Tritax Big Box Reit PLC
LSE:BBOX
Tritax Big Box Reit PLC
In the heart of the UK’s rapidly evolving logistics industry, Tritax Big Box REIT PLC stands tall as an orchestrator of critical infrastructure for modern commerce. Born from the rising tide of e-commerce and complex supply chains, this real estate investment trust focuses on acquiring and managing large-scale warehouses, the vital nodes that enable quick and efficient product deliveries from manufacturers to doorstep. With strategic foresight, Tritax aligns its property portfolio closely with high-quality tenants such as Amazon and Tesco, ensuring a steady stream of rental income. This symbiotic relationship not only positions Tritax as a critical player in the logistics landscape but also ensures stability and growth prospects in an era where online shopping is pervasive.
Tritax's business model thrives by identifying prime logistics locales near major transportation hubs, capitalizing on the UK’s need for connectivity and speed in freight movements. By investing in state-of-the-art facilities that cater to the specific logistical needs of their tenants, Tritax increases the value of its holdings, enhancing rental yields and long-term property appreciation. These investments in indispensable logistics hubs are coupled with scale efficiencies and a disciplined financial management approach, enabling Tritax to generate consistent income streams for its investors. Through keen asset management and strategic expansions, Tritax Big Box continues to solidify its role as the infrastructural backbone of the digital economy, turning logistical efficiency into financial prowess.
Earnings Calls
In a challenging year, the company reported an 18.3% rise in module shipments, totaling 26.5 gigawatts in Q4 and achieving a record 93 gigawatts for the year. Despite declining module prices, revenue hit $2.83 billion, a 37% drop year-over-year, with gross margins falling to 3.6%. Operating expenses were reduced by 27% sequentially, showcasing improved cost management. Looking ahead, the company anticipates domestic installations in China to exceed 270 gigawatts in 2025, with a global demand projection of 700 gigawatts, emphasizing its strategy to maintain leadership through product innovation and market expansion.
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Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co. Limited Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded.
I would now like to turn the meeting over to your host for today's call, Ms. Stella Wang, JinkoSolar's Investor Relations. Please go ahead.
Thank you, operator. Thank you, everyone, for joining us today for JinkoSolar's fourth quarter 2024 earnings conference call. The company's results were released earlier today and available on the company's IR website at www.jinkosolar.com as well as on Newswire services. We have also provided a supplemental presentation for today's earnings call, which can also be found on the IR website.
On the call today from JinkoSolar are Mr. Li Xiande, Chairman and CEO of JinkoSolar Holding Company Limited; Mr. Gener Miao, CMO of JinkoSolar Company Limited; Mr. Pan Li, CFO of JinkoSolar Holding Company Limited; and Mr. Charlie Cao, CFO of JinkoSolar Company Limited. Mr. Li will discuss JinkoSolar's business operations and company highlights, followed by Mr. Miao, who will talk about the sales and marketing, and then Mr. Pan Li, who will go through the financials. They will all be available to answer your questions during the Q&A session that follows.
Please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding this and other risks is included in JinkoSolar's public filings with the Securities and Exchange Commission. JinkoSolar does not assume any obligation to update any forward-looking statements, except as required under the applicable law.
It's now my pleasure to introduce Mr. Li Xiande, Chairman and CEO of JinkoSolar Holdings. Mr. Li will speak in Mandarin, and I will translate his comments into English. Please go ahead, Mr. Li.
[Foreign Language]
[Interpreted] We delivered more resilient operating results in a challenging year of 2024 with our leading position in N-type TOPCon technology and patent portfolio, competitive products as well as global sales and manufacturing networks. Our new module shipments increased by 18.3% year-over-year to about 93 gigawatts, ranking first in the industry. The ongoing imbalance between supply and demand led to a decline in the module prices in 2024, combined with the impact of short-term factors such as the elimination of obsolete production capacity, our profitability dropped significantly year-over-year.
