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JinkoSolar Holdings (JKS US)

Year: 2020

JinkoSolar Holding Co. Ltd., a Chinese company operates in the photovoltaic (PV) industry. The Company has built a vertically integrated solar power product value chain, from recovering silicon materials to manufacturing solar modules and solar power generation. The Company's segments include the manufacturing segment and the solar power projects segment. The manufacturing segment comprises its vertically integrated solar power product manufacturing business, under which the Company manufactures silicon ingots, wafers, cells and solar modules. The solar power projects segment comprises the downstream solar power generation, construction and operation business, including power generation; engineering, procurement and construction (EPC), and connecting solar power projects to the grid, and operation and maintenance (O&M) of the solar power projects. The Company sells its solar modules under the JinkoSolar brand. Its services include solar system EPC and processing services.

It listed on the NYSE in May 2010 raising US$64.19M in its IPO.   Between 2010 and 2019 it had five additional share offerings raising a total of US$479.09 ; (Nov. 2010 - 126M, Sep. 2013 - 71.01M, Jan.2014, 132.19M, Feb.2018 - 75.14M, May 2019 - 74.75M).

October 11, 2011 - An investor filed a lawsuit in U.S. District Court for the Southern District of New York against JinkoSolar over alleged violations of Federal Securities Laws in connection with certain allegedly false and misleading statements made between May 13, 2010 and September 21, 2011.  These were relating to environmental compliance, JKS's treatment of its waste products, and PRC environmental regulations.  Zhejiang Jinko Co., Ltd., a subsidiary of JinkoSolar in Haining, Zhejiang Province, China, discharged hazardous waste into a river, prompting local residents to protest at its facility from September 15 to September 17, 2011.  The case was settled out of court in September 2015.

March 4, 2020  Short-seller Bonistas Research issued a report on JinkoSolar noting that they believed the shares are worthless.   The report contained four main allegations:-

  1. In October 2016, JKS disposed of JinkoPower to Chairman Li at a US$ 455 million valuation. A month later, JinkoPower received an independent appraisal valuation of US$ 720 million and raised capital from PRC insiders at a valuation of US$ 788 million. Chairman Li acquired JinkoPower at a 40+% discount to market value.
    Post-disposal Chairman Li continued to financially support JinkoPower with JKS’ resources. Using an additional RMB 533 million in solar modules yet to be paid for and US$ 593 million in balance sheet support, Chairman Li grew JinkoPower in 3 years as a private company to seek a US$ 3.6 billion IPO valuation (RMB 25 billion) in 2020, a valuation 692% higher than what Chairman Li paid JKS for JinkoPower! None of this increased value made its way to JKS’ balance sheet, instead JKS got construction debts.
  2. Chinese filings revealed Chairman Li’s brother and JKS co-founder Li Xianhua secretly benefitted from secretly controlling a significant PV glass manufacturer within JKS’ supply chain called Zhejiang Xinruixin Energy Co., Ltd.  Xinruixin’s Chinese IPO Prospectus revealed that during its track record period, JKS contributed to more than 99% of Xinruixin’s revenues and that it supplied 20% of JKS Solar’s total PV anti-reflection glass purchases from 2014 to 1Q’16. Xinruixin’s business would not have existed without the support of JKS. Xinruixin is yet another example whereby value meant for shareholders was diverted to Chairman Li and his brother.
  3. Evidence shows that JKS fabricated its 2017 and 2018 financial statements by including US$ 209 million of fake sales to Australia. JKS’ SEC filings reported Australian sales that accelerated from US$ 37 million in 2016 to US$ 302+ million in 2018, up 696% in 2 years. Australian Securities & Investments Commission database filings for JKS’ only Australian operating subsidiary, Jinko Solar Australia Holdings Co., Pty Ltd. corroborated the accuracy of JKS’ SEC-reported Australian sales figures in 2015 and 2016. However, in 2017 and 2018, JKS’ SEC-reported Australian sales figures were US$ 209 million higher than what was reported by JKS’ ASIC filings, which showed that JKS fabricated its SEC-reported Australian sales in 2017 and 2018.
  4. Evidence shows that JKS lied about the disposal of its South African subsidiary to an independent third party and that JKS remains liable for US$ 42 million of customs duties owed to South African authorities that should be reflected on JKS’ current consolidated financial statements. Who is this mystery independent third party that wanted to acquire JKS South Africa despite its customs duties liability overhang? South Africa Companies and Intellectual Property Commission (“CIPC”) details for JKS South Africa revealed an address change in 2018 to 64 Kort Street, Parys, Free State which was a wall of cheap clothes and backpacks. The storefront was the same registered physical address for a separate logistics company maintained by JKS South Africa’s long-time sole director Wei Lu. The assumption is that JKS South Africa’s US$ 42 million liability is being held by an undisclosed insider.

March 5, 2020 JinkoSolar issued a press release saying that the Company was aware of and has carefully reviewed the short seller report. Based upon its review and evaluation, the Company denied the claims in the report and believed the report contains numerous errors, unsubstantiated statements and misleading conclusions and interpretations regarding events relating to the Company.

US Courts: Securities Class Action, 1 Jun 2012
Bonitas Research:  Short on JinkoSolar, 4 Mar 2020
JinkoSolar: Q3 Report 2019
JinkoSolar: Annual Report 2018
JinkoSolar: Annual Report 2017