Through various holding companies, Zheng owns 21.6 percent of LDK Solar Co. (LDK), the second-biggest supplier of PV wafers in 2012. He also owns 30 percent of the Hong Kong-based panel maker Shunfeng, which is seeking to buy Wuxi Suntech. That’s the main unit of what was the world’s biggest panel producer until it was surpassed by Yingli Green Energy Holdings Co. (YGE) in 2012. Suntech shareholders are scheduled to meet April 7 to vote on the deal.
Photographer: Qilai Shen/Bloomberg
The Suntech Power Holdings Co. headquarters stands in Wuxi, Jiangsu Province in this 2011 file photo.
Owning a stake in all that capacity may help Zheng control the amount of photovoltaic panels entering the market, said Dexter Gauntlett, senior research analyst for energy at Navigant Research.
Merging Suntech with stakes in LDK and Shunfeng “represents one of the largest, if not the largest amount of solar module manufacturing capacity” controlled by an individual, said Gauntlett. “I don’t want to say it’s unprecedented, but it’s definitely not the norm to take such a wide holding in three different companies.”
// Solar Tycoon and cash injection could result in single entity controlling 30% of world supply???
// Requires recognition that large plants do not perform well when under utilized, market is changing that.
If you want a deep analysis, you could take attributes of competing solars and derive coefficients that describe the space. Then rank each against LDK attributes.
I think cash and debt is and will be the issue, but I've not resorted to this level of analysis. LDK or LDKSY, it is about survival and LDK Solar getting healthy again. The market believes that going NYSE to Pink is bad, and it is - but it pales in comparison to the health direction of a company. The optimist would say that being Pink allows opportunity to go NYSE.
It is debt and cash flow and market direction.
1) If a stock goes up, the board thinks those with non-disparaging remarks have insight.
2) If a stock goes up, the negative Nancy's doe not weigh in because the likelyhood that tomorrow brings will ruin their reputation.
I make no predictions. The reason is it will burn you. I play a different ball game. The trend is your friend. To waste time trying to influence a few on a board against the masses if futile and comments tend to be infantile.
I only offer a few things of my personal concern
Negatives: Low Cash Flow, Delist, Competition, Late Audit KMPG.
Positives: Cold Hydrogenation, ~240M debt chunk (not all debt) dropped to 48M. Could view this as profit of ~190M paying down debt if you want. Consequence is that they probably burned bridges for additional loans. Market re-alignment in process. Recent nations now on board and consensus of climate change.
Thoughts - LDK runs best at 80-90% capacity. LDK M3/4 wafers are a good product. No one can really be a wafer company without capacity due to a 20% margin yielding just pennies. There are only two models that can exist in the solar space. Huge and single ended on one business unit (ie. wafers or Poly) or the whole end to end process precisely due to cost structures.
I read (but not officially announced) Xinyu 500M commitment, but translations tend to add a zero. Also conditional loan of 400M (again translation). I read Poly kick off is MAY, but they tend to be late and what about commissioning, training....
RE: Debt. Compare JKS debt and its capacity. It is not like LDK cannot pull a rabbit out of the hat. Compare others tool
RE Debt - FLSR and read their cost direction by 2016. But FSLR does not fill the niche of rooftop solutions well at least until 2017. Can or will FSLR expand?
My value in LDK is low and not too much of my concern for that reason, but from a prospect of a stock on the brink and with cards in the deck what they are.... I see no reason to panic yet
RE: When is it time to get out?
1) When Real Estate guys show no more interest
2) When we acquire enough money in LDKSY to buy a casket
Humor: They will take care of you if you rob a bank and get caught, and if you don't you can always go back. In the interim, my city has a soup kitchen for the needy. The way I figure it, a casket is the only thing really needed. No matter how much money you make in life, hospital and extended care will take it all.
Okay, I'm not that bad off.
I've lost enough on LDK. I now ride trends and never fall in love with a stock. I did jump in on trend knowing the ride would be volatile and pulled 50% of with winnings out apparently a day early. The 60% gain was impressive. I no longer have the stomach or gonnads. I'm running stops too.
I'm white knuckling it and the only reasons are cold hydrogenation, Xinyu support, and rising rebalance of solar. The final question is will it be enough.
I am leary that Pinks cannot be shorted and part of the run is forced covering. I've not done the math and figured volume, but it may be data point worth while to look at.
Dart - You and I both, and we may be the only ones left to have taken such loss. I'm not giving opinions this time. Only this advice and rule that I have not broken. Stay diversified. Run core holdings. Dabble in risk only what one can afford.
That said, this is what is on the table here:
1) Before this Pink Sheet thing, LDK was running over 1.01. There was a sharp downwardm trend from 1.10 range to 1.01..... like some people knew the Caymen news was coming. I consider $1.10 the fair price if none of the past events transpired. Past events and impact are to be evaluated.
2) LDK went pink. In retrospect, I thought it was because they were distracted by the Cayman thing. Pondering this further, I believe it is because LDK did not pay the auditors due to liquidity issues and so, knew either NYSE would nix them for the reason stated or an inevitable late filing.
