LDK

[la-onda]

LDK SOLAR (LDK)

Let's start with the first of our two new solar buys, which is a Chinese silicon wafer maker whose stock recently had an overblown sell-off and is in a good position to soar as photovoltaic (PV) production in China is only just beginning to ramp up.

We have been following this story for more than a year, but it was only when the company was accused of inventory miscalculations -- and the stock tanked 60% -- that we really took notice.

In effect, LDK Solar (LDK) is the MEMC Electronic Materials (WFR) of China. LDK has been producing silicon wafers for solar-cell manufacturers since 2005, and it manufactures both the polysilicon ingots and the wafers used in PV manufacturing.

The explosion in demand for polysilicon wafers has rocketed WFR up 250% since we first recommended it under $20 two years ago. Last week it traded above $80 and it's now at $76.

Between June and September 2007, LDK shares exploded from $24 to $74. Then came the recent accusations from a former employee of poor accounting of inventory, and within weeks the stock was cut down to $30. This is gives us another chance to make our move and we're moving now -- and here are the primary reasons:

First, in our conversations with other CFOs in Chinese companies, we're told that it's very common in China for a fired professional (in this case, the assistant controller was axed) to claim that the mother ship company is a mess. Their advice is to take this "drama" with a very large grain of salt.

Secondly, an audit of polysilicon inventory will soon be ready. Based on solid intelligence, we expect to see a clean slate. The company has already upped earnings and revenue guidance for Q4 2007 and Q1 2008, and that tells us LDK management is not going to be making significant write-downs of inventory.

Thirdly, at a 12 P/E ratio, LDK is selling at a fraction of WFR's valuation metrics, yet it is growing almost twice as fast.

Finally, LDK sells to the major Chinese PV manufacturer Suntech Power (STP), as well as other Chinese solar companies. Based on the robust outlook for demand, LDK has a huge new plant coming on line next year to double output.

Last week, LDK reported that it has secured an additional 312 metric tons in polysilicon supplies for 2008. LDK also confirmed that it is on schedule to reach its capacity goal of up to 6,000 metric tons in Q4 2008.

We anticipate $1 billion in sales for 2008 with an EPS of $2.25. Based on these numbers, we should see LDK shares at $70 or better by the end of 2008. On the downside, we could see $25 if there are any surprises regarding inventory.

We'll take those odds any time, so buy LDK under $35 for your Emerging Game-Over Dominator portfolio and collect some "poly profits." The Strong Buy Under is $32 and the Accumulate price is $37.

nice rebounding:

[setravis]

Solar Sees Increased Attention
on Energy Bill
Tuesday's session saw continued talk of Fed rate cuts, financials
seeing increased selling pressure, speculation regarding
gaming consolidation, and solar names on the rise again. This
alternate energy sector saw a barrage of news from many located
in the China market which spilled over into a sympathy
related rally for the whole space.
Solarfun Power Holding Company Limited (SOLF) began the rally when shares gained over 39%
following news that the Company had reached an agreement with Good Energies Inc., a renewable
energy investor, to sell some 66.7 million ordinary shares and 281,011 American Depository
Shares to the investor. Included in the investment were almost 50% of the shares held by
SOLF's chairman and CEO, Yonghua Lu. It was noted that Lu would retain a 16.1% stake in the
Company. The deal effectively raises Good Energies' holdings to 34.7% from only 6.3% of the
Company before the deal. It also will allow Good Energies to have additional control of the board
of directors.
The deal left some investors worrying about the CEO's faith in the Company. There aren't many
instances of CEO's liquidating 50% of their holdings. Even rarer was the security gaining over
40%.
Canadian Solar Inc. (CSIQ) also was in on the action as speculation circulated of a potential
partnership circulated the floors. The Company has been highlighted a few times with their growing
top line and more recently by raising $75 million in a 144A private placement. Shares gained
some 17% on the day with over 5 million shares traded.
LDK Solar Co Ltd (LDK) shares saw a 31% increase on Tuesday. The Company had become
embattled in an inventory disagreement with a former employee. Shares had seen their price fall
from highs of over $75 in late September to lows in the $26 area in late November. On November
15th the Company announced guidance for sales of $165 to $170 million. Earnings were
expected to be between 37c and 41c.
No official news had been reported over the past few days but a story circulated that noted the
Company had raised some $700 million in debt and had retained all of their customers throughout
the inventory discrepancy. The Company earlier had noted that the investigation into inventories
reporting had continued. They were expected to announce their findings in early December. With
that on the horizon, the shares could see additional attention.
Also contributing to the heightened attention to the sector was the proposed energy bill. The
legislation was seen as a negative catalyst last month as news that the Democrats were proposing
a stripping out of alternative energy tax cuts to gain favor of the Republicans to override any
presidential veto. With the bill possibly being on the agenda in the coming days, investors would
certainly be wise to watch many in the solar area.

