Yet Another Loss for LDK Solar
LDK Solar Co. Ltd. (LDK) reported first-quarter 2013 loss per American Depositary Share (ADS) of $1.21, wider than the Zacks Consensus Estimate of a loss of 98 cents per ADS. However, quarterly loss narrowed from the year-ago loss of $1.46 per ADS.
Operational Results
LDK Solar’s net revenue was $104.3 million, higher than the Zacks Consensus Estimate of $97 million. A sequential decrease of 23.2% and a year-over-year decline of 47.9% in its revenues were due to weak pricing of wafers, polysilicon, modules and cells related to strong market competition.
Quarterly gross loss decreased 54.6% year over year to $59.5 million due to lower cost of goods sold.
LDK Solar’s loss from operations was $93.2 million compared with a loss of $135.8 million a year ago.
Interest expenses, amortization of debt issuance costs and debt discount decreased 12.1% year over year to $57.8 million due to decline in long-term borrowings.
Financial Performance
LDK Solar had $174.1 million of cash and cash equivalents as of Mar 31, 2013 versus $135.7 million as of Mar 31, 2012.
Long-term borrowing was $109.8 million as of Mar 31, 2013 versus $889.9 million as of Mar 31, 2012.
Second Quarter Fiscal 2013 Guidance
LDK Solar anticipates its revenues to be in the range of $100 - $150 million. In addition, the company expects wafer, and cell and module shipments in the band of 250 - 300 megawatt (MW) and 30 - 40 MW, respectively.
Peer Comparison
ReneSola Ltd. (SOL) reported first-quarter 2013 loss per ADS of 45 cents per share, wider than the Zacks Consensus Estimate of a loss of 39 cents per ADS.
JinkoSolar Holding Co. Ltd. (JKS) reported first-quarter 2013 adjusted loss per ADS of 56 cents, narrower than the Zacks Consensus Estimate of a loss of $1.66 per share.
JA Solar Holdings Co. Ltd. (JASO) announced a loss of 85 cents per ADS in first quarter of 2013, better than the Zacks Consensus Estimate of a loss of $1.01.
Our Take
Chinese solar product manufacturers are currently facing hardship due to stringent U.S. government laws. This was reflected on the companies’ last few quarters’ financial performance. LDK Solar also registered a negative earnings surprise in last 3 out of 4 quarters.
Previously, Chinese manufacturers gathered large amount of contracts primarily from the U.S. companies. However, the U.S. solar markets are gradually becoming less profitable for the Chinese solar module manufacturers due to implementation of anti-dumping duties of 25.96% and countervailing duties of 15.24% by the U.S. Department of Commerce.
Currently, most of the Chinese solar product manufacturers are busy searching for new markets. A majority of the solar product manufacturers, including LDK Solar, intend to increase their presence in China. The companies are also revamping their domestic operations and positioning themselves to compete in the crowded domestic markets.
Going forward, LDK Solar expects to continue to reduce its solar module manufacturing costs through improvements in its manufacturing methods and reduction in operating expenses.
Xinyu City, Jiangxi Province in the People's Republic of China-based LDK Solar and its subsidiaries are engaged in the design, development, manufacture, and marketing of photovoltaic products and development of power plant projects. The company currently has a Zacks Rank #4 (Sell).
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