Wednesday, January 6, 2010

LDK Solar Slow Healing

January 6, 2010
LDK Solar
Slow Healing
What's Changed
Price Target US$7.80 to US$8.70

2009E/2010E/2011E EPS +22%/+335%/+14% Slow Healing: Over the past two months, LDK has digested some of its high-cost inventory and raised additional equity capital. This is the start of the healing process, which we expect will continue. Yet the current
balance sheet is still very stretched with net debt/equity > 2x and potentially negative FCF for another year. The stock now trades at 1.4x FY10E P/BV and 14.5x P/E,
reasonable but not compelling.…

but there may be a short-term trading opportunity: i) LDK was one of the worst performing solar stocks globally in 2009; ii) it has a very high short interest (22m
shares); and iii) we view consensus earnings

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