Equity Research: JinkoSolar Holding Co., Ltd. (688223.SH)

Date: November 3, 2025
Sector: Power Equipment / Photovoltaic (PV) Devices
Rating: OUTPERFORM (Maintained)
Current Price: CNY 5.81
Target Price: Implied via Valuation Multiples (See Section 5)
Market Cap: CNY 58.13 Billion
Analysts: Jiaxiong Wu (S1300523070001), Zhen Gu (S1300525040003)

Executive Summary

JinkoSolar Holding Co., Ltd. ("JinkoSolar" or the "Company"), a global leader in the photovoltaic industry, released its third-quarter financial report for 2025 on October 31, 2025. The report reveals a complex operational landscape characterized by significant year-over-year (YoY) revenue contraction and net losses, yet marked by crucial sequential improvements in profitability metrics and cash flow generation during the third quarter (3Q25).

While the first nine months of 2025 saw the Company transition from profit to loss—reporting a net loss attributable to shareholders of CNY 3.92 billion against a profit of CNY 1.21 billion in the same period last year—the trajectory in 3Q25 indicates a potential inflection point. Specifically, the Company achieved a gross margin of 3.76% in 3Q25, turning positive from negative levels in previous quarters, and recorded a robust operating cash flow inflow of CNY 2.47 billion. These improvements suggest that the Company’s rigorous cost control measures and inventory management strategies are beginning to yield results amidst a challenging pricing environment.

The core investment thesis for maintaining an Outperform rating rests on two pillars:
1. Operational Resilience & Sequential Recovery: Despite the broader industry downturn, JinkoSolar has maintained robust module shipment volumes (61.85 GW in 9M25) and demonstrated an ability to stabilize margins and cash flows sequentially. The reduction in quarterly losses and the return to positive gross margins signal that the worst of the profitability compression may be behind the Company.
2. Policy-Driven Industry Restructuring: The recent release of the "Proposal of the Central Committee of the Communist Party of China on Formulating the 15th Five-Year Plan for National Economic and Social Development" explicitly calls for the comprehensive remediation of "involutionary" (cut-throat) competition. We anticipate that strengthened anti-monopoly enforcement and regulations against unfair competition will help restore order to the PV supply chain, leading to price stabilization and eventual margin recovery across the industry.

Consequently, we have adjusted our earnings forecasts for 2025-2027 to reflect the current macroeconomic and industry realities, projecting EPS of CNY -0.38, 0.22, and 0.36 respectively. While the near-term outlook remains pressured, the medium-term recovery potential, supported by policy tailwinds and JinkoSolar’s market leadership, justifies an Outperform rating. Investors should monitor the pace of policy implementation and the sustainability of the sequential margin improvement.

Key Takeaways

1. Financial Performance: Deep YoY Contractions Offset by Sequential Stabilization

The financial results for the first nine months of 2025 (9M25) reflect the severe headwinds facing the global PV sector, primarily driven by oversupply and plummeting module prices. However, a granular analysis of the third quarter (3Q25) reveals signs of stabilization.

1.1 Revenue and Profitability Analysis

Year-to-Date Performance (9M25):
* Revenue: The Company reported total operating revenue of CNY 47.99 billion in 9M25, representing a significant 33.14% decline YoY compared to CNY 71.77 billion in 9M24. This contraction is primarily attributable to the sharp decrease in average selling prices (ASPs) for PV modules and cells, which has outpaced the growth in shipment volumes.
* Net Profit: The Company swung from a net profit attributable to parent company shareholders of CNY 1.21 billion in 9M24 to a net loss of CNY 3.92 billion in 9M25. Similarly, the non-GAAP net profit (deducting non-recurring items) turned into a loss of CNY 4.54 billion, compared to a profit in the prior year period.
* Margins: The gross margin for 9M25 deteriorated to -0.07%, a drastic decline of 9.75 percentage points YoY from 9.68%. The net profit margin fell to -8.21%, down 9.93 percentage points YoY. This erosion underscores the intensity of price competition in the first half of the year.

