This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

LDK Solar: Too Big, Too Fast?

NEW YORK (TheStreet) -- LDK Solar (LDK) is planning to build a solar manufacturing facility with 1 gigawatt of solar cell and 500 megawatts of solar module capacity. The manufacturing facility is expected to begin production in the second quarter of 2011, backed by $368 million in financing for up to three years from a Chinese lender.

Many of LDK Solar's Chinese peers are ramping up capacity and moving to a more vertically integrated model. Therefore, it's not a surprise that solar wafer maker LDK would be looking to branch out on the solar supply chain. However, LDK's plans are complicated by three factors: 1) its ongoing polysilicon plant ramp, 2) its balance sheet issues, and 3) potential oversupply in solar.

LDK just came off a solid second quarter, during which the Chinese solar wafer maker improved its balance sheet to an extent that LDK hadn't been able to achieve in the past two years.


With $433 million in cash balance at the end of the second quarter, LDK seemed to buy itself some breathing room versus critics who worry that the company remains overstretched as it ramps up its polysilicon plant. One major negative in the recent earnings was that the polysilicon plant ramp schedule, already delayed many times, seemed still behind schedule, even as it showed signs of progress.

"Certainly, in a traditional Wall Street sense, you would like to see LDK get the poly plant up and running and get the debt from the poly plant construction paid down before moving on to the next large scale program," said Soleil Securities analyst Paul Leming. "It's very clear that LDK knows only one speed, and that's 'damn the torpedoes, full speed ahead,'" the analyst added.

Solar is a commodity business and increasing market share means engineering lower costs. LDK is merely moving in the direction of all the Chinese solar players, whether it is a solar cell player like JA Solar (JASO) moving into solar modules, a solar module leader like Yingli Green Energy (YGE) moving into polysilicon production, or a relatively new entrant like Jinko Solar (JKS) moving out from polysilicon production to all aspects of the solar supply chain.

LDK purchased a solar module maker earlier in the year, and signaled at its last analyst meeting that it would be looking to further vertically integrate. With polysilicon production at one end, wafers in the middle and solar cell and module production at the other, LDK would be in a position to achieve cost efficiencies across the solar supply chain.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,979.13 +59.54 0.35%
S&P 500 1,986.51 +4.91 0.25%
NASDAQ 4,526.4820 -1.0320 -0.02%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs