The photovoltaic industry is grappling with formidable challenges that have reached a critical junctureThe phenomenon often referred to as "involution" within the sector has inflicted significant consequences on each enterprise involved, bringing to light deeper undercurrents affecting profitability and market stability.

Founded in 1996, JinkoSolar Technology, often regarded as a seasoned player in the solar sector, has weathered numerous market storms over the past two and a half decadesNonetheless, the harsh realities of a projected industry winter in 2024 present unprecedented trials for this evergreen entity.

Indicators suggest that JinkoSolar anticipates staggering losses between 4.5 billion to 5.2 billion yuan for 2024, a stark contrast to the profit of 7.04 billion yuan recorded during the previous yearThis marks a critical transition from profitability to significant loss, raising eyebrows regarding JinkoSolar's future viability amid a shifting landscape.

Long-term evaluations reveal that this could be JinkoSolar's poorest performance in over a decadeThe last time the company faced a net profit loss was in 2015, when it logged a comparatively minor deficit of 321.9 million yuanThe context of such an alarming financial downward turn has cast shadows on a company otherwise celebrated for its adaptability.

For analysts and industry watchers, the fourth quarter of 2024 is anticipated with bated breath, given that the recent forecasts underscore a tumultuous economic climateReports indicate that JinkoSolar recorded a net loss of approximately 484 million yuan in the first three quarters, suggesting that the losses for the last quarter alone could amount to a staggering 4 billion yuanComparatively, during the third quarter of 2024, JinkoSolar noted a profit of nearly 390 million yuan, accentuating the scale of the financial tumult that struck in the fourth quarter.

As a consequence of these dismal earnings projections, JinkoSolar's stock has witnessed a dramatic decline in recent years

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Stepping back and taking a longer view, the company has exhibited a troubling trend of annual declines, with stock values plummeting by 9.23%, 52.22%, and 31.8% in the years 2022 to 2024 respectivelyA glance at the latest closing stock price of 13.42 yuan reveals a staggering 75% decrease from its peak of 58.91 yuan, resulting in an astounding evaporation of over 150 billion yuan in market capitalization.

This raises an important question: how has a long-time industry stalwart like JinkoSolar found itself facing these tumultuous financial headwinds in 2024? Can this pillar of the photovoltaic industry remain steadfast amid such glaring losses?

Industry analysis posits that a variety of factors have collided to create this dire situational outlookAccording to JinkoSolar's earnings forecast, diminishing supply-demand balance in the photovoltaic sector has intensified competition, sending product prices spiraling downwardsThe increasingly rigid international trade environment has compounded this issue, further suppressing profitability.

Moreover, JinkoSolar has identified a commitment to prudence in managing its long-term assets, subjecting them to impairment tests that could lead to significant write-offs affecting core profits.

Although the factors prompting these losses appear multifaceted, they can ultimately be boiled down to the prevailing cycle within the industryEssentially, the downturn in the photovoltaic sector has precipitated a substantial drop in product prices, ultimately steering the company into the red.

In the last two years, a surge in photovoltaic module outputs has plunged the market into an oversupply predicamentBy 2023, production capacity for solar panels soared to 650 GW, significantly outstripping the global demand for newly installed unitsThe projection for 2024 suggests production will further swell to around 700 GW, while new installations are anticipated to be only around 300 GW, exacerbating the oversaturation issue.

Under such oversupply conditions, solar module prices have been caught in a downward spiral

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Statistical reports indicate that in early 2023, the price of PERC modules held at approximately 1.8 yuan per wattBy year-end, prices plummeted to around 1 yuan per watt, a trend that continued into early 2024, where the average price of mainstream modules dropped to 0.93 yuan per wattBy late 2024, this reduction would see prices plummet further, with pricing for the 182mm and 210mm mono-facial modules falling to 0.65 and 0.67 yuan per watt, respectively, representing nearly two-thirds of the opening price from early 2023.

As a key player in the photovoltaic sector, it follows that JinkoSolar is also vulnerable to the fallout from the steep declines in component pricingThe company's mid-year financial report for 2024 underscored that Jinko's solar module gross margin plummeted to just 4.53%, an alarming decline from 19.16% noted during the same period in 2023. An analysis of the third quarter of 2024 shows JinkoSolar's gross and net profitability at 5.4% and -1.58%, respectively, compared to the healthy margins of 19.41% and 11.62% from the previous year.

Thus, in the broader context of an industry entering a downward cycle, JinkoSolar has not escaped the adage that suggests leading firms often suffer the most significant lossesWhether the company can turn losses around hinges largely on when module prices stabilize and recover.

While 2024 has indeed been plagued by enormous financial losses, JinkoSolar faces another set of critical challenges that may render the current year merely a precursor to further difficultiesAn essential factor lies in the company's fluctuating financial health.

In pursuit of expansion, particularly to capitalize on the burgeoning TOPCon technology, JinkoSolar has taken on considerable debt over the yearsBack in 2019, its fixed assets and construction-in-progress were collectively valued at approximately 11.43 billion yuanBy the culmination of the third quarter for 2024, these figures had vaulted to a staggering 48.418 billion yuan, reflecting a quadrupling of production capacity in just a few years.

This rapid capacity expansion allowed JinkoSolar to capitalize on favorable industry trends, culminating in significant profit increases of 5.534 billion yuan and 7.039 billion yuan for the years 2022 and 2023, respectively, with impressive growth rates of 171.45% and 27.21%.

However, the pursuit of expansion came with a price

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By the end of the third quarter in 2024, Jinko's total liabilities reached nearly 83.9 billion yuan, resulting in a 72.15% debt-to-asset ratio, a stark contrast even when juxtaposed with peer competitor Longi Green Energy, which while exceeding 90 billion yuan in liabilities, maintained a considerably lower debt ratio of 59.2%.

Analyzing Jinko's staggering liabilities gives further cause for concern: of the vast 83.9 billion yuan, approximately 49.79 billion yuan reflects short-term obligationsNotably, both short-term loans and payables have crested 10 billion yuan individually, exceeding 30 billion yuan in total, which hints at significant liquidity strainsWith JinkoSolar's cash reserves of merely 24.2 billion yuan and short-term derivatives totaling around 84.9 million yuan, this coverage gap against short-term liabilities is alarming.

In contentions with such mounting debt pressures, and compounded by substantial losses, JinkoSolar’s operational challenges are poised to escalate significantlyIn addition to these financial troubles, the industry is witnessing the rise of BC (bifacial cell) technology as a potential disruptorBC technology, while still maturing, has emerged as a superior alternative to TOPCon, which has been a dominant player previously.

The current technical prowess of BC cell production suggests significant efficiency advantagesFor instance, unlike TOPCon, BC cells exhibit no front-side obstruction, contributing to higher efficiencies, lower degradation, and improved temperature coefficientsAs a result, under similar configurations, the output from BC modules tends to exceed that of their TOPCon counterparts, thereby reducing the cost per watt for solar installations.

Historically, TOPCon gained traction due to its compatibility with the existing production infrastructureHowever, the rapid maturation of BC technology is shifting industry perceptionsNotably, cost parity between BC and TOPCon technologies is anticipated to occur by the end of 2025, which could pose formidable competitive challenges for companies tethered to antiquated technologies.

In summary, JinkoSolar finds itself ensnared in a quagmire of internal and external pressures

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