“Investor Network” Wang Jianfan

This sudden fire may reshape the future pattern of the global PV market.

At 3 p.m. on April 26, 2023, a fire broke out at Jingke Energy's plant in Taiyuan, Shanxi. Heavy smoke billowed, and the fire was not controlled until 5 o'clock in the evening. Video and pictures from the scene showed that the fire covered the entire factory area, and the factory building of the first phase of the project was almost in ruins, causing heavy losses.

As the core of the “56GW annual vertical integration base project”, the total investment of the project reached 56 billion yuan. Less than a month ago, on March 26, the first production line just celebrated the completion of the entire line.

The scale of the project is unprecedented in the global photovoltaic industry.

Throughout 2023, Jinko Energy's total PV module shipments will be only 78.52 GW, which means that after completion, the Shanxi base alone will cover most of the company's production capacity.

“A butterfly in South America flaps its wings and causes a storm in the Pacific.” As an industry giant, what kind of waves will the Jinko Energy fire cause in the industry?

The new richest man, Li Xiande's photovoltaic empire

Looking back at the changes in China's photovoltaic industry over the past 20 years, you stopped singing, but the scene was bustling but often ended in bitterness. There is often ridicule in the industry: “PV is the richest, and the richest man has no way”.

The photovoltaic industry has given birth to many famous “richest” people, such as Shi Zhengrong, Miao Liansheng, Peng Xiaofeng, and Li Hejun, all of whom are adventurous challengers. However, most of these former heroes have failed to get out of this “richest man” — some have gone far abroad, some have retreated to the woods, and some have even gone to jail.

In an industry where risks and opportunities coexist, today Jinko Energy is inseparable from its founder, Li Xiande, the richest man in Jiangxi.

Li Xiande got involved in the photovoltaic industry under the leadership of his brother. In 2001, his older brother Li Xianshou founded Zhejiang Yuhuan Solar Energy, focusing on the production and sale of commercial and residential solar cell modules. Inspired by this, Li Xiande and his second brother Li Xianhua joined the photovoltaic circuit in 2006 to establish Jingke Energy and Desheng Solar.

By May 2010, Li Xiande, who was only 35, successfully led Jinko Energy to the New York Stock Exchange. Ten years later, JinkoTechnology, which was spun off from the US stock market, was listed on the main board of the Shanghai Stock Exchange. On January 26, 2022, Jingke Energy finally entered the A-share science and technology innovation board. The market capitalization surpassed 100 billion dollars on the first day, laying the groundwork for the company to return to its peak in the future.

Under Li Xiande's leadership, JinkoEnergy continued to develop, while his older brother, Li Xianshou, fell into financial difficulties after experiencing aggressive expansion during the financial crisis, and there has been no news since 2020.

After many rounds of technological iterations and industrial fluctuations, Li Xiande is undoubtedly one of the industry leaders most familiar with the PV cycle.

What is unique is that Lee Seon-deok's style of work is low-key. He rarely appears in the public eye, rarely participates in industry meetings, and often shares and expresses his thoughts through words.

On June 8, 2023, on JinkoEnergy's official WeChat account, he published an article entitled “Fill the Atmosphere of Tough Battles” which was particularly “out of the ring”.

The article concludes with a meaningful sentence: “It's time to do something big.”

Surging by storm, General Chang Sheng of PV casinos

Li Xiande's Jingke Energy is undoubtedly one of the most successful companies in the industry.

Jingke Energy's current position is inseparable from Li Xiande's decisions, especially his key “bet” in his early years — to fully develop TopCon battery technology and gradually implement the entire industry chain transfer.

This gamble has established Jinko Energy's position as a leader in N-type components. By 2023, as “Pioneer TopCon” became an industry consensus, Jinko Energy, which has boldly invested and deployed forward-looking, has occupied about 45 GW of sales in TopCon's high-end market, or about 40% of the market share.

Furthermore, in the PV module industry, there is a phenomenon known as the “boss curse”: in the past ten years, it has been difficult for Suntech, Yingli, Tianhe, and Longji to stay at the top of the market for more than three years.

However, JinkoEnergy was able to successfully break the curse, leading global PV module shipments for four consecutive years from 2016 to 2019.

