Friday, August 29, 2008
Asensio Questions LDK Solar
LDK Solar Co., Ltd. (NYSE: LDK) shares may be surging higher, but at least one short seller sees problems ahead. Asensio noted accounting irregularities at the company after an employee accused the company of making misrepresentations on its accounting of inventories. LDK's most recent financial statements show questionable entries, including its "inventories to be processed beyond one year" numbers. The 87% jump in inventory and 828% increase in accounts receivables are also suspect.

Asensio also questioned today's press release stating that LDK signed a contract to supply 440MW of solar wafers to Hyundai Heavy Industries over a seven-year period, from 2009 to 2015. However, LDK's press release from February 22nd stated that LDK signed a contract to supply 450MW of wafers from late 2008 to 2015. The only differences between the two releases are slight changes in the start date and amount of wafers. Interestingly, there is no reference to the prior announcement and makes it look like a new contact.

Asensio ends by stating: "LDK investors with questions on the company's accounting will not find many answers in its quarterly releases. LDK continues not to release the standard financial statements expected of companies trading in the US. The company apparently does not feel compelled to create greater transparency for investors. LDK only issued quarterly statements in the form of a press release, and even then it did not bother to include a basic cash-flow statement."

Related Companies
Canadian Solar Inc. (CSIQ)
ReneSola Ltd. (SOL)
Trina Solar Limited (TSL)

8/29/2008 7:53:47 PM UTC  #    Comments [2]  |  Trackback
8/30/2008 9:48:19 PM UTC
It's unfortunate that you failed to include a fair and balanced article. LDK was audited and cleared of any accounting questions based on it's inventory in 2007 by a major US accounting firm(not arthur anderson) Why on earth would an increase in accounts receivable be a reason to suspect them of wrongdoing? An increase in inventory. Hello? Do you follow the company or not? Did you happen to read the increased revenue projections for the third and fourth quarter? How about a simple phone call to clarify the Hyundai Heavy Industries contract. Even if the press release was a mistake, it's hardly a reason to short a stock which just raised it's revenue projections 1/2 a billion dollars for 2009. Sounds like a desperate article for an even more desperate short position.
George Magione |yakm13aAT NOSPAMaol dot com
8/31/2008 12:12:47 AM UTC
the press release does mention the preexisting contract. from the press release:

"As we continue to grow our solar business and meet the growing demand for our products in Korea and globally, we are excited to strengthen our long-term wafer supply pipeline by reaching this agreement to secure additional high-quality wafers from LDK Solar," commented Kwon-Tae Kim, HHI's Executive Vice President.

nuff said
joep |greendAT NOSPAMgmail dot com
Name
E-mail
Home page

Comment (HTML not allowed)  

Enter the code shown (prevents robots):