[Guest Klothilde]

SOL does not have the same structural problem with debt and fixed asset level preventing profitabilty. To pay off debt you need cash and to write down fixed asset you need equity. Issuing shares gives you both.

I think it is very hard to argue that YGE needs an equity infusion and SOL doesn't. Both companies are in horrible shape and technically on the verge of bankruptcy. SOL is both one of the most indebted and illiquid companies among the Chi 11. Its net debt to equity has expanded from 34% to 192% over the last 9 quarters. The Quick ratio is the second worst among peers (after LDK) at 49%. Even YGE and CSUN are more liquid than SOL. On top of that SOL is burning cash in their operations (operating cash flow when omitting changes in assets and liabs is @-7%/Rev), so the company is completely dependent on politically mandated credit to maintain liquidity and survive. The debt burden relative to sales looks more favorable than at other peers thanks to a relatively lower interest rate and sales in excess of capacity. Both of these factors may be short lived, however, as the roll-over of credit is quite fast at SOL and the value of outsourcing may change rapidly. Imo the structural defficiency of over-leverage makes SOL as prime a candidate for an equity infusion as YGE is. JMVHO.

[explo 629]

I've analyzed all solar11 thoroughly and shared with the board: EXPLO and any other experts in SOL, do you (guys) believe that there You can see that YGE has more issues reaching positive EBT even if they match SOL on EBITDA margin they're excessive interest and depreciation cost causes a EBITDA to EBT gap that makes it har for them to reach competitive EBT. It's this gap that is the structural problem that I mean YGE need to repair. Unlike STP YGE has no problem posting positive GM, their problem is a good GM can't translate to a good NM with current structure. So SOL is much better structured for self repair than YGE and infusion thus much less motivated. Other indicator of YGE issues is the decay rate, which combines the margin issues with existing leverage and show how leverage accelerates. A high and accelerating leverage might stop your ability to roll over short-term debt and throw you into a financial crisis. You can also see that the past 3 years (2010 to 2012) YGE lost more than 700m of share holder capital corresponding to about a 70% loss of what share holder have put in, while SOL lost none. So in a diffcult period SOL retained share holder money while streching balance sheet a bit and in a better period they should be able to repair balance sheet as they first convert fixed assets to current assets and later add equity. Most of these guys have stress balance sheets. Exceptions are TSL and JASO. But some have very stressed balance sheets, i.e. LDK, STL, CSUN and YGE and the same guys have the highest equity melting rate (which cause the high stress). These need or needed infusion. LDK and STP blew and CSUN is about to. YGE is very borderline and taking a big risk by not infusing here. The others have the bleeding under control now and has no urgent need of infusion. Share holders for those companies (SOL, JKS, CSIQ, HSOL, DQ) are likely better of is management let them self-recover during this industry recovery. TSL and JASO are the only ones in position to be aggressive during the industry recovery.

[Guest Klothilde]

Most of these guys have stress balance sheets. Exceptions are TSL and JASO. But some have very stressed balance sheets, i.e. LDK, STL, CSUN and YGE and the same guys have the highest equity melting rate (which cause the high stress). These need or needed infusion. LDK and STP blew and CSUN is about to. YGE is very borderline and taking a big risk by not infusing here. The others have the bleeding under control now and has no urgent need of infusion. Share holders for those companies (SOL, JKS, CSIQ, HSOL, DQ) are likely better of is management let them self-recover during this industry recovery. TSL and JASO are the only ones in position to be aggressive during the industry recovery.

From an equity melt point of view there is no significant distinction between YGE and SOL, so if we want to take that as an indication of need for equity infusion these companies are twins. Check out the equity ratio evolution of Chi since the beinning of Armageddon in 2011: I see a split of Chi into three clusters of different leverage: The good, the bad, and the ugly. The GOOD started out at equity ratios of mid 40s in 2011 and have been able to maintain a relatively high equity ratio relative to peers. JASO and TSL are the stars, HSOL also looks good though with a higher decay rate than the others. At the bottom you have the UGLY, who started out with low/medium equity ratios in 2011 and experienced accelerating decay rates as the companies went bust or almost bust (LDK, STP, and CSUN). The middle bunch, or the BAD, started out with equity ratios around 30% and dropped the equity to around 15%: JKS, CSIQ, SOL, YGE. These companies imo are approaching the limit of possible balance sheet stress and either need to revert the equity melt asap or go to recapitalization. So far it looks like JKS and CSIQ may have a fair chance at reverting the equity melt over the next quarters, since both companies exhibited reduced losses in Q1 if you take out forex. YGE and SOL however didn't provide a perspective for a quick return to profitability, and are thus at a higher risk of slipping to the UGLY bunch without recapitalization. Bottom line: no significant difference in equity melt discernible between SOL and YGE from the chart !

[explo 629]

Please look at development of equity attributable to share holders instead. You are now looking at (shareholder equity + non-controlling interest equity) / (shareholder equity + non-controlling interest equity + liabilities) This gives you a diffused trend not reflecting the trend of shareholder equity. Shareholder equity is what is relevant to me as a shareholder, please plot this trend instead.

[odyd 1,304]

And since the question was asked why YGE has a larger cap, the answer is the prospect, brand name and sell channels. I think it is essential to understand that CSIQ and JKS have recovery in the profitability. The risk for JKS is the bond payment which takes a heavy chunk of their liquidity. But in a peculiar way both companies have a connecting factor, large project assets. $400M for CSIQ including current $180M and JKS $100M. This is their ticket.

