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UPDATE 3-LDK earnings soar past estimates, shares up 19 percent

(Adds comments from conference call)

LOS ANGELES, Aug 11 (Reuters) - LDK Solar Co Ltd LDK.N on Monday posted quarterly earnings that blew past Wall Street estimates as a manufacturing capacity expansion allowed the company to sell more solar wafers, sending its shares up 19 percent in extended trade.

The Chinese solar power company also raised its revenue and shipment forecasts for the year.

Second-quarter net income rose to $149.5 million, or $1.29 per American Depositary Share, from $49.8 million, or 45 cents per ADS, a year ago.

Excluding the change in fair value of prepaid forward contracts, the company earned 82 cents a share, according to Reuters Estimates. Wall Street analysts had been expecting earnings of about 40 cents a share.

LDK and other solar power companies have enjoyed rapid growth as rising fossil fuel prices and concerns about global warming have spurred demand for renewable energy sources.

In recent months, however, investors have shunned solar stocks due to fears that an expected pullback in Spain’s generous solar subsidies could hamper demand.

ThinkPanmure analyst Peter Peng said much of the second-quarter demand for LDK’s solar wafers likely came from Spanish solar system installers who are scrambling to finish projects before a cap on subsidies goes into effect.

“There is a pull for the Spanish integrators to get projects in by September, but even beyond that most of these solar companies are seeing very, very strong demand for 2009,” Peng said. “There is a possibility that Germany, Italy and potentially France and other smaller markets could offset the loss of market size in Spain.”

MORE CAPACITY, MORE SALES

LDK’s second-quarter revenue was $441.7 million, well above the company’s May forecast of $278 million to $288 million.

Average selling prices on the company’s products were up 10 percent from the previous quarter, as it was able to pass along the high cost of their main ingredient polysilicon.

LDK also began selling wafers made from upgraded metallurgical silicon during the quarter, ahead of schedule. Upgraded metallurgical silicon is less pure, but also less costly, than standard electrical grade silicon.

LDK raised its full-year revenue outlook to between $1.65 billion and $1.75 billion. It had previously expected revenue of $1.08 billion to $1.18 billion for 2008.

“We experienced substantial revenue growth during the second quarter as our wafer capacity expansion exceeded our expectations,” LDK Chairman and Chief Executive Xiaofeng Peng said in a statement.

GT Solar International Inc SOLR.O, which went public last month, supplies much of LDK's manufacturing equipment, though LDK recently signed a contract to buy some equipment from China's JYT Corp., sending Merrimack, New Hampshire-based GT Solar's shares tumbling.

On the conference call, LDK executives said GT Solar was still “a very important supplier.”

Also on Monday, LDK said construction of its polysilicon plants remained on schedule.

Polysilicon prices have soared in recent years due to booming demand from the solar industry, though LDK Chief Financial Officer Jack Lai said on a conference call with analysts that the company’s silicon costs should improve in the fourth quarter.

To help offset high silicon costs, LDK is currently building its own polysilicon plant adjacent to its solar wafer facility in Xinyu City, China.

LDK said it was on track to produce between 100 tonnes and 350 tonnes of silicon in 2008, and next year plans to produce between 5,000 and 7,000 tonnes.

For the full year, LDK said wafer shipments are expected to be between 750 megawatts and 770 MW, up from a previous forecast of 560 MW to 580 MW for the year.

The company’s 2008 gross margin forecast was unchanged at between 23 percent and 28 percent.

LDK shares rose to $40, after closing up 9 cents at $33.58 on the New York Stock Exchange. (Editing by Phil Berlowitz, Richard Chang, Leslie Gevirtz)

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