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Harvard Financial Analyst Club | Fall Comp 2019 Finalist | Jinko Solar


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Jacob khan, Malik Khalil,Mohammad Mobashir & Ibraham Khan pitch at the HFAC Stock Pitch Competition 2019. They end up becoming a finalist.

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Harvard Financial Analyst Club | Fall Comp 2019 Finalist | Jinko Solar

  1. 1. Long: JinkoSolar 1-Year Price Target: $23.21 (25.0% upside) by February 2021 Malik Khalil, Mohammad Mobashir, Ibraheem Khan, Jacob Khan Harvard University HFAC Stock Pitch Competition Current Price: $18.57
  2. 2. JinkoSolar Overview Company Description Financial Summary Share Price (12/3/2019) $18.60 52 Week Range $11.37 - $18.60 % of 52-week high 34% Fully Diluted Shares (MM) 40 ________________________ Equity Value ($ MM) $5216.78 + Net Debt (MM) -$1181.31 ________________________ Enterprise Value $4035.47 ● Based in Shanghai, China, JinkoSolar (NYSE: JKS) is one of the largest and most innovative solar module manufacturers in the world. ● The company has built a vertically integrated solar product value chain, with an integrated annual capacity of 14.5 GW for silicon wafers, 9.2 GW for solar cells, and 15 GW for solar modules. ● It has shipped about 40 GW of solar modules to customers in 108 countries around the globe, integrating advanced polycrystalline solar PV technologies to optimize the entire power plant. Key Statistics Balance Sheet Summary Short-term Debt (MM) $1916.90 Long-term Debt $284.19 __________________ Total Debt $1632.70 Cash & Equivalent -$451.4 __________________ Net Debt $1181.31 + Equity Value $5216.78 __________________
  3. 3. Products Product Offerings Past Services ● Silicon wafers ($82,502,000) ● Solar cells ($42,358,000) ● Solar modules ($3,503,845,000) ● Solar system EPC ● Revenue from generated electricity Shangrao Economic Development Zone 12 Locations Worldwide 1 Yilin,Xinjiang2 Yuanhua Town, Haining3 Penang, Malaysia4 Shangrao Economic Development Zone5 Yuanhua Town, Haining6 Penang, Malaysia7 Yuhuan, Zhejiang8 Yuanhua Town, Haining (x3)9 Jackonsville, Florida10 Type Up to 335Wp Output Up to 19.49 Junction Box IP67 Weight 19.5 kg Temp. Coefficients of Pmax -.36%/C
  4. 4. Investment Thesis •We recommend longing Jinko Solar [JKS] because it is undervalued by 25%, and its stock price could increase significantly in the next 6-12 months. •Investment Thesis: The market has incorrectly penalized the company for earnings misses in FY 18 as the firm discontinued its service oriented offers. However, the company’s focus towards growing its product line will serve greatly to its growth in the industry. The incorporation of mono wafers solar panels will increase their earnings in the next quarter.
  5. 5. Customer Segmentation
  6. 6. Comparables ● Canadian Solar (NASDAQ:CSIQ) is the only other manufacturer of similar size, but its chief business is assembling modules. It has 12.2 GW of module capacity and 9.3 GW of cell capacity, but just 5.0 GW of wafer capacity, so its manufacturing model is a little different than JinkoSolar. ● That scale has allowed JinkoSolar to cut its costs and remain competitive in the global solar business. It is still subject to the fluctuations module prices go through, which is why it's gross margin and net income dropped in 2018. The fact that it has survived as many of its competitors dropped out of the business, though, speaks well of the company's long-term position.
  7. 7. Risks - High Short term Debt - Current U.S. Administrations Tariffs on Chinese manufacturing - Access to Rare Earth Metals
  8. 8. Catalysts - Technology transformation largely complete – 18GW mono wafer capacity by 2Q 2020E - Mono based high efficiency products will make close to 100% of shipments in 2020E - Record gross profit and income from operations in Q3 2019, despite push-out of China demand - Signed agreements to sell two solar power plants in Mexico with a combined capacity of 155MW, which will lead to deleveraging of balance sheet by c. US$133mn. The final closing is subject to customary approvals.
  9. 9. Moats: Efficient Scale ● Currently the world's largest solar panel manufacturer, shipping 11.4 GW of modules in 2018 and has the capacity to purchase any new market entrants. ● Gross margin reset driven by shift towards integrated mono capacity, leading in-house integrated production cost, new premium products and global footprint.
  10. 10. Gross Margin and Cost-Reduction Increasing with Mono-Capacity Integration
  11. 11. Maintaining Market Leadership in Mono Wafer and Module Capacity Technologies
  12. 12. Quarterly Financial Highlights
  13. 13. Credit Profile Earnings Estimate
  14. 14. Price/Earnings-to-Growth (PEG Ratio) Comparative Analysis
  15. 15. JKS WACC SunPower WACC
  16. 16. Stock Pitch, Fall 2019 Thank you. Questions?