* Q3 profit $0.27/ADS vs. est. loss of $0.10/ADS
* Sees sequentially higher shipments in Q4
* Sees Q4 sales above estimates
* Shares up 8.4 pct at $8.67 each (Adds comments from analysts, background; updates share movement; adds LOS ANGELES to dateline)
LOS ANGELES, Nov 23 (Reuters) - Chinese solar wafer maker LDK Solar Co Ltd LDK.N reported a surprise third- quarter profit on Monday and forecast better-than-expected fourth quarter sales and sequentially higher shipments, sending its shares up 8 percent in regular trading.
For the fourth quarter, LDK forecast sales between $280 million and $310 million, well above analysts’ estimates of $258.7 million, according to Thomson Reuters I/B/E/S.
The company also expects higher wafer shipments of between 320 megawatts to 340 MW, compared with the 320.5 MW it shipped in the third quarter.
The company’s surprise profit was due to stronger gross margins and better material costs, as well as nearly $14 million in government subsidies, Needham and Co analyst Edwin Mok said.
“I am incrementally more positive about the company,” Mok added.
But he noted the balance sheet was “still an investor concern.”
LDK ended the third quarter with $1.1 billion in current assets, including $67.8 million in cash and cash equivalents, and $2.45 billion in current liabilities.
“The results are not as good as they appear at first blush,” Soleil Securities analyst Paul Leming said, adding that government grants and subsidies and other items helped the company’s earnings.
“Their level of debt is extremely worrisome. The fact that they still do not have their polysilicon plant up and running is bothersome.”
The solar wafer maker is working to produce its own polysilicon — a key raw material in the solar industry — in order to reduce costs.
The company recently announced it would sell a 15 percent stake in its new polysilicon plant for about $219 million. [ID:nBNG436276]
The company’s results add to a growing list of Chinese solar companies that have signaled an uptick in demand.
Last week, Suntech Power Holdings Co Ltd STP.N and Trina Solar Ltd TSL.N also posted higher-than-expected earnings and said demand for the clean energy systems was rebounding after a dismal year. [ID:nN19165613]
For the third quarter, LDK earned $29.4 million, or 27 cents per American depositary share (ADS), compared with earnings of $88.4 million, or 77 cents a share, last year.
But sales, which nearly halved from a year ago, rose nearly 24 percent sequentially to $281.9 million.
Analysts on average were looking for a loss of 10 cents a share, on revenue of $277.2 million, according to Thomson Reuters I/B/E/S.
The company’s shares were up 67 cents, or 8.4 percent, at $8.67 on the New York Stock Exchange. The shares jumped nearly 10 percent in premarket trading. (Reporting by Laura Isensee in Los Angeles and Adveith Nair in Bangalore; editing by Hezron Selvi and Andre Grenon) ((email@example.com; within U.S. +1 646 223 8780; outside U.S. +91 4135 5800; Reuters Messaging: firstname.lastname@example.org))