I bet many American solar companies wish they could get the kind of government sponsorship that Chinese solar companies can get from their government.
Last week, I used Cetrotherm Photovoltaic’s deals with China as the latest examples of China’s seriousness about developing capabilities in solar technology. Today’s big news from China benefits LDK Solar, one of the numerous solar companies on a roll this year. LDK secured its future with a 5-year, $8.9 billion credit facility from China Development Bank Corporation (CDB). CDB is owned by the Chinese government. (Click here for the press release). This is significant news, especially since LDK currently holds $2.1 billion in total debt compared to $443 million in cash. As LDK states, this credit facility will give the company “…an enhanced ability to pursue our long-term growth strategy and further strengthen our position within the PV industry market.”
What a difference a year makes. Just last December, LDK warned investors that it might not be able to continue as a going concern.
The market responded with an 18% jump in price on massive volume almost 6 times the average daily volume of 3.1M shares. Monday’s move is important follow-through from Friday’s new high for the year (also on strong volume). With the financing behind its sails, LDK should be clear for an extended cruise onward and upward. If you choose to buy in, carefully pick your entry point (as always). Some kind of retracement would be nice, but the large 20% short interest in the stock may not accommodate such convenience. The shorts have more motivation than ever to cover here.
The weekly chart shows the tremendous upside potential assuming the positive momentum is sustained. (Click to see larger view)
(Click to see larger view)
*Chart created using TeleChart:
Be careful out there!
Full disclosure: no positions
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