Q3 2023 Daqo New Energy Corp Earnings Call
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Good morning, and welcome Baku allergy.
Third quarter results conference call, all participants will be in listen only mode.
Please signal conference for analysts followed by the Stark.
After todays presentation opportunity to ask questions. Please note that this event is being recorded.
The protocol all worked in most need of Zoo Resto Relations director. Please go ahead.
Okay.
Hello, everyone I'm on either via the Investor Relations of Popcorn you I'd actually thank you for joining our conference call. Today. So that's why you energy just issued its financial results for the third quarter of 2023, which can be found on our website at www Dot do you sell their dot com.
Today attending the conference call, we have our chairman and CEO, Mr. Shao Shield, Yeah, Hello, Mr. Among young and myself.
Our call today will begin with an update from Mr. Hu on market conditions and company operations and then Mr. Yao will discuss the company's financial performance for the quarter and the year.
After that well open the floor to Q&A from the audience before.
Before we begin the formal remarks, I would like to remind you that certain statements on today's call, including expected future operational and financial performance and industry growth are forward looking statements that are made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
These statements involve inherent risks and also to a.
A number of factors could cause actual results to the first materially from those containing any forward looking statements.
Further information regarding these and other risks is included in our reported adopt more documents, we have filed with or furnished to the securities and Exchange Commission.
These statements only reflect our current EMCORE lemon and Aerie you up.
As of today, and maybe subject to change.
Our ability to achieve these projections is subject to risks and uncertainties.
All information provided on today's call is that look today and we undertake no duty to update such information, except as required under applicable law.
Also during the call we will occasionally reference monetary amounts need less dollars.
Please keep in mind that our functional currency is the Chinese RMB, we offer these translations into us dollars solely for the convenience of the audience.
So now we would like to welcome our CEO Mr. Shao Zhu for the opening remarks.
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Thank you everyone for joining our conference call today.
Anita we will serve us by chance later during the call and if you have any questions or just to the company or to me. Please adjust the questions at the end of the call.
So now on behalf of Mr. Hu, Oh, no read all of his remarks regarding current market conditions and the market and the company performance.
So during the third quarter continued optimization of operations at our two power Silicon facility, resulting in total production volume by 57664 metric tons, an increase of 12358 metric tons or 27% compared to the previous quarter.
In our local area five eight facility, which is not only for production contributed approximately 40% of our total production volume. So Meanwhile, our production costs further decreased by five 8% from second quarter to $6 five $2 per kilo.
I'm Marilyn due to improvements in manufacturing efficiency as well as a reduction in the past because raw materials, particularly in metallurgical grade silicon so compared to our first quarter average production cost of 7.55 U S. Dollar per kilo cost have declined by more than a dollar put silica.
So based on the company's most recent production data, we expect our fourth quarter costs continue to trend downwards from the third quarter levels.
So we shipped a total of 622967 metric tons of polysilicon in third quarter, an increase of 9465 metric ton of our second quarter shipment and significantly higher than our quarterly production volume. This has resulted in a significant decrease in our policy count.
Inventory a cough are twofold facilities now at a level of less than one week of production volume so for the third quarter the company generated $70 million EBITDA.
The cash provided by operating activities for the first nine months of the year totaled $1 5 billion U S dollars with more than $711 million in third quarter.
Company continues to maintain a very strong balance sheet with no financial debt at the end of the third quarter. The company had a cash balance of $2 3 billion U S dollars and a combined cash and think they'll receivable balance up there.
6 billion U S dollars.
So our total annual also called main play capacity has reached 2002 or two or 5000 metric tons across our two facilities for fourth quarter. We expect total poly production volume to be approximately 15, 59000 metric tons to 62000 metric tons.
Well continue to increase over our third quarter levels.
Full year production is expected to be approximately 196000 metric tons to 119 night.
That metric tons, representing an increase of 46% to 49% compared to 'twenty to 'twenty two levels.
What is more than a decade of experience of poly production as well as a fully digitalized our integrated production system that optimizes operational efficiency. We are confident that we can strengthen our position as one of the dominant also called manufacturers in the industry.
At the end of the second quarter. After Paul your prices reached bottom customers began reordering on taking delivery of products significantly reducing industry inventory levels also on pricing recover gradually over the third quarter and in July our module makers intensified competition module prices fell from RMB.
One five per watt in June to 1.3 RMB per watt in July.
Meanwhile, the high demand in the module sector, coupled with lower utilization ratio, partly due to how a rocking our system maintenance drove a marginal recovery in polysilicon prices.
According to industry statistics mono polysilicon prices rebounded from the lowest level of Bluffton 60, RMB a parochial in June she was six at the age of 68 RMB per kilogram body in July.
And an average of 87 and RMB per kilogram by the end of September.
Furthermore, as the current price range is unlikely to be profitable when your entrance given their cost structure, we have seen delays in our production plans.
Going to the fourth quarter block production volumes of Holly sector are all likely are likely to increase marginally up from new capacities come online during.
During the third quarter, we saw an acceleration of in a transition from pizza hut to N type cell technology with strong growth anti product demand volume and the anti product our average selling price premium expand its a 10 to 12 RMB per kilo in the third quarter.
Going forward, we expect those transitions will further accelerate our anti product expand market share leading to continued demand growth.
To give an update on the company itself 100 million share buyback program announced in November 2022 by the end of September The company had already purchased $8 1 million a D. S were approximately three.
328, an $8 million with an average called approximately 40 and 40.5 $8 per ADR combined with a program completed in 2022 and other obligations. The company has already purchased approximately 10 million adss for approximately $448 8 million U S dollars.
Basic weighted average outstanding for the third quarter were 74 million shares total I'll finish outstanding shares at the end of the third quarter were approximately 71 8 million shares after fully reflecting our recently completed share repurchases.
Well the urgent need to address climate change, we're still at the very earliest stage of the energy transition from fossil fuels to renewables renewable energy, where he wants to energy needs are.
One of the most competitive forms of power generation, the continuous cost reduction in solar PV products and the associated reduction in solar energy generation costs are expected to create substantial additional clean energy demand, which we believe is all like it's likely to exceed most analyst expectations.