3) LDK shed ~ $200m off the debt number. On One hand, LDK would have to sell 2GW and 50 cents a watt and 20% net which isn't even close to a realistic scenario to pull in that level of success in a year. Bottom line is LDK did well at the 20 cents on the dollar deal, but it comes at a price.
4) LDK in the process probably ticked off lenders. They will not likely float LDK easily in the future. The lifeboat of getting a loan is gone for a while.
5) LDK is off the NYSE, but I think if they get their stock up over a buck within the month, they may have an arguement to be put back on.
These factors with various weighting go in order (bad, good, bad, bad). I expect some momentum here and it were not for what I believe to be coming, we would probably settle right here.
HOWEVER - THE RUMORED CONVERSION OF THE POLY TO COLD HYDROGENATION COULD BE A GAME CHANGER.
LDK Debt is a boat anchor with interest countering margin
Principle business is low cost wafers, which means a whole lot of wafers must be manufactured
Hence LDK requires 80% factory utilization
Market recovery has LDK adding lines
Just thought you should know. I followed my advice.
"Volume increase as prefered shares become common shares. Bets are placed. Pay attention to volume and PPS direction" - See my post on "Expectations"
I put a buy in after watching volume and price direction. Must admit, I thought I might have some soiled underwear, but my gut said it was not over. It was Xinyu reports of 500m and May expectation of cold Hydrogenation with Solar recovery.
Today, I pulled some of that gain off the table.
I would have put more powder in, but the NYSE delist put me in the 40:60 odds prospect.
After all our banter together, I thought you should know. Make sure you congratulate Hobo too.
Back to expectations
Tong becomes Tong and Peng - Savior or Down with Ship (Votes indicate LDK is not doomed)
Peng BK Public Court Notice official by Apollo.
(Neither affect LDK really)
Late reporting (Expected)
So now we are looking to Cold Hydrogenation.....
So Twohead... what do you figure is involved with commissioning cold hydrogenation turn on. It is chemical process right? Pretty simple. How many ways can LDK screw it up. Yes, I expect late since they did not manage NYSE delist process well, we can expect delay to June - July.
Looks to me LDK did not give NYSE a curtosy letter. NYSE seems to be playing the card to tell LDK to respect the playing field. It is these type of things that are detrimental. Odds go to 40:60
It seems Pip that LDK has always been single minded, one dimensional.
Expand without regard to debt
Build a poly plant larger than needed
Renegotiate debt while leaving the NYSE court wide open
Clearly I am not rosy here.
But on the other hand, presuming delist... its still not dead. Frankly, recent world events seem to favor a rosy solar sector. Do you think Xinyu is prepared to loose her?
Also, about 2 years ago, one of the USA firms that outsourced its cold hydrogenation process to China filed suit with that company for selling the process. I believe LDK was the recipient but gained the process in an inocent manner not knowing the source or NDA agreement in place... The cold hydrogenation process I believe will be first rate. The 400m conditional loan to convert was granted in principal even after reviewing LDK's condition.
Remember Piper Jeffry was consulted on how to get out of this prediciment. Piper is not exactly a poor resource. I suspect Piper and LDK have some plan otherwise you would be staring at BK/Shutdown. It is not over yet.
Apollo filed the lawsuit...
I presume Apollo, unless other parties with obligations file which may indeed occur. In this case, distribution.
The shares will move from prefered to common. By the time the dust settles, cold hydrogenation will be operational. I'm not convinced they would want to sell, but that remains to be seen if LDK can turn the ship. The wind (market) seems to be in here sales if enough debt is dumped.
That is not a bullish statement. There is not much working capital nor lenders marching forward.
Karma - I remember Peng's penchant to expand, to be aggressive in the face of an unknown duration of a downturn that no one expected to last years now leaves LDK in this prediciment.
Infrastructure now in place and his reward is loss of control will leave someone else to man the ship - probably Tong. Ironically, if the market is recovering and LDK rises on the winds of market demand - Tong will get the credit for turning the ship around simply by being in control.
Also, the auditors need more money to complete actions.
If auditiors do not complete audit before NYSE extension, Delist is inevitable.
If any one thing trips, LDK risk on odds swings from 60:40 to 40:60....
Somewhere in these events.. Pengs assets including BEST Solar, become disputed between the Caymen Islands decision and China courts. The issue is if the state should be paid or if those assets should be returned to LDK or CDB or to pay other obligations.
Apr 2 – Bondholder Agreement Official
* Auditors Re-Engaged for 2013 reporting, file NASDAQ request to delay FY 2013 reporting
* NYSE grants extension due to extenuating circumstances
* Peng Bankrupcy hits Global News
* BEST Solar 21 M ?? payment to LDK that never materialized + Pengs ownership of BEST is goes into collection
* Tong becomes the Peng of LDK
+ ~1 Week – Trading Starts
* Volume increase as prefered shares become common shares. Bets are placed. Pay attention to volume and PPS direction
* Sunways, SOPW become divorced from LDK, Part of settlement
May – Cold Hydrogenation Starts
Production and costs unknown until filing create a lot of conjecture on boards. Primary issue... is it enough to sustain or pull LDK out of quagemire.
