DQ - Earnings call transcript Q2 2021

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Operator

Good day and welcome to Daqo New Energy Second Quarter 2021 Results Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Kevin He. Please go ahead.

Kevin He

Hello, everyone. the of He, New Kevin is Investor Daqo Relations Energy. This call for joining you today. our Thank conference Daqo New found issued of at Energy just XXXX, second for www.dqsolar.com. which quarter the can be on website its our financial results facilitate a presentation prepared for also PPT today’s conference reference. To we have call, your attending Today, conference we call, the Mr. have Chief Executive our Zhang, and Mr. Longgen Officer; Yang, Chief our Financial Ming Officer. The call today will feature an update from Mr. operations, and then and Mr. market on Zhang discuss company’s financial quarter. the the will Yang for performance the open floor Q&A will audience. we that, After from to the

factors remind remarks, uncertainties. and Safe formal that certain I These industry the you begin Private involve contained actual and with these in These those to only including operational have that documents under Harbor risks our differ on in like information reflect future maybe Exchange growth, number statements we U.S. XXXX. materially other change. we view any the the financial risks could statements inherent Securities from regarding results preliminary subject call, the today’s the A Before Securities Further today of included furnished are to and and made statements of is or statements of Reform would Litigation of to and statement. and cause and as provisions Commission. to are reports expected forward-looking performance or current forward-looking filed Act

All call, monetary turn keep and into and Also as Our today’s is the call ahead. except the RMB. is is over today, go our in solely applicable the occasionally U.S. ability Please Mr. We further we law. now in offer CEO, to the projections of to that mind such of information U.S. currency is translations Please will reference our Chinese Without I convenience RMB Zhang. dollars for no ado, these undertake we audience. during provided in uncertainties. duty -- dollar these functional terms. under to risks subject call as to required information, the amounts achieve conference update

Longgen Zhang

for today. Hello, our Thank you, conference you everyone. call Thank Kevin. joining

strong We are record-high and very net excited profitability, better-than-expected to production with the income. achieved profit, report as excellent gross and volume, revenue growth quarter an Company

the to With the remain The momentum climate strong continue we in led with sector. half carbon stronger-than-expected module challenge strong the of and addressing for downstream conditions second of half strong neutrality, reach to of focus Despite rise market this global market see to the polysilicon demand polysilicon the increase into the plans continue shortage on expect kg a and prices we year, the caused year. to has this to solar price in to first polysilicon to QX. mono-grade in our prices. July the from are and polysilicon market even the price able ASP pass kg solar manufacturers significantly August, Recently the through per $XX.XX approximately the demand to at in at QX downstream in new has at prices customers. value $XX new $XX.XX to remained kg stable and per increases their price rise been $XX market market per In chain currently for has

and wafer a an base. last solar manufacturers customer pricing polysilicon in and price demonstrating from uptick for end-market wafers week increases cell the solar strong August weeks solar saw further diverse in We of China the the major two demand. in in our with orders During X, announced cells, surge

solar to global solar main approximately in chain. expect and factor XXX months barrier has the this in modules XXXX limiting be supply which chemical approximately of additional total supply the to other ramp-up support market gigawatts used a global complex considering potential a can of in for tons polysilicon the year. installations XXX solar of entry to metric Polysilicon polysilicon We This to the of XXX period the gigawatts XXX,XXX solar to on our see can produce polysilicon value production we the XXXX. Based to constrained X size polysilicon research, process supply highest is to expect to be approximately producers. XXX,XXX XXX

sector constrained be manufacturing most supply the polysilicon main with XXXX. solar PV still the will the across in one value So, chain

On side, up solar carbon neutrality have renewable more peak increase time that and tables the for demand countries energies carbon and including more targets for significantly will PV. set demand

has for stimulate across is reduction which larger there world. effectively potential demand, addition, the solar In grid still especially in will regions that in many parity value countries meaningful PV chain, cost already the reached given and room

the the As of run making our entry we will PV its XXXX complexity. in most given a in result, believe polysilicon sectors operational industry high long remain barrier solar healthy sector in attractive and one pricing the

Politburo XXXX Committee Central the activity XXXX, On Jinping regarding the the of for second coordination the on goals the President central possible. carbon urgency carbon the Mr. front, on China's carbon in and as action July national economic Xi early as related over and government with plans meeting, of reiterated policies XX peak meeting during policy peak the the development and presiding half neutrality

deploy of program [ph] projects recently believe solar beneficiary We strong addition, the to to an level. of In announced at distributed that the be county solar China a is local generation we ESG government decisions, massively ambitious government and our will level, continue of ESG our Sustainability are and inaugural policies Report our July. social we factors published With initiatives, in all environmental, governance process in and incorporating support. regard in business major to the

