LDK’s financial irregularities are evident and highly material.

Investors should be highly suspicion of LDK Solar Co., Ltd.’s (“LDK”) announcement with Q-Cells. The convoluted alleged transaction with a supplier would raise eyebrows even if announced by a company whose entire lifetime earnings record has not been seriously questioned. LDK hasn’t disclosed complete financial statements for over 11 months.

LDK’s reported earnings were suspect even before it went public. LDK had no sales in 2005 or the first quarter of 2006. And then, presto, it started claiming profits almost from day one of sales. It’s not as if LDK invented anything new. Or that it bought an existing profitable business. It’s a start up. And it’s a start up commodity supplier in a highly competitive and well established industry.

LDK reported net income of $25.9 million in 2006. Yet even by KPMG’s own reckoning its operation actually used $57.1 in cash during this same period. LDK claims to have earned $48.3 million in the first half of this year. LDK has not provided investors with a cash flow statement for this period. This, and all other LDK reports, and LDK itself, are under investigation by the SEC.

LDK’s expense capitalization and asset valuation investigation relate to the capitalization of over $200 million in expenditures as assets, instead of expenses, in just the first six months of this year. This figure is multiples greater than LDK’s entire claimed lifetime earnings.

Simpson Thacher & Barlett LLP, working for an LDK committee of two LDK directors, has hired Deloitte Touche Tohmatsu to investigate LDK. Yet LDK has publicly dismissed this alleged independent review. This public dismissal of the alleged “Independent Committee” and its advisors had led investors to believe that the investigation, including the Securities and Exchange Commission investigation will be resolved shortly and be resolved positively. (Click here to read related letter to Simpson Thacher.)

LDK’s accounting irregularities have prevented LDK from releasing any financial statements since June 30, 2007. Investor should understand that even those June statements were incomplete and only in the form of a press release without company certification or footnotes.

Posted in LDK Solar Co. Ltd.

Manuel Asensio doesn’t bet often. But when he does, it’s wise to pay attention.

Paul Kaihla
eCompany Now
1 2 3 4 5 6 7 8 9
About Our Founder
Learn more about asensio.com's founder, Manuel P. Asensio, and the website's origins. Click here to be directed to Mr. Asensio’s professional biography.
Media Record
Click here to see selected articles that discuss asensio.com's work and its unique legacy. asensio.com also strives to maintain a complete record of articles dealing with the companies that are the subject of asensio.com research.
Investment Record
Click here to view a list of the companies that have been subjects of asensio.com reporting and click here to see the complete investment record.
Asensio and FINRA
Asensio & Company, Inc. and Manuel P. Asensio are the only dedicated short sellers ever to have been members of FINRA. This unique-minority membership created complications in the regulatory relationship. Being the first activist short investors and among the first FINRA member firms with a website added to the complexity. A statement by Mr. Asensio is available here. Information necessary to obtain a meaningful understanding of the dispute is available in complete form HERE.