Gross margin was 10.9% in 2024 compared to 16% in 2023. Net income was USD 7.9 million, down 98% year-over-year. Module shipments were 25.2 gigawatts in the fourth quarter, in line with our guidance. As over 50% of modules were shipped to the domestic market where the price were lower and the proportion of higher-priced overseas orders declined sequentially, both module ASP and profit decreased sequentially. Gross margin was 3.6% in the fourth quarter compared to 15.7% in the third quarter. Net loss was USD 64.9 million compared to net income of USD 3.2 million in the third quarter.
In 2024, the global PV industry maintained fast growth momentum according to NEA data. Newly added installation in China was 277 gigawatts in 2024, an increase of 28% year-over-year, setting a record high. According to InfoLink Consulting, China's module exports reached 236 gigawatts in 2024, an increase of 13% year-over-year. Intensified supply and demand imbalances led to a downward trend in end product prices, putting profits under pressure in all segments of the industrial chain. In order to return the industry to healthy development, the national authorities took steps to resolve the structural imbalance between supply and demand with the participation of industry associations and manufacturers.
In November, state departments announced the policies to raise entry barrier for new manufacturing capacities, reduce export tax rebates and other measures. In December, leading PV enterprises signed a self-discipline pledge aimed to limit low-price competition and reducing production. Recently, the NDRC and NEA announced a policy on market-based reforms for on-grid renewable energy pricing aimed at promoting high-quality industry development. Guided by industry self-discipline and supportive policies, price in the industry as well as other module prices have stabilized and started to rebound.
We are committed to maintaining technology leadership through continuous R&D investments and mass production of our innovative products. By the end of the fourth quarter, the average mass-produced N-type cell efficiency reached nearly 26.5% and the efficiency on the highest performing production lines, our golden area reached over 26.7%. In addition, we have recently initiated production of third-generation Tiger Neo products with large-scale production expected by the end of this year.
We continue to phase out outdated production capacity while further enhancing our global manufacturing capabilities. At our Shanxi N-type Super Factory, we take ongoing efforts to reduce costs and improve efficiency through the introduction of automated equipment and process optimization. Our 2 gigawatts N-type module production capacity in the U.S. is operating at nearly full capacity, while our Saudi Arabia project is progressing steadily. As we continue to strengthen our localized supply chain, we are confident in our ability to meet customer demand for locally produced high-quality and stable product supply and services.
Recently, we were included in the S&P Global's 2025 Sustainability Yearbook as the only solar module company. In the latest corporate sustainability assessment, CSC results released by the S&P Global, we scored 69 points, ranking 1st among the top 5 PV module companies. In addition, we received a BBB rating for the second consecutive year in the MSCI ESG ratings. These recognitions are a strong testament to our continuous efforts in ESG.
We placed great importance on intellectual property protection and are committed to maintaining our global technological leadership through an extensive IP portfolio. By the end of the fourth quarter, we had built a strong patent portfolio, including 462 granted TOPCon patents, making us one of the world's leading holders of TOPCon-related patents. Our TOPCon patent portfolio covers a substantial number of countries and regions, including the United States, Europe, Japan, Australia, China.
Recently, we received patent infringement claims from some competitors. After a preliminary review, we believe these allegations lack both factual and legal merits. We are actively responding in collaboration with legal advisers and technical experts. As an industry leader in innovation, we fully respect intellectual property rights and advocate for fair competition while firmly defending our legitimate rights and interest. We believe that upholding these principles is essential for the healthy development of the industry.
In the short term, as some leading PV companies face significant financial losses, the industry may have entered a deep adjustment period. Companies lacking competitive costs and efficiency, product and technology iteration capabilities and global expansion capabilities are likely to be phased out, helping restore supply and demand balance to the industry. In the medium to long term, according to IEA data, renewable energy is expected to supply half of global electricity demand by 2030 with wind and solar PV generation doubling their share to 30%. This highlights the vast growth potential of the PV industry. With our extensive market insights and strong execution capabilities, we have successfully navigated industry cycles several times. We are confident this strength will continue to help us overcome future challenges and position us strongly for emerging opportunities.
