Piper Jaffray Downgrades LDK Solar (LDK) to Sell; Equity Viability an Issue
LDK Hot Sheet
Rating Summary:2 Buy, 4 Hold, 10 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 16 | Down: 7 | New: 23
Piper Jaffray & Co. downgrades LDK Solar (NYSE: LDK) from Neutral to Sell. Price target lowered from $9 to $3.
Piper analyst says, "We have had ongoing concerns surrounding LDK given 1) a steadily deteriorating balance sheet, and 2) what we believe is a risky plan to construct a polysilicon plant that may ultimately prove unsuccessful and drain liquidity...LDK reported its Q4 and indicated that balance sheet deterioration has accelerated, and for the third time has significantly lowered its polysilicon production targets. LDK has indicated that it will delay further expansion in 2009, but remains committed to the full 15,000MT plant. Additionally, LDK has indicated hundreds of millions of dollars of customer prepayments which had been promised to fund the new plant construction are now in default...Furthermore, the sudden contraction of market polysilicon prices will likely result in additional inventory write-offs in 1H09. Also, it is not impossible that the initial production from its polysilicon plant may have a cost structure that is uncompetitive with market rates and it is thus questionable if LDK would be profitable selling wafers that are made from its internal polysilicon supply."
LDK Solar Co., Ltd. (LDK Solar) is a manufacturer of multicrystalline solar wafers. Solar wafers are the principal raw material used to produce solar cells, which are devices capable of converting sunlight into electricity.
Piper analyst says, "We have had ongoing concerns surrounding LDK given 1) a steadily deteriorating balance sheet, and 2) what we believe is a risky plan to construct a polysilicon plant that may ultimately prove unsuccessful and drain liquidity...LDK reported its Q4 and indicated that balance sheet deterioration has accelerated, and for the third time has significantly lowered its polysilicon production targets. LDK has indicated that it will delay further expansion in 2009, but remains committed to the full 15,000MT plant. Additionally, LDK has indicated hundreds of millions of dollars of customer prepayments which had been promised to fund the new plant construction are now in default...Furthermore, the sudden contraction of market polysilicon prices will likely result in additional inventory write-offs in 1H09. Also, it is not impossible that the initial production from its polysilicon plant may have a cost structure that is uncompetitive with market rates and it is thus questionable if LDK would be profitable selling wafers that are made from its internal polysilicon supply."
LDK Solar Co., Ltd. (LDK Solar) is a manufacturer of multicrystalline solar wafers. Solar wafers are the principal raw material used to produce solar cells, which are devices capable of converting sunlight into electricity.
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