XXXX by the energy We reduced wastewater our as that installing front, in XX% well efficiency reduced we treatment progress compared making optimizing in density comprehensive on XXXX facility as -- consumption substantial density energy a by by process, compared are XXXX production XXXX. our XX% including XXXX. in wastewater recycling new energy discharge our and already sustainability sustainable Furthermore, increasing to to

use sources including for will part future. our to the We of our energy on work energy as continue ESG efforts, greater in renewable planning

on focus to Company's the long-term continue strengthen competitiveness. to We initiatives

the market and major started trading ticker share Energy, Board, A Daqo IPO capital New Our Exchange The IPO plans. operational XXXX. polysilicon Stock fund is: Xinjiang July, Shanghai China's completed of listing proceeds on will code its the subsidiary, future growth XX the Sci-Tech additional Innovation successfully provide project for Daqo's our on approximately gross total billion, are and RMBX.XX which XXXXXX expansion on Xinjiang

the tons Xinjiang A Daqo our Energy shares Daqo's XX.X% Daqo. growth and the quality to of of outstanding holds additional Following Energy's the technology management X.X% Daqo, set competitive cost us Daqo's Xinjiang of holds and to With no XX.X% Interest team, attractive solar New through offer IPO, increase serve years VIE, experienced road directly the advantages is capacity have Variable operational Xinjiang venue of Energy next future will XXXX, the by XXX,XXX and a growth in total of global markets Xinjiang and map to representing end approximately production annual an between subsidiary. fast-growing average China X Daqo shares for successful an our XX% access rate approximately structure, ownership share of better listed metric to New PV wholly-owned of Daqo's Daqo up New advancement, a and indirectly IPO subsidiary for over the There capacity expertise capital structure our The expansion. market. we Entity, Chongqing

metric metric Company facilities. I produced of year. in Now ton utilization level XX,XXX first tons the Company of this sold of discuss for approximately year, the for outlook, company's of polysilicon representing half XX,XXX production this will polysilicon and guidance full The

XXXX, utilization in sales of Company For the production similar volume. remain volume with the to half expects full second to

tons polysilicon Company's For XX,XXX of of from of maintenance. guidance Company XXXX, the raises to of the to metric metric year, XX,XXX its facility of full annual level of for the XX,XXX XX,XXX the year approximately impact tons production to level previous full inclusive the the the

Now the our financial will Thank CFO, call turn will performance who I company's the Yang, for over you. quarter. the to Mr. discuss

Ming Yang

good joining call our you for you, Thank Thank day conference today. and everyone. Longgen,

financial Now the XXXX. I second quarter our performance of will discuss for

growth $XXX.X and of first compared second strong the kilogram was and With report kilogram financial are market quarter. We in profitability. were quarter for the our ASP XXXX quarter with in QX the products, to to performance first demand pleased the to XXXX, for strong quarter record in million million, $XXX.X per Revenues of compared very strong per $XX.XX in $XXX.X $XX.XX million XXXX. second revenue

for the SG&A of XXXX million included of gross Selling, in margin compared first months million, to second and of related and in strong increased The $XXX.X was during market was in quarter quarter second the the XXXX expenses $XX.X and expect of non-cash share quarter quarter of quarter to And selling into in momentum the million development of $XX compared to in million, Longgen XXXX. quarter and and Research in and first million XX% second in incentive average was Company's the $XXX.X the to higher $X.X $XX.X plan, take the the primarily and expenses place expenses costs million share-based in of compensation XXXX second general were $X and margin Research due development the million in half kilogram. of administrative vary of to compared in that per of to continue prices. of second R&D second to increase were compared million, Gross and the Gross XXXX $X.X mentioned, period-to-period during quarter in to we million XXXX. further in million price XXXX. price $X XXXX. first $X.X XX.X% reflect and has the XX.X%, activities expenses $X.X quarter compared polysilicon and quarter the to $X to for quarter the million $XX the first As from July profit of million year. mono-grade approximately the August, the XXXX. this quarter first quarter. XXXX $X.X

million first XXXX was $XX.X quarter quarter $X.XX basic to and million the of Operating compared quarter As income of the the in and of $XX.X XXXX quarter in of in second to XX.X% and in $XXX.X the Earnings quarter expense in of the and and EBITDA first $XXX.X million from in quarter per a million XXXX. XXXX income the to Corp. XXXX, ADS in second the compared compared XX.X%, the was X.X% in million, $X.XX, $XX.X of was quarter $X.X $XXX.X in first quarter XXXX Interest of XXXX. quarter quarter result of XXXX XXXX. margin $X.X the second of was the of first and quarter attributable Net XX.X%, Energy million, XXXX first the to XXXX. second quarter was quarter of million, XXXX. million first $X.X to to XXXX. shareholders $X.X in million XX% of in of the in million the million, second the compared EBITDA second and of compared second in was XX% $X.XX to New the was XXXX. $XXX.X Daqo in of to million foregoing, margin quarter compared compared $XXX.X operations first