Before turning over to Gener, I would like to go over our guidance for the first quarter and the full year of 2025. By the end of 2025, we expect mass-produced N-type cell efficiency to reach approximately 27%. We are taking a more cautious approach to capacity expansion in this year. Besides upgrades to TOPCon technology, there is no newly added capacity. We expect our annual production capacity for mono wafers, solar cells and solar modules to reach 120, 95, and 130 gigawatts, respectively, by the end of this year. We expect module shipments to be between 16 to 18 gigawatts for the first quarter of 2025 and between 85 and 100 gigawatts for the full year 2025. We will also continue to optimize our assets and liability structure while maintaining a healthy cash reserve, further strengthening our resiliency to risk.
Thank you, Mr. Li. We are proud to have reached a historical high quarterly and annual module shipments, leveraging our global sales network and product strength. Total shipments were approximately 26.5 gigawatts in the fourth quarter with module shipments accounting for 95%. Annual module shipments were 93 gigawatts, ranking 1st in the industry. This marks the sixth year in the past decade that we have won the global module shipment championship. We continue to improve our product efficiency and quality and expand our client service network as our brand influence continue to grow.
By the end of fourth quarter, we were leading the industry as the first PV enterprise to reach the milestone of a cumulative module shipment over 300 gigawatts, covering nearly 200 countries and regions. In terms of geographic mix for the full year, 60% of our modules were shipped overseas, primarily Europe, India and Pacific, and Middle East, Africa. Shipments to North America accounted for around 8%, in line with our expectations. We further optimized our product with the portion of N-type Tiger Neo series exceeding 95% in the fourth quarter and nearly 90% for the full year.
Recently, we ranked 1st in the global solar module manufacturer ranking 2025 report published by Wood Mackenzie. In addition, we were ranked as the most bankable solar module company in the 2024 PV module bankability survey by Bloomberg. We were also only solar module company to receive 100% bankability rating in this year's survey. All this are strong evidence of recognizing our stable financial conditions as well as high efficiency and reliable products and services by our global customer, financial institutions and other industry stakeholders. In 2024, the newly added 277 gigawatts in domestic installation exceeded expectations with 70 gigawatts in December, all historical highs.
Looking forward to 2025, newly added installations in China are expected to be 270 gigawatts or higher and global PV demand is expected to be around 700 gigawatts. We will continue to leverage our advantage in products, brands, patent portfolios and global channels to provide better products and services to our global clients.
With that, I will turn the call over to Pan.
We are pleased to report that our total module shipment increased 18.3% year-over-year in a challenging year. As module prices declined in the fourth quarter, we enhanced control over costs and expenses, reducing operating expenses by about 27% sequentially. In addition, we improved operating efficiency by optimizing our asset and liability structure as well as operating cash flow.
At the end of fourth quarter, our asset liability ratio was 72%, a significant improvement from 75% at the beginning of the year. Our cash and cash equivalents were USD 3.8 billion. We will continue to optimize our asset and liability structure and maintain healthy cash reserves in the new year, further strengthening our resilience to risks.
Let me go into more details now. Total revenue was USD 2.83 billion, down 15.7% sequentially and down 37% year-over-year. Gross margin was 3.6% compared with 15.7% in the third quarter of '24 and 12.5% in the fourth quarter of '23. The sequential and year-over-year decreases were mainly due to the decrease in average selling price of solar modules.
Total operating expenses were about USD 380 million, down about 26% sequentially and same year-over-year. The sequential and year-over-year decreases were mainly due to the decrease in shipping costs. Total operating expenses accounted for 13% of total revenues in the fourth quarter of '24 compared to 15% in the third quarter. Operating loss margin was 9.8% in the fourth quarter compared with operating profit margin of 0.3% in the third quarter.
Now a brief view on our '24 full year financial results. Total module shipments were 92.87 gigawatts, up 18.3% year-over-year. Total revenues were USD 12.64 billion, down 22% year-over-year. For the full year '24, gross profit was USD 1.4 billion, a decrease of 47% year-over-year. Gross margin was about 11% compared to 16% in '23. The year-over-year decrease was mainly attributed to the decrease in the average selling price of modules.
