The headlines are filled this morning with chatter on the latest news that the European Union is launching an anti-dumping probe into Chinese solar panel makers, following a similar investigation by the US that is likely to result in punitive tariffs by the end of this year. In addition to news of the probe itself, most of the major Chinese panel makers have issued their own statements protesting the move, and Beijing has also expressed regret over the decision. Rather than always turning to these predictable displays of outrage and disappointment each time they receive a setback in this year-long dispute, the Chinese players might consider trying a more conciliatory approach if they really want to avoid a trade war over an industry that everyone agrees will be critical to the development of long-term sustainable energy sources.
Tag Archives: LDK
Solar: Trina Dumps Deloitte, LDK Shares Tank 光伏行业：天合光能解除与德勤审计关系 赛维LDK股价大跌
New developments from Trina Solar (NYSE: TSL) and LDK Solar (NYSE: LDK) reflect the financial turmoil gripping the struggling solar sector, boding poorly not only for these 2 major players but also for the China arm of Deloitte, the controversial auditor that has just been dumped by Trina. The developments are all part of a bigger picture that has seen the solar sector gripped by its worst-ever downturn for more than a year now, sending all manufacturers into the red and possibly pressuring some to resort to creative accounting to mask the gravity of their situations.
News Digest: June 5, 2012 报摘： 2012年6月5日
The following press releases and media reports about Chinese companies were carried on June 5. To view a full article or story, click on the link next to the headline.
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◙ China’s Jingdong Mall to Go Public in Sept; Led by Former Merrill Executive (English article)
◙ Citi (NYSE: C) Launches RMB Exporters and Importers Letters of Credits in Latin America (Businesswire)
◙ Clean-up Work Made on a Small Oil Leak at CNOOC’s (HKEx: 883) Penglai 19-3 Oilfield (PRNewswire)
◙ China Development Bank May Lend Alibaba $1 Bln For Privatization – Source (Chinese article)
◙ LDK Solar (NYSE: LDK) Signs 3 Multi-Year Photovoltaic Project Development Agreements (PRNewswire)
Solar Comments: Consolidation Chinese Style? 太阳能行业：中国式整合
When someone says an industry is in need of consolidation, the assumption is usually that mergers and bankruptcies will reduce overheated competition and excess capacity to create a more efficient and profitable sector. But the concept seems to have a completely different meaning in China, where 2 of the nation’s top solar panel makers discussed the consolidation concept in their latest earnings reports even though we’ve yet to see any major companies close or merge among a money-losing group that now produces more than half the world’s solar cells. In announcing fresh major new losses for their latest reporting quarters, Suntech (NYSE: STP) and Trina Solar (NYSE: TSL) both used the “c” word, with the latter saying specifically it sees further signs of industry consolidation happening. (Suntech earnings; Trina earnings) Suntech was less direct, saying simply it was consolidating its own operations to close down some of its less efficient facilities. Obviously there could be M&A deals now being negotiated that are still secret, but to the best of my knowledge there has been little or no consolidation happening in this sector that has been suffering from overcapacity for a year now. Several US companies had to close last year, but they were mostly smaller players and those bankruptcies happened almost a year ago. Other than that, the only deal I’ve seen so far this year was a small acquisition in January of a small German manufacturer by LDK Solar (NYSE: LDK). (previous post) China watchers will know that consolidation of any industry in China — especially a strategic one like solar that Beijing wants very much to develop — is extremely difficult due to the government’s willingness to support money-losing companies indefinitely with loans from state-owned banks and other public funding sources. That means even the most money-losing companies may never close if the government doesn’t want them to. What’s more, mergers are also extremely difficult, as most big manufacturers get strong support from local governments that worry that any such mergers might result in the closure of manufacturing facilities that contribute to their local economies. So what consolidation does Trina see exactly? Perhaps the answer lies in Suntech’s comments. Rather than consolidation through combinations and closures, the industry may have to follow Suntech’s example and see individual manufacturers close down their less efficient facilities. That approach could work for relatively well for more efficient companies like Suntech, though a less efficient player like LDK — which already announced massive layoffs earlier this year (previous post) — might have to shutter the majority of its operations to return to profitability. This kind of consolidation could be the most likely and practical, but will also mean we could expect to see some significant drops in capacity at Chinese solar companies as they self-consolidate on their march back to profitability.
