LDK Solar (LDK) Warns on Revenue Due to Bad Chinese Winter

I can see this massive storm becoming an issue for quite a few Chinese names. Again this weather issue we've been highlighting [China has Power Shortage; South Africa has Power Shortage] and [Serious Food Inflation Hitting China Due to Storm] was not even a blip to US media or investors. Quite amazing. Maybe it has to hit a coastal city like Shanghai to matter.

Aside from hurting individual companies, the other shoe to potentially fall in this end game, is "strength in foreign markets will offset US weakness". What will scare people is to see a sharp drop in Chinese GDP - while healthy for the country to retract to a more normal type of growth rate (6-8% down from 11-12%), I don't think that sort of reduction is priced into the market at all. What would the myriad psychological effects be of a GDP 8.5% Q1 in China? Still incredible growth but the "emerging markets is immune" myth would be fractured. Even if for the wrong reason (weather rather than economics). Hence why I have been blown away no one is paying attention to this story. Much of the bull theory right now is any US recession will be offset by booming foreign markets.

As I always like to say... it does not matter... until it does. Maybe it won't matter until April earnings reports when companies fall short, and China prints their GDP number. Or maybe it begins to matter now as companies begin to warn. All I know is until now, it's been conveniently ignored by the media.

First warning I can see is from LDK Solar (LDK)

• Chinese solar wafer maker LDK Solar Co Ltd (LDK) on Tuesday forecast first-quarter revenue below Wall Street analysts' estimates due to severe winter weather that disrupted shipments to its customers.
• Despite the revenue shortfall, LDK gave an earnings forecast that was in line with analysts' expectations.
• "The severe winter conditions that China has experienced in the past few weeks are likely to have some impact on most of the publicly traded solar companies," Oppenheimer analyst Adam Hinckley said in a client note. "We believe most estimates are still achievable, but upside for (the first quarter) may be more limited."
• Hinckley said weather was still impacting companies in China's Jiangsu province, including Canadian Solar Inc (CSIQ), Suntech Power Holdings Co Ltd (STP), Trina Solar Ltd (TSL), Solarfun Power Holdings Co Ltd (SOLF) and China Sunergy Co Ltd (CSUN).
• DK forecast first-quarter revenue of $195 million to $210 million, below Wall Street's average estimate of $228.5 million, according to Reuters Estimates.

It's not terrible news for LDK Solar, and the stock has been beaten to a pulp in the interim anyhow and trades at a low value. As the analyst says, it probably limits upside surprises however during earnings season next April/May.

Long LDK Solar, Suntech Power, Trina Solar in fund; long Suntech Power, Trina Solar in personal account