Total operating expenses were USD 1.84 billion, up about 4% year-over-year. The increase was mainly attributed to the write-off of net book value of equipment resulting from the fire accident in Shanxi province, which was partially offset by the estimated insurance proceeds from the fire accident and also an increase in the impairment loss of long lease assets.
Operating loss margin for full year was 3.7% compared with operating profit margin of 5% for full year last year of '23. Excluding the impact from a change in fair value of notes, and a change in fair value of long-term investment, also our share-based compensation expenses, the net loss resulting from a fire accident in Shanxi province in April '24 and the impairment of long-lived assets, adjusted net income attributed to JinkoSolar Holdings ordinary shareholders was about USD 78.3 million in '24.
Moving to the balance sheet. At the end of the fourth quarter, our cash and cash equivalents were USD 3.8 billion and a significant increase compared with USD 3.2 billion at the end of third quarter of '24 and USD 2.7 billion at the end of fourth quarter of '23.
Our turnover days were 80 days compared with 90 days in third quarter of '24. Inventory turnover days were 57 days compared with 66 days in the third quarter of '24 as a result of improved operating efficiency. At the end of the fourth quarter, total debt was USD 5.56 billion compared to USD 4.38 billion at the end of the fourth quarter of '23. Net debt was USD 1.76 billion compared to USD 1.63 billion at the end of the fourth quarter of '23.
This concludes our prepared remarks. We are now happy to take your questions. Operator, please proceed.
[Operator Instructions] Your first question comes from Brian Lee with Goldman Sachs.
This is Tyler Bisset on for Brian. We saw the U.S. Department of Commerce recently increased import tariffs from Vietnam. So can you share what you are embedding in your guidance and the potential impact of these tariffs on your margins as well as any changes to your pricing strategy in the U.S. this year?
Can you rephrase your -- which tariff you are mentioning? Is that just AD/CVD or something else you are referring to?
Yes, the AD/CVD ones.
Yes. AD/CVD, I think we have prepared all the solutions on that. So currently, we are not suffering on the AD/CVD. So we are -- our current utilization in our U.S. factories is full. And also, we are utilizing the other supply chain to try to provide the solutions to U.S. market without paying additional cost on the AD/CVD tariffs. So currently, we don't expect that will bring us a big negative impact on our margins. However, the demand in U.S. is the key factors, if the demand in U.S. market is weak, and it probably will bring the whole market headwinds on the margin side, but it's not quite related to the AD/CVDs.
Great. And then just on that topic, can you share your expectations for U.S. shipments this year and whether you might potentially pull back from U.S. market given the high tariffs [indiscernible]
I don't think I got the full picture of your questions, but I guess your question is more about the shipment to U.S. Now it's still early to define our shipment volumes to U.S. because the policies is still uncertain. So we have heard a lot of rumors which regarding the trade barriers regarding this IRAs, et cetera. So we are still expecting a reasonable range, but how far it goes, we will try to define once the policy is clear and we can have more clarity on that.
Your next question comes from Philip Shen with ROTH Capital.
Just following up on the recent import -- recent CVD tariff. So you mentioned just now, Gener, that the -- you could serve the U.S. with an alternative supply chain. Can you give us a little more clarity on that? Is it -- would you serve the U.S. from -- is Saudi Arabia up and running yet? My sense is it might be -- it might take a little more time. So just curious if you can share more color there.
Yes. So I think there are still quite a lot of availability capacities outside the AD/CVD scope, which is, I think, 4 countries in Southeast Asia. So looking to the map, definitely, I don't want to mention any particular countries or supplier names, but definitely, we see quite several availabilities on the market, which can supply to the U.S. market, which can be a short-term solution. So for Jinko's strategy, we don't plan to invest on that, but we probably will hire some OEMs to try to utilize the short-term -- short time opportunity together with our IP strength.
And then shifting over to pricing. I was wondering if you could give -- well, actually, let's focus on margins. In terms of your Q4 margin, I heard it was -- the weakness was driven primarily by price and maybe greater mix to China. So can you share what your expectation is for Q1 margin? And then how you think that margin trends in Q2 and Q3?