PV is generally expected to eventually become one of the most important of energy to power the world and that doesn't ask solar PV technology keeps evolving we believe that the increasing needs for very high purity policies such as our N type also car will help differentiate us from most of our competitors, while many of our competitors who are likely to struggle in the current <unk>.
Kent environment docking you energy has one of the best balance sheets in the industry with no financial debt at alcohol are confident that we will navigate the near term market volatility successfully we're optimistic that as the thought and market continues to grow and as our customers continue to transition to <unk>.
Higher efficiency N type technology, we will benefit from this trend.
Well continue to strive to maintain solid growth and capture the long term benefit of the growing global solar PV market. So.
So regarding future outlook and guidance, we expect to produce approximately 50 to 59000 metric tons to 62000 metric tons of poly during the fourth quarter of 2023 and for full year 2023 we expect to produce approximately 196000 metric tons to 199000 macro towers.
Wholesale com.
Now I'll turn the call to our CFO, Mr. Ming Yang to sell deeper on the financial performance.
Main please go ahead.
Thank you Anita Hello, everyone. Thank.
Thank you for joining our third quarter earnings conference call today.
I will discuss the company's third quarter financial performance.
Revenues were $484 8 million compared to $636 7 million in the sector.
First quarter of 2023, and 1.2 billion in the third quarter of 2022.
The decrease in revenue compared to the second quarter of 2023 was primarily due to the decrease in average selling prices mainly by an increase in sales force.
Gross profit was 67 8 million compared to $258 9 million in the second quarter of 2023, and $978 6 million in the third quarter of 2022.
Gross margin was 14% for the quarter compared to 40% in the second quarter of 2023.
80% of the third quarter of 2022.
The decrease in gross margin compared to the second quarter of 2023 was primarily due to lower average selling prices, which was partially mitigated by lower production costs.
Selling general and administrative expenses were $89 7 million compared to $43 3 million in the second quarter of 2023, and 280 million in the third quarter of 2022.
I will give a little bit more details about the increase in demand.
SG&A expenses for the quarter.
As compared to the previous quarter and this was primarily related to the resignation of expenses and the recognition of the remaining share based compensation expenses led to the company. Its recent management change.
The recognition of the remaining noncash share based compensation expenses cost us approximately 330000 shares which will be invested based on the vesting schedule over the next two years.
And based on the current share price is approximately $8 million.
In terms of expense.
However, U S. GAAP rules require us to have the company recognized there's literally expenses based on the share price at the time of grant and this would be approximately $23 million.
In addition, <unk> expenses during the third quarter includes a total of $46 3 billion in the past share based compensation costs.
Because the up of expense related to recent management changes as I had mentioned.
And so and this compares to a total of $27 5 million of share based.
Incentive expenses in the second quarter of 2023.
For the fourth quarter, we would expect G&A expenses normalize.
And we'll be in the range of approximately $35 million to $38 million per quarter in cool civil noncash share based compensation costs.
Research and development costs.
We're $2 8 million compared to $2 2 million in the third quarter of 2023, and $2 5 million in the third quarter of 2022.
R&D expenses for both periods to reflect R&D activities that take place during the quarter.
And.
Most of our R&D activities currently is focused on.
Increasing the percentage of N type.
Polysilicon for the company.
Got it.
Uh Huh alright, thanks, Jay.
$1 million for the quarter compared to a loss of $19 7 million.
The third quarter of 2023.
As a student to the volatility of always fluctuation in the U S dollar and.
And RMB exchange rates during the quarter.
And this is all of the above mentioned income from operation was $22 5 billion compared to 213 million in the same quarter of 2023 at 693 million in the third quarter of 2022.
Operating margin was four 6% compared to 33, 6% in the second quarter of 2023 answers to six 8% in the third quarter of 2022.
Net loss attributable to talk when you energy shareholders was $6 3 million compared to net income of 130 points in the second quarter of 2020.
123 million in the third quarter of 2022.
Loss per basic ADR for the quarter was the license.
For sure compared to earnings per basic ads of $1 35 in the second quarter of 2023 or $4.28 in the third quarter of 2022.
Yeah.
Eco or non-GAAP attributable to talk when you energy shareholders.
Noncash share based compensation cost was $44 million compared with $134 5 million in the second quarter of 2023, Assam $90 4 million in the third quarter of 2022.
Adjusted earnings for basic.
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<unk> to $1 75 in the second quarter of 2023.
$1.81 in the third quarter point in 'twenty two.
EBITDA was 70 to $78 2 million.
Paired with 230 million in the second quarter of 2023 mm 140 million in the third quarter of 2022.
Margin was 14, 5%.
Compared to 36, 1% in the second quarter of 2023.
9% in the third quarter of 2022.
Now I would like to provide some.
So color related to our operations so from a pure operation perspective, and this would exclude the impact of the one time restoration costs.
And the noncash share based compensation costs of the U S.
That's cool.
Our operating subsidiaries.
Cool.
Is recorded a pretax earnings of 888 million RMB.
Approximately 121 million U S dollars.
Other income of 600 689 million RMB.
<unk> $94 million.
New LNG currently owns approximately 70 to 72, 4% luxury is on Balco.
And so for new energy shareholders allocation of the operating net income.
It should be approximately $2 4 million, excluding the above mentioned GAAP accounting related expenses.
I know all of the company's financial condition.
As of September 30th 123.
The company had.
Three points to $8 billion in cash and cash equivalents. He was just a cash compared with 2.17 billion as of June 32020 to be a 2.0 by the way as of September 30 of 2022.
And as of September 30th 2023.
Those people will balance the company was $276 million compared to 799 million as of June $34, 23, and 1.5, Southern Doyle September 30th point too.
It's well balanced.
Bank notes with maturity within six months.
And then on the company's cash flow.
For the nine months ended September 32023, net cash provided by operating activities was.
One point.
Four 9 billion compared to 1.7 going in the same period of playing 22 <unk>.
And for the nine months ended September 32023, net cash used in investing activities was $954 million compared to net cash used in that respect that activities of 605 million in the same period of point in 'twenty two.
Next how do you see let's say activity in the third quarter of 2023 with primary related to <unk>.
