LDK Solar Co. (NYSE: LDK): Q1 Earnings Preview 2011

LDK Solar Co.Ltd. (NYSE: LDK),the world's largest maker of multicrystalline wafers, is scheduled to release its first quarter earnings after the closing bell on Tuesday, May 7, 2011. Analysts, on average, expect the company to report earnings of 86 cents per share on revenue of $769.45 million. In the year ago quarter, the company reported earnings of 6 cents per share on revenue of $347.55 million.

LDK Solar Co., Ltd., through its subsidiaries, engages in the manufacture and sale of multicrystalline solar wafers to the manufacturers of solar cells and solar modules in the People's Republic of China and internationally. The company offers multicrystalline solar wafers between 180 and 220 microns in thickness.

LDK is a low-cost producer, with polysilicon production costs down in recent years from $58 per kilogram to around $40 per kilogram, with a target of $30 to $35 by the end of 2011. LDK is also the world’s largest wafer producer, with more than 3 gigawatts of m

In the preceding fourth quarter, the Xinyu City, China-based company's net income was $145.2 million or $1.09 per ADS, compared to a net loss of $24.3 million or $0.22 per ADS in the previous year. Revenue  jumped to $920.9 million from $304.6 million in the same quarter last year. Analysts, on average, expected the company to report earnings of $0.90 per share on revenue of $870.55 million.

The company has stuck to its financial forecasts for the year despite declining prices for its solar products and pressure on the industry in Europe.. For the first quarter of 2011, LDK Solar reiterated its guidance of revenue in the range of $745 to $755 million, wafer shipments of 625 to 635 megawatts (MW), module shipments of 109 MW to 114 MW, in-house polysilicon production of 2,450 MT to 2,470 MT, in-house cell production between 44 MW and 46 MW, and gross margin between 30.0% and 31.0%.

LDK Solar also reiterated its 2011 guidance of revenue in the range of $3.5 to $3.7 billion, gross margins between 24% and 29%, wafer shipments to be between 2.7 and 2.9 GW, module shipments to be between 800 and 900 MW, polysilicon production to be between 10,000 and 11,000 MT, and in-house cell production to be between 500 and 600 MW.

In April, the company announced a business investment of about $40 million to establish a new manufacturing plant in Nanchang City, Jiangxi Province. The company said this new manufacturing facility would have capacity to supply two million two-inch equivalent pieces of sapphire wafers per year and be positioned to capture the growing opportunities in the LED industry. Also, the company reported a $35 million investment to establish a new manufacturing line to produce silane gas in its Mahong Plant in Xinyu City, Jiangxi Province to supply up to 2,000 MT of silane gas to meet the growing demand from the semiconductor, solar and flat panel display industries. The company expects to begin construction of this new plant in the third quarter and to achieve mechanical completion in the first quarter of 2012. Commercial production is being planned to commence in the second quarter of 2012.

Solar industry as a whole has benefited from continued strong demand thanks to growing awareness about global warming, skyrocketing oil prices, cheap financing and technological advances. Companies involved in the production of semiconductors used in solar panels have enjoyed a positive quarter. Many have experienced rising shipments over the last few quarters, resulting in a sequence of record quarters. The world is becoming increasingly environmentally conscious. Both commercial and private demand for solar power is rising. Solar options are becoming more attractive as more governments provide better options for buildings producing solar power to feed into and out of the grid as required. US President Barack Obama has called for 80 percent of the nation's electricity to come from clean sources by 2035. Meanwhile, China has doubled its target for installed photovoltaic power capacity over the next five years to 10 gigawatt by 2015. The government has also raised its installed solar capacity target for 2020 to 50 GW, up from the previous goal of 20 GW.

Thanks to better cost advantages, Chinese solar module maker have grabbed more market share from their international competitors. Local solar companies have also benefited from China's well-developed supply chain, cheap electricity, supportive policies and even low environmental standards.

However, the solar industry relies on government incentives to make electricity created by the sun competitive with sources such as coal and natural gas. Many governments, particularly in Europe, have implemented generous subsidies for solar power in recent years as they seek to reduce their reliance on fossil fuels and combat climate change. Late in February, German lawmakers passed a law, cutting solar power subsidies by up to 15 percent from this summer, six months ahead of schedule, dealing a blow to the world's biggest photovoltaic market. Similarly, Italy’s government recently approved a decree that reduces incentives to solar projects. The Italian solar market became the second-largest in Europe following Germany last year after the government offered the highest feed-in tariffs in the region.

Full Disclosure: None.

