Daqo New Energy(US:DQ)2021-08-18 18:43Financial Data and Key Metrics Changes - Revenues for Q2 2021 were $441.4 million, up from $256.1 million in Q1 2021 and $133.5 million in Q2 2020 [18] - Gross profit reached $303.2 million, compared to $118.9 million in Q1 2021 and $22.7 million in Q2 2020, with a gross margin of 68.7% [19] - Net income attributable to shareholders was $232.1 million, compared to $83.2 million in Q1 2021 and $2.4 million in Q2 2020, with earnings per basic ADS of $3.15 [21] - EBITDA was $311.7 million, with an EBITDA margin of 70.6%, compared to $128.1 million and 50% in Q1 2021 [21] Business Line Data and Key Metrics Changes - The average selling price (ASP) of polysilicon increased from $11.90 per kg in Q1 2021 to $20.81 per kg in Q2 2021, with expectations for further increases to approximately $26 to $28 per kg in July and August [8][18] - The company produced 41,287 metric tons of polysilicon and sold approximately 42,531 metric tons in the first half of 2021, indicating full utilization of production facilities [16] Market Data and Key Metrics Changes - The global polysilicon supply is expected to increase by approximately 180,000 to 220,000 metric tons in 2022, which can support around 200 to 210 gigawatts of solar installations [10] - The demand for renewable energy, particularly solar PV, is expected to rise significantly due to various countries setting carbon neutrality targets [11] Company Strategy and Development Direction - The company aims to increase its polysilicon production capacity to 720,000 metric tons by the end of 2024, representing an average annual growth rate of approximately 50% [16] - The successful IPO of Xinjiang Daqo New Energy will provide additional capital for future growth plans [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for polysilicon and the ability to maintain healthy pricing due to constrained supply [8][11] - The company is focused on ESG initiatives and has made substantial progress in sustainability efforts [13] Other Important Information - As of June 30, 2021, the company had $269.7 million in cash and cash equivalents, with a significant reduction in interest-bearing debt [22][23] - The company generated $186 million of free cash flow in the first half of 2021 despite increased capital expenditures [24] Q&A Session Summary Question: Outlook for polysilicon pricing in Q3 and Q4 - Management expects polysilicon prices to remain high due to tight supply and strong demand, with current prices around $26 to $28 per kg [27] Question: Cost structure outlook for 2022 - Management indicated a slight increase in costs due to rising silicon powder prices but expects potential cost reductions in the future [31] Question: Thoughts on U.S. ADR and potential privatization - Management is not currently interested in privatizing U.S. ADRs, focusing instead on maximizing shareholder returns through dividends and capital raises in Asia [40] Question: Expansion plans and timeline - The company plans to start production at its new capacity by the end of 2021, with full capacity expected next year [43] Question: Long-term polysilicon price expectations - Management anticipates that polysilicon prices will be influenced by supply and demand dynamics, with a potential compound growth rate of around 20% for solar demand [48]