Capital expenditures on the company's polysilicon project in Basel City in the Mongolia are inclusive of both based upon at least two.
And for the nine months ended September 32023.
Net cash used in finance activities was $602 million.
Compared to net cash provided by fitness activities, one fourth of Newco in the same creative point in 'twenty two.
No that's actually you're seeing financials to be for the first three quarters of 2023.
It was primarily related to $200 to share repurchases.
203 million in dividend payments made by the company Shandong Buffalo subsidiary to its minority shareholders.
The company continues to maintain a very strong balance sheet and cash balances and no financial debt as well as healthy operating cash flow.
And with that concludes our prepared remarks, operator, we will now open the line to questions from the audience.
Thank you Mike.
The question answer session.
Good question, Mike Bruff, Baltimore on you touched on phone.
You're supposed speakerphone, please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
We will pause momentarily to assemble the walls.
Okay.
Okay.
First question will be from Philip Shen of Roth.
Okay.
Alright.
Hi, everyone. Mr shoot me.
Thanks for taking my questions I wanted to explore.
Your view on polysilicon pricing.
Q4 came in with.
About $7.70 for Q3.
Program and.
Wanted to see what your expectations are for Q4, and then also for the beginning of next year and then by year end 'twenty for I.
Do you see a recovery or do you expect the polysilicon pricing to.
Thanks.
Okay.
Yeah.
Yeah.
Because this issue will provide commentary first and then well.
Operator: Good morning and welcome to Daqo Energy. Third quarter, 9.3 results conference call. All participants will be in listening only mode. Any assistance, please signal conference specialists followed by the start team. After today's presentation, an opportunity to ask questions. Please note that this event is being recorded.
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Operator: I like to turn the call over to Ms. Anita Zhu, investor relations director. Please go ahead.
Could you sorry for you. This year you we won't you look why Wouldnt you couldn't Java you issue.
Anita Zhu: Hello everyone. I'm Anita Zhu, the investor relationship of Daqo New Energy. Thank you for joining our conference call today.
Yeah, Yeah yeah.
And on the deal because it's all in there and it's not so good.
It was almost all in Austin and it's easy to.
Anita Zhu: So, Daqo New Energy just issue its financial results for the third quarter of 2023, which can be found on our website at www.dqsolar.com.
This is future.
Hey, good to.
So we know what we're putting on them.
Austin and each of those who do the judging I didn't get the Chihuahua, new outlets you once again.
Xiang Xu: Today, attending the conference call, we have our chairman, CEO, Mr. Xiang Xu, CEO of Mr. Ming Yang, and myself. The call today will begin with an update from Mr. Xu, a market conditions and company operation.
It doesn't always have the audience, we can get a geography that you want and so when.
This is Dan.
Yeah.
Oh, Hi, Philip So Mr. Hu will have commented that for the fourth quarter. The price would stay somewhat similar to now and for P. Type should remain around 78, RMB per kilo and for N type Theres, a 10, RMB premium which is around a D. A.
Ming Yang: And then Mr. Yang will discuss the company's financial performance for the quarter and the year.
Anita Zhu: After that, we'll open the floor to Q&A from the audience.
RMB per kilogram.
And December the.
Anita Zhu: Before we begin the formal remarks, I would like to remind you that certain statements on today's call including expected future operational and financial performance and industry growth are forward-looking statements that are made under the safe harbor provisions of the U.S, private securities litigation reform act of 1995. These statements involve inherent and uncertainties. A number of factors could cause actual results to the first material leaves from those containing any forward-looking statement. Further information regarding these and other risks included in the reports or documents we have filed with were furnished to the Securities and Exchange Commission. These statements only reflect our current and preliminary view of as of today and maybe subject to change. Our ability to achieve these projections is subject to risks and uncertainties.
Price should stay somewhat consistent as of now.
And going into the first quarter because of demand the price should no word to around 65 to 70, RMB parochial about around that range, but going to a second quarter and beyond it should go rise above 70, plus.
Okay, great. So.
The price to 55 to 70 kilograms lower.
In Q1.
What is driving that and is that price or are you talking about pizza hut.
Anita Zhu: All information providing today's call is as of today and we undertake no duty to update such information except as required under applicable law.
So should we expect that to be 10.
B, a higher and what would cause.
The price to go higher in Q2.
Anita Zhu: Also during the call, we will occasionally reference monetary amounts in the U.S, dollar terms. Please keep in mind that our functional currency is the Chinese RMB. We offer these translations into U.S, dollars solely for the convenience of the audience.
And what does he think the yearend 24 price might be thanks.
Yeah.
Anita Zhu: So now we would like to welcome our CEO, Mr. Shenzhu for the opening remarks. Today, Anita will serve us by translator during the call and if you have any questions addressed to the company or to me, please address the questions at the end of the call. So now on behalf of Mr. Shu, I will now read office remarks regarding current market conditions and the company performance. So during the third quarter, continue optimization of operations at our two possible consequences resulting in a total production volume of 67,664 metric tons, an increase of 12,358 metric tons, or 27% compared to the previous quarter.
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Thank you Jonathan.
So right there.
The price in the first quarter around 65 to so many of those the price range is primarily driven by seasonality, So Christmas and Chinese lunar new year and that causes lower demand. So that's that's primarily price and in January and February by price should recover starting in March and.
The price for P type for N type, we see a price premium of around five to 10 RMB per kilogram.
Yeah.
Okay got it. Thank you and one more question for me and then I'll pass it on.
Anita Zhu: Our inner Mongolia 5A facility, which is now in for production, contributed approximately 40% of our total production volume. So meanwhile, our production costs further decreased by 5.8% from second quarter to $6.52 per kilo, primarily due to improvements in manufacturing efficiency, as well as the reduction in the cost of the raw material, particularly in metallurgical grade silicon. So compared to our first quarter average production cost of $7.55 US dollar per kilo, the cost of the clients by more than a dollar per kilogram.
Hum.
As it relates to the industry structure and.
Given these low prices.
You know there are a lot of companies that might be having trouble with.
Driving profit so just curious if you can.
Talk about what he sees ahead.
And Kenny.