[la-onda]

Chairman Light DK Peng Receives 'The Most Admired Entrepreneur of 2007' Award
Friday , December 07, 2007 16:14ET

XINYU CITY, China and SUNNYVALE, Calif., Dec. 7 /PRNewswire-FirstCall/ -- LDK Solar Co., Ltd. (NYSE: LDK), a leading manufacturer of multicrystalline solar wafers, announced that on December 1st, 2007, Light DK Peng, Chairman and CEO of LDK Solar, was presented with "The Most Admired Entrepreneur of 2007" award at the "Annual Meeting of Chinese Management 2007," held by YingCai publisher, Sina.Com, at the JW Marriott Hotel. Beijing Youth Daily Group, the Economic Channel of CCTV, Shangdong TV, and other major media sources from the Beijing area were in attendance.

In June 2007, LDK Solar, led by Chairman Light DK Peng, listed its stock on the New York Stock Exchange. Chairman Peng founded the company with the goal of being a world-class solar wafer manufacturer. The main Chinese media groups elected Chairman Light DK Peng "The Most Admired Entrepreneur of 2007" for making an outstanding contribution to the alternative energy industry.

Shi Guangsheng, the Vice Director of Finance and Economics Committee of National People's Congress, Chen Zuoer, Executive Vice Director of Hong Kong and Macao State Council offices, and Zhai Huisheng, the Committee Secretary of National Journalists' Association presented the award to Chairman Light DK Peng.

The "Annual Meeting of Chinese Management" was launched in 2001, and this year focused on identifying the most experienced and successful managerial talent in China. These leaders were selected for their significant contributions to enterprise development as well as to their contributions to society.

Each year, the panel at the "Annual Meeting of Chinese Management" consists of hundreds of national leaders, including senior officials, domestic and international business leaders, senior media, and scholar representatives. The event therefore creates a forum for the most influential executives and entrepreneurs to promote progressive and conscientious management practices.

nice chart action:

[la-onda]

LDK Solar Signs a 10-Year Wafer Supply Agreement with Q-Cells
Monday December 10, 3:15 am ET

XINYU CITY, China and SUNNYVALE, Calif., Dec. 10 /PRNewswire-FirstCall/ -- LDK Solar Co., Ltd. (NYSE: LDK - News), a leading manufacturer of multicrystalline solar wafers, announced today that it has signed a 10-year "Take or Pay" contract to supply multicrystalline wafers and polysilicon to Germany-based Q-Cells AG.

Under the terms of the agreement, LDK Solar will deliver more than 6 giga watts of multicrystalline solar wafers to Q-Cells over a ten-year period commencing in 2009 through 2018. LDK will use polysilicon from its polysilicon plant that is currently under construction, or other sources. Q-Cells shall make prepayments in the order of 10% of the silicon value to assist LDK with financing the expansion required to supply these volumes. Additionally, Q-Cells has the option to purchase further silicon wafers if LDK expands its production capacity.

"We are very pleased to expand our long standing relationship with Q-Cells with this significant supply agreement," stated Xiaofeng Peng, Chairman and CEO. "We believe this contract is a testament to the quality of our products and strong customer relationships. We are also pleased to continue to support Q-Cells' growth plans."

"LDK has been a highly reliable partner and we are pleased to deepen our business relationship with the company," stated Anton Milner, CEO of Q-Cells AG. "This 10-year contract with LDK ensures that we will continue to receive their high-quality multicrystalline wafers in support of our growth plans."

[David Randolph]

Hi La-onda, thanks for posting these insights into LDK and today's positive news.