XX,XXXX, cash had XXXX. in June March and restricted $XXX.X June and to cash, Company of $XXX.X as the cash As compared as XXXX $XXX.X million million million XX, equivalents of and XX, of

notes $XX.X As balance as of million, receivable $XX of of as June million million March and was compared XXXX. XX, $X.X to XX, the XX, XXXX June XXXX,

the our operating further to during cash the opportunity strong the debt With and quarter. flow, bearing balance Company's we took earnings reduce interest

bearing all XXXX. $XXX.X XXXX, borrowings total million bank were borrowings this of off the long-term which million, XXXX cash that bank $XXX.X expect balance million year, borrowings of million of borrowings of cash June borrowings, our we XX, With of $XXX.X including XX, long-term end As bank for June XX, would borrowings, total strong long-term we and total year. generation to as interest of including $XX.X million, before the of pay bank bank of borrowings, March as $XXX.X were of million, $XXX.X bank and our compared bank

same polysilicon to The to $XX the period was months first June XXXX, $XXX.X half used in of expansion in XXXX. million the activities activities $XX was net net to used capital period cash of XXXX investing in primarily on activities million, cash And provided compared ended was the million, projects. net in XXXX, XX, $XXX of For in investing XXXX the by Company's X XXXX. the the same cash related for compared operating and expenditures million

increase half generated million Company first expansion, related despite polysilicon XXXX, the the in the our to capital free cash of strong For expenditures flow. of $XXX

of will $XX X The to financing million, ended net cash was the the same related bank net activities period XX, used prepared primarily the to XXXX, And by For June net million the the cash floor provided in used months was audience. cash of compared $XX our XXXX we activities XXXX. in financing loans. concludes Operator, of repayment in questions from that in open activities remarks. now to financing

Operator

Capital ROTH first go Instructions] ahead. with Shen question from [Operator Phil And Partners. the comes Please

Philip Shen

questions. my taking Thank everyone. Hi, for you

You talk that your remains Thanks. and QX also how the you I healthy in could pricing to and QX for then was mentioned, if through Longgen, in outlook trend expect XXXX. wondering XXXX? poly pricing in you

Longgen Zhang

see or new Okay. Basically a supply by we it year, new into end didn't single have you the pipeline. any of the -- this call any capacity

So, right module I'm average $XX is to XXX even the higher to RMB I around to per price, around okay, from like the now right ending price right see to current X.X right well to we $XX per now, think price the now selling -- transferred X.XX per watt. now around watt RMBX.XX sorry RMBX.X kg

now, the now. tight very is think I supply So, we basically poly see right right

year. high I is to the wafer the from price as mentioned think expected demand will see So, within we The strong in end we cell I in expected in this that Also the the we the strong. now continue, increase is than year, because price half think very on think second price the of also I higher next of year, shows with that for the and the module demand. demonstrating the is reason that the and stay sector

XXX around per think per were a price reduction think search, expect be industry think We we the approximately RMBX.XX in our to the I bring of additional on polysilicon XXX,XXX cost approximately module. metric the solar XXX tons overall supply I RMBX.XX contributing $X RMBX.XX to -- see can produce XXX,XXX maybe based watt. -- down to XXXX, which to used in watt to of to module and kilowatts

to be the continue can let's power watt. go per if price the lower XX kg, to say module further per to down, price RMBX.XX XX So

basically, the So you module. calculating can continue on

ASP the So we think average single year, think we year polysilicon next the believe kg. first I next -- around RMBXXX of is half per

the RMBXXX. year, okay, it so like kg. of RMBXXX the For I'm XX%, around you should think just can half around, we be for second per the range

our into got a So for XB increase. end the capacity think I of will as next we think, year, so year, we’ve the this put see by we year, production you that next production XX% our

So the bottom line continue Philip. [indiscernible] growth,

Philip Shen

you, cost but for then Longgen. QX not also little the a outlook little costs year And helpful. for really cash side, What's -- a seen Thank Great. your cost bit, your cost from just increased That's much, XXXX? and we've and bit. structure then this structure and the QX

Longgen Zhang

Okay.

of -- to is around QX at compared cost sold think $X.XX. to QX look The a QX cash $X.XX you cost the If QX, compared all $X.XX. is $X.XX together, $X.XX plus compared cost $X.XX. The goods I everything it's XX to

slightly think we up. think The also reason tax I ASP because sales yes, is go up, adding the value So, the increased. when I go, go price

to that's expenses. the So adding operation

up. the on, polysilicon, So, think, I powder QX, see now powder in from the -- the especially basically, prices go we silicon

per because price for metal the the to our a of little we scale, cost, ton. jumper I cut the go X% definitely, the year. with But X% I the XB finished, I future policy -- -- costs are So, think, still think, the think to for the like the RMBXX,XXX now and then slightly, I think the QX in slightly scalability maybe prices this powder, I production we have, next the week, the the year, total, output, right because mostly to QX I next become policy plus additional think continue in line, Especially our same, think, up keep maybe think X% maybe lot.