Philip, this is Charlie. And in terms of the outlook for the gross margins and the Q4 -- the fourth quarter last year, it's a downward trend, right? And we have a lot of shipments in China and the supply and with demand imbalance and put the market price under pressure. And the first quarter is a slack season for the solar sectors, we expect the gross margin and will continue to be moderately declined. With the improvement outlook and gradually -- we gradually balance between the supply and the demand side and as well as China's push demand in the second quarter, the module price is gradually improved.
So we expect in the second quarter, there is high opportunities. The gross margin will improve moderately. But if you look for the long-term perspective, we strongly believe the solar sector is at the bottom side. And the top-tier companies are very disciplined and in terms of output, in terms of pricing strategy, but it still takes time for the balance of -- particularly from supply side. For the long-term perspective, we are still optimistic.
Okay Charlie. I want to make sure I heard you right. Did you say Q1 margins could be lower than Q4?
Yes, you're right. And it's slack season, and we expect several orders we signed in the first half of last year, the price is relatively lower and the volume is lower and the gross margin we expect relatively lower in the first quarter.
Got it. So we have negative margin in Q1?
Well, improved in the second quarter. Were you talking about net margin?
No, we're talking about gross margins.
Sorry. Gross margin, yes. And the Q1 is slightly lower than Q4 and improved and moderately in second quarter.
Okay. One last housekeeping question. What's your expectation for CapEx for 2025?
In the prepared remarks --
Yes. As far as CapEx, right? In '25, we expected it will be much lower than this year. It's approximately RMB 4 billion to RMB 5 billion, yes.
Your next question comes from Alan Lau with Jefferies.
So I would like to follow up Phil's question on margin. So because the margin in 4Q was affected by a couple of things like a higher China shipment and module prices was lower. So 2Q is expected to be better, but how about second half, considering -- because before we were discussing there might be more U.S. shipment in the second half and utilization rates are likely to be higher in second half as well. I would like to know what's the view of 2Q in terms of the margin.
It depends on the market situation in the second half year, but we expect maybe a little bit soft demand in third quarter after the push demand from China pick up in the fourth quarter. But the most important thing is the capacity phase-out in industries and the demand gradually pick up and including the U.S. U.S. now the policy is uncertain. It's not only the AD/CVD, it includes the tariffs, reciprocal tariff on aluminum tariffs, a lot of uncertainties, but we expect after the policy to be finalized, the U.S. from a long-term perspective, we are very optimistic given the AI innovations and leading significant demand in accessories. For the short term, the first half year, in U.S. and we expect a relatively soft but it's highly possible and it's going to improve after the finalization of the policies.
Yes. And following on the previous buyback -- share buyback plan, I would like to know after the result announcement right now, will the company start buyback? And also, would there be another period of blackout after 31st of March, which is a couple of days from now. So how does the management consider in terms of the buyback pace? And is it linked to the issuance of GDR of the Asia subsidiary?
It's not necessarily linked to the GDR timetables. And we plan to increase the total shareholder returns this year up to USD 200 million and including the dividend and including the repurchase of shares. And we believe we have sufficient cash positions, including the U.S. holding companies has USD 120 million cash. And for the ecosystem investment portfolio, financial investment, we have roughly, I think, [ USD 150 million ], and we're trying to divest of the ecosystem of the investment. And in terms of timing and it's a very short time window this quarter because it's going to be -- it's reaching to the end of the first quarter. So I don't believe we have sufficient days to start the purchase of the shares this quarter. And after Q1 earnings release, and I think we are thinking of both the dividend and the repurchase of shares.
Okay. So just to confirm, first of all, it's not related to GDR, right?
Yes, yes. And I don't -- we don't believe that's related to GDR. GDR -- Asia is planning to issue the [ ADR ] in Germany and the U.S., and it's not -- I don't believe that is relevant because we plan to divest the ecosystem investment. And it's -- we have some portfolio companies, which has been invested in Asia and we take a minority interest, we can cash out the investment.