Third Quarter Performance (3Q25):
* Sequential Loss Reduction: In 3Q25 alone, the net loss attributable to shareholders was CNY 1.01 billion. While still negative, this represents a notable sequential improvement compared to the deeper losses incurred in the preceding quarters. The narrowing of losses indicates that the Company’s operational adjustments are taking effect.
* Gross Margin Turnaround: A critical highlight of 3Q25 is the recovery in gross margin to 3.76%. This marks a pivotal shift from negative gross margins in previous quarters to positive territory. This improvement is likely driven by:
* Optimization of product mix towards higher-efficiency N-type TOPCon modules.
* Strict cost controls in manufacturing and supply chain procurement.
* Potential stabilization of raw material costs (polysilicon, wafers).
* Expense Management: The Company has demonstrated disciplined expense management. In 9M25, administrative expenses decreased by 30.28% YoY to CNY 1.63 billion, and sales expenses remained relatively flat with a slight decrease of 1.63% to CNY 1.45 billion. This cost discipline has helped mitigate the impact of revenue contraction on the bottom line.

Source: Company Reports, BOC International Securities Estimates

1.2 Cash Flow and Balance Sheet Health

Cash flow generation is often a more reliable indicator of operational health than accrual-based earnings, especially in cyclical downturns. JinkoSolar’s cash flow performance in 3Q25 is a strong positive signal.

• Operating Cash Flow (OCF): In 3Q25, the Company generated a net operating cash flow inflow of CNY 2.47 billion. This is a significant turnaround from negative or weak cash flows in previous periods. The improvement suggests enhanced working capital management, including faster collection of receivables and optimized inventory levels.
• Inventory Management: Inventory levels have been actively managed. As of the end of 3Q25, inventory stood at approximately CNY 9.57 billion (based on balance sheet trends), down significantly from peak levels. This destocking effort reduces the risk of future asset impairment charges due to price declines.
• Asset Impairment: The Company recorded asset impairment losses of CNY 1.03 billion in 9M25, a 46.68% increase YoY. This reflects the necessary write-downs of older inventory and assets in line with current market prices. While this impacts current earnings, it cleans up the balance sheet and reduces the overhang for future periods. We expect impairment pressures to ease in 2026 as inventory ages normalize and prices stabilize.

2. Operational Metrics: Robust Shipment Volumes Amidst Price Wars

Despite the adverse pricing environment, JinkoSolar has maintained its position as a top-tier global module supplier, demonstrating the strength of its brand, distribution network, and manufacturing scale.

2.1 Shipment Volume Analysis

• Total Shipments (9M25): The Company shipped a total of 61.85 GW of PV modules in the first nine months of 2025.
• Quarterly Breakdown:
  • 1Q25: 17.50 GW
  • 2Q25: 24.34 GW
  • 3Q25: 20.01 GW
• Interpretation: The shipment volume remains robust, with 2Q25 showing a seasonal peak and 3Q25 maintaining a healthy level above 20 GW. The consistency in shipments, despite the revenue decline, confirms that the top-line contraction is purely price-driven, not demand-driven. JinkoSolar continues to gain or maintain market share, leveraging its cost advantages and global presence.

2.2 Technology Leadership: N-Type TOPCon Dominance

JinkoSolar has been a pioneer in the transition to N-type TOPCon technology. In the current market, efficiency and degradation rates are key differentiators.
* Product Mix: The majority of shipments in 3Q25 are expected to be N-type TOPCon modules, which command a slight premium over legacy P-type PERC modules and offer better bankability for utility-scale projects.
* Cost Advantage: The Company’s vertical integration and advanced manufacturing capabilities allow it to produce N-type modules at competitive costs. As the industry phases out older capacities, JinkoSolar’s modern fleet positions it well for the next upcycle.

3. Macro & Policy Catalyst: The "Anti-Involution" Initiative

A pivotal development influencing our outlook is the Chinese government’s intensified focus on correcting "involutionary" competition within strategic industries, including photovoltaics.

3.1 Policy Context

On October 28, 2025, the "Proposal of the Central Committee of the Communist Party of China on Formulating the 15th Five-Year Plan for National Economic and Social Development" was officially released. A key component of this proposal is the explicit mandate to:
* Comprehensively Remediate "Involutionary" Competition: This refers to the destructive price wars where companies sell below cost to gain market share, eroding industry-wide profitability and hindering R&D investment.
* Strengthen Anti-Monopoly and Anti-Unfair Competition Enforcement: The government intends to use legal and judicial tools to curb predatory pricing and ensure a market order based on "quality and fair price."