Talk through you know because you expect a certain companies to stop production or.
Even accelerates the stoppage of production shut down.
What does he see for the evolution for the industry.
Anita Zhu: So based on a company's most recent production data, we expect our fourth quarter cost to continue to trend downwards from the third quarter levels. So we shipped a total of 6 to 2967 metric tons of policy silicon in third quarter an increase of 9,465 metric tons over our second quarter shipment, and significantly higher than our quarterly production volume. This has resulted in significant decreasing of policy-accompronic inventory across our two facilities, now at a level of less than one week of production volume.
I mean six months thanks.
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Anita Zhu: So for the third quarter, the company generated 70 million dollars in EBITDA, and that cash provided by operating activities for the first nine months of the year totaled $1.5 billion US dollars, with more than $711 million in third quarter. The company continued to maintain a very strong balance sheet with no financial debt. At the end of the third quarter, the company had a cash balance of $3.3 billion US dollars, then it combined cash and banked the receivable balance of $3.6 billion US dollars.
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Anita Zhu: So our total annual policy called name plate capacity has reached 205,000 metric tons across our two facilities. For fourth quarter, we exert total poly production volume to be approximately 59,000 metric tons to 62,000 metric tons. A continued increase over our third quarter levels. Full year production is expected to be approximately 196,000 metric tons to 199,000 metric tons, representing an increase of 46% to 49% compared to 2022 levels. But more than a decade of experience in poly production, as well as a fully digitized and integrated production system, that optimizes operational efficiency.
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Your line.
Yes.
So we do believe so as you can see the hockey.
Over the summer.
In terms of industry structure first of all you want to highlight that we have a very competitive cost advantage and producing powerful.
Yeah, we see that as price goes down from a 60.
Five to seven is there.
Roughly 50.
<unk> thousand to 60000 of production volume that's.
Anita Zhu: We are confident that we can strengthen our position as one of the dominant policy manufacturers in the industry. At the end of the second quarter, after poly process reached bottom, customers began reordering and taking delivery of products, significantly reducing industry inventory levels, also comprising recovered gradually over the third quarter. And in July on module makers intensified competition, module prices fell from R&B 1.5 per watt in June to 1.3 R&B per watt in July.
That's at the year.
They're not going to be profitable.
And for the new entrants are of course are obviously, a lot higher than us which is around <unk>.
75000 to 80000.
So given that they don't have enough cash not enough cash and the financing route is relatively limited now they will be struggling and become enough quarters. So so we certainly see industry supply adjustments going forward in the coming months.
Anita Zhu: Meanwhile, the high demand in the module sector coupled with lower utilization rate for poly due to a higher rationing system, maintenance drove a marginal recovery in policy comparison. According to industry statistics, modern trade policy comprises rebounded from the lowest level of less than 60 RMB per kilo in June to 63 to 68 RMB per kilogram per end July, and an average of 87 RMB per kilogram by the end of September. Furthermore, as the current price range is unlikely to be profitable for new engines given their cost structure, we have seen delays in the production plans.
The industry rebalancing normalized.
Okay got it.
Thank you for the color I'll pass it on.
Great. Thank you Phil.
Thank you.
Thank you next question from Jeffrey.
Jefferies. Please go ahead.
And then Steven.
Yes.
Thanks, a lot. Thanks, a lot for taking my question.
Thanks, Mr. Sean Menke for the prepared remarks, so I'd like to have more clarity on the.
Anita Zhu: Going into the fourth quarter, plus production volumes in polysector are likely to increase marginally as some new capacities come online. During the third quarter, we saw an acceleration in a transition from P type to anti-cell technology with strong growth in anti-product demand volume and the anti-products average selling price premium extended to 10 to 12 RMB per kilogram in the third quarter. Going forward, if we expect this transition to further accelerating, anti-products expand market share, leading to continued demand growth.
Sure base.
This seems to be the item.
Which has a major change quarter over quarter. So I would like to know what is the breakdown on the $89 7 million of SG&A because.
Prepared remarks.
$46 3 million of non cash share based compensation, but.
A reconciliation is $50 million, so we'd like to know how much just the original.
Share based compensation and how much is related to the resignation of.
Anita Zhu: To give an update on the company's 100 million share buyback program announcing November 2022, by the end of this September, the company had already purchased 8.1 million ADS for approximately $328 million US dollars. With an average cost of approximately $40.58 per ADS, combined with the program completed in 2022, and other things aggregate, the company has already purchased approximately 10 million ADS for approximately $448 million US dollars. While basic weighted average ADS outstanding for the third quarter was 74 million shares, total outstanding shares at the end of the third quarter were approximately 71.8 million shares. After fully reflecting our recently completed share repurchases.
It's all good.
Hi, all this.
Me.
I'll discuss the increase in SG&A expenses.
For the quarter, we had a total of $46 million in noncash share based compensation expenses.
Approximately half or approximately $23 million.
As laid to low risk.
<unk>.
Our previous CEO Mr. Logan.
And this actually is approximately 330000 shares.
<unk>.
His previous equity grant, which would be invested over the next two years.
But because of GAAP accounting rules and we are required to recognize this expense during the third quarter.
Xiang Xu: With the urgent need to address climate change, we're still at the very early stage of the energy transition from fossil fuel to renewable energy for human energy needs of Earth. As one of the most competitive forms of power generation, the continuous cost reduction in solar PV products and the associated reduction in solar energy generation costs are expected to create substantial additional energy demand. Which we believe is unlikely to exceed most analysts expectations.
Based on specific nation as we saw and this also would be recognized.
In terms of at the time of the grant.
Iraq, which was around $70 per share or so so that's what every quarter, the additional $23 million losses, and additional share based compensation costs.
So and the remaining is also primarily related to the other.
Xiang Xu: Solar PV is generally expected to eventually become one of the most important energies to power the world. In addition, as solar PV technology piece evolving, we believe that the increasing needs for very high purity poly, such as our entire fossil cost, will help differentiate us from most of our competitors. While many of our competitors will likely struggle in the current market and environment, Dr. New Energy has one of the best balance sheet in the industry with no financial debt.
As we mentioned expenses as well.