Understood. So first of all, the company has already has USD 120 million in holdco. And secondly, I would like to know, is there any lockup period in terms of the minority financial investment in Asia because sometimes there may be lockup period, et cetera.
Yes. Some of the investments it did have some lockup period, but some of the investment, we try to do the private sale. And we have completed 2 private -- 1 private sale and 1 public sale around USD 20 million in the first quarter. But some of the investment, we are not able to sell until the fourth quarter of this year, but it's under our schedule.
That's clear. I think the next question is about the China supply side reform policies because there has been a lot of discussions on government policies. I would like to know the company's view given that Jinko is the leader in the self-discipline initiative. I would like to know, do you see any policies coming out from the government as well?
We are not in a position to comment the details. But again, I think the solar sector, the EV sector is a key sector. I think the government keeps an eye. And I think in the last national MPC meetings, there is some kind of general release from the government, and we would expect some supply reform policies coming out.
My last question is about update on the Saudi capacity. Like is it on schedule to be completed by first quarter 2026? And like how is the orders contracted in that plant?
Saudi, the Super Factory is a strategic move for Jinko to do the globalization, and we work with PIF and Vision Industries. And now it's in the early preparation stage, and there are a lot of work in progress, and we target to break the ground by the end of second quarter. And we expect the fully operational and ramp-up will be the end of next year.
Your next question comes from Rajiv Chaudhri with Sunsara Capital.
I have a couple of questions. The first is about market share. If last year, 2024, was around 600 to 625 gigawatts, and you can confirm that number, and this year, you are expecting 700 gigawatts, then I'm curious why you think that your market share this year will actually be slightly down or not more than flat from last year. Actually, you are saying that your market share will be slightly down. So could you elaborate on that, please?
Rajiv, I think we didn't look at from that perspective, we did expect the total market size will improve moderately, but not significantly this year. And what we guide is a kind of very broad range, 85 gigawatts to 100 gigawatts. And the industry is under the consolidation stage. The more important thing is we keep the investment on the technology and the capabilities and to make Jinko has the capabilities to go through the cycles. So we don't believe that is so important. We stick to some fixed numbers of market share. And after the consolidation, I think Jinko will be in a good position to increase the market share. So I think our marketing department has a long-term vision, and we are able to achieve 20% to 25% global market share from a long-term perspective.
Okay. So you're saying that even though in the near term, your market share may not go up, but you are basically letting the people who have the highest cost and the highest losses to sell whatever they can produce this year, and then you'll be back in subsequent years. Another question is on depreciation. Could you give the number for the fourth quarter and for 2025?
Yes. Maybe Pan will provide your numbers.
Okay.
Do you have a number?
Yes. Thank you for the question. We have -- the number would be approximately RMB 1.6 billion to RMB 1.7 billion in Q4.
And can you give the number for the expectation for 2025?
Rajiv, this number is still pending for check for the 2025.
Okay. Final question. Can you talk about free cash flow expectations for 2025?
Rajiv, and from the operating cash flow perspective, we target to be positive. And this year, you understand and it's still a challenge year, particularly, we believe the first half year. And from an operation perspective, we try to, let's say, improve the cash inflow and as well as cutting operating expenses and to achieve at least the positive operating cash flows. And for the CapEx, we estimate RMB 4 billion, which is focused on the upgrade TOPCon technology and make sure Jinko is in the best position to lead from the product perspective as well as some automation upgrades and to further reduce our production cost.
So back to your question, free cash flow may be negative, but not so significant. And if the outlook and the supply-demand balance situation improve significantly, we expect we will achieve better numbers. But now we take a conservative approach. And if you look at last year, even we did deliver a very good operating cash flow, roughly RMB 8.5 billion, which is roughly RMB 9 billion CapEx, free cash flow is kind of near to 0. But this year, 2025, I think we focus on the key operating metrics, operating cash flows.
There are no further questions at this time, and that does conclude our conference for today. Thank you for participating. You may now disconnect.
[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]