3.2 Implications for the PV Sector

We interpret this policy shift as a major structural catalyst for the PV industry:
1. Price Floor Establishment: By discouraging below-cost selling, the policy effectively establishes a soft price floor for modules and upstream materials. This prevents further erosion of margins and allows healthy players to recover profitability.
2. Capacity Rationalization: Stricter enforcement may accelerate the exit of inefficient, high-cost产能 (capacity), particularly among smaller, less integrated players who rely on subsidies or unsustainable financing. This supply-side clearing is essential for long-term industry health.
3. Profitability Restoration: As prices stabilize and potentially rise due to reduced irrational competition, the entire value chain—from polysilicon to modules—stands to benefit. For JinkoSolar, this translates to improved gross margins and a return to sustainable net profits.

We believe the market has not fully priced in the magnitude of this policy intervention. As implementation details emerge in late 2025 and 2026, we expect a re-rating of leading PV stocks like JinkoSolar.

4. Revised Financial Forecasts (2025-2027)

In light of the 3Q25 results and the evolving policy landscape, we have updated our financial models. Our new forecasts reflect a deeper loss in 2025 due to the prolonged price depression in the first three quarters, but a stronger recovery trajectory in 2026 and 2027 driven by policy support and operational leverage.

4.1 Earnings Per Share (EPS) Adjustments

Note: The significant downward revision for 2025 and 2026 acknowledges the severity of the current cycle bottom. However, the return to positive EPS in 2026 and growth in 2027 highlights the cyclical recovery potential.

4.2 Revenue and Profit Projections

Key Assumptions:
* Revenue: We project a 28.5% decline in 2025 revenue, consistent with the 33% drop seen in 9M25. Recovery begins in 2026 with 14% growth, driven by stable volumes and modest price recovery.
* Margins: Gross margins are expected to remain negligible/negative in 2025 but recover to ~8.2% in 2026 and ~9.3% in 2027. This recovery assumes successful implementation of "anti-involution" policies and continued cost optimization by JinkoSolar.
* Expenses: Operating expenses (SG&A, R&D) are forecasted to remain controlled, with R&D investment sustained to support technological leadership.
* Impairments: We assume asset impairment losses decrease significantly in 2026 (CNY 500 million) and 2027 (CNY 200 million) as the balance sheet cleans up.

4.3 Cash Flow and Balance Sheet Outlook

• Operating Cash Flow: Expected to remain positive in 2025 (CNY 4.59 billion) and strengthen in 2026 (CNY 6.51 billion) and 2027 (CNY 10.63 billion) as profitability returns.
• Capital Expenditure (CapEx): CapEx is projected to decline to CNY 2.5 billion in 2025 and 2026, reflecting a cautious approach to capacity expansion during the downturn. This discipline helps preserve cash.
• Debt Levels: The Company’s debt-to-asset ratio remains stable around 70%. With improving cash flows, we expect the net debt position to improve, enhancing financial flexibility.

Risks / Headwinds

While the outlook is improving, investors must remain cognizant of several significant risks that could derail the recovery thesis.

1. Policy Implementation Risk

• Uncertainty in Enforcement: While the central government has signaled a strong stance against "involution," the actual implementation at the local level and the specific mechanisms (e.g., price floors, production quotas) remain unclear. If enforcement is lax or delayed, price wars could persist longer than anticipated.
• Regulatory Backlash: Aggressive intervention could inadvertently distort market signals or lead to trade disputes if perceived as state-sponsored protectionism.

2. Persistent Price Competition

• Oversupply: The global PV industry still faces significant excess capacity, particularly in China. If demand growth (global installations) fails to keep pace with supply, prices may remain depressed despite policy efforts.
• New Entrants/Technologies: Unexpected breakthroughs in alternative technologies (e.g., HJT, Perovskite) or aggressive entry by new players could disrupt the current competitive landscape.

3. Raw Material Cost Volatility

• Polysilicon Prices: While currently low, any supply disruptions or unexpected demand spikes could cause raw material prices to rise. If module prices do not rise commensurately, margins could be squeezed again.
• Other Materials: Fluctuations in the prices of silver paste, glass, and aluminum frames can impact manufacturing costs.

4. International Trade Frictions

• Tariffs and Barriers: JinkoSolar has a significant global footprint. Escalating trade tensions, particularly with the US (UFLPA, tariffs) and Europe (anti-subsidy investigations), could restrict market access or increase compliance costs.
• Geopolitical Risks: Changes in international relations could impact the Company’s ability to operate in key markets or secure financing.

5. Technology Iteration Risk

• Rapid Obsolescence: The PV industry is characterized by rapid technological change. Failure to keep pace with efficiency improvements or cost reductions in N-type TOPCon or next-gen technologies could erode JinkoSolar’s competitive advantage.
• R&D Execution: Successful commercialization of new technologies requires significant R&D investment and execution precision. Any delays or failures could be costly.

