LDK Solar (LDK) Reports Solid Numbers

LDK Solar (LDK) with a decent report tonight and based on how pummeled the stock is, decent is good enough to offer some contentment for bulls. Revenue showed solid sequential growth, gross profit margin continued to suck wind, down to 30.1% (from 30.8% previous quarter and way down from the 43% of a year ago), but they beat estimates by 3 cents ($0.44 vs $0.41). In terms of guidance, first quarter is "better than expected" @ $0.41 - $0.45 but considering they warned on earnings just a few weeks ago due to the Chinese storms it's sort of silly to see them do that, and then push estimates right back up. (Analysts in @ $0.39)

For the full year 2008 they are sticking to the $960M to $1B target (below analysts target) with previously announced 26-31% gross margins. That continues to be an enormous range and means 2008 earnings estimates are still a huge guess; 27% gross margin average for 08 would derive a very different result than 30% would. I would of liked to see a narrower range or at least a narrower range for the 1st half of 2008 i.e. 28-31% for first 2 quarters and then 26-31% in second 2 quarters. Right now, it makes it just impossible to model an earnings estimate.

This is still an interesting long term story; if/when they get their polysilicon plant off the ground (1+ year) their gross margins should expand dramatically and each unit of revenue should produce much more profit. But there are still a lot of ifs between now and then.

Long LDK Solar in fund; no personal position