I won't say this stock won't double or triple in 12 months time, but I believe that over the long term it won't be worth the current market cap, which is $4.8 B. I say this because the company (like many others) is investing a lot of money in a technology that will soon be obsolete, in my view. Now everybody needs polysilicon to make wafers, but what about the future?

I guess the following article shows why LDK and other "traditional" solar plays shouldn't sport such a high valuation:

Bright Days for NanoSolar

I would rather go with small thin film producers than $5 B - $15 B companies making PV using polysilicon.

But I can be wrong, good luck

[la-onda]

good news

LDK Solar Announces Conclusion of Independent Audit Committee Investigation Into Alleged Inventory Discrepancies and Date for Reporting Third Quarter 2007 Financial Results
Monday December 17, 3:15 am ET

XINYU CITY, China and SUNNYVALE, Calif., Dec. 17 /PRNewswire-FirstCall/ -- LDK Solar Co., Ltd. (NYSE: LDK - News), a leading manufacturer of multicrystalline solar wafers, announced today that its Audit Committee has completed its independent investigation into the recent allegations made by LDK's former employee, Mr. Charley Situ, that the Company incorrectly reported its inventories of silicon feedstock, as evidenced by an alleged inventory discrepancy as of August 31st, 2007. The investigation found no material errors in the Company's stated silicon inventory quantities as of August 31st, 2007, and concluded that Mr. Situ's allegations of an inventory discrepancy were incorrect because he had not taken into account all locations in which the Company stored its silicon feedstock. The investigation further concluded that the Company is using each of its various types of silicon feedstock in the production of its multicrystalline solar wafers, and that a provision for obsolete or excess silicon feedstock is not required.

The Audit Committee's two outside directors, Louis T. Hsieh and Bing Xiang, oversaw the investigation, which was primarily conducted by the Audit Committee's independent counsel, Simpson Thacher & Bartlett LLP and a Big Four independent accounting and consulting firm that was separate from the Company's external auditors, as well as independent experts in the evaluation of silicon feedstock and the production of multicrystalline solar wafers. In reaching its conclusion, the Audit Committee relied on various forensic procedures performed by its independent accountants, testing of the Company's feedstock by independent experts, review of company and third party documentation and interviews of certain present and former Company personnel and third parties. Commenting on the results of the investigation, Mr. Hsieh stated: "The Audit Committee and its highly qualified professionals have conducted an extremely detailed and thorough investigation into these matters. We are confident that we have reached a well-reasoned, objective and correct result."

LDK further announced today that it expects to release its financial results for its third fiscal quarter 2007 following the NYSE market close on Wednesday, December 19, 2007. The Company will host an earnings conference call and live webcast at 6:00 p.m. Eastern Time (ET) the same day. To listen to the live conference call, please dial 800-366-7449 (within U.S.) or 303-262-2193 (outside U.S.) at 5:50 p.m. ET on December 19, 2007. An audio replay of the call will be available to investors through December 24, 2007, by dialing 800-405-2236 (within U.S.) or 303-590-3000 (outside U.S.) and entering the passcode 11104747#.

A live webcast of the call will be available on the Company's investor relations website at

[la-onda]

LDK: To Release Q3 Results Dec 19 [AMC]
Tuesday , December 18, 2007 13:00ET

LDK Solar Co Ltd (NYSE: LDK) is scheduled to release its Q3 financial results on December 19, 2007, after the close of the market (AMC).

CONSENSUS ESTIMATES:

Q3 Revenue: $145.35 million
Q3 EPS: $0.37 per share

[la-onda]

LDK: Q3 EPS 37c vs 4c Meets 37c Est; Guidance Above Consensus
Wednesday, December 19, 2007 16:16ET

QUARTER RESULTS
LDK Solar Co Ltd (LDK) reported Q3 results ended September 2007. Q3 Revenues were $158.72M; +404.67% vs yr-ago; BEATING revenue consensus by +9.20%. Q3 EPS was 37c; +825.00% vs yr-ago; MATCHING earnings consensus.


GUIDANCE

Q4-07 Revenue Outlook [$180 - $185M]: For the fourth quarter of fiscal 2007, LDK estimates revenue to be in the range of $180 to $185 million for wafer shipments of 87 to 92MW. The Q4-07 revenue forecast is above current consensus estimates.
Q4-07 Earnings Outlook [40c - 43c]: The Company also estimates fully diluted earnings per ADS to be in the range of $0.40 to $0.43. The Q4-07 earnings forecast is above current consensus estimates.