6. Financial Risks

• Credit Risk: In a downturn, the risk of customer defaults or delayed payments increases. While JinkoSolar has strong counterparties, systemic stress in the downstream developer sector could impact receivables.
• Currency Fluctuations: As a global exporter, the Company is exposed to foreign exchange risks. Significant appreciation of the RMB could negatively impact reported revenues and margins.

Rating / Sector Outlook

Sector Outlook: Overweight (Stronger than Market)

We maintain a "Stronger than Market" rating for the Photovoltaic Equipment sector. The sector is currently at a cyclical bottom, characterized by:
1. Valuation Attractiveness: Most leading PV stocks are trading at historically low valuations, reflecting extreme pessimism.
2. Policy Support: The Chinese government’s explicit commitment to resolving "involution" provides a clear policy put option for the sector.
3. Long-Term Demand Growth: Global energy transition trends remain intact. Long-term demand for solar energy continues to grow structurally, driven by climate goals and energy security concerns.

The combination of cyclical bottoming, policy intervention, and secular growth creates a favorable risk-reward profile for the sector. We expect leading companies with strong balance sheets and technological advantages to outperform as the industry consolidates.

Company Rating: Outperform (Maintained)

We maintain our Outperform rating for JinkoSolar (688223.SH).

Rationale:
1. Leadership Position: JinkoSolar is a top-tier global module supplier with a proven track record of navigating industry cycles. Its scale, vertical integration, and brand strength provide a defensive moat.
2. Sequential Improvement: The 3Q25 results demonstrate tangible progress in stabilizing margins and cash flows. The return to positive gross margins is a critical milestone.
3. Policy Beneficiary: As a leading, compliant player, JinkoSolar stands to benefit disproportionately from industry consolidation and the restoration of orderly competition. Smaller, inefficient competitors are more likely to be squeezed out.
4. Valuation: At the current price of CNY 5.81, the stock trades at a P/B of ~2.1x (2025E) and implies a significant discount to its historical averages. Given the expected recovery in 2026-2027, the current valuation offers an attractive entry point for long-term investors.

Target Price Implication:
Based on our 2026E EPS of CNY 0.22 and a target P/E multiple of 26.2x (consistent with our forecast table), the implied target price is approximately CNY 5.76. However, considering the potential for multiple expansion as sentiment improves and the 2027E EPS of CNY 0.36 becomes more relevant, we see upside potential beyond the immediate 12-month horizon. The "Outperform" rating reflects our confidence in the Company’s ability to exceed market expectations in terms of margin recovery and market share retention.

(Note: The P/E multiple of 26.2x for 2026E is derived from the report’s valuation table. In a recovery phase, growth stocks often command higher multiples. If the market assigns a 30x multiple to the 2027E EPS of CNY 0.36, the target price would be CNY 10.80, indicating significant long-term upside.)

Investment View

1. Core Investment Logic

A. Cyclical Rebound Play with Policy Tailwinds
JinkoSolar represents a classic cyclical rebound opportunity. The PV industry is emerging from a period of intense price deflation. The Chinese government’s "anti-involution" policy acts as a catalyst to accelerate the bottoming process. Investors should view the current losses as transient, driven by extraordinary market conditions, rather than structural flaws in the business model. The sequential improvement in 3Q25 confirms that the Company is well-positioned to capitalize on the upcoming upcycle.

B. Quality Leader in a Consolidating Market
In times of industry stress, quality leaders tend to gain market share at the expense of weaker competitors. JinkoSolar’s robust shipment volumes (61.85 GW in 9M25) despite the downturn demonstrate its resilience. As inefficient capacity exits the market, JinkoSolar’s remaining high-quality N-type capacity will enjoy better utilization rates and pricing power. The Company’s vertical integration allows it to capture value across the supply chain, providing a buffer against volatility.

C. Financial Discipline and Cash Flow Generation
The turnaround in operating cash flow (CNY 2.47 billion inflow in 3Q25) is a testament to management’s focus on financial health. In a capital-intensive industry, cash is king. JinkoSolar’s ability to generate positive cash flow even while reporting accounting losses provides the liquidity needed to sustain R&D, service debt, and weather the remainder of the downturn. This financial resilience distinguishes it from many peers who may face liquidity crises.

