Tuesday, October 14, 2008

LDK Poly Plant News - 10/14/08

Well, now that I have time to say a few words, I'll do so.

LDK Solar Provides an Interim Update on Its Polysilicon Plant Construction.

LDK Solar Co., Ltd. (NYSE: LDK), a manufacturer of multicrystalline solar wafers, today provided an update on the progress on the construction of its 1,000 metric ton (MT) annualized capacity polysilicon plant.

Equipment installation for the 1,000 MT annualized capacity polysilicon plant has been completed and plant process commissioning has commenced. To date, installation has been completed of eight reactors and one converter in the reactor/converter station, and eight distillation/purification columns, heat exchangers and associated piping in the TCS purification station. The 10kV utility power substation, 10kV process power station, and 110kV/10kV switchgear are operational.

The anticipated polysilicon production levels in the fourth quarter of 2008 will be updated in a separate announcement as the entire manufacturing system continues to progress through the startup and commissioning phase. Additionally, LDK Solar remains confident in its 15,000 MT polysilicon plant construction progress and reiterates its plans to produce between 5,000 and 7,000 MT of polysilicon in 2009.

"We are pleased with the progress made to date on our aggressive schedule for the construction of our polysilicon plants and to continue to work on the long term productivity and safety issues of our new factory," commented Xiaofeng Peng, Chairman and CEO of LDK Solar. "We would like to recognize the hard work and contributions made by our employees during the construction of the polysilicon plants and in readying the facilities to ramp polysilicon production."

This PR is full of good news. It was unclear previously whether they even had all of the equipment on-site, and particularly, whether they had a Converter Reactor. It's now clear that it's all there, and it's installed.

Of course, the Stock went down today, and there are Bashers all over the boards. Nothing new there.

This is news we've been waiting for, and I'm actually suprised at the actual level of completion of the plant. If it weren't for overall market conditions, which are not only been attracting all of the attention, but also have wiped out a tremendous amount of long-interest buying power, we'd have had a major move. As it is, long interest is still on the sidelines, probably in Cash or Government debt, and they continue to wait.

Shorts were given another chance to short sell the news, but they're running up against major forces that are lining up against them.

For one, LDK will announce earnings in November, and they should far exceed even the expectations that LDK raised just a few days ago. Today's announcement increases the likelihood that along with earnings, we'll actually get word that LDK has successfully produced Polysilicon In-house. This will be the final nail in the coffin for the claims of analysts like Jesse Pichel who have said that LDK would NEVER produce Poly.

Second, we're looking at a very likely Obama win in just three weeks. When you come up to an intersection, you make a choice. Which way do you go? Your future is irrevocably defined by this decision. When you choose the direction, you may not know exactly what lies down that particular path, but at least you will have some idea of where you're heading. Likewise, on the 5th of November we won't be able to see any detail of what will happen in the days, months, and years ahead, but we'll know that the choice has been made between "Drill, Baby, Drill" and a renewably-powered US grid. Money will move on that difference in vision.

Third, Solar Earnings for the quarter will demonstrate that even in this shitty Economy, Solar Energy is a bright spot. It takes very little money in the greater scheme of things to completely buy up all of the Solar Industry Output for the next few years. Even without further positive changes by Obama, we already have the extension and expansion of the Solar Energy Tax Credits in the US by way of the recent passage of the Wall Street Bailout. As money continues to flee underperforming industries, it will continue to find its way into those growing industries like Solar. In addition, as risks to the Economy continue to suprise and frighten people around the world, those people with resources available will increasingly find personal use of Solar for their Energy needs to be a comforting hedge against the possibility of breakdown, or hyperinflation.

Sunday, October 12, 2008

Wednesday, October 8, 2008

What this is.

This is assuming that the Market survives. I'm sorry that I have to preface this way.

This is a rare chance for "the little guy" to buy in BEFORE "the big guy." We KNOW how big the totality of the various alternative Energies are striving for, and it's as big or bigger than the totality of today's Coal and Oil Industries. That's freakin' big.

So, today's big money, that is invested in yesterday's technology, is looking at a situation where they are simply unable to take part in the presently tiny alt-Energy industry with any significant portion of their vast wealth, without creating an incredible bubble.

On the other hand, they are also looking at a situation where that tiny industry is going to replace them, unless they own it, and they simply cannot let that happen.

