Bankrupt Solar-LDK, Suntech, SunEdison

[Guest Klothilde]

Standard processing cost and no equity. I would say this is worthless. Target price 0

[Guest eysteinh]

Well just visually looking at the modules they pruduce they have Metal Wrap Trough in design allready. So while the cost is average the ASP and what module they produce is actually quite decent. But then again huge opex numbers compared with shipments.

[Guest eysteinh]

REC ASP per quarter for modules: q12013: 0,73 $ per watt q22013: 0,74 $ per watt q32013: 0,73 $ per watt q42013: 0,72 $ per watt q12014: 0,71 $ per watt q22014: 0,70 $ per watt Rec EBITDA cost per quarter (module cash cost +sg&a & r&d per watt): q12013: 0,71 $ per watt (0,61 + 0,08) @ profit 2 cents per watt q22013: 0,66 $ per watt (0,58 + 0,08) @ profit 8 cents per watt q32013: 0,63 $ per watt (0,55 + 0,08) @ profit 10 cents per watt q42013: 0,60 $ per watt (0,52 + 0,08) @ profit 12 cents per watt q12014: 0,58 $ per watt (0,50 + 0,08) @ profit 15 cents per watt q22014: 0,55 $ per watt (0,47 + 0,08) @ profit 15 cents per watt REC MW shipments per quarter and EBITDA cashflow q12013: 213 MW shipped @ 4,26 million $ profit q22013: 213 MW shipped @ 17,04 million $ profit q32013: 213 MW shipped @ 21,3 million $ profit q42013: 213 MW shipped @ 25,56 million $ profit q12014: 235 MW shipped @ 35,25 million $ profit q22014: 235 MW shipped @ 35,25 million $ profit Total 138,66 million $ ~ 794 million nok REC ASP per quarter for fbr polysilicon: q12013: 17,29 $ per kg q22013: 19,00 $ per kg q32013: 19,00 $ per kg q42013: 23,00 $ per kg q12014: 23,00 $ per kg q22014: 23,00 $ per kg REC FBR EBITDA cost per quarter (polysilicon cash cost + sg&a & r&d per kg) q12013: 15 $ per kg (12,0 + 3) @ profit 2,29 $ per kg q22013: 14,5 $ per watt (11,5 + 3) @ profit 4,5 $ per kg q32013: 14 $ per watt (11,5 + 2,5) @ profit 5 $ per kg q42013: 14 $ per watt (11,5 + 2,5) @ profit 9 $ per kg q12014: 14 $ per watt (11,5 + 2,5) @ profit 9 $ per kg q22014: 14 $ per watt (11,5 + 2,5) @ profit 9 $ per kg REC FBR MT shipments per quarter and EBITDA cashflow q12013: 4125 MT shipped @ 9,45 million $ profit q22013: 4125 MT shipped @ 18,57 million $ profit q32013: 4125 MT shipped @ 20,63 million $ profit q42013: 4125 MT shipped @ 37,13million $ profit q12014: 4125 MT shipped @ 37,13 million $ profit q22014: 4125 MT shipped @ 37,13 million $ profit Total 160,04 million $ ~ 917 million nok Float zone, Electronic grade, simens sg, off spec and silane gass sales: Total cash flow profit from these volumes has varied between 80-150 million nok in the last quarters. In q1 rec recived 27 million $ (155 mil nok) compensation for a silane gas contract. I expect the cashflow from these products to be around 55,72 million nok (10 million $) giving a total of 27 + 60 = 87 million $ during the next 6 quarters. ( 498 million nok positive cashflow.) In additional there could be a potential cash flow of 16 million $ from a tax settlement (not added in the calculations here) source: http://www.columbiabasinherald.com/politics/article_4297eee8-7d33-11e2-8daa-001a4bcf887a.html?mode=jqm Total all cashflow: 385,7 million $ ~ 2209 million nok. Capex estimated for period 2013: 66 million $. 2014 q1-q2: 37 mil $. Total: 103 mil $ ~ 590 mil nok. Interest rate for period 2013: 60 million $. 2014 q1-q2: 30 mil $. Total: 90 mil $ ~ 515 mil nok. Profit before taxes: 192,7 mil $ ~ 1104 mil nok. With the general assembly they will have the ability for 10% convertible loans (about 200-300 mil nok) and 10% share issues (about 200-300 mil nok). This should be enough when you realize they have around 1.9 billion nok in cash / cash equivalents and they will get income of 1.1 billion nok. The debt maturing in q2 2014 is around 3.1 billion nok.

[Guest redsolar]

Is there a way to buy REC on US markets?

[Guest eysteinh]

As of now. Nope. It is listed on the oslo stock exchange.

