LDK: An Exploding Star for a Sector in Turmoil
The bloodbath also known as China’s alternate energy sector is nearing the end of its worst reporting season on record, and newly updated guidance from problem-plagued LDK Solar (NYSE: LDK) should provide a spectacular finale to the show. (company announcement) The company won’t release final figures until the end of this month, but it has revised down all of its previous forecasts for the second quarter by 20 percent or more, including a staggering 63 percent downward revision in shipments of modules, the final product in the solar energy production chain. At the same time, its gross margins tumbled to about 2 percent from a previous forecast of about 24 percent, and it wrote off $60 million in inventory, which is the company’s way of preparing the market for a massive net loss when it releases its actual results. The company made its announcement after New York markets closed on Thursday, and not surprisingly its shares were down 21 percent in after hours trading. LDK’s dismal report follows downbeat results from nearly everyone, including the most recent forecast-missing figures from Canadian Solar (Nasdaq: CSIQ) (company announcement). Despite signs that the downturn has bottomed, severely depressed valuations this week prompted mid-sized player Renesola (NYSE: SOL) to approve a shareholder rights plan, often called a poison pill designed to prevent hostile takeovers, in a sign that we’re likely to see some consolidation in the months ahead for this bloated sector. Such consolidation would mean smaller companies like Renesola could become acquisition targets. But major money losers like LDK are likely to find little interest from potential buyers, forcing them to sell off assets or even to file for bankruptcy if they run out of funds.
Bottom line: LDK Solar’s sharply lowered Q2 guidance reveals a company on the brink of crisis, boding poorly for its future as the broader solar sector struggles to emerge from its current downturn.
Related postings 相关文章:
◙ Renesola Rights Plan: Consolidation Coming
◙ LDK: Cash Crunch Looming? 赛维LDK即将囊中羞涩？
◙ Trina, Ming Yang Kick Off New Wave of Energy Deals 天合光能、明阳风电掀起新一轮能源“订单潮