Philip Shen

Great.

Wanted Congratulations U.S get your in ADR. Okay, successful thoughts view IPO thanks. your on on your on China. to the

U.S would asking you and are under through taking the given that raises. investors cycle, future generating cash the shares you're capital private conditions also the consider Some what

use You'll share A the entity. probably

China, have Exchange performed while in shares well has trended Stock So, York lower. New the your stock

also what So, just consider under dividend about U.S ADR. or a on would conditions So, the buyback you're thinking you curious how Thanks.

Longgen Zhang

Daqo calculation By they’re underpriced, its right. in It's than of total almost a right XX.X% to subsidiaries. listing holds right Asia New your XX%, a the good the now on listed also discounted now of Actually U.S is price undervalued market ownership our Asia. Energy factor based the share more in Basically, here question. U.S compared now

New Xinjiang New is there So VIE between Daqo. the not Daqo also Daqo and Energy is structure Energy

can -- after Daqo right -- years mean we IPO, the Xinjiang market Xinjiang now Asia's So I can X XX, is Daqo Xinjiang Daqo Daqo That shares. is be shareholding Energy's in XXXX. traded in sell think New which July

it I think made letter has will the the X averaging annual baseline, Xinjiang profit -- from from X profit shareholders, X China, distributable is from the In a Daqo that shareholders okay, commitment a IPO. period. XX% XX% its years, than the now okay. its pay to no I think U.S the cash to as on, pay Asia less during of that dividends years also in back of mean years next

shareholders' So we and April, needs in annual also think, be announced together by XXXX. Xinjiang its with of usually XXXX to be approved Daqo its meeting middle report, the

as of in even we for So market. shareholder a Daqo, expect buyback, U.S the to potential receive cash distributed as sources the financial dividends XX% or dividends Xinjiang

we developing Of high the money course, value for expansion, in further a as continue Asia to valuation. can raise

to of Xinjiang I cannot I you Daqo's it we by the needed all Daqo, approved think needs to to these shareholders. remind because -- be also are that we So information. want plan Xinjiang dividend guarantee just

are we But not some in to yes, definitely, I channel arbitrate the arbitrator have the basically, think So, future. player. we

We manufacturer. are the

our you, We both all Philip. of the make efforts and Thank are, U.S shareholders Asia I the and to think, manager reward shareholders. company

Philip Shen

last very question. Thank detail. One much you for the

problem? challenges or there to no Xinjiang think were you Is out how might difficult to Board shareholders? cash to Or -- be is China pay it get the is the to approves plan, -- get -- cash do dividend the of the the you U.S it out? if it If Board Daqo

Longgen Zhang

see it's the you you China, as it New list the them foreign holders, see -- as I we think, CSRC, approved. in because is China Energy the call no already It's The SEC call Daqo Asia, want to the when CR shareholders. problem,

have pay to So when we just basically U.S -- tax. we but dividends, to to basically we the exchange dollar, it's dividend declare the easy

middle directly tax. set we have [indiscernible] XX%. XX% Hong if the pay just a to company, we company, we So pay dividend we pay Kong, If

we So the dividend can or just buyback with distribute continue money, to that our either U.S shareholders. to do

Philip Shen

Great. Longgen, you again, color. it I'll Thank the pass Really appreciate and on.

Longgen Zhang

you. Thank

Kevin He

Thanks, Philip.

Operator

Please go with question comes Suisse. from Credit next The Gary ahead. Zhao

Gary Zhou

from Credit the Hey, Garry questions. congratulations three results. hello. is And quarter I’ve got quick And strong This second Suisse. very on Firstly,

The with to question of is actually listing first plans one the pull platform. kind earlier U.S up the for on the

just U.S wondering the valuation management So you between also -- as a of ADR. that gap mentioned huge contribute and Asia kind

So of kind here. like it a big arbitrage opportunity seems kind of

country the So just wondering, kind company of what controlling the thinking of use other kind been of, kind of [indiscernible]. or shareholders

is kind if actually actually it the ADR, that get valuation. you kind higher to of the So -- privatized of much you U.S

kind So wondering Thank just possible if of? of would company you.. it's option think the a

Longgen Zhang

Okay, Gary.

