interface news reporter | ma yueran

Interface News Editor Zhang Hui

three years after falling off the top position in global component shipments, jingke energy (688223.SH) has returned to the throne.

As the head of Jingke Energy, Li Xiande has been rarely interviewed by the media, and is very low-key compared with other private photovoltaic entrepreneurs. The industry can only see his written speech at the annual festival or major event node of Jingke Energy.

in 2006, Li xiande established jingke energy. Five years later, JinkoSolar became the tenth Chinese photovoltaic company to land on the New York Stock Exchange. Under the baptism of multiple rounds of industry crises, Jingke became more and more courageous. In 2016, it ranked first in global photovoltaic module shipments and achieved "four consecutive championships".

since then, due to the slower pace of entering the domestic capital market than its peers, and under the pursuit of "attackers" such as Longji Green Energy (601012.SH) at that time, Jingke was overtaken by Longji in 2020, falling to second place and fourth place the following year.

2022 is a crucial year for the development of JinkoSolar. This year, Jingke "returned to A" success, betting on N-type TOPCon technology and rapidly expanding production capacity.

This time, Li Xiande got the rhythm right.

With higher efficiency than PERC and lower cost than other N-type technologies, TOPCon has rapidly gained market share over the past two years, and Jingke's market share has steadily increased.

in 2023, jingke will basically lock in the first place in global component shipments, with sales expected to exceed 75 GW and a market share of nearly 15%. In TOPCon, Jingke Energy sold more than 45 GW, with a market share of about 40%, ranking first in the world in N-type module shipments.

but this king return of jingke energy has caught up with another cycle of photovoltaic. The current component prices in the Chinese market have fallen to almost no profit.

Can Jingke hold its position in the industry again, and how does Li Xiande feel about this round of industry changes? At the end of January, at the Shanghai Jingke Center, Li Xiande accepted media interviews such as Interface News, discussing topics such as corporate development, industry chain prices, and industry status.

Li Xiande, Chairman of Jingke Energy Source: Jingke Energy

Back to Component Boss

Q: Jingke returned to the number one component shipment because of what it did right? How do you personally feel about this?

Li Xiande : The industry is very competitive in 2023. In this context, the Jingke team has achieved such results, I am very sure, which reflects the strong strategic execution of the Jingke team.

Jingke didn't do one thing right to reach its current position in the industry.

In 2021, Jinko does face some strong opponents. Since then, the company has reorganized its strategy in conjunction with executives and external agencies.

At present, JinkoSolar's strategy is to continuously improve its scientific and technological innovation capabilities and improve product competitiveness. Second, the global layout, enhance the ability to serve global customers. Third, the construction of an efficient management system to improve business competitiveness.

In the future, the company will face problems such as overcapacity in the industry, but judging from the current product leadership, market capability and capacity effectiveness of Jingke, I believe Jingke can go through the cycle and improve its position and market share.

Q: How does Jingke Energy plan to be the leader of the industry?

Li Xiande : how to be the leader of the industry is not what Jingke wants to talk about. But at least in the process of technological reform from P-type to N-type, Jingke has left a strong mark.

Now that technology has entered no man's land (editor's note: Jingke Energy has an absolute advantage in the TOPcon field), I hope Jingke can continue to promote technological progress and lead the development of the industry. At the same time, it can promote the wide application of photovoltaics and enhance the competitiveness of photovoltaics in the energy industry.

What we need now is confidence. The industry should not overestimate the turbulence of a year or two and underestimate the trend of the next decade. It is more appropriate to use these words to describe the industry: the more you are in the market downturn, the more confident you are. With the cost falling, photovoltaic is the future of energy.

PV companies do not need to over-boast their products, more importantly, know what customers need. Photovoltaic is not a consumer product, but an investment product. Customers need high efficiency, low cost and cost performance, and we pay more attention to the yield, which is the logic of the photovoltaic industry.

When we talked about N-type TOPCon two years ago, there were still many voices of doubt. Even today, there are many voices of doubt, mixed with different opinions, but we don't need to defend them. Time does not speak, can always answer all the questions.

q: how does jingko plan to maintain its market share advantage? How are jingko's orders this year?

Li Xiande : Component is the easiest industrial chain to cut into, but it is also the most difficult industrial chain to do well. It needs systematic construction. It takes a long time for an enterprise to establish its brand and cultivate its market. If a new brand wants to enter high-end markets such as Europe and the United States, most of them can not be obtained at low prices. In contrast, Jinko has sufficient market layout and globalization capabilities.

usually a company of such size as jingke will sign more than 50% of the orders in the previous year to ensure the production plan for the whole year. During this process, there will be some market changes and price adjustments. The current order volume signed is sufficient to support the company's operations in 2024.

The rhythm of capacity clearance cannot be determined

q: what do you think of this round of component price reduction since the fourth quarter of last year? what is the price strategy of jingke in 2024?