[David Randolph]

• LDK Solar Reports Financial Results for the Third Quarter 2007
PR Newswire (Wed 4:05pm)

Hi La-Onda, I guess that after LDK's 100% plus bull run in a couple of weeks investors needed more.

LDK really has impressive sequential growth.

But I notice an awful development, even more so when dealing with a Chinese company:



In Q2 2007 there were $26,750,000/$0.29 = 92 million ADS outstanding on a fully diluted basis.

In Q3 2007 there were 41,605,000/$0.37 = 112 million ADSs.

We're talking about 22% dilution from one quarter to the next, or a double in the # of ADS outstanding on an annual basis.

I don't see respect for American shareholders, or a desire to increase shareholders value in this company.

I say the company's value will probably rise over the long term, but the share price won't.

I can be wrong though, good luck

[la-onda]

great analysis David
LDK was downgraded today also

Out of the Gate: LDK Solar Falls
Thursday December 20, 10:38 am ET
LDK Solar Shares Drop After Material Prices Shrank Company's Third-Quarter Profit Margins

NEW YORK (AP) -- Shares of LDK Solar Co. Ltd. sank in Thursday morning trading, on concerns about the solar cell maker's profit margins and material supplies.

LDK reported its third-quarter results after trading ended Wednesday. Its profit of 37 cents per share matched analyst estimates, and revenue of $158.7 million was greater than expected. However, its gross profit margin shrank to 30.8 percent. Piper Jaffray analyst Jesse Pichel said high prices for polysilicon -- a key material used in solar cell manufacturing -- eroded LDK's margins. Growing demand for polysilicon from solar companies has pushed prices upward, and analysts generally expect prices to remain high into 2008.

"We believe gross margin will continue to fall at a similar rate given the higher price of scrap silicon which we have confirmed in our recent trip to China," Pichel said. He said currency exchanges rates also hurt LDK. The company's profit margin in the second quarter was 35.2 percent, and in the third quarter of 2006 it was 39.4 percent.
Pichel downgraded LDK shares to "Sell" from "Neutral", and removed his $34.50 price target.

Goldman Sachs analyst Cheryl Tang added the stock to her Conviction Sell List, and held a price target of $33 per share.

to summ it up:
1)
LDK Solar "strong buy," target price raised
Thursday, December 20, 2007 11:05:04 AM ET
Needham & Co
NEW YORK, December 20 (newratings.com) - Analysts at Needham & Co reiterate their "strong buy" rating on LDK Solar Co (ticker: LDK). The target price has been raised from $65 to $95.

2)
LDK Solar downgraded to "sell"
Thursday, December 20, 2007 10:18:55 AM ET
Piper Jaffray
NEW YORK, December 20 (newratings.com) - Analysts at Piper Jaffray downgrade LDK Solar (ticker: LDK) from "neutral" to "sell." The target price is set to $34.5.

3)
LDK Solar "sell," target price raised
Thursday, December 20, 2007 11:22:33 AM ET
Lazard Capital Markets
NEW YORK, December 20 (newratings.com) - Analysts at Lazard Capital reiterate their "sell" rating on LDK Solar Co (ticker: LDK). The target price has been raised from $25 to $35.

[la-onda]

interesting from seeking alpha:

LDK Solar: The Naked Shorting Crime
Recent experiences have demonstrated to me the realities of a crime.

The crime is that of the naked short selling of stocks for the purpose of market manipulation (yes, it is actually a crime).

In brief, allegations were recently made against the company by a former accounting controller. In the first ten days of trading upon the release of this claim, approximately 152 million shares changed hands. It should be noted that the company was still in IPO lock-in, and so the only shares on the market available for trade added up to around 17 million shares. Now, perhaps in the chaos, shares were traded through an average of 9 times each in the first 10 days, but since the ticker appeared on the naked short threshold list on October 16th, we do know that at least some of the shares were not being delivered due to naked short selling. As of 12/21/07, LDK remains on the naked short threshold list.

Now, naked shorting of stocks "by market makers engaged in bona fide market making" is not illegal or unethical. However, "selling stock short and failing to deliver shares at the time of settlement with the purpose of driving down the security's price" is, indeed, illegal and unethical (see here).

It should be noted that in the process of naked shorting a stock, dilution of the shorted stock occurs due to the introduction of virtual shares (fails) into the system by the naked short seller. According to the SEC, "the value of a stock is determined by the basic relationship between supply and demand. If many people want a stock (demand is high), then the price will rise. If a few people want a stock (demand is low), then the price will fall." Well, this seems pretty obvious, but it should be reiterated. Public companies are required to follow guidelines when altering the number of shares available for trade (dilution), because to do so alters the "supply" side of the equation. It is in the Investor's critical interest to have access to information regarding the "supply" of a stock that they would like to purchase. However, information on the level of dilution of a stock due to naked short activity is not available to the public. Thus, in the case of the purchase of a stock that is listed on the naked threshold list, the investor has no way of knowing how many shares of a stock are outstanding, and thus has fundamentally no way of making an informed decision on an appropriate value for the stock.

The case of LDK is a convoluted one, and has not yet entirely concluded. However, it is a demonstration of the issues surrounding the naked shorting process, and it should be investigated, both from a law enforcement perspective, and from an ongoing market regulation perspective. As an investor in this company, do I not have reason to expect information on the number of shares of stock available for trade? I believe that I and other investors should very much be able to expect that this information is made public on some basis by the DTCC.

[la-onda]

niec buy sell ratio:
http://www.thebuylist.com/default.aspx?Stock=ldk

chart:

[la-onda]

fyi:
LDK Solar Announces Financial Outlook for 2008 and Preliminary Business Outlook for 2009
Wednesday, January 02, 2008 03:14ET

XINYU CITY, China and SUNNYVALE, Calif., Jan. 2 /PRNewswire-FirstCall/ -- LDK Solar Co., Ltd. (NYSE: LDK), a leading manufacturer of multicrystalline solar wafers, today announced its financial outlook for 2008 and preliminary business outlook for 2009.

The following statements are based upon management's current expectations. These statements are forward-looking, and actual results may differ materially. The Company undertakes no obligation to update these statements. The estimates do not include the potential impact of any mergers, acquisitions, divestitures or other business combinations that may incur.

    2008 Financial Outlook:

     * Revenue: Between $960 million and $1 billion.
     * Wafer shipments: Between 510 MW to 530 MW
     * Polysilicon production: 100 metric tons to 350 metric tons
     * Gross margin: Between 26% to 31%

    2009 Preliminary Business Outlook:

     * Wafer shipments: 1,050 MW to 1,150 MW
     * Polysilicon Production: 5,000 metric tons to 7,000 metric tons
     * Gross margin: Between 42% to 50%

[la-onda]

LDK update:

Dilution as analyzed by David is really a problem !

Why LDK beats FSLR:
http://seekingalpha.com/article/59390-why-ldk-beats-first-solar?source=yahoo
LDK = Bright future:
http://seekingalpha.com/article/59015-ldk-solar-constructing-a-bright-future?source=yahoo

January IR presentation:
http://media.corporate-ir.net/media_files/irol/19/196973/new_Jan_2008_FINAL.pdf

highlights are attached, check attachment 4:
75% of 2008 prices are fixed and predefined

chart:

[David Randolph]

Awesome information la-onda, thanks a lot

I don't have much time today, just would like to say that LDK is a traders paradise and the stock rose 10.8% yesterday.

The following outlook is very ambitious:

2008 Financial Outlook:

     * Revenue: Between $960 million and $1 billion.
     * Wafer shipments: Between 510 MW to 530 MW
     * Polysilicon production: 100 metric tons to 350 metric tons
     * Gross margin: Between 26% to 31%

2009 Preliminary Business Outlook:

     * Wafer shipments: 1,050 MW to 1,150 MW
     * Polysilicon Production: 5,000 metric tons to 7,000 metric tons
     * Gross margin: Between 42% to 50%

What is more impressive is the expected run up in polysilicon production and the expansion of gross margin. Maybe LDK's dilution is for a good reason, like making heavy investments in developing production capacity and increasing productivity, it remains to be seen.

I got curious about LDK and will make a more in depth analysis soon.