to not is the think privatization to under, the think shares because we the returns. It's [indiscernible] Board, the we're site. U.S short-term I I the I to of controller first you think, I to uptick company the to Asia. because It's interested enjoy think, transfer also of arbitrator. to U.S all do my than least privatization. think the controller, want shareholders opportunities at not -- the the the all, lot We from now right I there's see easier know We think, from shareholder perfect a to knowledge in

continued by every why time the think dividends the is market profit can shareholders. mean of value our few can to to increase or make bottom I continue law, is years, raise the to we the strategy see, continue Chinese think to XX% you distribute as expanding reward In what future continue that's continue market, maintain our at capital increase use the to can next XX% in or maximize think, year distributed. So be In the Asia XX%, XX% do guarantee to sure average line capacity. to to the do I I least distributable

think I do will So, we that.

to to I and company, back you the have [indiscernible] you. to U.S or U.S the continue shareholders. buy Gary, question? declare dividends thank do exchange to to the the comments and Ming, any dividend think either the declare currency the

Gary Zhou

Okay. on helpful. my then Thank question plan. you. expansion is This the And second is very

that XXX,XXX So mentioned earlier target by you to polysilicon capacity. your achieve XXXX

more wondering the is Asia current of if position cash strong, kind economy kind specific further have that's very of this a proceed secondly, expansion. to a Just also for proceed already and and a the given your timeline had And kind you of IPO. from that

even the to possible, is expansion that raised of continue be can the pick? So solar if higher demand target kind

Longgen Zhang

balance by the of I to think, with market you look strong. the want think -- sheet maintain think the want And yes, I we very continue I to think market July XX, all, end we our I the if sheet, the first balance share. Definitely, the of expansion. is share maintain,

of name we all, IPO, XX,XXX tons year. we of we think be successful, I I is the place We I try were production this XB think can starting, by -- First the tons. metric think -- end

full year, Next we're running. capacity at

the will it XX,XXX detailed will But point So the later add continue I year. at whole a that to certain average next market continue order Then XX%. up share, year solar mentioned market the in metric least do, tons the the for we maybe, growth market -- late this at of in we I after see time think, to think that, -- year. just compound the end XX,XXX to market for figures that, we keep on --

capital -- share we inside management the the ability maintain think with team, continuing the with have our possible access XX%. strong the I to market the from now Asia generation cash. So market, to think the right around With company to I

in our base. place planning for Xinjiang, So production we are beside looking to another

I another Yunnan we Shanxi. expanding It's place even or in province, XXX,XXX tons. can continue Qinghai province, Mongolia the think it's possible around

two into divided So, we phases. the were

metric tons, semiconductor, production The is first the line think I X,XXX is [indiscernible] which phase the tons.

that So, think I we are planning.

We now are looking. right

place, you, the we as soon Gary. announce we will Thank finalize As that.

Gary Zhou

Thanks. Okay.

of be but know last with my early longer share it your Thank wondering Yes, term Okay. the price. if might just the for too tell, so polysilicon view question is, kind us you. [indiscernible] to I

there by example, so capacity may when more to polysilicon for be So, XXXX, be commissioned.

is would it do be or of achieve? Thank can you. when price kind So sustainable a more a think polysilicon where

Longgen Zhang

I the this next that, about to question year. year with ASP Philip answer think and the of just

demand So, supply. we supply its yes, I plus I the we lot a I comer, XXXX, considering some From for side, continuously China, consider think and XXXX, to really you new, that. continue think, have expansion, player to a think of but have existing

to As to in the technology next the quality. to improve, I change cell the that's maybe for think, change the continue generation P NFL, it P asking is from P -- high silicon

produce share. So type share, That's have continue The can market who polysilicon? N important. the can most market to you

it's hopes. we player, new mentioned CMC, this existing not is newcomer, easy a manufacturing a even, Second, let's that control chemical for just is say,

around the I I the structure reach percentage a mono can silicon, is XX%. almost they think For think We only, XX.X%.

time. reach So I the the also real I the it's up it's think to think -- the I chemical, supply I -- ramped we say, taken quality, a the think call,

distributed is on I carbon So country carbon, I generation, trade level, tell be if a growth energy major new global, rate now, say renewable a China the you think that -- targets. think very, Besides, course, big. neutrality that's you still think the is side. From think the market think neutrality think think as can't I targets, I China, war, the energy, but you the future. to think very, look because think really of potential around at think global I I the I very, the look the a I reach think I tool U.S compound it's It the supply least is very and XX%. I should the we demand right at side, I

I we the really, demand the think from side, expert because you be may don't So, know. Gary, really

he by [indiscernible],some by people [indiscernible] And the -- -- XXX is Mr. I mega Some XXXX. that maybe say estimated it kilowatt Lee, XXXX the even think kilowatts. -- the X,XXX maybe people figures from

X it's XXX,XXX quality [indiscernible] It's like a around no, So it's metric high -- a million silicon. silicon -- tons -- tons.

another I larger largest around worry reason because own we to we as that. have think we’re maybe scale, we to not the think scale about XXXX in X,XXX maybe we continue is finished, to are So, the new our tons, put of are edge. -- competitive Then around XB We by into -- which X,XXX The for as middle have looking action. capacity the come we add tons. XXX,XXX XXX,XXX It's Xinjiang, another capacity the far is [indiscernible] place, we we think tons. the that then

that's long-term strategic I plan. think all So the

Gary Zhou

Okay, is helpful. okay. Yes, this And is this me. questions all from the very

Ming Yang

Thank you, Great. Gary.

