Wednesday, December 12, 2012

Dubious Solar Stock Rally ($STP)

All of the ridiculous Chinese solar stocks were up huge today on the information (news? rumor?) that China would slightly increase (by $1 billion) the subsidies of PV solar equipment purchases.

"The Chinese government has allocated a further 7 billion yuan ($1.1 billion) in subsidies to the solar sector, taking this year's support to 13 billion yuan, the official Xinhua news agency reported on Wednesday, quoting the finance ministry"
However, as one analyst astutely pointed out,
"'Just because you sell more megawatts at zero percent margins doesn't mean you'll make more money. China will be able to absorb more capacity next year, but it doesn't change the economics of solar,' said Aaron Chew, an analyst at Maxim Group."
It also doesn't help come up with the cash needed to meet bond maturities in March 2013!The STP bonds were up slightly today, but still trading at yields around 700 percent!

LDK Solar said today that it "entered into discussions with certain creditors to obtain additional flexibility," which normally means that the equity is going to get obliterated.That's currently being perceived as bullish, of course.


carpet cleaning denver co said...

The march 2013 1.00 put options in STP went up today. Not a lot of believers in the runup today.

CP said...


Bonds traded up but still yielding >600% ytm.