Friday, October 12, 2007

LDK Solar continues to make deals

October 10, 2007

The company announces its first supply contract since disclosing accusations of inventory discrepancies.

It's business as usual at Xinyu, China's LDK Solar (NYSE: LDK). The company announced today its first supply contract since word leaked out of accusations of inventory discrepancies.

LDK signed a three year contract to supply multicrystalline solar wafers to Beijing's Chinalight Solar. LDK valued the deal at RMB 1 billion, with delivery expected to start in 2008.

The company disclosed last week that it fired its financial controller "for cause" in September, after he spent just seven months on the job. The ex-controller claimed the company has poor inventory controls.

LDK said its management conducted an internal investigation and physical inventory counts and found no material discrepancies.

The company also said its audit committee is conducting a review, which will be disclosed to the public when it's complete.

LDK manufactures multicrystalline solar wafers, which are the principal raw material used to produce solar cells, using both virgin and recyclable polysilicon for ingot production.

This week, the company boosted its third quarter revenue guidance to $140 million to $150 million, up from $115 million to $125 million.

Yingli Shines Among Solar Energy Stars

October 10, 2007: 08:05 PM EST
Oct. 11, 2007 (Investor's Business Daily delivered by Newstex) --

As solar stocks continue to power ahead, newcomer Yingli Green Energy is casting a long shadow on its rivals.

The Chinese solar company has seen its stock soar more than 150% since its debut in June.
Most other solar shares have also soared, though their gains over the same period have been far less dramatic.Analysts say the company is catching more attention with new supply agreements to ramp up production. It's also got the size and scale to drive profits and attract the best customers.

"I believe this is the best-positioned company in China," said Jesse Pichel, an analyst with Piper Jaffray (NYSE:PJC) who has an outperform rating on the stock. Yingli YGE has been a Piper Jaffray banking client, and the investment bank expects to do more business with the firm.
There's no doubt that the company is in a hot market. The solar industry continues to grow as governments around the world pour money into programs to spur "clean energy." Companies like Yingli are in the photovoltaic segment of the solar industry that helps businesses and homeowners tap the power of the sun via rooftop solar panels.

In the second quarter the company reported sales of $118 million, up more than 150% from the year-ago period. Thomson Financial had no official estimates for the newly traded company's quarter, but Pichel says sales beat views. The company earned 6 cents per share for the quarter, which the company says also topped estimates.

That's drawing more interest from bigger investors to Yingli and other solar stocks, analysts say.

"Part of it has just to do with momentum in the sector," said Adam Hinckley, an analyst with CIBC World Markets. "There's a lot of institutional money that has not really been involved in the sector. There is now capital inflow into the sector." Hinckley has a sector performer rating on the stock, and his firm has a banking relationship with Yingli.

Although Yingli is new to the U.S. stock market, it's one of the oldest Chinese solar companies around, founded in 1998, Pichel says.

Through its subsidiary Baoding Tianwei Yingli New Energy Resources, the company keeps its costs low with a business model that says, in essence, more is better. The company has brought just about every step of the manufacturing process in-house. Analysts note that Trina Solar (NYSE:TSL) TSL is moving toward this vertical model as well.

The only step Yingli excludes during production is the actual manufacturing of silicon, the basic material used to make photovoltaic solar modules.

After Yingli buys the silicon, it makes the basic polysilicon ingot, then the silicon wafers, then the actual photovoltaic fuel cells. From there, it makes the larger modules and finally the complete solar-energy system.

Miao Qing, Yingli's director of investor relations, says the company has all of its manufacturing process at one central site in China. That means there are no extra transportation costs to move products from one site to the next.

Perhaps most importantly, Yingli avoids paying third-party providers.

"Why let your supplier make margin on wafers when you make the wafer?" Piper Jaffray's Pichel asked. "And why let your supplier make the ingot when you can make the ingot?"
The company had gross margins of about 23% in the quarter, easily beating out other solar players such as China Sunergy CSUN, according to Hinckley.

The company has found the right target market. About 80% of the company's sales come from Spain, where solar expansion is on a tear, Pichel says. Government incentives are a big help in expanding megawatt capacity.

"We thought it was going to be 300 megawatts (of solar) in 2008," Pichel said. "Now it looks like it's 500 megawatts."

China itself is opening up with its own set of government incentives, which could be finalized by the end of the year.

To meet demand, Yingli is expanding production with new equipment. The investments should double its 2007 manufacturing capacity by the end of 2008. Analysts say capacity could then rise 50% in 2009.

Pichel says the company's size should help make it an attractive customer for polysilicon makers.

That's important, since polysilicon is in short supply in the industry. Companies that can't get enough polysilicon can't meet their manufacturing targets.

For example, China Sunergy saw its stock slump 19% in one day in July after announcing difficulties in getting enough polysilicon.

CIBC's Hinckley says he had hesitations about the company's ability to meet supply and manufacturing equipment goals when he initiated coverage in July. But in early September he saw signs that the company's prospects were better than he'd first thought -- and the stock began its big surge.