Operator

question ahead. go from BOCI. Please Tony with next The Fei comes

Tony Fei

BOCI. is Tony capacity from Good industry Hi. evening, one the management. This And from Three is questions expansion. my side. regarding still first the

conference of the year, intensity Sha in on China, Qinghai in status So was energy the in this just first the yesterday, in to energy [ph]. the Xinjiang, including and NDRC consumption which according had a increased half Ming to there update been nine provinces China has

most these peers. the hosts know provinces your new we So capacity of three announced by

So capacity will terms expansion? of new in think do this slow down pace you the

Longgen Zhang

report. of It read warning. that, Everybody gives think Yes. the NRDC three I level

I hefty I those think energy have you to think think I supply priority. the about Yunnan China, continues they first think. think have a put cause, warning. unfortunately, priority, think first think -- -- polysilicon the capacity Qinghai, that. supported I first the I is the It's polysilicon have solar is I industry. and a [indiscernible] we We But in province production -- the line think

think polysilicon project I the with priority government think, new I energy, solar any think first. put, put definitely new will I adding additional So

existing, energy supply. think energy, the think, to consumption, green I the then the So some energy I supply carbon, have change to even provinces reduce increase I think the to structure the

because grow. needed, that, worried targets. needed clear very polysilicon. solar They these I not Tony? think to to I'm of is I the Definitely, about solar continue think, reach the the So, think government I growth

Tony Fei

great. Okay,

silicon So a supply. my second powder follow-up question on is

So mentioned you up the just ladder gone recently. the has price

So it troubled well seems by measures. energy as power that the the as tariffs smaller control producers the increasing

term, be longer given China for course, silicon big silicon future won't in a power be will prices prices But supply does not the you poly of production the do your up allowing So, you bottleneck to problem capacities. the now. poly with a think the powders margins, build current right

Longgen Zhang

because this We I because situation. momentum, province, is China, is think the think I [ph], of produced shut is also [indiscernible], powder we I in think now poly where and The mantle water. of the the in situation because silicon the majority think that think Xinjiang go short-term, reason price up probably

of down. So power shut plants a water lot

a plant, the So think, that's of I why I polysilicon I think, metal, think a down. lot shut

excellence, I are temporary some think the they're plants. a -- silicon Secondly, I for hope metal closed is closed, think they metal also new -- their

-- So metal I cause go up. price that's think silicon metal why short-term

I future down. think it would in the go

out of to -- think maybe projects like not the in plans is existing, successful is we upstream I looking maybe us, XX silicon a supply just That upstream. sustainability, acquire integrated mean we to powder I think attention powder the I pay or from investments, also poly for X very are think for metal, go we supply the are Secondly some I future -- poly vertically the single XXX,XXX think to I we to project, situation. think maintain, possible to manufacturers. looking also To existing that this also

area bigger is in deal. So, technology we this Yes, the but is key -- like The on think ton only The not issue total the basically, top is billion. also I in around not metal, because definitely investment the future, stone that. also the I the think silicon we the invest much, will for XXX,XXX too RUBX.X are looking resources. investments

I [indiscernible] think Second is supply. the

Tony Fei

you quota the do for an But supply? issue the will powder be think energy

Longgen Zhang

The value for just the it'd think solar some for only poly I the [indiscernible], think, so. -- also not the reason solar basically the I the Also, is provide to metal, think but industry think I provide, be in -- the industry. I I provided yes. also Then think don't silicone. is think chain because our other powders also I

yes. So of it's a usage lot area,

Tony Fei

That's your plan. And great. to questions last good know. on incentive my Okay,

incentive in that for plan know you all place great had we So U.S in a the past the ADRs. very

and your most your in the Now that staff listed Asia Asia have you moved of to entity.

incentive new will the you reduce in Asia in that at ADR share-based guess also to the level plan compensation the a levels? U.S fair and it is your future incentives have So

Longgen Zhang

to a think team I -- an think, match, the strong policy. incentive execution I think, We needed

is this think I very important.

to maintain think, plans, think incentive to team together our help I people continue U.S, expansion, strong the have and I us the continued expansion. Our

team, see, because that no it's lot you of outside. a one team, our China attractive today, in leave, management So

for big, think, will do I we the billion. new, almost So I is incentive so didn't But, Asia $XXX have right? that. valuation It's in plan. look, today, future, we Yes, the think

share price period the we can half market think price issue issue second the have from employees, of a I We share to say, X plan. employee the or the So called management X to to at price let's years years.

