovoltaic cells and modules, Jinko Solar's GDP fundraising this time is still mainly focused on N-type battery projects and lacks verification; Moreover, even though N-type batteries represent a new technological route, there is still a hidden concern of overcapacity due to the fierce efforts of all parties involved.
3 years, 3 fundraising frequencies to earn money
This is the third financing of Jinko Solar since its listing in January 2022, and all three financing focuses on capacity building.
In January 2022, JinkoSolar went public on the Science and Technology Innovation Board with a planned fundraising of 6 billion yuan, of which 4 billion yuan was used for the construction of 7.5GW high-efficiency batteries and 5GW high-efficiency batteries. However, the fundraising exceeded the target significantly, raising 9.723 billion yuan. The construction period of the project is about 2 years, and by the end of the first half of 2024, the excess IPO funds of 3.7 billion yuan have been used up.
Due to the destruction of the global supply chain after the global public health event and the soaring crude oil price caused by the Russia-Ukraine conflict, the demand for new PV installations continues to rise, and the PV industry will benefit greatly from 2021 to the first half of 2023. From 2021 to 2023, JinkoSolar's net profit attributable to the parent company was 1.143 billion yuan, 2.938 billion yuan, and 7.44 billion yuan, respectively. Since the second half of 2023, the photovoltaic industry has experienced a sharp decline in performance due to overcapacity. In the first half of 2024, JinkoSolar's revenue and net profit attributable to shareholders were 47.251 billion yuan and 1.2 billion yuan, respectively, a year-on-year decrease of 11.88% and 68.77%; The net profit after deducting non recurring expenses was 217 million yuan, a year-on-year decrease of over 93%.
The IPO project has indeed shown good profitability during the past photovoltaic boom period. As of the end of June 2024, the realized benefits of the initial public offering funds were 2.036 billion yuan. However, during the photovoltaic downturn cycle in the first half of 2024, the project incurred a loss of 45.24 million yuan.
Half a year after going public, Jinko Solar has raised funds again. In July 2022, the company released a convertible bond issuance plan, intending to raise no more than 10 billion yuan. After deducting issuance expenses and 3 billion yuan to supplement working capital, the rest will be used for expansion, including 4.1 billion yuan for the annual production of 11GW high-efficiency battery project, 700 million yuan for the 8GW automated photovoltaic module production line project, 600 million yuan for the new doubling phase of 8GW highly automated module project, and 1.6 billion yuan for the 5GW solar module and battery production line project. The expanded solar cells are N-type TOPCon solar cells, and the expanded photovoltaic modules also use N-type TOPCon solar cells.
Similarly, the performance of some completed projects of Jinko Solar's convertible bonds during the photovoltaic downturn in the first half of this year was also unsatisfactory. The production of efficient batteries with an annual output of 11GW is a project with a large investment amount, using convertible bond funds of 4.1 billion yuan, with a progress rate of 69.97%. It will reach the expected usable state in March 2023 and achieve a cumulative benefit of 874 million yuan, of which 33.16 million yuan was achieved in the first half of this year. The benefit sharply declined during the photovoltaic downturn.
In addition to supplementing working capital and repaying bank loans, JinkoSolar's funds raised this time will mainly be invested in the 1GW high-efficiency component project in the United States and the construction of the Shanxi Phase II 14GW integrated production base, with the latter planning to use the raised funds of 2.74 billion yuan.
For the two projects raised, Jinko Solar has given an optimistic forecast: according to calculations, the after tax financial internal rate of return for the US project is 11.83%, and the after tax investment payback period is 8.80 years (including the construction period); The after tax financial internal rate of return for Shanxi 14GW integrated project is 10.76%, and the after tax investment payback period is 6.93 years (including the construction period). The expected benefits of the two projects are good.
Is it reasonable to raise no more than 4.5 billion yuan for the main investment in N-type batteries this time, as the previous convertible bond investment in N-type batteries has not been fully verified throughout the entire industry cycle?
Shadow of overcapacity
Previously, there was a temporary overcapacity in the global photovoltaic industry. After multiple rounds of elimination in 2011-2012 and 2018, a large amount of ineffective and outdated production capacity was eliminated, but the overall overcapacity has not been resolved.
Public information shows that by the end of 2023, the global photovoltaic module production capacity will be 1103GW, with a production capacity of 612GW and a capacity utilization rate of less than 60%. Among them, China accounts for 83.4% and 84.6% of the global module production capacity and output, respectively.
Due to severe overcapacity and continuous price wars, industry leaders have directly fallen into losses. For example, Longi Green Energy, the leader in the photovoltaic industry, suffered a loss of over 5 billion yuan in the first half of 2024.
The global new installed capacity of photovoltaics in 2023 is 268GW, and according to the International Energy Agency (IEA) forecast, it is expected that the global new installed capacity of photovoltaics in 2024 will be about 402.3GW. From an industry perspective, even N-type batteries known as new quality productivity have serious overcapacity.
As of June 30, 2024, JinkoSolar has achieved stable mass production of over 75GW of N-type batteries. In the first half of 2024, N-type components accounted for over 80% of the company's shipments, and the total shipments and N-type product shipments continued to maintain the industry's first place.
Trina Solar (688599), a competitor of JinkoSolar in the N-type battery industry, announced a private placement prospectus in July 2023, intending to raise no more than 10.9 billion yuan for 10GW of high-efficiency solar cells, battery modules, and photovoltaic modules. After the completion of the fundraising project, the company will add 20GW of N-type high-efficiency battery production capacity and 10GW of N-type high-efficiency module production capacity, with 20GW of N-type high-efficiency batteries mainly for self use. However, in July 2024, Trina Solar announced that after careful analysis of the company's actual situation, capital market and related policy changes, it had decided to terminate this non-public offering.
According to the production capacity plan revealed in the 2024 semi annual report of another competitor, JA Solar, the company's module production capacity will exceed 100GW by the end of 2024, with silicon wafer and battery production capacity reaching 80% of the module production capacity, including 57GW of N-type battery production capacity.
According to statistics, the total production capacity of N-type batteries under construction and operation in 2023 for 21 photovoltaic companies included in the statistics, including Jinko Energy, JA Solar Technology, Junda Corporation, Chint Solar, Trina Solar, Longi Green Energy, Atlas, Yidao New Energy, Tongwei Corporation, Aixu Corporation, Yingfa Deyao, and Dongfang Risheng, is 542.1GW. Among them, TOPCon's battery production capacity is 498GW, accounting for over 90% and occupying an absolute majority.
JinkoSolar, JA Solar, Junda Corporation, Chint New Energy, and Trina Solar are currently leading the way in TOPCon capacity construction, with a total capacity of 251.5GW by the end of 2023.
The latest research report released by Dongwu Securities analysts predicts that TOPCon's mainstream position is confirmed, with an expected production capacity of 798GW by 2024 and a further increase in penetration rate of over 70%.