LDK Solar (NYSE:LDK) was downgraded by Soleil Securities today, citing the overall underestimation of the large debt the company carries. They downgraded them from "Buy" to "Sell."
Soleil said, "As we noted in a Sunburst last week (November 12th), we believe the odds are high (65%) that the PV industry has passed an inflection point, and fears of extreme overcapacity in 2011, particularly in the second half of the year, are now going to dominate the investment outlook for the PV stocks... We believe investors are under-estimating the true level of LDK's net debt. In talking to investors we find most have overlooked the sharp growth in the company's Accrued Expenses over the last two-and-a-half years (from roughly $100mm to roughly $700mm)."
LDK was trading up today, coming in at $11.08, gaining $0.11, or 1.00 percent as of 1:02 PM EST.
Thursday, November 18, 2010
LDK Solar (NYSE:LDK) Will Struggle as Debt Levels are High
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5 comments:
fuckj you
fuckj you
All spin has some level of truth,
and I believe that the solar segment is ripe for consolidation. and LDK will be getting large. As for the debt level of ldk solar being to high to manage it's just not true.
The outer points are week as well there is a expansion of large solar projects in Calif. with several 200+ acre in progress and more in the permitting to come the reliance on Europe for sales is starting to swing to the U.S.
This is the LONG view 2-5 years nut the solar segment looks bright!!
This is just a preposterous reason to downgrade. LDK has 800 million cash and cash equivalents, while the company had 83 million at the end of 2007. Long Term debt has risen but the large accrued expenses are offset by decreasing payables. Note further that LDK has paid off it's tax liability completely.
They are 100% correct. All these idiots that are supposed solar experts and their very scientific commentary such as "fuckj you" have no business being in the market.
The debt levels are crushing. Who cares if they have $800mm in cash or equivalents? Meaningless. Especially when you look at the larger market losing momentum because of reduced subsidies.
These "200 acre" solar fields in California are anecdotal. The industry needs another Italy or larger in subsidy just to absorb the excess capacity coming ointo the channel. There is NO new entitiy out there ready to save the subsidy day. In fact, when you look at the problems the EU are having (Ireland et al) Don't be surprised for further cuts past Germany's early 2011 cut.
I'm constantly amazed at how people think a single company is the market. The MARKET calls the shots and not LDK. LDK is is simply along for the ride and it's about to get very bumpy.
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