Since then, even in the face of successive losses after 2020, JinkoEnergy was able to return with a strong attitude in 2023, not only regaining the top position in global PV module shipments, but also setting the highest profit record in the company's history.

However, there are hidden risks behind every bet. Although Li Xiande's bold layout has brought victory over and over again, this strategy is also a double-edged sword hanging over Jingke Energy's head. It may not only open up barriers to the future, but also bring unpredictable risks to the enterprise.

Capital thirst, the financing frenzy behind “big gambling”

Since its launch, JinkoEnergy's financing activities have been very frequent.

In January 2022, Jingke Energy successfully landed on the Science and Technology Innovation Board and raised 10 billion yuan in capital. This capital was mainly used to build an efficient battery production line with an annual output of 11 GW and to supplement working capital, marking a continued boom in production capacity.

However, after only six months and one day (which happened to be in the shortest time interval between the two specified financing periods), JinkoEnergy once again carried out large-scale financing and launched a 10 billion yuan convertible bond program, showing that the company is highly dependent on continuous capital injection.

Although, according to relevant media statistics at the time, the monetary balance on the company's account reached 24.855 billion yuan, which seemed to be sufficient, it was still insufficient to support Jinko Energy's bold expansion ambitions. Soon, JinkoEnergy announced a fixed increase plan of 9.7 billion yuan, causing its total capital raised to nearly 30 billion yuan in less than a year and a half.

Li Xiande is betting on the Jingke Energy Shanxi base project that caught fire this time. In May 2023, in the midst of widespread controversy, the company announced the largest single investment plan of 56 billion yuan in the photovoltaic industry.

This “blood drawing” approach to capital expansion has met with a lukewarm reaction from the market.

Although Jinko Energy's performance is still strong, its market value has experienced sharp fluctuations, falling all the way from a peak of about 180 billion yuan to just over 70 billion yuan. Since 2023, the cumulative decline in JinkoEnergy's stock price has nearly reached a standstill. There was a flurry of criticism from the outside world for the time being that the company was “unsightly.”

After all, there is a significant risk of high debt ratios hidden behind repeated expansions. The company maintains a debt ratio of 70%-80% all year round, and the financial risk ranking within the industry remains high. Among them, Jinko Energy's debt ratio reached 81.40% in 2021, which is significantly higher than the figure of about 50% of competitors such as Longji Green Energy, Jingao Technology, and Tongwei Co., Ltd.

Faced with this highly indebted financial situation, even Li Xiande had to publicly admit: “The debt ratio has become the most important financial battle for Jinko Energy.”

epilogue

Currently, the entire photovoltaic industry is going through a difficult period. The main photovoltaic chain — silicon, silicon wafers, cells, and battery modules — is facing the problem of overcapacity, and the imbalance between supply and demand has become a prominent contradiction. The industry generally anticipates that competition in the PV industry will become more intense.

At the same time, industry competitors including Jingao Technology, Trina Solar, Tongwei Co., Ltd., Artes, and Zhengtai New Energy are all accelerating the expansion of TopCon battery and module production. Driven by the “double carbon” goal, many new and old players have entered the game one after another, and the industry is showing an unprecedented competitive situation.

On the one hand, there is fierce industrial competition, and on the other hand, capital markets are tightening IPOs and refinancing.

In this context, many photovoltaic companies have slowed down the pace of production expansion, and Jinko Energy is no exception. The company suspended almost all of its new investment plans, retaining only the Shanxi base and overseas Vietnam base construction projects.

Someone once asked Lee Seon-tak, “Are you basing your strategy through market research or policy interpretation?” Lee Seon-duk's answer was, “I trust my instincts more.”

Indeed, in this grand gambling game in the photovoltaic industry, Jinko Energy's chips are piled up like mountains. On the market table, rivals are strenuously pouring in, and JinkoEnergy is the gambler who relies on intuition to win again and again.

However, on the table, chips are always flowing, and every round of boosting is full of variables. The table is getting more and more crowded, and you may lose the whole game if you are careless. How much impact will this fire incident have on Jinko Energy, and “Investor Network” will continue to pay attention to how the company will overcome the impact of this incident as soon as possible. (Produced by Thinking Finance) ■