David White

China ADRs: Mixed July

I should have mentioned JASO which also reports this week. It was recently given a new buy recommendation. Also SOL has steadily moved up from a 2 star CAPS rating to a 5 star CAPS rating. It should do well.

China ADRs: Mixed July

Both LDK and CSIQ report earnings this week (8/11/08-8/15/08). Other solar stocks report the next week such as SOL, STP, and TSL (perhaps others also). After the big down movement recently, I think we can expect an up movement over the next couple of weeks from these stocks. Virtually all should report great earnings. Hopefully LDK will report some positive guidance about their polysilicone plant also. The ones will great multiples seem likely to move up substanitally. This would include LDK, SOL, CSIQ, and TSL. LDK's movement will likely be dependent on its margins and its guidance about the two polysilicone plants it is building. The others should all move up on great results. The highest rated ones should move up more easily. The average analyst ratings for the latter three stocks are: SOL (1.8), CSIQ (2.0), and TSL (2.3). The FPE's are: SOL (6.88), CSIQ (7.40), and TSL (6.23). It looks like there is likely some room for these stocks to move up. They all have low PEG ratios, especially when compared to FSLR (which has moved down after its great earnings). FSLR's PEG ratio is currently 1.29. FSLR's FPE is 37.54 (even after the great earnings). The PEG ratios of the others are: LDK (.34), SOL (.26), CSIQ (.39), and TSL(.28). I think you can see where these other solar stocks may behave differently than FSLR at this point in time. Of course, there is still the possible headwind of oil prices continuing to go down.

Wall Street Breakfast: Must-Know News

I should add that the LDK earnings figure for FY2008 was calculated based on the same margin figure that the Q1 estimates were. This means that the FY2008 EPS should be significantly higher than the current estimate, if LDK can maintain this higher than expected margin throughout the year. It would seem likely that they can. The FY2008 production has already been sold at fixed prices. Most of the FY2008 polysilicone has already been contracted for at fixed prices. This snowstorm of "bad news" about LDK is just that a "snowstorm". You are not seeing what is really there because of the snow (and ice). You'll see better when the weather clears.

Wall Street Breakfast: Must-Know News

LDK did not lower its FY2008 earnings or revenue forecast. It kept the revenue forecast unchanged. Its forecast may be below the market forecast. It did lower its Q1 2008 revenue forecast. However, overall it raised its Q1 2008 EPS range. The $.39 is (and was) the analysts' estimate. The range given by LDK yesterday was $.39 to $.44. Actually the picture for LDK got rosier. Because the Q1 2008 revenue forecast is lower (but the EPS estimate is not) LDK has effectively said it is going to beat the analysts' estimate for margin in Q1. Since LDK last quarter got downgraded when its margin was lower than the analysts' estimate, you might expect LDK to go up on this news. LDK left there total 2008 revenue estimate unchanged. They are obviously seeing no problem in catching up on the missed production as the year goes on. This leads one to believe that the production estimate for the year is seriously underestimated. This should again be good news for LDK. LDK further reiterated that there polysilicone plant construction is still on schedule. Currently LDK earnings predictions are for $1.75 (avg.) in FY2008 and $3.76 for FY2009 (range for 2009 is $1.52 to $7.30). If LDK can come close to executing on their polysilicone plant construction, they will triple or more in 2009. The PEG listed on Yahoo is only 0.24. They don't get much better.