Jinko in no rush on yieldco IPO

Jinko chief executive Chen Kangping

Jinko chief executive Chen Kangping

China's JinkoSolar will not seek to launch a yieldco for its projects business until at least the end of the year, and perhaps not until mid-2015, amid near-term market headwinds.

The initial public offering would take place either in the US, where China-based Jinko currently trades on the New York Stock Exchange, or in Hong Kong, chief financial officer Zhang Longgen said in a conference call on Tuesday.

However, Zhang revealed that Jinko is also looking at other financing opportunities – including speaking with private-equity funds – regarding the funding of its downstream plans.

In January, Jinko told investors that its board had authorized an exploration of “strategic alternatives” for the company’s downstream business -- including the possibility of a yieldco, or other forms of financing.

In China, as elsewhere, project development is a hugely capital intensive business.

A yieldco, along the lines of those that have taken off in North America and the UK over the past year, would allow Jinko to recycle capital from its fast-growing portfolio of existing PV plants back into development and construction.

SunEdison, one of the largest US-based solar companies, and a key Jinko rival in many emerging solar markets, is planning a yieldco IPO this year.

A successful yieldco launch from Jinko would represent a breakthrough for Chinese renewables developers. Yet the company faces a number of challenges in getting it off the ground, including the recent pull-back seen in many solar stocks.

Jinko shares have fallen nearly 30% since January, when it began openly contemplating a yieldco IPO.

Among major Chinese PV manufacturers, Jinko has perhaps been most aggressive in pivoting downstream over the past year, and has trumpeted its plans to become a "solar solutions provider" along the lines of First Solar, rather than a mere kit supplier.

Jinko, the fourth largest Chinese module supplier, already has 252MW of operational capacity on its books, after connecting another two projects to the grid in Jiangsu province last month.

In the first quarter of 2014, Jinko generated 50 million kWh of electricity, translating into 48.4m yuan ($7.8m) of revenue. By the end of the second quarter, the company may have another 250MW under construction, Zhang says.

Despite the near-universal expectation that the global PV market will continue to grow for the foreseeable future, and will be increasingly dominated by a handful of tier-one players like Jinko, significant uncertainty clouds both mature and developing solar markets.

Jinko shares fell nearly 7% in early trading on Tuesday after the company reported its first-quarter results, with investors apparently unimpressed by the company’s 570MW-600MW shipment guidance for the second quarter.

Last week, larger rival Trina Solar guided for 950MW-1,010MW of module shipments during the second quarter, sending its own shares surging.

Jinko – the first Chinese module maker to return to profitability last year – saw its net income shrink sharply on a sequential basis in the first quarter, to 9.5m yuan ($1.5m), due to soft wintertime demand in China and adverse currency fluctuations.

Jinko nevertheless held to its full-year shipment guidance of 2.3GW-2.5GW.

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