Dec. 21, 2009 (Chinavestor) We have been following the Chinese solar sector very closely for a number of reason. One of them being that two solar companies have made it to the Portfolios plus China solar plays have been on the Weekly Stock Buy List from time to time. LDK Solar (NYSE:LDK) plunged 20% in the last two days of the previous week following news that the company is issuing an additional 16.52 million ADRs priced at $7 each. No wonder LDK Solar (NYSE:LDK) plunged right to $7 - this explains the 20% dive.
Taking a step back from LDK, the rest of the Chinese solar sector has been extremely hot! JA Solar (NASDAQ:JASO) has advanced 15% during the same time when LDK got hammered. Or take a look at Canadian Solar (NASDAQ:CSIQ) or ReneSola (NYSE:SOL). This is telling investors that the financial health of the solar sector remain intact.
But what really matters at this point is where the stock is going to go from here. With net proceeds of ~$90 million from the offerings LDK Solar (NASDAQ:LDK) has got ahead of the game - no more credit crunch fears in the near term. Assuming LDK can close that chapter for now and remain profitable for 2009 Q4 and beyond, current $7 per shares looks very attractive to me.
Source: Reuters.com
Looking at the latest reported quarter, 2009 Q3, LDK reported above analysts estimates just as did the rest of the sector. The relatively narrow yellow band implies that visibility to the sector have greatly improved yet Chinese solar companies surprised to the upside. With LDK issuing 2009 Q4 revenue outlook to $280-$310 million well above analysts' estimates of $262 million, I think LDK is going to head north from current $7.00 share price.
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