Would you expect this to normalize for the next quarter and we expect next quarter's G&A expense to be in the range of 35% to $38 million.
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Understood. Thanks, a lot.
Because it seems that Oh.
Other than.
The city, just because the increase in.
Xiang Xu: And we, as a whole, are confident that we will navigate the near-term market volatility successfully. We're optimistic that as the solar and market continues to grow and as our customers continue to transition to higher efficiency and type technology, we will benefit from this trend. Daco will continue to strive to maintain solid growth and capture the long-term benefit of the growing global solar PV market.
Expenditures quarter over quarter, it's like 46 minutes, so pulp a British.
One officer Cynthia also.
The increase in.
Oh expenses, so idose cash expenses.
Yeah. So I mean, some of the expenses related to for example shipping costs as we should have more volume for the quarter.
But the remaining is primarily to.
Xiang Xu: So regarding future outlook and guidance, we expect to produce approximately $59,000 to $62,000 of poly during the fourth quarter of 2023. And for full year 2023, we expect to produce approximately $196,000 metric tons to $199,000 metric tons of policy accounts.
The explanation cost.
Understood.
So.
The next question.
We can get you a buyback plan. So all we have already a buyback a.
A major portion of our 700 million buyback plan, but still we have quite a lot of bullets.
Ming Yang: So now I turn the call towards the full Mr. Ming Yang to sell deeper on the financial performance. Ming, please go ahead.
Are we planning to declare dividends or what is the plan to.
Execute the remaining of the Vicki Vicki yourself that would be meaningful for the buyback or dividend.
Ming Yang: Thank you, Anita, and hello everyone. Thank you for joining our third quarter earnings conference call today. Now I will discuss the company's third quarter financial performance. Drug news were 484.8 million compared to 636.7 million, the second quarter of 2023 at 1.2 million in the third quarter of 2022. The decreasing revenue compared to the second quarter of 2023 was primarily due to the decrease in average selling prices, benefited by an increase in sales volume.
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How are you setting their budgets.
You don't ever Miss Jonathon.
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Listen you see somehow.
Ming Yang: Gross profit was 67.8 million compared to 2568.9 million in the second quarter of 2023 and 978.6 million in the third quarter of 2022. Gross margin was 14% for the quarter compared to 40% in the second quarter of 2023 and 80% in the third quarter of 2022. The decrease in growth margin compared to the second quarter of 2023 was primarily due to lower average selling prices, which was partially mitigated by our lower production costs.
There won't be much Angie.
Yeah, John what is your content.
Sure.
Sure.
Regarding the 700 million of share back we have a remaining seven.
388 million left.
And because our CEO has just been in that position for a quarter and we have been in talks with our board and our management team and we have decided that we will continue to pursue their share repurchase program and we're committed to repurchase during the last quarter to whatever the.
Ming Yang: Selling general and administrative expenses were 89.7 million compared to 43.3 million in the second quarter of 2023 and 280 million in the third quarter of 2022. I will give a little bit more detail about the increase in SG&A expenses for the quarter as compared to the previous quarter. And this is primarily due to the resignation of expenses and the recognition of the remaining share-based compensation expenses due to the company's recent management change.
To whatever the upper limit would be.
So what we can do.
To repurchase on database data, but overall, we will continue to repurchase.
She was a woman named Joe Macaluso.
We just didn't know about them.
Ming Yang: The recognition of the remaining non-caps share-based compensation expenses consists of approximately 330,000 shares, which will be vested based on the investing schedule over the next two years. And based on the current share price, this is approximately $8 million in terms of expense. However, US gap growth requires that the company recognize the delayed expenses based on the share price of the time of grant and this would be approximately 23 million. In addition, our SG&A expenses during the third quarter includes a total of 46.3 million in low-pass share-based compensation costs, which it includes the above expense rate to the recent management change as I had mentioned.
Tickets it almost just yesterday.
Yes, we will buy back as much as we can in the last quarter.
Oh.
Thank you so you effectively need 318 the live in.
The remaining two months.
First of all yes, so that's as much as we could repurchase.
Okay. Okay. Thank you.
Yep Yep.
Okay.
I think that the charterer, although generally don't do that.
Global warming canola lines, you're completely answered your question.
But as it goes to the junket chartered with either John.
Sure.
There will not be sure to get out of it also comes with <unk>.
Okay.
Yes, we see the price of being very low point. So we are very committed to repurchase debt.
At this point.
Understood. So.
Yeah.
As communicated before the company May also consider to cancel those shifts.
Ming Yang: And so, and this compares to a total of 27.5 million of share-based incentives expenses during the second quarter of 2023. For the fourth quarter, we would expect our SG&A expenses to normalize and would be in the range of approximately 35-38 million dollars per quarter, inclusive of a non-caps share-based compensation cost. Research and development costs were 2.8 million compared to 2.2 million in the seventh quarter of 2023 and 2.5 million in the third quarter of 2022.
So is this still the plan or <unk> with the company canceled those shares.
How about yourself.
Yes.
It is the composite intention.
By year end, we would capsule.
The shares that will have to repurchase the company's intention is to cancel those shares.
The previous year.
Yes.
Yes that would definitely help a lot, but increasing the EPS as well so that's kind of a lot. So.
Ming Yang: Our D expenses vary from period to period at to reflect on the activities that take place during the quarter. And most of our D activities currently is focused on increasing the percentage of end-type polyphonic ends for the company's for four exchange gains with $2.1 million for the quarter compared to a loss of 19.7 million in the 10 quarter of 2023, as is attributed to the volatility and fluctuation in the U.S, dollar and R and B.A, change rates during the quarter.
Then my last question here is.
<unk>.
Well what is your view.
On the call or next year.
What do you think you will be you're.
Protection plan.
Capacity based on the current capacity.
And lastly, what is the progress on your semiconductor grade polysilicon.
Okay.
Yeah.
BNET is unable to warm up by Ed do come with Oklahoma.
Ming Yang: And as the above mentioned, income from operation was 22.5 billion compared to 213 million in the 10 quarter of 2023, 693 million in the third quarter of 2022. Operating margin was 4.6%, compared to 33.6%, the second quarter of 2023 and 56.8% of third quarter of 2022. The loss at the hospital to Daqo New Energy shareholders was 6.3 million compared to net income to 133.3 million in the second quarter of 2023 and 323 million in the third quarter of 2022.
