正文
[again, DO NOT buy spikes, "buy dip" is the way for wave players]
-----------------------------------------
Tobin Smith's LDK REcommendation:
Let's start with the first of our two new solar buys, which is a Chinese silicon wafer maker whose stock recently had an overblown sell-off and is in a good position to soar as photovoltaic (PV) production in China is only just beginning to ramp up.
We have been following this story for more than a year, but it was only when the company was accused of inventory miscalculations -- and the stock tanked 60% -- that we really took notice.
In effect, LDK Solar (LDK) is the MEMC Electronic Materials (WFR) of China. LDK has been producing silicon wafers for solar-cell manufacturers since 2005, and it manufactures both the polysilicon ingots and the wafers used in PV manufacturing.
The explosion in demand for polysilicon wafers has rocketed WFR up 250% since we first recommended it under $20 two years ago. Last week it traded above $80 and it's now at $76.
Between June and September 2007, LDK shares exploded from $24 to $74. Then came the recent accusations from a former employee of poor accounting of inventory, and within weeks the stock was cut down to $30. This is gives us another chance to make our move and we're moving now -- and here are the primary reasons:
First, in our conversations with other CFOs in Chinese companies, we're told that it's very common in China for a fired professional (in this case, the assistant controller was axed) to claim that the mother ship company is a mess. Their advice is to take this "drama" with a very large grain of salt.
Secondly, an audit of polysilicon inventory will soon be ready. Based on solid intelligence, we expect to see a clean slate. The company has already upped earnings and revenue guidance for Q4 2007 and Q1 2008, and that tells us LDK management is not going to be making significant write-downs of inventory.
Thirdly, at a 12 P/E ratio, LDK is selling at a fraction of WFR's valuation metrics, yet it is growing almost twice as fast.
Finally, LDK sells to the major Chinese PV manufacturer Suntech Power (STP), as well as other Chinese solar companies. Based on the robust outlook for demand, LDK has a huge new plant coming on line next year to double output.
Last week, LDK reported that it has secured an additional 312 metric tons in polysilicon supplies for 2008. LDKalso confirmed that it is on schedule to reach its capacity goal of up to 6,000 metric tons in Q4 2008.
We anticipate $1 billion in sales for 2008 with an EPS of $2.25. Based on these numbers, we should see LDK shares at $70 or better by the end of 2008. On the downside, we could see $25 if there are any surprises regarding inventory.
We'll take those odds any time, so buy LDK under $35 for your Emerging Game-Over Dominator portfolio and collect some "poly profits." The Strong Buy Under is $32 and the Accumulate price is $37.
-----------------------------------------
Tobin Smith's LDK REcommendation:
Let's start with the first of our two new solar buys, which is a Chinese silicon wafer maker whose stock recently had an overblown sell-off and is in a good position to soar as photovoltaic (PV) production in China is only just beginning to ramp up.
We have been following this story for more than a year, but it was only when the company was accused of inventory miscalculations -- and the stock tanked 60% -- that we really took notice.
In effect, LDK Solar (LDK) is the MEMC Electronic Materials (WFR) of China. LDK has been producing silicon wafers for solar-cell manufacturers since 2005, and it manufactures both the polysilicon ingots and the wafers used in PV manufacturing.
The explosion in demand for polysilicon wafers has rocketed WFR up 250% since we first recommended it under $20 two years ago. Last week it traded above $80 and it's now at $76.
Between June and September 2007, LDK shares exploded from $24 to $74. Then came the recent accusations from a former employee of poor accounting of inventory, and within weeks the stock was cut down to $30. This is gives us another chance to make our move and we're moving now -- and here are the primary reasons:
First, in our conversations with other CFOs in Chinese companies, we're told that it's very common in China for a fired professional (in this case, the assistant controller was axed) to claim that the mother ship company is a mess. Their advice is to take this "drama" with a very large grain of salt.
Secondly, an audit of polysilicon inventory will soon be ready. Based on solid intelligence, we expect to see a clean slate. The company has already upped earnings and revenue guidance for Q4 2007 and Q1 2008, and that tells us LDK management is not going to be making significant write-downs of inventory.
Thirdly, at a 12 P/E ratio, LDK is selling at a fraction of WFR's valuation metrics, yet it is growing almost twice as fast.
Finally, LDK sells to the major Chinese PV manufacturer Suntech Power (STP), as well as other Chinese solar companies. Based on the robust outlook for demand, LDK has a huge new plant coming on line next year to double output.
Last week, LDK reported that it has secured an additional 312 metric tons in polysilicon supplies for 2008. LDKalso confirmed that it is on schedule to reach its capacity goal of up to 6,000 metric tons in Q4 2008.
We anticipate $1 billion in sales for 2008 with an EPS of $2.25. Based on these numbers, we should see LDK shares at $70 or better by the end of 2008. On the downside, we could see $25 if there are any surprises regarding inventory.
We'll take those odds any time, so buy LDK under $35 for your Emerging Game-Over Dominator portfolio and collect some "poly profits." The Strong Buy Under is $32 and the Accumulate price is $37.
評論
博主已隱藏評論
博主已關閉評論