year. think, consider second we this thinking were that half of So in the yes,

Tony Fei

you very pass much, Okay. Longgen. will I Great. on. Thank it

Kevin He

with Great. Thank Please Bernstein. next question you, comes Wang from Tony. go [Operator ahead. Lu Instructions] The

Lu Wang

for taking Lu I you Thank our two is Wang questions. from Bernstein. This questions. have

your progress future you. semiconductor market and Firstly, grid have please share plans solar polysilicon can grade share targeted of the XXXX? Thank in a terms of you do you production? Secondly, by polysilicon

Longgen Zhang

XX% anyway polysilicon I to continued future, are us. solar maybe the XX% you, look yes, I share, Basically we our I the in you on around market XX%. all capacity, extra speaking over quicker But didn't the Thank we Lu. of half to first growth. think player think have expansion is I figure, year, think think average, keep than okay frankly side. this if And

XXXX, So, our the can reach we XX%. think share XXX,XXX, the our by market year can maintain capacity around

So target. that's our

to is the are polysilicon. Secondly we semiconductor starting do think yes, I

with it think together. line metric I is X,XXX new think think yes, X,XXX projects tons I I all, production polysilicon of First tons that

have but think to at production -- semiconductor only this to to also years qualify I take line user. the not think, downstream, successful is the polysilicon, produce time. X make to polysilicon mean least by successful. I X We I to the taking It

As -- at I very X you I quickly. take in expansion is think in the the now, and But chips now, years. good very the know, to general wafers, least right also that the downstream semiconductor think right China semiconductor thing X

to as market China now, target. can want gives that share. usage. I in right Yes, the future, opportunity maybe tell share we in it the in the much XX,XXX So around, -- market you to Lu. take around I We qualification first cannot think a you in us future side can I semiconductor X maybe period polysilicon X the you down how to our supply. right you, now tell can think I the We But now XX,XXX first I tons the to tons import. semiconductor, at is right replace think That's think Thank years.

Lu Wang

follow-up going terms mover they energy or secure mover consumption energy intensity. energy the I the And think and faster areas is the electricity, one to the the quota probably share, total on the first cheap have the market also to is provinces in where and of and you. potential targeted Thank that problem

in even makes than is with securing higher be have bottleneck you which provinces energy -- can new to existing capacity able potential we think terms prices, be of be that the cost will that that and will And this potentially, Do problem? So Daqo electricity a capacities also with if in capacity, some quota. Daqo the Xinjiang? to are higher case expand left

Longgen Zhang

Daqo question. ago, started we look very history, -- X think see frankly ago think I at The years is -- are today, for like than are collecting we you you we another good Lu, place reason our speaking, are And think X it's conservative. said. semiconductor years not we if because did always I But it's X the ago, starting years I technology. looking more

think, than study, new starting more worry the place, about feasibility years. I are Don't local that. already For is think I -- a content we a X.X

We the from mostly four governments it think Xinjiang, power we because now, $X.XX contact I I think the I just industry as think major most per -- competitive, and think the I and don't think Also power quality control the cost the in price important. I $X.XX the think I polysilicon than future as is think scalability, labor, key to I around priority, right government, management. elective put today, the it's -- is think I the to outside the the price right now, rather think factor mostly of places, gigawatts. solar think said, five local first I is

can cost -- in history, our So see the in as also the cost cutting structure, future. our future the map you in

China. We are, in the think, number are one I the

speaking. So we're about frankly not that, worried

some signed the we people. said, like the they and think the same. some the stimulation example, talk is to only Right [technical we the for though thing are governance contribute very is at right is to governments, -- want now, us government policy ESP, price agreements, already there. also [indiscernible] price people -- The to we to also The -- now So, around I local welcome even society, difficulty], to may also an we be it's local different. want the we just $X.XX. But

because the The want never example, to take we for So center, all Xinjiang, wafer the RMBX about consume in per shipping QX, Mongolia, costs [ph] that, in today, taking basically, we about reason So worried shipping to today, and XXX consumer around every QX capacity like Guizhou in kg. we're province, even polysilicon we're Yunnan the not or province, or in manufacturing almost of kg. that. Thinking kWh per is

$X.XX almost do shipments to extra, it's wafer So our from Xinjiang the we producer. because

grid, power power that so Yunnan governments. let's worried that. to, save $X.XX from I'm not Mongolia, the to so per we So to local say, move think, price, if province, about I can kWh Local, we the can pay right,

Lu Wang

helpful. Thank you. That's really

Operator

Securities. from The Colin with ahead. go Daiwa Yang next question comes Please

Colin Yang

from Colin Daiwa. is This got management. I evening, Good two questions.

