Monday, May 12, 2008

A couple of points: LDK: Regional Distribution, and 1000MT Plant.

Point 1:

From the CC:

34% China
30% Asia / Pacific
33% Europe
3% North America

This is exactly the kind of distribution that we want to see, in the case of a weakening US Economy.

Incidentally, we know that AKNS got creamed the other day, specifically as a result of the Mortgage Meltdown. LDK doesn't look like a candidate for this.

In fact, if you look at their annual report, you'll see that while they hold net debt in Dollars, they have net assets in Euros. Seems like a bet on a further weakening Dollar to me, and seems likely a good bet (nevermind the recent noises that the Dollar was going to Strengthen; I don't believe it).


Point 2:

During the CC, Jesse had questions about the 1000 MT plant, and the impression that he left was that he was somewhat confused by the fact that at the end of Q2 LDK wouldn't actually have that plant COMPLETE. Well, I'll admit that I was confused, too, as also, it sounded like, was one of the other analysts (Kim-Chong Tan, UBS).

The LDK Speaker (Lai?) stuttered alot on the answer. I think he was confused by Jesse's use of the term "mechanically complete."

Answer found.

On November 15th of last year, LDK described EXACLY how it would go. See http://www.ldksolar.com/11-15-07.html

"In line with plans for construction of the plant, LDK announced that it expects to receive the two readily available Siemens technology-based reactors and related plant equipment from Sunways in the fourth quarter 2007 and will begin installation soon thereafter. The Company expects to start trial production of the equipment by the end of second quarter of 2008. Delivery of GT Solar reactors and other long-lead equipment and reactors is expected to commence in the second quarter of 2008 through 2009."

First, I'm not sure what source Jesse is referencing to suggest that LDK claimed "mechanical completeness" of the 1000 MT Plant by the end of Q2.

Looking up "LDK 'mechanically complete'," I get references to the Flour deal for the 15,000 MT plant.

Maybe Mr. Pichel did have a source for that term, and since "mechanically complete" is a somewhat generic term for a benchmark and handoff to the owner for production (as far as I can tell anyway), it could very well have been used to describe the state of just the two Sunways Reactors at the end of Q2.

In any case, there's no foul at all, everything adds up perfectly.



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