October 27 2025 Q3 2025 Results Presentation This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "guidance" and similar statements. Among other things, the outlook for the fourth quarter and the full year of 2025 and quotat ...

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Core Insights - Daqo New Energy Corp. reported a significant recovery in its financial performance for Q3 2025, with revenues reaching $244.6 million, a substantial increase from $75.2 million in Q2 2025 and $198.5 million in Q3 2024 [3][10]. - The company achieved a gross profit of $9.7 million, compared to a gross loss of $81.4 million in the previous quarter, indicating a turnaround in profitability [3][11]. - The CEO highlighted a recovery in market prices for polysilicon, which contributed to positive EBITDA of $45.8 million and adjusted net income of $3.7 million for the quarter [6][19]. Financial Performance - Revenues for Q3 2025 were $244.6 million, up 225% from $75.2 million in Q2 2025 and up 23% from $198.5 million in Q3 2024 [3][10]. - Gross profit was $9.7 million, a recovery from a gross loss of $81.4 million in Q2 2025 and a gross loss of $60.6 million in Q3 2024, resulting in a gross margin of 3.9% [3][11]. - The net loss attributable to shareholders was reduced to $14.9 million from $76.5 million in Q2 2025 and $60.7 million in Q3 2024, with a loss per basic ADS of $0.22 [3][16]. Production and Cost Metrics - Polysilicon sales volume increased to 42,406 MT in Q3 2025 from 18,126 MT in Q2 2025, reflecting strong demand and effective inventory management [4][6]. - The average total production cost decreased to $6.38/kg from $7.26/kg in Q2 2025, while the average cash cost fell to $4.54/kg from $5.12/kg, marking the lowest cash cost in the company's history [4][6]. - The company maintained a nameplate capacity utilization rate of 40% and produced 30,650 MT of polysilicon in Q3 2025, slightly above guidance [6][8]. Market and Industry Context - The solar PV industry is experiencing a recovery, with market prices for polysilicon rebounding significantly due to improved industry fundamentals and government regulations aimed at curbing low-price competition [6][7]. - China's new environmental targets announced in September 2025 aim to increase the share of non-fossil fuels in total energy consumption to over 30% and expand solar power capacity significantly by 2035 [6][7]. - The implementation of stricter energy consumption standards for polysilicon production is expected to reduce overcapacity in the industry, contributing to higher prices [7][6]. Outlook - The company anticipates producing approximately 39,500 MT to 42,500 MT of polysilicon in Q4 2025, with a full-year production estimate of 121,000 MT to 124,000 MT [8][6]. - Daqo New Energy is well-positioned to capitalize on the ongoing market recovery and long-term growth opportunities in the solar PV sector, supported by a strong balance sheet and no bank loans [6][7].

Core Insights - The article discusses the legal challenges faced by a small business, specifically the "DQ Sisters," due to a lawsuit related to New York State's Frequency of Pay law, which mandates weekly pay for manual workers [1][4][5] Group 1: Legal Challenges - The lawsuit originated from a former employee's claims regarding overtime and other labor-related issues, which escalated into a class action suit, resulting in a $6 million legal challenge for the sisters [1][2] - The sisters were unaware of the Frequency of Pay law, which led them to pay employees biweekly, a practice that was not flagged by their payroll company or during state audits [4][5] - Ultimately, the sisters settled the lawsuit for $450,000, but after legal fees, former employees received only about $200 each [5][7] Group 2: Community Support and Response - Following the lawsuit, the DQ Sisters received significant community support, including a GoFundMe campaign that raised over $55,000, highlighting their reputation for caring for employees [8][13] - The sisters have taken proactive steps to protect other small business owners by working with state lawmakers to amend the law, ensuring that businesses paying biweekly would only owe interest on late wages [6][7] Group 3: Business Philosophy and Employee Relations - The DQ Sisters are known for their commitment to their employees, often providing support during personal crises and fostering a family-like atmosphere within their business [3][8] - They have a history of hiring individuals with challenging backgrounds, demonstrating a belief in second chances and community upliftment [3][8]

Company Overview - Daqo New Energy Corp. (DQ) is a leading Chinese polysilicon producer, specializing in ultra-high-purity materials for solar photovoltaic applications, with a combined annual capacity of 305,000 metric tons, ranking third globally and commanding 18-20% of the market [2][5] Financial Position - DQ maintains a strong financial position with $2.06 billion in cash and zero debt, allowing it to operate at a reduced 34% utilization while awaiting a cyclical recovery [3] - The company's market capitalization stands at $1.7 billion, with substantial asset backing from its 72.4% ownership of Xinjiang Daqo New Energy, listed on the Shanghai STAR Market, valued at $5.8 billion [5] Competitive Advantage - DQ's technological edge in N-type polysilicon for high-efficiency solar cells, combined with cost leadership from a proprietary modified Siemens process, enables profitability even in severe market downturns [3] - The global polysilicon industry is undergoing consolidation, benefiting low-cost, technologically advanced players like DQ as weaker competitors exit the market [5][6] Strategic Initiatives - The company has long-term supply agreements with top-tier solar manufacturers and a disciplined approach to production and capital allocation, exemplified by a $100 million share repurchase program [4] - DQ is well-positioned to expand market share and generate robust cash flows as prices normalize toward $7–8/kg, creating significant shareholder value [6] Market Performance - DQ's stock has appreciated about 50% since a previous bullish thesis was published, reflecting operational resilience and strong market positioning [7]