[Guest Uncle Chang]

If and only if one can still trust these Chinese CEOs and CFOs, the processing costs and the wafer price ain't bad at all, forget about the working capital deficit and sharebaggers' Equity when bad can be good with local funding secured. You gotta buy their story of building huge inventory at lower spot (wafer?) prices, this can be Key to "success" story when ASP goes up. By the way, I think higher ASP has more to do with future raw input prices such as poly, wafer, cell, depending on companies. Reporting from Taipei, Taiwan.

[Guest Klothilde]

...forget about the working capital deficit and sharebaggers' Equity when bad can be good with local funding secured...

That's what STP shareholders thought as well and they ended up like fried chicken.

[Guest Boss]

how do you know that REC can sell poly at $23 in 2014?????

[Guest eysteinh]

Boss I base myself on among other things research done by The NationalRenewableEnergyLaboratory (in Solar EnergyMaterials&SolarCells114(2013)110–135 ) this is the minimum sustainable cost if one assumes that fbr will in the world average increase to around 20% production. Keep also in mind well respected researchers like bernreuter has claimed polysilicon prices can increase to around 25$/kg. " The market research firm forecasted that PV installations could reach between 35GW and 37GW in 2013, driving renewed polysilicon demand that could push polysilicon spot prices to between US$20/kg and US$25/kg by the end of 2013.""http://www.pv-tech.org/friday_focus/what_next_after_the_polysilicon_apocalypse_of_2012 Also if you know chinese there is an interesting article here: http://dp.solarmediastore.com/i/113686 Finally one might want to take a closer look at tier 1 capacity in china with production costs under 20$/kg and find that this is around 17.6 GW (at 5.8 gram per watt average) while production levels are far above this. Given tariffs or just plain demand then costs should increase. I believe 23$/kg is a bare minimum. Ironically some of the analytical numbers I have read is not well updated. For example REC is reported with 21500 MT while they now only are using fbr solar grade + simens eg / fz so they are currently only doing 20000 MT.

[Guest Uncle Chang]

Whether it's STP, LDK , CSUN or DQ, it just doesn't matter as long as people don't buy them and start worrying (about them). What we are discussing here are based on what we think/guess, STP defaulted on "foreign" debts/notes, others have different situations even they are as shaky if banks are going to push "the issues" of liquidities. This is life time experience for everyone over the Chinese government credibilities and commitment to "help" the solar industry. I have betted on SOL, JKS, TSL, YGE and CSIQ equally weighted in dollars, it is not any recommendation for anyone to take same risks with me and I don't care if I lose All either. I will dump them all if they don't improve on their next quarter's reports.

[Guest Klothilde]

http://www.pv-tech.org/news/ldk_solar_defaults_on_us23.7_million_bond?utm_source=pvtech-feeds&utm_medium=rss&utm_campaign=news-rss-feed http://investor.ldksolar.com/phoenix.zhtml?c=196973&p=irol-newsArticle&ID=1807016&highlight= WTH??? These guys don't even have pocket change to pay western bondholders 24 lousy millions??? This is a big blow to the whole sector. Imho it shows China is not serious about protecting the interests of western share- and bondholders.

[Guest eysteinh]

I wrote about suntech and LDK in danger of falling over a year ago on the norwegian forum hegnar online. I would also point out to the exellent article here on pvsolarinvestor: https://solarpvinvestor.com/spvi-news/474-ldk-solar-struggles-to-survive-becomes-desperate

[explo 710]

It's already been known for a long while that LDK bond and share holders are screwed. With LDK much deeper under water than STP, nothing else is to be expected.

[explo 710]

April 18 will should shake those with no clue, but I think the market has accounted for this. Reverse on news.

[Guest eysteinh]

It's already been known for a long while that LDK bond and share holders are screwed. With LDK much deeper under water than STP, nothing else is to be expected.

This is true. One carefull look at the balance sheet and you would have known.

[Guest solarcat]

Sorry explo but the street shows it is clueless when it trades LDK at $142mil market cap as of the close yesterday. That's nearly 40% more valuation than JKS and SOL and nearly as much as JASO and CSIQ. The street is clueless all around. LDK and STP should have been trading at 10c months ago IMO. The street has not shown intelligence when it comes to differentiate among Chi solars, even when a large body of evidence shows them the path.