August – A very late FY2013 filing
August – Clearer picture emerges with realization Xinyu through HRX owns 13% stake in LDK, financed 500M life preserver due to 13% of Xinyu working for LDK Solar.
One year chart shows a low of 62 cents, high of $1.64. 2015 appears to be very good year due to solar recovery
Predictions with odds of 60:40
I believe the number if your 1B is correct to be ~ 78% of 1B due to co-owners stake in the poly plant. I have no idea if the State Owned part of LDK is then Baked into the 78% or if that was the State owned part. I've not followed LDK too closely for the last year. I've been AWOL working other interests.
Good to see you Crack
I think we can all expect LDK will not suddenly take off to $30 like JKS or based on Market Cap $8 PPS (Ball Park).
But the question I pose is if considering health and the fact of a recovering market and that LDK never runs well with factory under utilization.... Will it float to $2...
It is about percent gains. Compare wait time for JKS to go to $60 per-se
Finally - decent #$%$ chat...
Doubt they would do the latter point. China wants investment too. Pretty hard to lure the fish in if the tank is spoiled.
If that were the intent, then they had opportunity to offer a penny on the dollar and sink arbitration/negotiation with bond holders
You hate Hobo more... wow! Did I just move up 1 point out of 100 on your #$%$ list
My strategy is to wait but offer rediculously low buy if fear sets in. But not much. Just test some waters at this point. Could mark bottom. My fear is dead money for anything I toss at it. for a year.
LDK has much to repair with investors of stock and bonds alike.
But then greed always gives in. AIG BP .... I think those are interesting as well. Ridiculously low PE. A buddy of mine bought a retirement home in Costa Rica just off AIG.
It is these plays that are dirt cheap. Buy 10 of them at rock bottom and if even 1 pans out.... holy #$%$ batman.
LDK may apply to this strategy as the stars in the market are aligning.
Finally something with meat on the bone. Congrats for an intellegent post.
I am concerned by the expansion of solars to capture the market. LDK expan ded the most believing a turn around was near - misscalculating. Thus leaving LDK in the delema of the day.
I also read Xinyu dropped 500m with a commintment to her that I don't think is in the books
SEC statements lag
Poly priceing is such that a cold hydrogenation plant and its capacity can be an engine
I remain concerned that production of cheap wafers marketed with even an impossible margin net little with them selling for fractional dollars
Yet, they can produce 3.2 Billion
I see an enterprise that can only do well if filled. I see the poly cold hydrogenation as potentially yielding profit
LDK going forward stands 2 tests:
1) Can it achieve profit by scale and filling that scale to utilize maximum potential
2) Can the market hold steady enough to climb out of the quagemire that ensnares it.
I don't offer answers. But I know the numbers on other successful solars imply they are baking the numbers or LDK can achieve and the problems are more so related to the the lack of demand and overcapacity.
I advise LDK to be treated same as NYSE stated - watch it. And if you wish to crunch hypotheticals... well I dropped some numbers relating to lines in operation now didn't I as well as reportedly 500m coming in from Xinyu
Even more odd... the dude offering to buy shares....
Now this guy is buying and you don't throw down the red flag of insults.
Clearly you have a long lasting issue and it is clouding judgement of the stock. I think you are bias after years of calling it correctly. Well, that leads to clouded judgement. Be careful there pip.
Thats all. You may be correct. For me, I wait for rediculous cheep PPS or confirmation of trending. I think it is around the corner
Finally - I love to poke at you. If you haven't figured it out.
No one would take offence since I am not screaming buy or sell. But you do. I offer some balanced thinking for others to consider. Yet you refrained from posting china info on the deal posed to bond holders. I reported money offered for cold hydrogenation and target date. But you refrained from doing so.
Why is this Pip?
tells you a lot. There is a negotiation process. LDK wants them to buy into a share at 100.00 per se, and investors want shares cheep. There are books opened, plans, negotiation. I expect they have more insight than you and I or crack. The price negotiated is several percentage points over current close.
If you have your way, or fear sets in... I got an opportunity forthcoming.
Look Pip... I'm out of the business of second guessing or telling people to buy and sell. I don't write articles anymore. I've been contacted to do so. I found better ways and truly, if Hobo lost some money I am sure he did so honestly believing on the long side.
I find that it is better to identify trends. I like to hedge by understanding market demand direction over/under capacity....
So I expect some stupidity because the nominal PPS is unknown since the numbers are not in and some time has expired. If the swing diverges significantly, those are opportunities. IT is how the market works. The calculation is risk reward, nothing else. risk mitigated by market. Market is not bad. LDK engine in the poly process is being changed out.
No recommendation to anybody.
The only thing I say is WATCH this one. To many wild cards are in play on a rising market.