LDK Solar Co. (NYSE: LDK): Q1 Earnings Preview

LDK Solar Co. (NYSE: LDK),the world's largest maker of multicrystalline wafers, is scheduled to release its first-quarter earnings after the closing bell on Monday, May 10, 2010. Analysts, on average, expect the company to report earnings of 1 cent per share on revenue of $325.86 million. In the year ago period, the company posted a loss of 21 cents per share on revenue of $283.26 million.

LDK Solar Co., Ltd., through its subsidiaries, engages in the manufacture and sale of multicrystalline solar wafers to the manufacturers of solar cells and solar modules in the People's Republic of China and internationally. The company offers multicrystalline solar wafers between 180 and 220 microns in thickness.

In the preceding fourth quarter, the Xinyu City, China-based company's net loss narrowed to US$7.28 million or US$0.07 per ADS from US$133.09 million or US$1.25 per ADS in the previous year. Excluding one-time items of US$10 million related to the settlement of a class action lawsuit, net income for the quarter was US$2.7 million or US$0.03 per ADS. Revenue declined to US$304.59 million from US$426.61 million in the same quarter last year. Analysts, on average, expected the company to earn US$0.12 per share on revenue of US$301.91 million. Module shipments were 23.2 megawatt in the fourth quarter, up from 9.4 megawatt in the third quarter.

The company's manufacturing cost in the fourth quarter of 2009 declined to approximately $0.32 per watt.

LDK said in February that it remains on track towards its goal of reducing wafer converting cost to as low as $0.25 per watt in the next eight quarters. It reached 1.8 gigawatts wafer manufacturing capacity at the end of the fourth quarter of 2009 and recently increased its annual production capacity to 2 gigawatts, becoming the world's first photovoltaic firm to reach this level.

It expects all first quarter 2010 wafer shipments to be in the range of 370 megawatts to 400 megawatts and module shipments to be in the range of 25 megawatts to 30 megawatts. Revenues for the first quarter 2010 is expected to be in the range of $310 million to $330 million. It also expects to see an improvement to our profitability in the first quarter.

The solar industry has undergone significant changes in the past few years. The industry suffered heavily during recession as turmoil in the credit market forced financial players to abandon U.S. solar energy projects. The 2008 collapse of top solar financier Lehman Brothers and the freeze-up in the global credit markets drove nearly all banks to halt funding for major new solar projects, forcing the makers of systems that turn sunlight into electricity to cut prices for their products and sending their stocks crashing. The problems of solar companies had been further compounded by an oversupply of polysilicon, a material used in solar panels.

Globally, solar industry depends upon government subsidies and incentives and support to remain competitive. However, recent developments suggest that subsidies will inevitably be reduced or phased out. Evergreen Solar sells bulk of its panels in key European markets like Germany and Spain, where generous federal subsidies ensured high electricity rates for solar energy system. In Germany, Solar subsidies for rooftop-installed solar power will see a one-off cut of 16 percent from July, while most open-field installations will be cut by 15 percent.Support for farmland solar systems is to be scrapped completely, according to media reports.

However, the industry as a whole is likely to benefit from growing attention to global warming, skyrocketing oil prices, cheap financing and technological advances. At the Copenhagen Summit held in December 2009, the five major polluters of the world agreed to take action to reduce CO2 aggressively, with $100B per year pledged to help developing nations adopt green energy technology to cut greenhouse gas. Meanwhile, the US, China, Brazil and India continue to invest heavily in wind and solar energy with China's $454B in the next 5 year period as the most aggressive one. As part of the stimulus bill signed last year, the federal government approved around $60 billion in loan guarantee authority and $30 billion in energy grants for renewable energy and transmission companies. Congress has also granted a 30% renewable-investment tax credit to help expand the development of alternative sources of energy. As of February this year, the industry had gotten Treasury grants worth $81 million. That grant program is scheduled to end Dec. 31. The industry is still hoping that Congress will approve further policies to aid solar.

Thanks to better cost advantages, Chinese solar module maker have grabbed more market share from their international competitors. Local solar companies have also benefited from China's well-developed supply chain, cheap electricity, supportive policies and even low environmental standards.

In terms of stock performance, LDK solar shares have lost nearly 36 percent over the past year.

Full Disclosure: None.

LDK Solar Co.Ltd. (NYSE: LDK): Q4 Earnings Preview 2009

LDK Solar Co.Ltd. (NYSE: LDK),the world's largest maker of multicrystalline wafers, is scheduled to release financial results for the fiscal fourth quarter before the opening bell on Tuesday, March 30, 2010. Analysts, on average, expect the company to report earnings of 12 cents per share on revenue of $301.11 million. In the year ago quarter, the company reported a loss of $1.2 per share on revenue of $426.61 million.