Bottom line: Chinese solar cell makers, unable to consolidate through mergers and closures, are starting to close less efficient factories to reduce overcapacity and return the sector to health.
Related postings 相关文章:
◙ Sohu Disappoints Again, LDK Cuts Inspire 搜狐再次令人失望，江西赛维裁员鼓舞人心
◙ Passive Beijing Blasts New US Solar Tariffs 中国炮轰美高关税不实用 解决太阳能产品纷争需更主动
◙ LDK Cuts, Suntech Waits As Solar Winter Nears End 太阳能行业冬季将结束：赛维裁员，尚德等待
Sohu Disappoints Again, LDK Cuts Inspire 搜狐再次令人失望，江西赛维裁员鼓舞人心
As China returns to work after a long May Day holiday, the latest earnings released from online portal Sohu (Nasdaq: SOHU) and struggling solar firm LDK (NYSE: LDK) are showing that numbers don’t always tell the complete story, or at least not by themselves. In Sohu’s case, many of the numbers look good on the surface, but closer examination points to a sharp advertising slowdown that is already showing signs of hitting the broader Internet sector. Meanwhile, a highly troubled LDK has encouraged investors simply by filing its long-delayed fourth quarter report just before the final deadline, and also by announcing mass layoffs. Let’s look at Sohu first, which reported that revenue rose 30 percent in the first quarter of this year, but that its profit fell by a similar amount. (company announcement) The profit decline obviously wasn’t very helpful, nor was guidance that showed advertising growth would continue to slow. What’s more, Sohu said revenue from its Sogou search engine, hyped in previous quarters as a major new growth area, would roughly double in the current quarter — down sharply from the 184 percent growth in the first quarter and the nearly 250 percent jump in last year’s third quarter. The broader message was clearly not very positive, prompting a sell-off that has seen Sohu shares sink 10 percent since the results were announced. That followed a trend set by online search leader Baidu (Nasdaq: BIDU), whose shares have sagged 5 percent since it delivered a similar message with its latest earnings last week. (previous post) Look for other ad-dependent firms like leading portal Sina (Nasdaq: SINA) and social networking leader Renren (NYSE: RENN) to follow with similar messages in the weeks ahead. Meantime, LDK’s battered shares received a minor but surprising lift from the company’s latest results, in which it reported a massive $600 million loss in last year’s fourth quarter, as net revenue plunged by about half and looked set to tumble further in the current quarter as the global solar industry struggles in its worst-ever downturn. (company announcement) Some might say there was little to be excited about, but clearly some investors saw some light in the report, bidding up LDK’s shares by 7 percent the day after the numbers came out. Investors were apparently encouraged by comments that LDK has cut more than 5,000 jobs this year, and some were also undoubtedly happy that the company managed to file its fourth-quarter report before an April 30 deadline, after which it would have faced possible delisting. The storm is hardly over for LDK, though early signs of improvement for the entire solar sector could eventually help the company to pare its losses if it can managed to stay in business.
Bottom line: Sohu’s latest results point to a sharp advertising slowdown in the months ahead, while LDK will survive for another quarter after managing to report its results just before a deadline.
Related postings 相关文章:
◙ Slowing Ad Revenue Weighs on Phoenix 凤凰新媒体看淡广告收入前景
◙ Apple Feasts on China, Baidu Burps 苹果在华享受盛宴，百度盛宴停顿
◙ LDK Cuts, Suntech Waits As Solar Winter Nears End 太阳能行业冬季将结束：赛维裁员，尚德等待
News Digest: April 10, 2012 报摘： 2012年4月10日
The following press releases and media reports about Chinese companies were carried on April 10. To view a full article or story, click on the link next to the headline.
