LDK Solar has started off the new year for solar with a bang. The company significantly raised guidance for both the fourth quarter of FY10 and the entire FY2011 with particularly strong expectations for the module business. Here is a listing of the new sales guidance compared to the old guidance:
Revenue
4Q10: $870-910M from $710-750 (increase of 21-23%)
FY11: $3.5-3.7B from $2.9-3.3B (increase of 12-21%)
Wafer shipments
4Q10: 615-620 megawatts (MW) from 580-600 MW
FY11: 2.7-2.9 gigawatts (GW) from 2.5-2.8 GW
Module shipments
4Q10:160-165 MW from 120-130 MW (increase of 27-33%)
FY11: 800-900 MW from 700-800 MW (increase of 13-14%)
Gross margin
4Q10: 25-27% from 24-26%
FY11: 23-28% from 22-28%
LDK increased guidance for in-house polysilicon and cell production as well.
Given increasing fears that pricing competition will hurt solar companies as production capacities ramp up, I will be very interested to hear the source of LDK’s optimism when it reports official earnings. LDK’s guidance could also bode well for other major solar companies.
The stock has gone nowhere for over a month and sits at the bottom of the last big breakout in October, 2010. I am guessing today’s announcement should bring upside momentum back to the stock.
*Chart created using TeleChart:
Be careful out there!
Full disclosure: long LDK (update 1/10/11, 12pm Eastern – sold my shares in LDK. Per recent practice, I posted the trade posted to my twitter account).
For my commentary on solar stocks and the industry, click here.
I’ve been following your analysis of the solar industry and appreciate your insight. Now that LDK has posted great numbers, I’m wondering if you’ve rethought your position on JKS. I think you initially went long but changed your mind after the series of downgrades following the last earnings report. It seemed to me that the downgrades were not specifically directed at JKS as much as they were the entire solar sector (with some small exceptions). The rationale being sales will level off and margins will tighten in 2011.
But with LDK’s numbers being so good, and JKS stock price going up last week and this, have you thought about getting back in on JKS?
Thanks for following, Shaz. I actually held onto, and continue to hold, my position in JKS. What I said in my last post is that I suspected that I would have to brace myself for more losses in the stock before it bottomed, so I suspended my plan to buy a third tranche of stock. With LDK’s numbers, I think a whole slate of Chinese solar companies are likely to outperform, JKS included. Please note that I sold my LDK holdings into today’s move to take profits and reduce my overall solar holdings for risk management purposes. I am still long: FSLR, JKS, ESLR, SOL, SWPRa, and JASO (as well as Solarworld!).