Tuesday, December 11, 2007

LDK Needs A Big Investor Day

LDK Solar (LDK) continues with rather controversial news. They have announced a 10-year "Take or Pay" contract to supply multicrystalline wafers and polysilicon to Germany-based Q-Cells AG.

Under the terms of the agreement, LDK Solar will deliver more than 6 giga watts of multicrystalline solar wafers to Q-Cells over a ten-year period commencing in 2009 through 2018. LDK will use polysilicon from its polysilicon plant that is currently under construction, or other sources. Q-Cells shall make prepayments in the order of 10% of the silicon value to assist LDK with financing the expansion required to supply these volumes.

The press release was issued Monday at approximately 03:45 ET through PR Newswire a long established news dissemination service. On Dec 11, in a story posted at approximately 10:00 ET, Reuters reported that Chinese-based solar wafer maker LDK Solar is not planning any refinancing in the short-term. According to Chief Executive Xiaofeng Peng. "We have enough cash for our expansion in the short-term. We are very profitable, we are cash-generating." LDK Solar had earned "several hundreds of millions of dollars" in pre-payments as a result of a deal with Germany's Q-Cells AG, announced on Monday, he added.

In reading the Monday press release I cannot find any mention of financial details. Yet the stock is moving upward so someone knows something or thinks they know something. The stock has popped approximately 20% since the announcement. LDK needs to have the financial ramifications fully disclosed so as to ensure complete financial transparency.

Asensio has weighted in issuing a release in the morning of Dec 11. They point out that “LDK has no polysilicon production capacity. LDK has never produced polysilicon or any other chemical product. Polysilicon has been produced in commercial quantities since the 1950s.”

Asensio went on to state “It is also difficult to understand what Q-Cells means by "current polysilicon plant." LDK recently announced that it had finished clearing the ground for its new plant, but so far no plant has been built. This minor detail does not prevent LDK from issuing wild predictions about future production capacities.

LDK’s web site IR page has links which do not lead you to the correct page which only increases frustration and causes confusion. The link for SEC filings goes nowhere. But the picture of the American flag draped over a structure that looks like the NYSE building on Wall Street looks nice. LDK you need one big investor day where you lay out the whole story all over again from a to z. Invite analysts, investors and the media.

By the way where is the independent report that was promised regarding Mr Charley Situ allegations about improper inventory valuations. It was promised in early Dec. It is now early Dec.