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◙ Baidu’s (Nasdaq: BIDU) Lekutian Repositions, Launches Store Operations Service (English article)
◙ China’s Mobile Internet User Base Reaches 356 Mln (English article)
◙ LDK Solar (NYSE: LDK) Implements Large-Scale Lay-Offs – Source (Chinese article)
◙ Shanda Sells Non-Core Assets in Post-Privatization Clean-Up (Chinese article)
◙ Muddy Waters Says to Soon Release Short Selling Report on HK-Listed China Firms (Chinese article)
China Rescues LDK With New Financing 中国拯救赛维LDK举动与未提供不公补贴说法相左
If China was trying to convince the world and the US that it doesn’t unfairly subsidize its solar panel makers, it has a strange way of doing that, as reflected by a recent series of high-profile moves that seem to say just the opposite. In the latest of those moves, Chinese investors — most likely local governments or financial institutions — have purchased a hefty 3 billion yuan, or nearly $500 million, worth of LDK Solar (NYSE: LDK) short-term notes at a meager interest rate of just 6.8 percent. (company announcement) That rate looks like a huge bargain for LDK, which reported a massive $115 million loss in the third quarter and whose other debt issued earlier this year to global investors now trades at about 50 cents on the dollar. Of course all this shows that LDK is able to borrow money at highly favorable rates from the Chinese government or government-backed entities, even as Beijing vehemently denies it unfairly supports to its solar companies amid a US anti-dumping probe that is likely to result in punitive tariffs against Chinese solar cell makers. (previous post) This latest contradiction comes on the heels of other similar gaffs, including wind power equipment maker Ming Yang’s (NYSE: MY) October announcement that Beijing will provide it with up to $5 billion to help finance its sales (previous post); and a top government official’s announcement in November of a new campaign to help developing countries build new solar plants. (previous post) I suspect that these moves from Beijing and local governments are less a deliberate attempt to anger Washington, and more a reflection of the longer term reality that China does strongly support its solar sector and is having a difficult time changing its ways. Regardless of the reasons, Beijing needs to stop this kind of action and even take one or 2 steps in the other direction — for example by letting a weak player like LDK fail — if it wants to ever resolve its solar trade dispute with Washington.
Bottom line: The latest government rescue for LDK underscores China’s ongoing support for its solar sector, undermining Beijing’s claims that it doesn’t provide unfair subsidies to the industry.
Related postings 相关文章:
◙ China Retaliates With Own US Solar Probe 中国启动对美可再生能源补贴调查
LDK Challenges Market With Mega Offer LDK大规模融资方案挑战市场
An interesting test is looming for the struggling solar cell sector, with one of the worst-performing players, LDK Solar (NYSE: LDK) preparing a massive new note offering worth 5 billion yuan, or nearly $800 million, that will test both the market and Beijing in different ways. If market forces prevail and Beijing declines to step in, I wouldn’t be surprised to see this offer collapse completely due to lack of investor interest, potentially resulting in a financial crisis for LDK that could see it become one of the first major victims of the ongoing crisis among major solar cell makers. So let’s have a more detailed look at the situation. Under its new plan, LDK wants to float 5 billion yuan in new bonds, starting with a first tranche worth about $80 million on December 7, or next Wednesday. (company announcement) It says funds raised will be used to pay off short term debt, meaning LDK is sorely in need of cash to repay some of the billions of dollars in debt it owes that will be maturing in the near term. My guess is that the first tranche of this offering will meet with little or no investor interest unless LDK offers very high interest for the notes, which face a very strong possibility of never maturing if the company ultimately has to file for bankruptcy. But LDK, which recently reported a massive $114 million third-quarter loss and is bleeding cash like many of its peers, can hardly afford such high rates. Thus the only other alternative would be for a major state-run institution, under orders from Beijing, to step in and buy the notes at a more reasonable interest rate to keep the company afloat for now. The only problem is that kind of intervention would be a clear case of a direct state subsidy to the industry, just as the US is investigating China for unfairly subsidizing its solar cell makers — a charge that Beijing strongly denies. The result of all this is that Beijing will be under huge pressure not to intervene in this case, and the market is also unlikely to want to help this struggling company, meaning LDK’s options could be extremely numbered at the end of the day.
