Research Note: LDK Solar Co, Ltd. (NYSE:LDK)

Last Updated: Feb. 25, 2008 – 7:37pm EST

NEW YORK--Ludlow China upgrades LDK Solar (NYSE:LDK), a Chinese manufacture of solar polysilicon wafers, from a B- to B rating based on earnings guidance, adjusts 2008 price target to $80 to $90 price range.

SUMMARY

On Feb. 25, 2008, LDK Solar reported fourth quarter earnings, beating analyst expectations on both the top and bottom lines. For the fourth quarter, LDK reported total revenues of $192.8 million, which beat street estimates of $187.1 million. For the fourth quarter net income rose to $49.2 million, or 44 EPS, up from $41.6 million, or 37 EPS for same period last year.

The company has also raised their Q1 2008 EPS forecast to .41 to .45 per share. Revenues were guided a bit lower for Q1 due to snowstorm event in China, which may have delayed some shipments in Q1 2008.

Mark Blackwell, Research Associate with Ludlow Energy Ventures commented, "LDK came through on both their top and bottom line estimates, with net sale up 311% from the prior year, after securing 9 long-term contracts over the period. Gross margins could have shown better performance, but their new polysilicon plant expected to come online in late 2008 should offset this. It is in our opinion that LDK Solar may provide for a great entry at or below the $35 to $40 range for the longer term investor." 

Ludlow China upgraded LDK Solar's (LDK) equity rating from B- to B, and adjusting the company 2008 price target to $80 to $90 a share.

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NEW CONTRACTS

On Dec. 10, 2007, LDK Solar signed a 10 year agreement 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.

On Oct. 10, 2007, LDK Solar said it received a contract to supply solar wafers to Chinalight Solar Co. Ltd. worth $133 million. On Oct. 16, 2007, LDK solar announced a contract to Solarfun (SOLF) worth $266 million. On Oct. 03, 2007, LDK signed a 5 year contract with Solartech Energy Corp. worth around $224 million. On Sept. 27, 2007, LDK announced it received a five-year contract from Taiwan-based Mosel Vitelic Inc., for its multicrystalline solar wafers, worth at least $190 million. 

Over the past few months LDK Solar has signed contracts totaling almost $1.8 billion, and one would have surmise that if their were an underlying issue with silicon inventories or quality, these companies would have done their due diligence and not signed these contract agreements with LDK Solar. For the third quarter the company had signed four long-term wafer supply contracts.


About LDK Solar

LDK Solar Co., Ltd. is a leading manufacturer of multicrystalline solar wafers, which are the principal raw material used to produce solar cells. LDK sells multicrystalline wafers globally to manufacturers of photovoltaic products, including solar cells and solar modules. In addition, the company provides wafer processing services to monocrystalline and multicrystalline solar cell and module manufacturers.


About Ludlow China Ventures

Based in New York City, Ludlow China Ventures is a venture capital and research firm with a specific focus on the Chinese market. Ludlow China owns and operates the Ludlow China Indices, which tracks a wide basket of US traded large and small cap Chinese stocks. www.ludlowchina.com 

LDK is a component of the Ludlow China Index, which tracks a portfolio of large cap Chinese equities. (http://www.ludlowchina.com/indices/historic/) 

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Ludlow China Advisors, LLC
Phone: (718) 855-8451
Email: gerry@ludlowchina.com 


Disclosure: This is NOT a solicitation to Buy or Sell any security, but rather is for research purposes only. Content contained herein includes facts, views, opinions and recommendations of individuals and organizations deemed of interest. Ludlow China Ventures does not guarantee the accuracy, completeness or timeliness of, or otherwise endorse these views, opinions or recommendations, or give investment advice. Ludlow China Ventures, its affiliates, or directors, may or may not hold a position in the above security from time to time, and investors are encourage to consider this as a possible conflict of interest when reviewing this information. In Compliance with SEC Rule 17B Ludlow China Ventures was NOT compensated for the distribution of this research material, but may hold the company in its privately managed index fund, which should be considered a conflict of interest.