Later in September, Yingli announced a new deal with Wacker Chemie of Germany. Wacker is set to supply Yingli with polysilicon from 2009 to 2011, enabling it to produce more than 80 megawatts' worth of solar modules over the life of the contract.

Hi-Tech Wealth Provides Business Update

Next Generation Solar Mobile Phone Shipments Planned For Early 2008

October 11, 2007: 04:01 PM EST

BEIJING, Oct. 11 /PRNewswire-FirstCall/ -- Hi-Tech Wealth Inc. , a leading Chinese consumer sales and marketing company engaged in the development and distribution of digital devices, today provided a business update regarding the launch of its Solar Mobile Phone in China.

"In the third quarter of 2007, we delayed shipment of approximately 30,000 Solar Mobile Phone units of the 50,000 we had expected to ship in order to make manufacturing improvements and in anticipation of our next generation version, the 4500, which we expect to commence shipping in early 2008," stated Dr. ZhengYu Zhang, Chief Executive Officer of Hi-Tech Wealth Inc. "While we are disappointed with the delay, the Solar Mobile Phones we did ship during the third quarter generated a net profit per phone despite the increased costs of manufacturing enhancements. Our sights are set on early 2008 when we expect our sales to reflect three key initiatives: a proactive Solar Mobile Phone marketing campaign to reinforce our brand leadership, expanded manufacturing capacity to quickly meet demand, and a potential new distribution channel to reach more consumers more effectively. Together we hope to make the Solar Mobile Phone the hottest high-end consumer technology product in China."

Jacques Ma, Chief Financial Officer of Hi-Tech Wealth Inc., concluded "In our experience, we have never witnessed customer demand like the initial demand for the Solar Mobile Phone. We generated over 100 orders from only one sixty-minute interactive television program in one of our test markets, for example. We believe that 2008 will be a transformative year for our Company as we roll out the new version of the Solar Mobile Phone as well as deliver additional products from our portfolio, like devices with digital TV functions for next year's Beijing Olympic Games. Over the long term, we are dedicated to building an innovative and diversified portfolio of electronic products that appeal to niche consumer markets."

About Hi-Tech Wealth Inc.

Hi-Tech Wealth Inc. is an integrated, multi-channel consumer sales and marketing company. Hi-Tech Wealth Inc. engages in the development and distribution of digital devices via direct response TV, internet sales, and through more than 1000 exclusive distributors throughout the PRC. Learn more about Hi-Tech Wealth Inc. at

JA Solar gains after completing follow-on

By Anette Jönsson 12 October 2007

The $266 million debut follow-on is priced at a 2.2% discount but triggers a 5.6% rally in the secondary market.

Nasdaq-listed solar cell manufacturer JA Solar Holdings priced its marketed follow-on offering at a 2.2% discount to Wednesday's close, allowing it to raise a total of $266 million. Only 63% of the shares on offer were new, however, which means not all the proceeds went to the company.

This was the first offering of shares in China-based JA Solar since it went public in February this year and the sale met with strong demand. According to one source, the deal was about four times covered and attracted about 50 to 60 investors, including some existing shareholders. The interest continued in the secondary market last night, pushing the share price to a new intraday record of $49. It ended the session 5.6% higher at $45.35, suggesting at least some investors weren't happy with their allocations and chose to top up their holdings in the market.

One observer notes that the strong interest is part of a recent trend whereby US investors are increasing their exposure to Asia through discounted share offers. China Digital TV Holding, which debuted on the New York Stock Exchange on Friday last week, soared 219% in the first three sessions to above $51, after pricing its IPO at $16. Since then, the provider of connectivity access services for digital TV systems has eased back somewhat, however, and finished Thursday's session at $42.27 - less excessive, but still 164% up since its debut.

Including Thursday's gains, JA Solar has more than tripled since its IPO at $15.

The solar power play offered 6.33 million shares, or 12.6% of its enlarged share capital, and priced the deal at $42. This equalled a 2.2% discount to Wednesday's close of $42.93. Four million of the shares were new, while the rest were existing shares sold by three different entities controlled by the chairman, the chief executive officer and the chief technology officer. The chairman remains the single largest shareholder with a 25.3% stake after this transaction (pre-greenshoe).

There is a 15% greenshoe that could boost the total deal size to $306 million.

The company said it will use $50 million of the proceeds to purchase and make prepayments for raw materials, which remain in short supply. In the listing document, the company said it believes it has contractually secured an adequate supply of silicon wafers to meet its anticipated production needs for the remaining months of 2007 and a large portion of its anticipated production needs for 2008.

It will spend $70 million to buy manufacturing equipment and to construct manufacturing facilities in order to expand capacity and $10 million to enhance its research and development facilities. JA Solar plans to add up to 10 new manufacturing lines to boost its solar cell manufacturing capacity to 425 megawatt per year by 2008 from 175MW at present.

Credit Suisse and Lehman Brothers were joint bookrunners for the deal.

Copyright Ltd., a subsidiary of Haymarket Media Ltd