Yes, or no answer.
Suzanne.
Both of them and yes also.
Also under the do you want to add also under question Nathan.
<unk> finance.
So right now it wasn't 1 billion than Goodall.
Alibaba and the second one.
Yes.
The two boys some risks.
Patricia I'm kind of thing.
That's helpful.
Okay.
Uh huh.
First of all those things.
Oh for the production volume for next year.
Our cash around to 80000 metric tons to 300 mesh accomplishments that will also be a contingent upon.
Ming Yang: Mass per basic ADS for the quarter was a nice chance for share compared to earnings per basic ADS of $1.35 in the second quarter of 2023 at $4.28 in the third quarter of 2022. And just to net income, a non-gap attributable to Daqo New Energy shareholders, excluding non-cashable compensation costs was 44 million compared to 134.5 million in the second quarter of 2023 at $9.4 million in the third quarter of 2022. Just as earnings per basic ADS was 6.9% compared to $1.75 in the second quarter of 2023 at $7.81 in the third quarter of 2022.
<unk> progress.
Awesome.
Doesn't mean, yes, each under <unk>.
Yes, and for semiconductor will start pilot production at the end of this year, so far last year.
<unk>.
Uh huh.
So that's why I also at a high level right. So we will have full production on our Cingal. Our facility sits at around 130000, Mr time, and also a full production on our inner Mongolia phase one which is also an additional 100000 metric ton.
Leawood.
Our.
I'm going to a phase two to start production around mid year next year. So approximately based on 100000 metric ton capacity around 50000 metric ton production.
Ming Yang: If the Daqo was 70.2 million compared to 230 million in the second quarter of 2023 at $9.25 in the third quarter of 2022, in the Daqo New Energy shareholders was 14.5% compared to 36.1% in the second quarter of 2023 at $9% in the third quarter of 2022.
So that's why we think next year a range $2 80 to 300.
A very preliminary estimate is not an official guidance and we will have.
As a more.
Formal numbers based on what.
And then we'll go into a phase two is more closer to completion and start of production.
Okay. Thank you.
Ming Yang: Now I would like to provide some additional color related to our operations. So from a pure operation perspective, this would exclude the impact of the one-time destination cost and the non-cashable compensation cost of the U.S, list code. For our operating subsidiary, Xinjiang Daqo, it recorded a pre-tax earnings of 888 million RMB or approximately 121 million U.S, dollars, and net income of 689 million RMB or approximately 94 million U.S, dollars. Daqo New Energy currently owns approximately 72.4% of Xinjiang Daqo and Daqo New Energy shareholders' allocation of the operating net income should be approximately 52.4 million excluding the amount of capital-counting related expenses.
Yes, very clear thanks, a lot.
Thank you.
Thank you.
Thank you. Our next question come from Ondrej <unk> from the corporate Ravi Corporation. Please go ahead.
Hello, Sir just so I understand repurchasing in the last Ah I liked the total shares outstanding decreased finally.
I wanted to ask one more question. So my first question is.
How much more we'll share.
<unk> shares would be issued for management compensation plans in the next one year or two years.
What we see.
$40 million or something like that is share based compensation. That's the first question and the second question, you have 350 million or something like that repurchasing glass.
Last quarter, you were stating that you will finish it by the end of the quarter by the end of the year. So we'll be expecting Q4 for you to deploy all of these capital load or as much as possible and at an accelerated pace compared to the.
Ming Yang: And now on the company's financial condition. As of September 30, 2023, the company had 3.28 billion dollars in cash and cash equivalence in Lucinda Cash compared to $3.17 billion as of June 30th, 2023, at $3.05 billion as of September 30th, 2022. And as of September 30th, 2023, no suitable balance to company was $200.76 million compared to $799.00 as of June 30th, 2023, and $1.57 billion as of September 30th, 2022. No suitable balance to present bank notes with maturity within six months.
Tito quarters. So till now you bought in Freeport, there's like $300 million.
Telling us that you will buy $200 million or even 300.
What is left in the last quarter you'd one quarter.
Yeah.
Yes.
Okay.
Okay.
Okay.
Okay.
Thank you Joe.
Ming Yang: And now the company's cash flow. For the nine months ended September 30th, 2023, net cash provided by operating activities was $1.49 billion compared to $1.7 billion in the same period of 2022. And for the nine months ended September 30th, 2023, net cash used to invest in activities was $900.64 million compared to net cash used to invest in activities of $600.00 in the same period of 2022. Net cash used to invest in activities in the 3.25, 2023 was primarily related to capital expenditures on the company's policy and project in Baltic City, in the Mongolia, inclusive of both phase 1 and phase 2.
Regarding the share repurchase yes.
We can turn to your purchase based on the rule, we can repurchase around 220 to $2 50.
Million.
U S dollars in the last quarter and it will definitely accelerate we'll keep that piece.
Okay.
Okay, and how many in quarter four I don't know what the exact number but if you have it on the top of your head or something around that what how many shares will be issued for share based compensation, if I'm not wrong. This quarter. It was like 45 million, but last quarter. So Q2.
You had like a $170 million or something like that you had to.
Larger one time. So my question is for Q4, how many shares will be issued for share based compensation.
Ming Yang: And for the nine months ended September 30th, 2023, net cash used to invest in finance activities was $602 million compared to net cash provided by the new activities of $1.4 billion in the same period of 2022. Net cash used to invest in finance activities was $3.4 billion to $0.23 billion, was primarily related to $300.22 million in share repurchases, and $300.3 million in dividend payments made by the company Shindong.gov subsidiary to its minority shareholders. The company continued to maintain a very strong balance sheet which can cash balances a note financial debt, as well as healthy operating cash flow.
For management.
In aggregate around 350000 shares.
300000 shares something like that so that's all right.
Thanks.
$94 today's price, it's okay, not even $1 million and share based compensation.
Okay. Okay.
Okay last question is.
Two questions left.
You stated in last quarter, and I really like that in the transcripts and the earnings call you stated in August.