Therefore, they will have to buy in at some point, bubble or not, and the advantage goes to the little guy, as he can put a huge portion of his total wealth into this industry without moving the dial at all. The little guy can wait till the big guy comes looking for shares in final desperation for ownership of future productive capacity.

Now, this is always the game, right? Everybody is trying to get in before everybody else. The trick is to be right about where the big guy is going, beforehand. Why am I so confident? Because we're talking about Energy.

There is no Economy without Energy. That's a basic physical fact, and not even the most powerful equations of Economists can supersede it. The Economic Powerhouse that gives value to the present set of World Currencies, demands an incredible amount of Energy.

Therefore, since the Rich and Powerful benefit neither from the collapse of the economic system as a whole, nor from the inevitable replacement of the Fossil-based Industries that they currently own, the conclusion of greatest likelihood is that those Rich and Powerful will at some point move to own the future industries. When the move is made, there will be competition between the wealthy, and associated rapidly inflating prices.

Friday, October 3, 2008

$700 Billion, plus Renewable Energy Tax Credits - LDK, STP, WFR.

This is an interesting situation, and there are alot of unknowns. Personally, I really don't even know who is really for, and who is really against this "rescue." I know that the majority of the populace is against it, but then I also gather that as they are learning about what's going on, they're starting to get scared, and may be turning around. On the other hand, I wouldn't put it past Wall Street to use the markets and a threat to the people's 401K's and Pensions, simply to extort a huge wad of cash from the Taxpayer. I do tend to believe, though, that Wall Street is in very serious trouble right now, and the fears and solution of Paulson / Bernanke could very well be entirely justified.

A few days ago I was wondering whether Democratic Leadership in Congress really wanted to pass this thing. Why else would Pelosi go out there and insult House Republicans right before they had decided to vote. So, I got the feeling that the goal was to not actually pass this Bill, but just to not be the ones taking the hit for actually stopping it.

This move by the Senate to amend the Bill to Include modifications to the Alternate Minimum Tax, Disaster Recovery for Hurricane-ravaged Texas, and Tax Credits to support Alternative Energy and Efficiency is an incredibly suprising more. The exact same Amendment just failed to pass in the House last week, but it was Democrats that killed it. House Democrats, following Pay as you Go rules, did not support a Bill that did not pay for itself. Republicans, of course, don't care if it's payed for, or not, and they are in VERY Strong support of the Alternate Minimum Tax Cut.

So, when the Senate added this Amendment to the main Bailout Package, they were giving to the Republicans in the House something that they Really Really wanted, and forcing the House Democrats into an unenviable position, where passing the Bill means backtracking on their previous position, by adding to the Deficit, but where failing to pass the Bill sets upon them the blame for an increasingly likely catastrophic Market Crash.

Wow. Housemembers must be sweating profusely right now.

Apparently the House plans to vote on this Bill on Friday, which gives them just about zero chance to make any modifications to the Bill without delaying into next week (unless they work all Weekend). If they fail again to get a Bill to the President by Market-open on Monday, then I can't help but think that all Hell is going to break loose. I'll say, though, that the way I see it, if anybody kills this Bill, or at least the Alt-Energy Incentives, sadly, it will now be the Democrats in the House.

Now, having followed the Energy Debate way too closely over the last year or so, I can tell you that it's been a long and brutal battle. Powerful forces have been working against this part of the Bill for quite a long time, though they don't often take credit for their success in blocking these critical extensions to Wind and Solar Tax Credits. Could this current game finally force the issue through Congress and onto the President's Desk for a signature?

I don't know. We'll have to see. For those that are watching the industry, and particularly the Associated Public Companies, the risks are that the House will either fail to pass the Bill at all by Monday, at which point just about every stock will be dropping like a rock, no matter the industry, or else that the House and Senate will wrangle out a deal by Monday that doesn't include the Energy Tax Credits, which would create a rally in Financials, but would have a very limited effect on Alt Energy Company Valuations.

On the other hand, if this Bill passes with Renewable Investment Tax Credits, the upside on valuations will be incredible for the Alt-Energy Industry and its Shares.

When the 2006 Election was said and done, it became quite clear that the Conversation going on in the US had subtly changed. Republicans and those supporting their ideologies became slightly quieter and less confident. Suddenly people were starting to look forward to... ehem... "Change," even if the exact nature of the Change was uncertain.