LDK Solar Co., Ltd., through its subsidiaries, engages in the manufacture and sale of multicrystalline solar wafers to the manufacturers of solar cells and solar modules in the People's Republic of China and internationally. The company offers multicrystalline solar wafers between 180 and 220 microns in thickness.

In the preceding third quarter, the Xinyu City, China-based company's net income attributable to shareholders was US$29.4 million or US$0.27 per ADS, compared to a net income of US$88.4 million or US$0.77 per ADS in the previous year. Revenue declined to US$281.9 million from US$541.8 million in the same quarter last year. Analysts, on average, expected the company to report earnings of US$0.10 per share on revenue of US$277.20 million.

LDK Solar shipped 320.5 MW of wafers during the third quarter, up 26.8% year-over-year.

Recently, the solar wafers maker lifted its fourth quarter revenue guidance, as well as wafer and module shipments forecast. LDK Solar Co.Ltd. said it now expects fourth quarter revenue in the range of $300 to $310 million, compared to its previous forecast in the range of $280 to $310 million.The company also tightened its wafer shipments to a range of 330 MW - 340 MW and module shipments between 20 MW and 25 MW. Previously the company had projected wafer shipments between 320 and 340 MW and module shipments between 20 and 30 MW.

Further, for the fiscal year 2010, the company expects revenue in the range of $1.35 billion to $1.45 billion. Wall Street analysts expect revenues of $1.37 billion. The company projects wafer shipments to be in the range of 1.3 GW to 1.4 GW, and module shipments between 300 MW to 400 MW.

LDK said it expects production of 4,500 metric tonnes (MT) to 5,500 MT of polysilicon in 2010, and sees gross margin of 15 to 20 percent for the same period. Separately, LDK Solar said it signed photovoltaic module guarantee cover with Munich Re's Special Enterprise Risk unit, which will cover the performance warranty of LDK Solar modules for a period of 25 years.

The Chinese company mended its relationship with German photovoltaic cell maker Q-Cells after a brief supply deal dispute. In December, LDK Solar announced that it has reached an agreement with Qcell to continue their supply contract for solar wafers from 2009 to 2018.

Last month, LDK Solar announced that it has agreed to acquire Best Solar's crystalline module manufacturing plant at cash consideration of $21.5 million. The deal will significantly enhance LDK Solar's position in the downstream PV market.

Among other developments during the quarter, LDK closed FPO of 16,520,000 American depositary shares (ADSs), each representing one ordinary share, at a price to the public of $7.00 per ADS. The company said that it intends to use the proceeds to pay its debts and expand its solar module business.

Thanks to better cost advantages, Chinese solar module maker have grabbed more market share from their international competitors. Local solar companies have also benefited from China's well-developed supply chain, cheap electricity, supportive policies and even low environmental standards. In fourth quarter, Chinese makers won 46% of the new installations in California.

The demand for solar power products has picked up after a difficult 2009, when the turmoil in the credit market forced financial players to abandon U.S. solar energy projects. The 2008 collapse of top solar financier Lehman Brothers and the freeze-up in the global credit markets drove nearly all banks to halt funding for major new solar projects, forcing the makers of systems that turn sunlight into electricity to cut prices for their products and sending their stocks crashing. The problems of solar companies had been further compounded by an oversupply of polysilicon, a material used in solar panels.

The solar industry is poised to benefit from growing attention to global warming, skyrocketing oil prices, cheap financing and technological advances. At the Copenhagen Summit held in December 2009, the five major polluters of the world agreed to take action to reduce CO2 aggressively, with $100B per year pledged to help developing nations adopt green energy technology to cut greenhouse gas. Meanwhile, the US, China, Brazil and India continue to invest heavily in wind and solar energy with China's $454B in the next 5 year period as the most aggressive one. As part of the stimulus bill signed last year, the federal government approved around $60 billion in loan guarantee authority and $30 billion in energy grants for renewable energy and transmission companies. Congress has also granted a 30% renewable-investment tax credit to help expand the development of alternative sources of energy.

In the near term, the solar industry is facing an important challenge in the form of reduced government subsidies. Globally, solar industry depends upon government subsidies and incentives and support to remain competitive. However, recent developments suggest that subsidies will inevitably be reduced or phased out. According to media reports, the German government is planning to cut solar subsidies for new roof and open-field sites from April by 16 percent to 17 percent. Additional cuts to the subsidies will be made from 2011 if solar projects amount to more than 3,000 megawatts, and even more if they total more than 3,500 megawatts. Already, France in January slashed the tariffs for electricity produced from rooftop solar panels by 24 percent. Spain too has taken similar steps.

The company's stock currently trades at a forward P/E (fye 31-Jan-11) of 18.78. In terms of stock performance, LDK Solar shares are up 72% over the past year.

Full Disclosure: None.