You will consider issuing shares in 2024.
The Shanghai listed shares.
The 75% ownership that glow in your energy has.
And you would consider selling shares there to buy shares on the stock exchange. So my question is when will that be available is it two years out third IPO or in what months of next year next quarter next year sorry.
Operator: And with that concludes our prepared remarks. Operator, we will now open the line to questions from the audience. Thank you. Now begin the question and answer session. To ask a question you may press star than one on your touch phone. For you to speak your phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. It's time will pause momentarily till it's time will be lost.
Okay.
Yeah.
Philip Shen: First question will be from Philip Shindong.
Yeah.
Xiang Xu: Well, MKM, please go ahead, sir. Hi everyone, Mr. Shue Ming. Thanks for taking my questions. I wanted to explore your view on polysilicon pricing for Q4. You came in with about $7.70 for Q3, for the program, and wanted to see what your expectations are for Q4. And then also for the beginning of next year, and then by year end 24, or do you see a recovery, or do you expect a policy-like pricing to remain at the front of us? Thanks.
Yeah.
But what are your general thoughts.
Well, Mike Cuda, Colombia.
Hello, Mr. Chairman, good I can handle the newbuild market.
Okay.
This is <unk> Li.
Thank you.
Thank you gentlemen.
Jamie Thank you.
Tommy Bahama.
So yes, we will.
We thank you for the suggestion that we will consider that proposal and in fact I think by July next year, we are able to sell the shares being issued and then use that amounts to continue maybe employ deploy another share repurchase plan for 2024.
Do you have any idea.
It's not an estimate of what these share repurchases. After you finish this share repurchase this year that $750 million.
Xiang Xu: Okay, Mrs. Xu will provide commentary first, and Anita will provide a translation. [inaudible] Mr. Liu, Mr. Liu, Mr. Liu, Mr. Liu, Mr. Liu,[inaudible] Liu, Mr. Liu, Mr. Liu, Mr. Liu,[inaudible] The price in the first quarter, around 65 to 70, the price range is primarily driven by humanity. So Christmas and Chinese New Year, and that causes lower demand, so that's primarily the price in January and February, but price that recover starting in March.
So you have like 300 million that they're beyond the $50 million. So my question is what will the scale of the 'twenty 'twenty four repurchase program b or other dividend yields for investors in the New York Stock exchange shares Im talking in the queue on your stock Exchange Hey, do you have any idea or if you could comment on that.
And thank you very much for all your answers very very nicely.
Okay.
Hello. Thank you. Thanks for your question.
Uh huh.
Still early.
Say or to estimate what the program side.
It'd be like.
Yeah.
Starting in July of 2024, after the three year lockup period for our Asia listing.
So the U S.
New LNG is able to start to sell down some of its shares of the Asia listing.
So I'll just start on numbers.
Assuming that we say sell downs event.
Minor 10% stake in <unk> based on the current valuation of the Asia listing, which is roughly 70 billion RMB right. So we could potentially raise.
Somewhere in the range of $7 billion.
So little capital and while I would expect that majority of this could be used.
For share repurchase.
The U S.
I see.
Listing.
Okay, very nice way, how you stated it.
So Dr <unk>, New energy just for all shareholders and for me also to understand we own 75% of the Shanghai lifting right. It's such a rudimentary question, but I just wanted to make it clear.
That's question number but yes.
That's right at 72, 4% to be exact yet, but thats right, yes, yes.
The discount to do thing, Okay, and the last question and then final one what will be what was the free cash will be for a 20% before or how much capex last quarter I really liked how management talk to you the earnings call and I just wanted to make a revamp of what's happened this quarter. So capex you talked last quarter.
Actually Ming Yang stocks I think the last thing you always plan or whatever.
She talked that's how.
How much Capex is left.
Integrated than before what will the outflow what would the capex be it the day before.
How much is left feedback.
Okay.
Yes.
The end of the third quarter, So total cap capex remaining for the companies.
Major projects, including in the Mongolia baseline in amongst our phase II semi project is approximately.
Six.
<unk> 5 billion RMB or approximately $900 million or so and then of that we expect for the third quarter totaled Pac Capex plan Capex is around <unk>.
$2 7 billion RMB four roughly.
300, yes.
I mean, you would be well.
For the next year, yes, so thats the total Capex plan right now.
So what is left in 2000 2040 is the $900 million right.
Xiang Xu: And that's the price for P-Type. For P-Type, we see a price premium of around 5 to 10 RMB for kilogram. Okay, got it, thank you, one more question for me and then I'll pass it on. As it relates to the industry structure, and given these low prices, there are a lot of companies that might be having trouble with driving profit.
Or that is minus <unk> 300.
$6 million to $700 million approximately.
Okay and in 2025 do you have any major plans yet or is there any capex contributed to five which is eccentric like about $500 million.
No no plan right now.
Okay. So we'll go to phase two or phase one with a very good luck. Okay. Thank you very much you are very very nice. Thank you bill.
Thank you.
Okay.
Yes.
Thank you next question will be from Jackie healthy capital. Please go ahead.
Xiang Xu: So just curious, if you can talk about what he sees ahead and can he talk through, you know, does he expect certain companies to stop production or even accelerate, you know, what does he see for the evolution for the industry in the coming six months? Thanks. But the cost of our cost is the most advantageous. At that time, it was about 60,000 yuan. We know it's about 50,000 yuan. It's about 50,000 yuan.
Oh.
I want to tell me about the cancellation of the shares just now.
Yeah, I'd just add that at the end up yet that might be cancellation of the ship.
We would like to know.
Just cancel all of it.
At the end of the year.
At the end of gigabit Sabic chances are we so what is the schedule of the cancellation of that yeah.
In detail.
<unk>.
Okay, most likely it will be one time around the end of the year and we would likely cancel much almost all if not.
The majority if not all of this year that we group question I think most likely all of the shares that we repurchase at that time will be canceled.
Okay. Thank you.
We also want to know.
Do you consider any dividend ups and I'll.
Xiang Xu: Now in China, it's about 50,000 yuan. The cost of our cost is about 30,000 yuan per year. It's about 50,000 yuan per year. In the first quarter, you know, it's about 90,000 yuan per year. In the first quarter, it's about 90,000 yuan.