Bottom line: LDK’s upcoming $800 million offering in new notes is likely to fail without help from Beijing, which is under immense pressure to show it doesn’t unfairly support its solar cell makers.
Related postings 相关文章:
◙ Solar Slips Squarely Into the Red 太阳能行业陷入全线亏损
◙ China Retaliates With Own US Solar Probe 中国启动对美可再生能源补贴调查
◙ New Solar Signals: Slowdown Easing Amid Writedowns 太阳能企业减计库存 行业或将开始摆脱危机
News Digest: December 1, 2011
The following press releases and media reports about Chinese companies were carried on December 1. To view a full article or story, click on the link next to the headline.
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◙ China Cuts Bank Reserves in Policy Shift To Lift Economy (English article)
◙ Alibaba-Led Group Said to Prepare Yahoo (Nasdaq: YHOO) Bid (English article)
◙ Changyou (Nasdaq: CYOU) to Buy Game Info Portal 17173.com from Sohu (Nasdaq: SOHU) (English article)
◙ Baidu (Nasdaq: BIDU) YouA Spins Off, Receives Eight-Figure USD Funding (English article)
◙ LDK Solar (NYSE: LDK) Announces Plan to Issue RMB3,000,000,000 Notes (PRNewswire)
Solar Slips Squarely Into the Red 太阳能行业陷入全线亏损
The negative news just keeps coming from the solar sector, where industry leader Suntech (NYSE: STP) reported its second consecutive quarterly loss and Canadian Solar (Nasdaq: CSIQ), one of the few firms that had managed to stay profitable, finally slipped into the loss column as inventories swelled and their margins continued a downward slide. (Suntech announcement; Canadian Solar announcement) It goes without saying that industry laggard LDK Solar (NYSE: LDK) also reported a massive third-quarter loss (company announcement), and all 3 companies predicted more turbulence ahead. The one potential bright spot is plummeting prices for polysilicon, the main raw material used to make their solar cells, which, ironically could someday push solar cell prices down to the point where they become competitive with traditional power sources like coal and oil. Unfortunately, by the time that happens many of these solar cell makers could be out of business. In addition to huge oversupply in the market, the Chinese firms face potential punitive tariffs from the US — one of the solar industry’s top markets — if an ongoing investigation determines they are selling their products at below-market prices. (previous post) The Chinese companies have said they may request their own anti-dumping investigation against Western makers of polysilicon, in a clear tit-for-tat move that certainly won’t help the industry if China implements its own retaliatory punitive tariffs against polysilicon makers. Foreign media are reporting that Chinese solar cell manufacturers are quietly making plans to move some of their production to the United States and other Western markets to avoid potential punitive tariffs, and are also stepping up their efforts to improve technology to make their products more efficient at converting sunlight into electricity. (English article) I still see at least 1 and possibly 2 more painful years ahead for this sector, with at least 2-3 major players likely to either close or be purchased by other companies before the crisis ends. In the meantime, look for the bad news to continue in the fourth quarter and into 2012.
Bottom line: Latest results show the entire solar cell sector has now slipped solidly into the red, with losses likely to continue through most or all of next year.
Related postings 相关文章:
◙ Beijing, Yingli Send Mixed Solar Signals 英利和中国政府似乎“背道而驰”
◙ New Solar Signals: Slowdown Easing Amid Writedowns 太阳能企业减计库存 行业或将开始摆脱危机
◙ Solar Fight Sees Accusations Flying 中美太阳能纠纷引发口水大战
News Digest: November 15, 2011
The following press releases and media reports about Chinese companies were carried on November 15. To view a full article or story, click on the link next to the headline.
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◙ Bank of America (NYSE: BAC) Sells Most of China Construction (HKEX: 939) Stake (English article)
◙ Mobile Game Developers Sue Baidu (Nasdaq: BIDU) for Piracy (English article)
◙ Huawei Buys Symantec (Nasdaq: SYMC) Stake in JV for $530 Million (English article)
◙ LDK Solar (NYSE: LDK) Revises Q3 and Fiscal 2011 Guidance (PRNewswire)
◙ HiSoft (Nasdaq: HSFT) Reports Q3 2011 Financial Results (PRNewswire)
