LDK Solar Co., Ltd (ADR) (NYSE:LDK) Facing Uncertain Future Despite Growth in Solar
Northern, WI 04/24/2013 (GDPInsider) – LDK Solar Co., Ltd (ADR) (NYSE:LDK) opened trading at $1.14 and is currently trading up at 9.21%. Despite this buoyancy in the stock however, a few analysts are hinting at trouble for the manufacturer of Photovoltaic (PV) products. LDK solar has on offer several products, many of which sell to the industrial and residential sectors but it’s the company’s internal numbers that have analysts worried about the long term survival of the company.
The company missed a $24 million bond payment recently and had to negotiate a late payment of $16.6 million of that amount. Whilst no clear indication was given about the company’s plans to make up the shortfall of $7.4 million, many analysts also cited disappointment in the company’s numbers for fiscal Q4 2012. LDK is reportedly carrying debts totalling $5.4 billion and much of this owed directly to the Chinese Development Bank (CDB). This seemingly strong backing according to some analysts should not be taken as an indication of safety. The CDB also helped out another struggling solar company last year to the tune of $7.3 billion. That company, Suntech Power, fell into bankruptcy shortly after it got the money from the CDB.
For analysts the internal troubles at LDK comes at a time when solar in general seems to be climbing northwards. According to one report, solar installations were up 76% in 2012 and approximately 1.2 million Americans now augment their energy needs with solar power. Indeed other solar companies seem poised to benefit from the growth. Competing manufacturer, First Solar has made its intent clear and announced recently that it intends to snap up TetraSun, a small startup that makes rooftop solar panels.
There is a silver lining for LDK however, and the company recently announced the winning of a contract to supply solar modules to EA Solar Nakornsawan Co., Ltd., one of Thailand’s largest makers of photovoltaic projects. Will this be enough? Some analysts are mixed. There is presently massive restructuring going on inside LDK and although the stock’s technical chart shows a southward slope, EPS is expected to rise next year by 16.70%.
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