Ja&jinko Financial Analysis

20500 Financial Valuation and Strategy

Table of Contents

1.0 Industry Analysis of Solar Market                                                                                 1

2.0 The examination of the revenue recognition policies                          7

3.0 Profitability and Risk Analysis and Comparison                              13

4.0 Liquidity and Solvency                                                   19

5.0 Cash Flow Analysis                                                      26

6.0 Forecasting and subjective analysis                                         33

Reference                                                                   46

1.0 Industry Analysis of Solar Market

• The Overall Profitability of Solar Industry

Owing to the boom of emerging markets economy and other related factors, the demand for global solar products maintains its constant growth throughout these years. In 2013, China's new installed capacity of solar photovoltaic reached 12.9GW, an increase of 186.7% compared to the same period. For the first half of 2014, the poly-silicon production reached 60,000 tons--- a 100% growth compared to the same period. From January to May, 2014, China's poly-silicon imports reached 36,400 tons. Meanwhile subject to the high market demand, by the end of the first half of 2014, China's battery module capacity reached more than 40GW, and the output of about 15GW---with a year-on-year growth of 30.4%. From January to May, China's solar battery value of exports added up to $5.492 billion---with a year-on-year growth of 25.6%. The export proportion of countries like Japan, India, South Africa, USA and other Asian countries has been increasing.

It is expected that after a few years’ time, emerging markets such as China and the Asia Pacific regions will continue to maintain a good growth momentum. Overall, thanks to the reduction price of PV modules, and the average price downturn of solar industry’s grid purchase price, the profitability of solar industry will still have been enhanced later on. Meanwhile, benefiting from the state subsidies and low operating and construction costs, distributed photo-voltaic power generation project has its strong economic strength, and in the premises of enhanced solar economy, the development of Chinese solar power project is expected, in the short term, to speed up significantly.

• Current Situation of Solar Industry

At present, JA mainly emphasizes on the selective vertical integration mode, forming a relatively complete industrial chain for production of silicon wafer, batteries and component elements. At the same time, it provides a development service of photo-voltaic system project.     So far, JA's is equipped with financial soundness and good development trend.                                                                                                             [pic 1]

At the same time, another solar member---Jinko, one of its subsidiaries gained a $20 million line of credit for a two-year period from Well Fargo in the second half of 2014 to support the wealth of nations, USA operating capital and business operational requirements. In fact, since the second half of 2011, affected by the global financial crisis, several countries have to shrink the subsidy policy of photo-voltaic industry, leading to the fact that Chinese domestic PV export enterprises suffer from tremendous impact of businesses. The signing of these agreements will undoubtedly plays a strong supporting role in expanding business and long-term development for the solar industry members.[pic 2]