one, current and N type price, first between between expectations price P ASP it's polysilicon? because difference to difference cost do of polysilicon you you the of potential relevant and type share beyond? the for The and type XXXX type any the P N And can have the

Longgen Zhang

not I are N in line I -- good we massive. production silicon sales clients. The only just question. think N already we're mentioned a provide major four things type that now, right Colin, now, starting major to our Basically today it's type the China is

the very I commercial level. -- high its in still, not research think, it's think I commercial,

our example, tons like major for per provide -- is month. is like to four probably think around around around XXX, clients XXX month I like we XXX every per So tons

price basically too think, our only N to RMBX I is from adding around per think is like XX% output, we like can, kg. added type the not can, XX%. I today, But much. So It's around, we

the to the the as continue let's to if, cell downstream, in production increase the to say, our shift N technology. I future, think the, P So type type I on We [indiscernible] line can N think, XX% based we think today, from N XX%, popular. type

The very too think, bigger XX%, go maybe I'm or the output it output us, the to knowledge. -- not per it's for reason we To don't the issue. will thing cost take furnaces, today about big kg. deal on of to maybe added furnaces. time maybe shift like think more RMBX The from RMBX player. much, to also we I because digitalized the affect we for around So But very not other okay. talking down. or The X% depository it's whatever, okay, is so will our around AI, the that because a cost, so put a only to it's is us, The volume, technology. modern calculation not

is for easy Thank Colin. us it So shift. to you,

Colin Yang

Thank you. Longgen. Very clear. you, Thank

have customers? products, the have confirmed the wondering powder adding was the by inspection just contain X And U.S been we [indiscernible] what my U.S second question, any from for So So is the the which customer. do the for almost we months. at least like actual actually portions

from any wondering that? updates So I was if

Longgen Zhang

think the have U.S., think, some some didn't can Basically from only information we We exact I read from -- think researcher. I information. I loud,

producer basically, some we see U.S now, I customers. I some in shipments the module think, right think

To I think customer U.S I we basically manufacturing, think see to our holding, think think traceability. is polysilicon. us, the are I I want

Our producer. most wafer customer in China in is China all a --

So -- to we're U.S. outside to especially not any shipping products, finally

to no I yes, So, us. currently, think effect

future Then to [indiscernible] U.S., in on the think show the maybe module holding. I manufacturer traceability. have also we side, the see a product, maybe course, export the module Of to maybe

poly no think we’re will and replace. I if contrary, much U.S U.S., China to don't But source they market the issue bigger approximately I players, to for alternative than it's XX% of see are because in think be solar if China. made a the idea XX% of to And will there the prolong, wafer is because very impact this The to and limited. us to I impact good think negative I think that. temporary So -- is reason doing the be

it ASAP, So market U.S the interest we issue common carbon and the address difficulty] think believe area. to producers, [technical That both especially common reach I to solar led I to think Chinese is targets. neutrality mean the

that. about worried not I'm So

Colin Yang

Thank you, everyone. Thank you.

because XX% in can XX% of think to bottom I year-on-year line long confirm So one run. I lastly, thing, the mentioned you heard growth I a

is call So a at to XXXX official year-on-year the for least beyond? profit this like, growth net guidance a and XX% Company's XXXX of XX% to

Longgen Zhang

is okay. that I to year next we expansion, only given think cannot that, emphasize capacity, XX% give say let's continue want I the Okay. can assume, because we the The thing I forecasts. just say, -- future, we

plant. around As to adding soon I we're existing the metric XB, XX,XXX XX,XXX we tons, with think to finish as

continue In [indiscernible], that So the for average, capacity. ask first achieve bottom half I half believe I [indiscernible], assume just of supply mentioned line we a definitely year I to can XX% in polysilicon and the of really think think selling next year, around is is expansion the the ball to is is year, next make annual do I like can't we demand XX% the crystal bottom only we the future, future. around rate can't the second think because of can the guarantee like we I this that line of will efforts increase. the price for But we year to to expansion next XX%

said, market real I supply if silicon. much the factors, side technology the the shift we mentioned like the growth. the on can from polysilicon provide P supply? upon, Just We, side, we N, really potential how demand the we type you just How right? How know future, two have that. don't to much much in From N can

efforts. answer question yes, I the So your cannot make basically, our we But future. in

Colin Yang

my Longgen. [Indiscernible]. That’s question. you, Thank all

Operator

any conference for our over over concludes the closing now back will I Kevin He session. question-and-answer turn remarks. to This

Kevin He

a or Thank Thank you. call. email conference a Should feel day. you for us bye. in Bye, you, today's any call. us everyone questions, just nice send free give further Have participating to have

Operator

you The now today's for presentation. Thank conference attending concluded. is

You may now disconnect.

Daqo New Energy (DQ) 18 Aug 212021 Q2 Earnings call transcript