[explo 629]

Please also considered inflated books. STP, LDK, YGE and HSOL are inflated to different degrees. JASO, TSL and JKS books are not. SOL is borderline. JASO and TSL are only good ones on actual book adjusted leverage. STP, LDK and CSUN are R.I.P. and YGE is only one heading that direction fast. If trough continues through 2014, then I think the mid pack should infuse now, but that seems unlikely. YGE depends more on imminent boom. STP and LDK have wished for it before and it was their doom.

[Guest Klothilde]

I think it is essential to understand that CSIQ and JKS have recovery in the profitability.

That's the way I see it also. Among the 4 guys with BAD balance sheets the "recovery factors" are more discernible at CSIQ and JKS and not so discernible at SOL and YGE. In the case of SOL the recovery factor imo was/is an increase in poly prices, however it is not yet discernable at what rate that will happen over the next quarters.

[explo 629]

Yes, CSIQ has best quick recovery opportunity, but we are talking about destruction risk. YGE is it. SOL and other mid pack should be able to stay above surface now until repair starts. Anyway to be conservative all my investment analysis include repair cost by infusion and SOL still comes out on top after those dilution costs, but I think there's a good chance we won't see dilutions. YGE is the only one I would prefer to dilute now if I were a holder. Project assets are like inventory, something to turn into AR at a margin. Both carry different types of risk. Module inventory is of more current nature. Project asset have higher margin hopes (at least for CSIQ) than current module inventory. Did you guys note that JKS had project revenue in Q4 and none in Q1. Same with CSIQ and yet these guys had big GM improvement Q4 to Q1.

[Guest cfeng]

Klothilde, I find it interesting that in your own chart the JKS comes out in as bad shape as YGE. Yet somehow you exclude it from any armageddon because of their Q1 even though they have a bond payment coming up while SOL has nothing till 2018. Amazing at only one quarter of improvement can do, right? BTW, I'm still waiting with an answer on why YGE is valued 3x as much with as huge shareholder equity melt that they have.

[Guest cfeng]

I need to own a stock like LDK where the company burns shareholder equity on a monthly basis and dilute in selling 25m more share at $1.03 and the common stock trades up to $1.44. Chi stocks live in the bizarro world. LOL

[Guest Klothilde]

@cfeng: What a difference a quarter makes... Wasn't that a song? I'm just voicing my humble and limited opinion to some facts here. Feel free to toss in some nasty facts and voice your opinions as well. I didn't know that JKS had a bond payment upcoming (not following JKS). When is this due? And yes, a quarter does make a difference in my opinion when you are at the brink of imploding under your own weight. Either you turn the corner fast or you go the LDK way... jmvho...

[Guest Klothilde]

BTW, I'm still waiting with an answer on why YGE is valued 3x as much with as huge shareholder equity melt that they have.

For sure they are not valued that high in my eyes ! In my eyes they already have negative equity. My speculation is they have a "too big to fail" bonus. Why do YOU think they are valued 3x higher?

[Guest cfeng]

Either you turn the corner fast or you go the LDK way... jmvho...

Oh is that right? Please show us with facts (or charts since you like those) of LDK sales, LDK costs, LDK growth, LDK cash flow, LDK bonds, LDK cash, LDK debt, etc.. so that we might know ahead of schedule who's heading the way of LDK. Thanks.

[Guest littleguyintucson]

http://guangfu.bjx.com.cn/news/en/20130530/437269.shtml no company is going to die of China has its way.

[Pop2mollys 414]

http://guangfu.bjx.com.cn/news/en/20130530/437269.shtml no company is going to die of China has its way.

Did china give them a loan last time around? What's really funny is STP is half the market cap of CSIQ. Wow they have a whole 11MW of utility scale projects,,,, lmfao compare that tp FsLR or CSIQ... STP only has 600'MW capacity left...

[explo 629]

http://investor.ldksolar.com/phoenix.zhtml?c=196973&p=irol-newsArticle&ID=1828676&highlight= Gross margin -57% Net margin -179% Equity -660m Do something.

[Guest singular]

How and why are they still trading? I have never shorted a stock before, but I might consider it for LDK. It is, for all intents and purposes, bankrupt. Is there any reason why all of us should not short it to 0?

[odyd 1,304]

I guess NYSE does not have a negative or below $10M equity rule. CSUN has delayed its release. I am thinking that maybe associated with some sort of announcement to fix this condition. As long as LDK is filing and providing reporting NYSE is letting her trade, look at STP , not reporting for over a year now but still trading. I begin to think that the US regulators want to keep them alive to uphold to the motion that China does not want anyone let go, to prove this point. Their presence on the market is pure US regulators. The biggest confusion is people trade millions in both stocks. They poor-man equities with lottery ticket for the miracle as an outcome. Stock evaluations are crazy compare to healthy ones.

[Guest JulyWebb]

Good Question singular??? I think there could be naked shorts involved that got stuck in the stock possibly Jim Chanos, Goldman and other famous crooked short sellers. DTIC should know if shares were not covered in the appropiate time. This stock should not in any way be trading with this high of a market cap! I wish anyone of you that could would check and see if there are short shares out that are not covered. And again maybe the farmous short sellers are trading back and forth with each other to prevent being exposed.

[Guest singular]

Well i just put an order in to short LDK and was not allowed. My etrade account blocked it saying that I could not short this security because shares in it could not be borrowed.