LDK SolarLDK Solar (LDK) recently announced the completion of the $240 million investment by China Development Bank International Holdings Limited (a wholly owned subsidiary of China Development Bank Corporation). Under the deal, the holding company purchased an 18.5% stake in LDK's polysilicon production unit, LDK Silicon & Chemical Technology Co., with LDK Solar retaining the rest. LDK is a leading vertically integrated manufacturer of photovoltaic products, and a leading manufacturer of solar wafers. It competes with other solar energy players like First Solar (FSLR), Suntech Power (STP) and Sunpower (SPWRA).

We continue to maintain a positive outlook on the company's stock value, which we estimate at just about $12.

Stimulus from the Chinese Government Remains Strong

Our price estimate for LDK Solar stands at a 73% premium over the current market price of $7. A possible reason for the market's pessimism over LDK is the recent postponement of LDK Solar's debt offering, which was originally planned to pay down the company's short-term debts. This may have raised concerns over the company's debt position and whether it can meet its near-term obligations.

The $240 million investment by China Development Bank is a strong indicator of China's commitment towards becoming a leader in solar and other green industries. Additionally, the China Development Bank agreed last year to lend 232 billion yuan ($35.4 billion) to Chinese wind and solar companies, including a more than $9 billion credit line to LDK over the next five years, which should significantly ease any debt pressures that might arise for the company.

LDK Solar has delivered on its fundamentals, and posted close to 4% growth in its gross margin in the first quarter of 2011 from the previous quarter, indicating solid execution of its long term strategy of vertically integrating its photo-voltaic businesses.

Given these factors, we believe that concerns over the company's short-term liquidity position are excessive.

See our full analysis for LDK Solar

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Michael McDonald

July 23 2011 at 12:17 AM Report abuse rate up rate down Reply

China approves $35B in loans to the solar industry.

The US approves $45B in loan guarantees to the nuclear industry and continues to provide $20B a year in tax subsidies to the Oil industry (Fortune Magazine).

Which of those is a winning strategy?


July 11 2011 at 9:09 AM Report abuse rate up rate down Reply

More American companies should move their manufacturing overseas. There are far more potential customers in China and India than in the US. They outnumber us 7:1. Companies should write off the US market. American consumers are in decline and with all the US government business regulations, frankly, the US market just isn't worth the hassle. It won't be too many years before the entire US will look like Detroit.

July 08 2011 at 3:02 PM Report abuse rate up rate down Reply

The US needed to fix the large problems with our education system about 20 years ago to keep ahead. As it is we still don't know how to inspire, interest or teach kids to do anything other then use Twitter/Facebook, watch reality TV and play games.

July 08 2011 at 1:54 PM Report abuse rate up rate down Reply
pat hill

it is your government that wants free trade, the only problem is they give free trade
to all but there is no reciprecation.
all our manufacturing is going overseas with great tax breaks. we have 40 million illegals in this country stealing from U.S. TAXPAYERS driving our infrastructure broke and we have over 20 million unemployed AMERICANS AND THE IDIOTS IN DC WANT FAST TRACK FOR TO CITIZENSHIP FOR THE ILLEGALS WHO BREAK OUR LAWS EVERYDAY. THEY HAVE NOT ENFORCED OUR LAWS!! VOTE THESE IDIOTS OUT. BOTH PARTIES STINK

July 08 2011 at 1:31 PM Report abuse rate up rate down Reply

China is not trying to bury us...we do ot own the World even though we act like it. They have the right to have any kind or form of goverrnment they want.They even lend us money..they will transform the world. They will lead us into the future.

July 08 2011 at 1:19 PM Report abuse rate up rate down Reply

China is not trying to bury us. They are trying to move forward while our Tea Partiers are trying to move us back to the late 18th century.

July 08 2011 at 11:28 AM Report abuse +3 rate up rate down Reply

there trying to bury us

July 08 2011 at 10:14 AM Report abuse -1 rate up rate down Reply
1 reply to yankeedoug1121's comment

They already have.

July 08 2011 at 12:03 PM Report abuse +1 rate up rate down Reply