[explo 710]

I don't mean market cap of LDK and STP. Those make no sense since those companies have drowned already. I mean when the street pull down all solar 11s, even those with healthy balance sheet and business conditions, in anticipation of the sentiment effect the illness headlines LDK will post shortly will have on its healthy peers for the clueless mass. They've all be taken down (like SOL from 2.85 to 2.15, chased to 2.35 on blow out report and then beaten to a pulp down to 1.25) on no new development. We knew STP and LDK would blow up and EU would register modules. And liked it. So I think WS is playing a sentiment game with the clueless part of the market that will capitulate on the lows on the "no news" while the WS accumulates its target amounts and then release them. The status is still the same. 2011 was the decline year, 2012 was the trough year, and a major one, 2013 will be the recovery year, with margins turning positive in second half for those with lowest cost structures. 2014 might be boom and shortage with bloated margins and major balance sheet repair. Now is the time to accumulate all who will not drown coming 2 months. SolarWorld, STP and LDK gave the street the perfect excuse to achieve a super low accumulation point before the party.

[Guest Boss]

That LDK is bankrupt is really nothing new. Everyone (except LDK shareholder) knew that for at least 1 year. It is about time that LDK goes bankrupt. IMO

[Guest Klothilde]

Oh Baby Jesus all Chi Solars except CSUN are actually UP despite the LDK news. Explo might be right, the market may already know the difference between LDK, CSUN and peers.

[Guest solarcat]

Yeah right... the market sure knows the difference... LDK up 13% since the open... LOL

[Guest chrisceeaustin]

Shouldn't LDK bankruptcy benefit both SOL and WFR? Is that not common sense? Or am I missing something? And should not GTAT take a bit of a hit as it may lose a customer, along with other Chinese customers from the new restrictions on lending?

[dydo 1,566]

details here http://www.ne21.com/news/show-40750.html interesting news, on the back of two new business units http://en.ccccltd.cn/

[dydo 1,566]

The bond was $23M and they made arrangements for 17M. Sounds to me those who were defaulted on did not like the arrangements. To go to such a bad press for $6M, while three months ago company had about $111M in cash, is pretty brutal. The fact that STP is moving up on it is just confirmation how surreal the solar stock market is, if even such a thing exists. How is Suntech Holdings which is a shell of the company without its subsidiaries in China, still trading and not making statements around its solvency?. Based on Yingli's CFO, foreign debt is the one they have worried about the most so, if those are paid off or default on, this will be the difference between what happens in China. Now they are saying 80% of industry in China is closed and domestic debt will be turned without issue, until they can get profits again. Not the most ethical way to work this, but who cares at the end. They have been left for dead by the global markets, so naturally they should get supported at home.

[Guest redsolar]

What is Unethical here is... Total disregard to the foreign investor..and running them like Govt. Employment centers. These should not even be allowed to be listed on global markets.

[Guest Klothilde]

Go to the GTM commentary about the STP insolvency. In the end the thing basically was a transfer of ownership from foreign investors to Chinese stakeholders. Sharholders and bondholders got flushed down the toilet and assets went to banks and local government, ensuring continuity in operations and jobs. Seems they'll replicated this model with LDK.

[dydo 1,566]

well, we will still have to see what the final outcome is . Wuxi Guolian was appointed to look after the assets by the court. Assets are in China owed by Chinese subsidiary of Suntech holdings. I am sure you know there is GSF and the Japan's business which has nothing to do with Wuxi moves. My opinion is that Suntech Holdings will remain as owner of those entities (not located in Mainland). The only plant which is running today is already owned by 40% Wuxi SOEs. This will be kept by the state. Rest will be sold to give something back to banks. This is the only way I can explain why Suntech Holdings is simply trading. The GSF maybe the only value they have and one to be sold to pay that convertible bond. I am sure details will be known. The story with LDK is similar, I agree. Every bankruptcy destroys shareholders, and perhaps saves few cents on the dollar to bondholders.

[Guest solarcat]

Klothilde, I agree with what you wrote. Then why STP is still trading and up 15% at that? Who are those 4 million stock holders? All chinese? I very much doubt it.

[Guest so-so-solar]

Actually many chinese solar forums mentioned about the LDK's status and critically stated LDF with high default risk. In a short run, SunTech model should apply to LDK. What different is SunTech itself was a company with good operating model. It was just a few wrong decision done owner causing the default inevitable. However, LDK is very different because LDK is extremely inefficient and possess poor operating model. It was superbly back up by a chinese province in such a way that govt had guaranteed a huge amount of debts. In turn the debt grew too big to be sustained and yet good operating business was to build up to sustain the continuity of business. LDK does not only a refinance of its debt and also need a super restructure of the company so as to keep the going concern.

[explo 710]

Like odyd says in case of BK the share holders are last in line, so when bond holders don't get paid how can people pay this much for STP and LDK shares when they are likely not worth anything?

[Guest solarfun]

We don't know who is buying these shares, it could be somebody collecting shares for a takeover bid. Plus it could be just gambling, if you believe that the Chinese government will bail them out eventually.