Market Overview - US stock market showed mixed results, with the Dow Jones reaching a new high driven by corporate earnings, while uncertainty in trade impacted tech and small-cap stocks, leading to a decline in the Nasdaq [1] - Apple experienced a three-day rise, hitting a new high before closing up 0.2%. General Motors surged 14.8% post-earnings, and Coca-Cola rose 4%. Meme stocks and Beyond Meat saw a dramatic increase of 146%, accumulating a 600% rise over three days [1] - The Nasdaq Golden Dragon China Index fell by 0.97%, with Daqo New Energy down over 4.4% and Alibaba down over 3.9% [1] Bond and Currency Markets - US Treasury yields fell, with the 10-year yield dropping nearly 2.5 basis points. The US dollar index rose for three consecutive days, increasing by approximately 0.4% [2] - Bitcoin saw a recovery, rising over 6% from its daily low [2] Commodity Markets - Gold prices dropped over 5.7%, marking the largest single-day decline since 2013, while silver experienced an even greater decline of nearly 8% [3] - Oil prices fluctuated upwards, with West Texas Intermediate crude oil rising over 1.2% due to the Trump administration's commitment to purchase 1 million barrels for the Strategic Petroleum Reserve [4] Industry Developments - The zinc market is experiencing a "short squeeze," with available inventory lasting less than a day and spot premiums reaching the highest level since 1997 [5] - Anthropic is in talks with Google for a cloud agreement potentially worth up to $10 billion [6] - The Federal Reserve will hold a "Payment Innovation Conference" on October 21 to discuss how innovative technologies are reshaping payment systems and currency forms in the digital age [7] Domestic Developments - Shanghai government issued a plan to promote high-quality development in the construction industry, encouraging business integration [9] - Guangdong government released an action plan for AI-enabled high-quality development in manufacturing from 2025 to 2027, supporting the establishment of "model vouchers" for industrial model services [9] - The Ministry of Industry and Information Technology is soliciting opinions on the "Computing Power Standard System Construction Guidelines (2025 Edition)" [10] - The world's first offshore wind direct-connected underwater data center demonstration project was completed in Shanghai Lingang [11] Company Announcements - Yingxin Development plans to acquire an 81.8091% stake in Guangdong Changxing Semiconductor Technology Co., Ltd. through cash payment [21] - Greebo secured a significant order from a leading US home improvement retailer for lithium battery outdoor power equipment, with an estimated order value of approximately $60 million [21] - Jindi Co., Ltd. signed a strategic cooperation framework agreement with Inbol to promote the application of electric drive system products [22] - Chengda Bio signed a strategic cooperation agreement with the Institute of Microbiology, focusing on emerging infectious diseases [22] - China Telecom reported a third-quarter net profit of 77.56 billion yuan, a year-on-year increase of 3.60% [22]

Market Performance - The three major U.S. stock indices closed mixed, with the Dow Jones Industrial Average rising by 0.47%, the S&P 500 remaining flat, and the Nasdaq Composite declining by 0.16% [1] - The Dow reached a new all-time high [1] Sector Performance - The Philadelphia Gold and Silver Index experienced a significant drop of 9.57% [1] - Large-cap tech stocks showed mixed results, with Amazon rising over 2%, while Google fell more than 2% and Tesla dropped over 1% [1] Notable Stock Movements - General Motors surged nearly 15%, marking its best single-day performance in five years [1] - Beyond Meat, referred to as the "first stock of artificial meat," skyrocketed over 146%, with a cumulative increase of approximately 600% over the last three trading days [1] Chinese Stocks - The Nasdaq Golden Dragon China Index fell by 0.97%, with notable declines in several popular Chinese stocks, including Daqo New Energy down over 5% and Alibaba and NIO down over 3% [1] - Some Chinese stocks like New Oriental and Bilibili saw gains of 5% and 6%, respectively [1]

Core Insights - Daqo New Energy (DQ) is expected to report a year-over-year increase in earnings despite lower revenues for the quarter ended September 2025, with a consensus outlook indicating a quarterly loss of $0.61 per share, reflecting a 33.7% improvement year-over-year [1][3] - Revenues are projected to be $162.3 million, down 18.2% from the same quarter last year [3] Earnings Expectations - The earnings report is anticipated to be released on October 27, and the stock may rise if the results exceed expectations, while a miss could lead to a decline [2] - The consensus EPS estimate has been revised 17.24% higher in the last 30 days, indicating a reassessment by analysts [4] Earnings Surprise Prediction - The Zacks Earnings ESP model shows that the Most Accurate Estimate for Daqo matches the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, making it challenging to predict an earnings beat [12] - Daqo currently holds a Zacks Rank of 3, which does not strongly indicate a likelihood of beating the consensus EPS estimate [12] Historical Performance - In the last reported quarter, Daqo was expected to post a loss of $1.16 per share but actually reported a loss of $1.14, resulting in a surprise of +1.72% [13] - Over the past four quarters, Daqo has only beaten consensus EPS estimates once [14] Industry Comparison - Another company in the Zacks Chemical - Specialty industry, Minerals Technologies (MTX), is expected to report earnings of $1.47 per share, indicating a year-over-year change of -2.7%, with revenues projected at $532 million, up 1.4% [18][19] - The consensus EPS estimate for Minerals Technologies has been revised 1.4% lower in the last 30 days, leading to an Earnings ESP of -1.02% and a Zacks Rank of 4, indicating difficulty in predicting an earnings beat [19][20]

