NEW YORK (
shares popped at the open on Friday morning after announcing a 45 megawatt module deal for the Italian market. LDK shares rose by 8% at the open, and rose for the second straight day; 2 million LDK shares traded in the first half hour of the market open on Friday.
The beating absorbed by solar stocks, and Chinese solar stocks in particular, has inevitably led to the question: Have shares bottomed out?
Between Thursday and Friday morning's opening bell surge, LDK shares gained almost $1 in value.
LDK Solar has been the poster-child for concern in the solar sector, down 36% in the last month as the inventory build in Europe and concerns about a solar glut lingering in the second half of the year turned investors' attention back to LDK Solar's
. Its share gains on Thursday and Friday have to be viewed in light of its recent losses.
Also, bear in mind that LDK Solar has yet to report first quarter results. It is now nearing the end of the second quarter and LDK won't be offering its first quarter report until June 7, and it already pre-reported that the revenue line would miss by as much as $105 million (the mid-point of its revised revenue guidance was $75 million lower than original guidance).
announced a 190 megawatt deal for the German market, and Chinese solar shares had their best day of trading after unmitigated share bleeding in recent weeks.
Most analysts continued to believe that uncertainty about the second-half 2011 pricing and the ability to move an inventory build-up now as high as 10 gigawatts of solar modules in the European channel imply that solar shares could move sideways for a while. However, at least on Thursday and Friday, there were some signs that Chinese solar shares were finding some level of support.
Most solar companies have reaffirmed full-year shipment guidance, even as the inventory glut has led to first-quarter misses and second-quarter guidance revisions. The confidence expressed by solar management that shipments will not
increases the importance of announcements showing new module deals.
With the annual Intersolar conference coming up in June, the expectation is that solar companies will try to boost confidence in the second half outlook by announcing module deals at the conference, or as word leaks out from the conference about shipment deals being secured. Last year, solar shares rebounded from May bottoming-out levels around the time of the Intersolar conference -- however, there were reasons for the solar rebound last year, including a rush to install in Germany before the end of the year fee-in tariff cuts took effect. Also, there was no inventory glut last year, a major difference from the situation that solar companies face today.
Still, the news from LDK and Suntech over the past few days doesn't answer the more important question of at what price level Chinese solar companies will sell modules to move the inventory and meet their reaffirmed shipment guidance. The deals also don't come anywhere near representing the shipment goals of these two companies in particular. Suntech Power plans to ship 2.2 gigawatts this year. LDK Solar expects to ship 800 to 900 megawatts of modules this year, versus the 46 megawatts announced in Friday's deal.
was alone in guiding shipments down for the second quarter, predicting a 19% decline, though it sent the market a mixed message. Even as it expects a 19% drop in shipments in the second quarter, Hanwha Solar reaffirmed its full-year shipment guidance.
Yingli Green Energy
both reaffirmed full-year shipment guidance, but both reported
outlook for the year, heightening fears that pricing pressure could remain severe in solar.
Yingli and Suntech shares were up between 1% and 2% on Friday morning, while Trina shares were up marginally. Most Chinese solar shares remain at, near -- or even below -- book-value share levels.
-- Written by Eric Rosenbaum from New York.
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