CAPS Rating: 1 out of 5

The Company manufactures multicrystalline solar wafers, which are thin sheets of crystalline silicon material primarily made by slicing multicrystalline ingots or monocrystalline boules.


Player Avatar TMFInnovator (49.80) Submitted: 7/18/2013 1:06:14 PM : Underperform Start Price: $1.77 LDKSY Score: +89.23

Another failed solar company that is about to go belly-up.

LDK got too aggressive in taking out debt right before the downtown (2007-2008). Their revenues have fallen by 70% since then and margins have turned sharply lower. Take note that last year, LDK's net loss more than 10% greater than its TOTAL revenue. That's bad news here, folks.

Subsidies are drying up, and costs per MW are still moving lower. I'm still bullish on concentrated solar as a potential low-cost, regional power source. But solar PV companies (LDK included) are really going to have it rough for the next few years.

TMFFlushDraw wrote a great piece about what it would take for solar companies to get back to profitability: http://www.fool.com/investing/general/2013/07/17/can-chinese-solar-companies-make-a-profit.aspx?source=itxsitmot0000001&lidx=1.

For LDK, 28% gross margins just aren't going to happen. It's only a matter of time until the lenders demand their money back and the music stops playing.

Report this Post 3 Replies
Member Avatar camarodan64 (98.31) Submitted: 9/30/2013 12:43:49 PM
Recs: 0

you will be sorry

Member Avatar camarodan64 (98.31) Submitted: 10/15/2013 5:47:56 PM
Recs: 0

and why did u not close this yet (today)

Member Avatar TMFInnovator (49.80) Submitted: 3/28/2014 9:55:14 AM
Recs: 0


Normally, I would close out a pick once a company goes to the bankruptcy courts (as LDK is right now). It's definitely not my specialty to interpret the legal proceedings. :)

But with so many obligations to take care of first (senior notes converting to equity, preferred shares, and other 'offshore' claims), I just don't see any way that equity holders don't get completely wiped out here.

Thus, I'm going to hold on to this for awhile, expecting LDK's equity valuation to crater even further.

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