Core Viewpoint - The article discusses the journey of Daqo Energy, highlighting the contrasting paths of its founders, Xu Guangfu and Shi Zhengrong, in the photovoltaic industry, emphasizing Daqo's resilience and strategic management despite facing significant challenges in recent years [1][2]. Company Background - Xu Guangfu, the founder of Daqo Energy, has a humble educational background and built his wealth through hard work and prudent financial management, maintaining a debt ratio below 10% [1][2]. - Daqo Energy has evolved into one of the "four major silicon material leaders" in the photovoltaic industry, demonstrating strong growth and stability compared to its competitors [11][13]. Recent Challenges - Daqo Energy has faced continuous losses for six consecutive quarters as of mid-2023, with significant executive turnover and ongoing legal disputes with suppliers [2][14]. - The company reported a revenue decline of nearly 50% and a profit drop of nearly 70% in 2023, with further losses projected for 2024 [14][16]. Financial Performance - Daqo Energy's revenue and net profit have fluctuated significantly over the years, with a peak in 2022 when net profit reached approximately 19.12 billion yuan, translating to over 50 million yuan in daily profit [12][16]. - The company has maintained a strong cash reserve, with total liquid assets exceeding 120.9 billion yuan as of mid-2025, positioning it favorably against competitors with higher debt levels [15][16]. Strategic Management - Daqo Energy's management strategy focuses on cautious expansion and maintaining a strong balance sheet, which has allowed it to navigate industry downturns effectively [17][20]. - The company has implemented cost-cutting measures across various departments, reducing management, research, and sales expenses significantly in response to market conditions [19][20]. Future Outlook - Despite current challenges, Daqo Energy's leadership believes in the long-term potential of the photovoltaic industry and aims to leverage its core competencies to weather economic cycles [20].

Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: China Utilities, Renewables & Power Grid [2][3] - **Key Trends**: Rapid deployment of renewable energy sources, particularly wind and solar, with annual installations projected at 200 to 300 GW [2][4] Core Insights 1. **Renewable Energy Deployment**: - Wind and solar installations are expected to reach 200-300 GW annually, with cumulative installations surpassing 3,000 GW by 2030 [4][2] - Offshore wind is anticipated to have the best growth prospects due to higher utilization hours and government support [4][2] 2. **Energy Storage Systems (ESS)**: - Strong growth in energy storage systems and pumped storage, with a combined CAGR of 20% projected until 2030 [2][8] - The power regulation capacity gap for renewable energy is estimated to reach 700 million kW by 2030, necessitating increased ESS deployment [8][5] 3. **Grid Investments**: - Continued investment in grid infrastructure is essential for integrating renewable energy, with UHV (Ultra High Voltage) capex expected to rise from RMB 380 billion per annum during the 14th FYP to RMB 500-600 billion during the 15th FYP [9][2] - Distribution grid automation is projected to grow at a CAGR of 15% due to increased capacity from distributed renewable projects [9][2] 4. **Thermal Power Outlook**: - Capacity charges for thermal power plants are expected to increase from 30% to 70% of fixed costs by 2030, while their role in peak shaving will diminish [10][2] - Thermal plants will generate more revenue from ancillary services, potentially offsetting lower utilization rates [10][2] 5. **Green Power Trading**: - Anticipated policy reforms may lead to green certificates covering all renewable power by the end of 2025, with prices expected to rise from RMB 5-6 to RMB 50 per certificate [11][2] - Green power trading volume is projected to reach 1.5 trillion kWh by 2030, growing at a CAGR of over 30% [11][2] Investment Recommendations - **Top Picks**: - Daqo (DQ US), GCL Tech (3800 HK), Orient Cable (603606 CH), Nari (600406 CH), and Huaming (002270 CH) are rated Overweight (OW) [2][12] - A long/short pair strategy is recommended with Longyuan (916 HK, OW) and Huaneng (902 HK, Underweight) [12][2] Additional Insights - **Catalyst-Rich Environment**: The period leading up to mid-2026 is expected to be rich in catalysts for policy discussions, which could positively impact the renewable energy sector [3][2] - **Technological Advancements**: Innovations in offshore wind technology, such as larger turbines and flexible DC cable transmission, are expected to enhance project returns [4][2] Conclusion - The renewable energy sector in China is poised for significant growth driven by government support, technological advancements, and increasing demand for energy storage solutions. Investment opportunities are abundant, particularly in companies aligned with these trends.