- China's LDK Solar (LDK) warned on Wednesday it will curtail expansion this year and lose $135 million to $145 million in the fourth quarter as wafer prices fell, sending its stock skittering 13 percent.
- Makers of solar cells and modules have suffered in recent months as the global credit crisis dried up funding for new projects and the weak euro hurt margins for companies that sell into the European arena.
- LDK Solar, one of a crop of up-and-coming Chinese solar gear manufacturers, plans to delay wafer expansions by one quarter, meaning it will hit 2.0 gigawatts (GW) of solar wafer capacity by the end of 2009 instead of an original plan for 2.3 GW.
- Overall, the firm expects total polysilicon capacity to hit 12,000 MT by the end of 2009, down a quarter from a previous target of 16,000 MT.
- It said it will write down inventory by $210 million to $220 million in the fourth quarter.
Suntech Power (STP) - the largest player in China also reported a not so inspiring earnings with inventory write downs as well. Guidance was also not something to hang your hat on.
- Chinese solar company Suntech Power Holdings Co Ltd (STP) posted a quarterly loss on Wednesday as prices and orders for its clean power products fell sharply.
- For the fourth quarter, the company posted a loss of $65.9 million, or 42 cents per American depositary share, compared with a year-earlier profit of $50.6 million, or 29 cents per ADS.
- Revenue rose 4.2 percent to $414.4 million, Suntech said. (ah the heady days of 75-100%+ revenue growth seem like a dreamland now)
- Results include a provision for inventory and purchase commitments of $50.7 million, reflecting the rapid decrease in the silicon and module prices in the fourth quarter.
- Last month... the company also said it had cut 800 jobs, or 8 percent of its staff, in the fourth quarter because of the weak economy.
- Suntech Chief Executive Zhengrong Shi said the euro weakness had accounted for 8 percentage points of the 15 percent decline in the average selling prices for solar modules for the company during the fourth quarter from the third quarter.
- For the first quarter, those average selling prices are likely to drop about 10 percent from the fourth quarter. Still, declines in the cost of silicon, the key material used to make solar modules, will outpace the decline in selling price and help support margins, Shi said.
- Suntech, one of the world's largest makers of the photovoltaic modules that turn sunlight into electricity, said it was seeking to triple its sales in the United States to 120 megawatts in 2009. The United States, which on Tuesday enacted a measure that could help revive demand for solar as part of the $787 billion stimulus package, is expected to see total demand of between 400 to 700 megawatts this year, the company said. That is still far smaller than the European market, where Suntech shipped about 70 percent of its products in 2008, and earnings suffered as the euro tumbled sharply against the U.S. dollar.
- Earlier this week, Chinese solar company Trina Solar Ltd (TSL) warned that its margins would suffer due to a charge to write down the value of its silicon inventory, while rival Canadian Solar Inc (CSIQ) said it would ship fewer solar cells in 2009 than it originally forecast.
I am probably going to have to "discontinue coverage" of this area since I have only so many hours in the day and the prospects are so discouraging. The "commoditization" of this sector has engulfed the investing prospects for the most part. Even President Solar has not helped these guys. When 'speculation' comes back to the market of course these names will have their turn of rising 40% in 3 days like they do 2-3x a year... before losing it all and more. As they always do. But from an investing standpoint - they've been a disaster; especially the Chinese merchandise.
p.s. on a sidenote David Einhorn (hedge fund manager of Greenlight) has started some purchases in this group including Chinese name JA Solar (JASO). I wish him good luck.
No positions
