Two things we have overlooked about LDK

I could not believe that How LDK could gave such a high earning when I first heard it this evening. However, nwo I have figured out two things I have overlooked:

the first, the expansion of its wafer production line (one of three lines) was in production since late May and earlier June, this provided 200 MW annual capacity. I think the second line is almost ready again.

The second, LDK is using Upgraded Metallurgical Silicon for its wafer production. The cost for Metallurgical silicon now is about 30-50 USD/KG, which is even cheaper than scrape silicon now (about 200 USD/kg). That is why they can improve their margin this Q. This is a great news whose significance is not even less significant than its in-house PS production line. Due to the huge supply of Metallurgical silicon, the bottleneck that limits LDK is solved. They can use the Metallurgical silicon to replace the scrape silicon now (scrape silicion is very limited).

LDK 08Q2 earning estimation: 0.57 USD/share

My estimation:

Total revenue: 311- 316 M USD,
Net income: 62-65 M,
EPS: 0.56-0.58/share

Here are my Calculations:

Total revenue:
Total revenue of the first half year 2008: 3800 M Chinese Yuan (CNY),First quarter: 233. 40 M USD = 1680 M CNY (I used the exchange rate of 1 USD = 7.2 CNY at that time)So this quarter revenue: 3800 M – 1680 M = 2120 M, equals to 311 M, ( 1 USD = 6.85 CNY now).

Net income:

Last quarter, LDK net margin was 21.3%, I use 20% for this Q, so 311 M *20% = 62 M net income,EPS: 62 M / 110 M shares = 0.56 /share

This has been confirmed by another piece of information: LDK 08Q2 revenue has been increased 190% over the same quarter last year (in CNY).

Last year, 07Q2 revenue was 99.05 M USD, at that time, exchange rate was 1USD = 7.5 CNY), so the revenue was 99.05 M USD * 7.5 = 743 M CNY,

if this quarter is 190% increased over that Q, then the revenue would be 742 M * (1+ 1.9) = 2152 M CNY for the current Q, which means 316 M USD (2152 M CNY /6.81 = 316 M),

Based on 316 M revenue, the net income would be 63.2 M USD, EPS would be 0.58/share, Therefore, My estimation of 08Q2 is :

0.57 USD/share

赛维LDK公司上半年国税收入突破亿元及最新消息

为助推赛维LDK公司发展，实现税收收入，经济开发区国税部门尽可能为LDK公司及光伏产业链提供税收服务便利，通过实行纳税辅导、开展新企业所得税法宣传、开通税收服务直通车等方式做好全方位的税收服务工作。目前，赛维LDK公司税收出现良好的发展势头，至6月中旬，已入库所得税1.24亿元。 以赛维LDK公司硅料、硅片为核心，以延伸产业链为主攻方向，进一步强化服务体系建设，成立主要领导为组长的专门服务领导小组，编发专门快报，加强工作调度，举全区之力扶持光伏产业快速发展，光伏新能源产业主导地位进一步凸显。到6月底，预计实现主营业务收入38亿元，同比增长190%，占全区的39.6％，同比增加16.8个百分点。光伏产业项目进展非常顺利，赛维LDK公司多晶硅片产能已达到600MW，继续保持亚洲第一、世界第二的领先地位；赛维公司三期1600MW硅片项目共需建34栋厂房，今年开工建设28栋，现有18栋厂房和仓库主体工程基本完成，部分厂房已安装设备，年底产能将达到1100MW以上，2009年产能可达到2000MW。第四期多晶硅片项目已完成征地， 正在进行土方平整等前期准备工作；N型单晶硅项目5月份正式开工，预计今年10月份设备进厂，年底投产，可形成200MW的生产能力；15000吨硅料项目正抓紧厂房及附属设施建设， 基建部分施工已完成年内计划数的85%以上，设备已订购，首期5000吨硅料项目预计10月底之前可投产，2009年全部建成，产能达到1.6万吨；年产10万只坩埚的中材新材料二期计划6月27日主体工程开工建设，2009年3月份投产。

Estimation based on Tax information

Here is my version based on tax information:

By the mid-June LDK has paid 124 M CNY tax. If we consider at least another half month to 20 days, they will have to pay 8-10% more that will be 135 M CNY (124/11 * 12 = 136 M or 124 * 1.09 = 135 M).

first Q tax was 8.511 M USD = 60.43 M CNY (exchange rate ws 7.1 at that time), then Q2 tax paid was: 135 M - 60.43 = 74.57 M CNY, which is 10.95 M USD (rate: 6.81 now).

Then based on 14.5% taxation rate (based on last Q), the net income would be 11.097M /0.145 * 0.855= 64.5 M,divided by 110 M shares, EPS is 0.58, which also agrees with my 0.56-0.58 range.