The sun is starting to shine bright…

When we adviced Jan2011 options some time ago we knew it was a bit of a gamble. The company was in terrible shape, the industry was plagued by overcapacity, low entry barriers, and falling prices. On top of that, LDK got it’s contract cancelled by it’s biggest customer (Q-cells of Germany).

At the time, we thought these options would have time enough for a recovery, and once a recovery is underway, the stock is usually already up and away. Our gamble was really about the huge coming China investment program in alternative energy.

It now looks like our gamble might pay off after all. After selling part of a plant earlier, LDK issued a surprise profit this morning, and guidance is up. Read the results here. Some of the highlights:

• Third quarter 2009 revenue was $281.9 million;
• Shipped 320.5 MW of wafers, up 26.8% year-over-year;
• Gross margin for the third quarter of fiscal 2009 was 20.1%;
• Net income was $29.4 million, or $0.27 per diluted ADS;
• Increased wafer capacity to 1.7 GW and started pilot production at first 5,000 metric ton (MT) train in 15,000 MT polysilicon plant; and
• Sold a 15% ownership stake in 15,000 MT annualized capacity polysilicon plant to Jiangxi International Trust and Investment Co., Ltd. for RMB1.5 billion (equivalent to approximately US$219 million)

We would say, pretty good!