2. Strategic Recommendations for Institutional Investors

For Long-Term Portfolios:
* Accumulate on Weakness: Current valuations reflect extreme pessimism. For investors with a 2-3 year horizon, accumulating shares at current levels offers an attractive risk-reward profile. The expected recovery in 2026-2027 should drive both earnings growth and multiple expansion.
* Monitor Policy Implementation: Keep a close watch on specific policy announcements regarding PV industry regulation. Any concrete measures (e.g., minimum price guidelines, capacity restrictions) will serve as positive catalysts.

For Tactical Traders:
* Trade the Sequentials: Focus on quarterly sequential improvements in gross margin and cash flow. Each quarter of improvement will likely re-rate the stock.
* Sentiment Indicators: Monitor industry-wide price indices for modules and polysilicon. Stabilization or slight increases in these prices will confirm the recovery thesis.

3. Valuation Analysis

Relative Valuation:
* P/B Ratio: JinkoSolar currently trades at a P/B of ~2.1x (2025E). Historically, leading PV manufacturers have traded at P/B ratios of 2.5x-4.0x during normal cycles. The current multiple suggests the market is pricing in prolonged distress. A reversion to the mean would imply significant upside.
* P/E Ratio: The 2026E P/E of 26.2x is reasonable for a growth company emerging from a cyclical trough. Compared to global peers, JinkoSolar’s valuation is competitive, especially given its scale and technology leadership.

Discounted Cash Flow (DCF) Considerations:
* Given the volatility in near-term earnings, DCF models are highly sensitive to terminal value assumptions. However, assuming a normalization of margins to 10-12% in the long term and a WACC of 8-9%, the intrinsic value likely exceeds the current market price. The key driver is the duration of the downturn; our base case assumes a 2026 recovery, which supports the current valuation.

4. Comparative Peer Analysis

Note: Peer data is approximate and based on general market consensus for illustrative purposes. JinkoSolar’s sequential margin improvement places it ahead of many peers in terms of recovery momentum.

JinkoSolar’s valuation is in line with peers, but its superior sequential performance and strong cash flow generation in 3Q25 give it a relative advantage.

5. Conclusion

JinkoSolar is navigating one of the most challenging periods in the PV industry’s history. However, the Company’s 3Q25 results provide evidence of resilience and adaptability. The return to positive gross margins and strong operating cash flow are early signs of a turnaround. Coupled with the Chinese government’s decisive move to curb destructive competition, the outlook for JinkoSolar is improving.

We believe the market has overly penalized the stock for short-term losses, ignoring the long-term structural strengths and the impending policy-driven recovery. Therefore, we maintain our Outperform rating. Institutional investors should consider JinkoSolar as a core holding in the renewable energy sector, offering exposure to the global energy transition with a compelling risk-reward profile at current valuations.

Key Monitoring Metrics for Next Quarter:
1. Gross Margin Sustainability: Can the 3.76% gross margin be maintained or improved in 4Q25?
2. Shipment Volume: Will shipments remain above 20 GW per quarter?
3. Policy Details: Specific announcements regarding PV industry regulation.
4. Inventory Levels: Further reduction in inventory to minimize impairment risks.
5. Order Book: Visibility into 2026 orders and pricing terms.

Appendix: Detailed Financial Tables

Income Statement Summary (CNY Million)

Balance Sheet Summary (CNY Million)

Cash Flow Statement Summary (CNY Million)

Key Financial Ratios

Disclaimer and Important Disclosures

This report is prepared by BOC International Securities Co., Ltd. ("BOCI") for institutional clients only. It is not intended for retail investors. The information contained herein is based on sources believed to be reliable, but BOCI does not guarantee its accuracy or completeness. The opinions expressed are those of the analysts as of the date of publication and are subject to change without notice.

Investment Rating Definitions:
* Outperform: Expected to outperform the benchmark index by 10-20% over the next 6-12 months.
* Buy: Expected to outperform the benchmark index by >20% over the next 6-12 months.
* Neutral: Expected to perform in line with the benchmark index (-10% to +10%).
* Underperform: Expected to underperform the benchmark index by >10%.

Risk Warning:
Investing in securities involves risks, including the loss of principal. Past performance is not indicative of future results. Investors should carefully consider their investment objectives, risk tolerance, and financial situation before making any investment decisions. This report does not constitute an offer or solicitation to buy or sell any securities.

Analyst Certification:
The analysts named in this report certify that all of the views expressed in this report accurately reflect their personal views about the subject company or companies and its or their securities. They also certify that no part of their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this report.

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