I believe that if this Amendment is signed by the President, a similar change will again happen in America. This change will be reflected in a new explosion of productivity, entrepreneurialism, and industrial growth surrounding "Green Energy." We've all seen the numerous commercials and political statements of support for Green Energy. For the most part, this has been alot of hot air. There has been very little substantial backing for action in support of these popular Green Ideas. If passed, this Bill will change this. Real money will begin pouring into actual Green Technologies, no long just in Germany, Spain, China, and California, but literally across the US. US Solar Companies will find themselves excellent partners, and yes, competitors, in China and Europe.

Focusing on Solar, following are a couple of reasons for my belief in this potential for Explosive Industrial, and Shareprice Growth.

Short Interest: Solar Energy Companies have been heavily suppressed over the last year by way of incredible levels of Short Interest piled on just about every Solar Stock. If this Amendment passes IT WILL BE A SUPRISE. The failure of Congress and the President to extend these tax credits for the last year, even though they are due to expire at years end, has given shorts plenty of reason to believe that the Solar Industry would continue to suffer at least until next January when we'll get a new President. If these shorts have to reverse direction in response to this highly significant change in US Government Policy, they will certainly feel a squeeze. There's nothing like Shareprice Performance to create a self-fulfilling prophecy. If Industry Share Prices take off all of a sudden in an extended expectation of increasing production and profits, many new investing eyes will turn to look and buy.

Jobs: This Bill will provide for a 30% Tax Credit on Residential Installation of Solar Energy Systems, just like the Tax Credits that it extends. Unlike those previous Credits, these new Credits DO NOT have a $2000 Cap. This means that for those that benefit from the full Tax Credit, the Cost of Installing a System in many parts of the US has suddenly become cost-effective, particularly in those States that provide additional benefits. This new buying will not only produce jobs, but it will also generate the narrative that Solar Energy is for real, as every new installation will stand out as a kind of free advertisement for the Industry and the Technology. People will be increasingly have opportunies in some area of this new industry to make a living. From this will come new selling, lending, and buying of goods and services related to Solar, and other Renewable Energy Industries.

Inflation: If this Bill passes, it will almost certainly put us on an inflationary path. Though the Dollar may strengthen in the short term, over the long term, it will weaken, and Traditional Energy prices will increase. Since the Olympics we've seen crashing prices in Oil and Commodities. Some of this may actually be due to decreasing demand from China, as well as from the slowing Western Economy. However, remember that even at today's prices, Oil is still incredibly high, and could easily go higher on either the prospect of a weaker Dollar, or a stabilized World Economy. Even with the Crisis in the West, China continues to grow at an astounding pace, and Oil and Coal Demand in Asia continues to increase. Energy Prices will follow, which will once again focus awareness on Alternatives as Cost-Effective Solutions to Increasing Demand.

We'll soon know what action is chosen by the House of Representatives, and from there we'll see clear results in one direction or another.

I could go on, but it's very late, so I'll leave it here for now, with just a couple of nice links.

So What Happened To Solar Stocks This Time? - Barrons
"And finally, one other note. Paul Lemming, an analyst with Princeton Tech Research, today picked up coverage of the sector, setting Buy recommendations on LDK Solar (LDK), Q Cells, Suntech (STP), Wacker Chemie and MEMC (WFR)."

I note here that three of the four companies mentioned are Polysilicon Producers. Poly Producers are in a sweet spot under this Rescue Plan and Energy Amendment. Increased demand for Poly from an reinvigorated US Energy Policy will drive up World Poly Prices by a significant amount. The Production of Polysilicon is the key component of a Silicon-based Solar Industry, and it's by far the trickiest part of the Supply Chain.

Green the Bailout - NY Times - Friedman
"In a green economy, we would rely less on credit from foreigners “and more on creativity from Americans,” argued Van Jones, president of Green for All, and author of the forthcoming “The Green Collar Economy.” “It’s time to stop borrowing and start building. America’s No. 1 resource is not oil or mortgages. Our No. 1 resource is our people. Let’s put people back to work — retrofitting and repowering America. ... You can’t base a national economy on credit cards. But you can base it on solar panels, wind turbines, smart biofuels and a massive program to weatherize every building and home in America.""

This is a great article by Friedman, which to me, provides support to the importance of investment in Alternative Energy as a critical part of the long term resolution of today's Economic Troubles. Credit to RamblerGambler of Yahoo for the find.