Li xiande : although jingke's shipments are large and its market share is about 15%, such a market position is not enough to drive price fluctuations in an industry. The imbalance between supply and demand must lead to a decline in component prices.

From a management point of view, it is necessary to make the right choice in an uncertain market. There is a strong market analysis team behind Jingke, but the company guessed the process and did not guess the result.

therefore, in this round of market price reduction process, in the bidding project from January to November 2023, jingke won the top three bids in the industry. on the contrary, from December to January this year, jingke hardly won the bid.

from this perspective, it cannot be said that enterprises blindly push prices down, but it is precisely based on the judgment of last year's market that Jingke will not engage in vicious competition in December last year and January this year.

In an irrational market, Jinko is very rational and cautious. At present, the component prices of 0.85 yuan/W and 0.79 yuan/W in the industry are definitely losing money.

Q: The price of the industrial chain has been at the bottom recently. How long is the current price from the end of the cyclical adjustment, and what fluctuations and phases may it experience in the future?

Li Xiande : Capacity elimination may be faster than expected. Around 2017-2018, polycrystalline production capacity was quickly eliminated, especially in the case of oversupply in the market. Unprofitable production capacity in 2023, that is, uncompetitive products, will be unsustainable and will also be quickly eliminated.

Second, production capacity without market capacity and sustainable construction capacity will also be quickly eliminated. Photovoltaic is a process that requires continuous production to improve efficiency and reduce costs.

Third, capacity without sustained investment capacity will soon be eliminated. At present, Jingke TOPCon can achieve 26% efficiency, which is expected to increase to 26.5 by the end of this year, and the component power is expected to increase to more than 600W. If there is no such efficiency capacity, will not be competitive.

But the pace of capacity clearance is not to be judged, to be prepared for a long cycle.

Q: In the fourth quarter of last year, the performance of photovoltaic enterprises was generally frustrated. How to evaluate the performance of JinkoSolar? The performance fluctuation also caused the industry to think about the integration and specialization of enterprises. How to treat it?

Li xiande : there is a certain gap between jingke's performance and expectation in the fourth quarter, mainly due to the decline in market prices and the relatively insufficient judgment on the price adjustment mechanism signed by the contract.

at that time, there was an extreme situation in the market below the cost price, which made jingke adjust the price when it was scheduled to ship in December, which had an impact on profits.

From the perspective of the overall industry, integrated companies have very strong competitiveness due to their market capabilities and sustainable operation capabilities, and they are optimistic about their development in 2024.

Some specialized companies may face challenges, such as lost customers and product sales problems. At present, it is very challenging to extend the industrial chain. After all, it is a very long process to cultivate the market and establish the brand.

Q: Is the current PV market sentiment too pessimistic?

Li Xiande : The first quarter is the worst time. It was originally the off-season. The market demand will be lower than that in the fourth quarter of last year, and the utilization of production capacity will drop very fast, which has caused some panic in the industry. The signing price of the current order will be a burden in the subsequent delivery process.

In the second to third quarters, component prices will be adjusted to a reasonable profit range. I am optimistic about the market demand in 2024, which will increase by 20% compared with 2023, mainly because the price drop has increased the investment income of photovoltaic power plants.

The future is still the top enterprise competition

Q: In addition to leading enterprises, there are also many dark horses in the second and third lines. What changes will the competition pattern of the industry in the future? Will the differentiation and gap between TOPCon enterprises further widen?

Li Xiande : Photovoltaic is a highly competitive and challenging industry, which is reflected in many aspects such as market ups and downs, rapid technology iteration, global trade disputes, etc. Therefore, the industry needs to be professional.

Although there areMany excellent enterprises have crossed borders, but I have not seen any successful cases.

It is important for second-tier companies to keep cash and survive, and not to chase unprofitable orders. Companies that can survive and do well in several rounds of fluctuations are highly competitive, and future competition will focus on a few leading companies.

manufacturing enterprises, especially solar energy enterprises, the slight gap reflected in the performance will be particularly large, especially has reached the current scale.

if the influence of jingke brand can achieve a 1-2 cents premium, it is believed that jingke TOPCon products still have a great advantage over other enterprises in terms of cost. In terms of efficiency, Jingke has a 1-2 gear advantage over other head companies. At the same time, because of the scale, the advantages of product competitiveness and production costs will be magnified in performance.

Q: JinkoSolar's debt ratio has not been low. Will the current capital market financing difficulties affect JinkoSolar's expansion plan?

Li Xiande : Debt ratio has become the most important battle of Jingke Energy's finance.

because of some uncertainties in the capital market, the company's original financing plan was disrupted, resulting in a relatively high debt ratio among the head photovoltaic enterprises.

Jinko has a very clear and strategic plan to reduce its balance sheet, and the company will find a balance between profitability and expansion to continue to reduce its debt ratio.

In terms of production expansion, Jingke has now stopped almost all investment plans, retaining only the base construction in Shanxi and the investment in Vietnam.

Vietnam's investment is aimed at the US market, and the company has a short-term demand for orders. Shanxi large base is the future manufacturing trend, the industry needs technology and mode innovation, Jingke will insist on completion. Although the market is facing the challenge of overcapacity, such capacity construction will provide better support for Jingke to improve the competitiveness of the industry in the future.

HJT technology has no chance

Q: How do you view the future development of photovoltaic technology? What is the next mainstream technology of TOPCon?

Li Xiande : In this round of new technology industrialization process, TOPCon ran very fast. HJT is also facing cost pressure, especially in today's industry situation, I don't think it will have a chance.

One of the possible directions for future crystal batteries is TBC. The biggest problem with BC batteries is the low double-sided rate, but in market segments such as roofs, there are some opportunities for their positive efficiency.

in the longer term, the efficiency of crystalline silicon components to 28.7 is the limit, and perovskite superposition of crystalline silicon will form an advantage in the future. The efficiency of the crystal TOPCon-stacked perovskite product has reached 32.33 percent, but its decay can only last for 6000 hours.

Perovskites form commercial capacity to compete in the market, which I think will be a little longer than expected, or more than five years.

Q: What is the focus of Jingke's scientific research and innovation investment in the future?

Li xiande : in TOPCon, HJT, BC, and the perovskite technology further in the future, crystal has been fully covered, and will also cover silicon wafers, batteries, and component links.

In addition, JinkoSolar will study the technical bottlenecks faced by the integrated large base, as well as digital construction. The energy storage business accounts for a relatively small proportion and will pay more attention to core technologies. This part of the business is still in the stage of market cultivation, customer trust foundation establishment, and the establishment of the entire production system. Photovoltaic plus energy storage will be the main mode of power supply in the future, which is also the continuous concern of Jingke.

Q: In recent years, there have been frequent patent protection disputes in the field of IBC batteries. What do you think?

Li Xiande : As a global enterprise, Jingke must respect the protection of intellectual property rights, which is the responsibility of enterprises. There are many ways to obtain patents, such as authorization, purchase, and exchange, rather than evading them.

jingke has applied for 3500 patents and has obtained more than 2000. Especially in the field of TOPCon technology, Jinko has most of the patents, which also provides support for China's industrial development. Jingke also hopes that the industry will respect our technology research and development.

Overseas market considerations

Q: What are Jingke Energy's considerations and plans for overseas expansion?

Li Xiande : China has formed the world's largest manufacturing base, has the most complete industrial chain, and has gathered the world's best talents. Products made in China are very competitive in the world.

Because of the US 201, 301 and other bills, as well as the double-counter laws of other countries, Chinese companies need to establish factories in third countries and enter the market.

Jinko has more than 12 GW of overseas vertical integration capacity, the largest of all photovoltaic enterprises, the company in Malaysia, Vietnam, the United States of America's plant is relatively successful.

When building factories overseas, the first thing to consider is geopolitical issues; the second is the industrial base related to costs and the competitiveness of the industrial chain; the third is the issue of currency changes and policies. In addition, because of local protection, many power plant investments require elements of localized products.

In places like the Middle East, Europe, and the United States, in order to protect the development of new energy, local companies will be supported to make some policy subsidies. Chinese enterprises also need to consider the issue of government credit, whether the policy can be continuously fulfilled, and whether China's photovoltaic products are still competitive even if they are fulfilled.

Q: What is the proportion and trend of JinkoSolar's performance in overseas markets such as the United States and the Middle East in the future?

Li Xiande : Jingke ranks first in most markets. In the U.S. market, Jingke did not do well in 2022-2023. However, Jingke is the only photovoltaic company in China that complies with the anti-circumvention investigation. Due to the smooth customs clearance into the US market, shipments in the US market are expected to increase significantly this year.

The Middle East is Jingke's advantage. The company accounts for more than 40% of this market. This part of the market will continue to improve in the future. Jingke has little backlog of inventory in the European market. With the outbreak of the Red Sea incident, the European inventory in the industry will continue to decline.

Q: Recently, Europe has launched some new ESG standards, such as supply chain traceability, which is a new threshold for photovoltaic exports. What do you think?

Li Xiande :ESG will be a stepping stone to overseas markets in the future.

ESG is the advantage of Jinko. In addition to the advantages of integration and technology, the most important thing for Shanxi factories is digitalization. Digital delivery will allow customers to see the overall ESG of Jingke, including carbon footprint, supply chain traceability system, etc. Jingke has the ability to face the ESG requirements of customers in the United States and Europe.

Q: What other things will affect the development of the entire industry in the future?

Li Xiande : De-globalization and future trade upgrades will have a greater impact on the entire photovoltaic industry.