Dividends for the company.
[noise].
Xiang Xu: [inaudible] So given that they don't have enough cash, not enough cash, and the financing route is still to be limited now, they will be struggling in the coming in the quarters. So we certainly see industry supply gas spend going for in the coming months, as well as the industry balancing and normalize. Okay, got it. Thank you for the color. I'll pass it on. Great, thank you so. Thank you.
Goodbye.
Here, we are our priority this year will still be in our share repurchase plan.
We just stated we will continue to repurchase our shares as much as we can and for next year, we will construct split between <unk>.
Another share repurchase program or issue a dividend that will be contingent upon board approval and we'll need to.
Delve deeper into that and considered the plan, but as of now.
Our primary goal is to complete as much as we can in terms of the share repurchase plan.
Okay. Okay. Thank you that's all my questions.
[noise]. Thank you. Our next question will be from Gordon Johnson <unk>.
<unk> research. Please go ahead.
Okay.
Hey, guys can you hear me.
Okay.
Hello.
Yeah, Hi.
Hey, Thanks, Hey, Thanks for taking my questions.
So.
A lot of my questions have been answered, but there seems to be some concern amongst some of our on the ground contact in China that there could be grid issues with respect to the massive amount of solar that's been installed this year.
Over the first nine months of a close to a 130 gigawatts in China, suggesting we could get 172 gigawatts for the full year 2023, that's amazing that's great for you guys, but.
Alan Lau: Next question from Alan Lau, Jeffrey, please go ahead. And I'm thinking about that. Yeah. Thanks a lot. Thanks a lot for taking my question. Thanks, Mrs. Xu and also Ming for the prepared remarks. So I would like to have more clarity on the share base expression. As with this seems to be the item which has a major change quarter of a quarter. So we'd like to know what is the breakdown on the $89.7 million of S.C.M.A.
But what we're hearing is that could potentially cause issues with respect to grid to next next year, unless you could get flat to down installs in China. Two questions number one have you heard this number two if you have what are your thoughts and then I'll follow up thank you.
Alan Lau: Because in the prepared remarks, there was $46.3 million of non-cash share base commentation but in the reconciliation is $50 million. So we'd like to know how much is the original share base commentation and how much is related to the resignation of Ms. Long-Gun.
Okay.
Yeah.
Hey, John.
Yeah.
If you didn't get that.
To the best centers are working because it seems to be coming down.
Okay.
Thank you Danielle good July.
Ladies and gentlemen, your commitment.
So just wondering vehicles.
Ming Yang: Hi, Alan, this is Ming and I will discuss the increase in S.C.M.A, expenses. So for the quarter, we had a total of $46 million in non-cash share base commentation expenses. And of that approximately half or approximately 23 million is related to the resignation of our previous CEO, Mr. Long-Gun. And this actually is approximately, again, $330,000 shares of his previous equity grant, which would be vested over the next two years, but because of gap accounting rules, and we are required to recognize this expense during the third quarter based on its resignation.
So what they want natural gasoline.
Try not to go out and do that.
Just one question that you Pat Russo.
Yeah.
And on the coaching.
Congratulations you guys.
Ming Yang: And this also would be recognized in terms of at the time of the grant, which was around $70 per share or so. So that's how we recorded a $23 million in non-cash share base commentation costs. And the remaining is also primarily related to his other resignation expenses as well.
The issue there.
John passengers on these.
You said this again.
So in particular, the Shanghai, Paul, which Encana and you've got some water.
Do you assume that the enthusiasm to continue.
So sika.
EMEA.
Sure.
Good luck to you can get some of that.
As you know.
Okay, Let me translate for Mr. <unk>.
So even though this year.
Awesome and 130 gigawatt has already been installed and let's just seems still very optimistic about the overall escalation.
Tier within China.
Great question.
And again he is actually an expert.
On the grid side has been a supplier of equipment to the pie for much of the grid for many many years.
Hey, thanks.
Next year it could be approximately 200 gigawatt.
Ming Yang: But we do expect this to normalize for the next quarter. And we expect next quarter's share base to be in the range of $35 to $38 million per quarter. And that's a lot. So because it seems that other than these expenses, because the increase in expenses quarter of a quarter is like 46 million. So probably this 24 million is one of the things that are also other increase in expenses. So are those cash expenses? Yeah, so I mean some of it is expensive related to, for example, shipping costs as we ship a more volume for the quarter. Yeah, but the remaining is primarily related to the destination cost.
What's happening here in China is one is it is the.
Chairman, Jim King's goal and its mandate that that China to deploy significant amounts of renewable energy.
And also the.
National Energy administration is very proactive in terms of allowing and requiring actually local grids too.
Except as much energy as possible at the same time, China is building significant amount of capacity and energy storage to that storage it could reach.
Highest 10% of the overall power generation for China over time.
In the near term.
Hello, exploring technology, including not just battery storage, but also in terms of hydrogen storage as well.
Well as a.
Hydro or.
Alan Lau: So the next question, switching gear to a buyback plan. So we have already buyback a major portion of our 700 million buyback plan, but still we have quite a lot of bullets. So are we planning to declare dividends or what is our plan to execute the remaining of the, making use of the remaining funds for the buyback or dividends? [inaudible] and we are going to be able to do it at the end of the year, and we are going to be able to do it at the end of the year, I think it's not much of a challenge, it's not quite good, it's not much of a challenge.
Water based type of LNG story. So this is all happening within China, So I think I'm combining.
All of these factors, including.
The mandate from Chairman should <unk>, we do believe that China will.
Renewable energy, particularly solar market will continue to grow for next year.
Okay. That's helpful. And then one last one for me.
And again congratulations on your prior of execution guys really good in the poly market.
So we've heard that there was in September there was roughly 60 gigawatts of output.
Yet the market only absorbed 40 gigawatts.
And again, we're hearing that there could be perhaps on the market.
200, Gigawatts in 2024, so just wanted to hear your thoughts on if indeed those numbers are accurate is there the potential for some of your competitors.
Potentially shut down capacity slash idled capacity, that's making the market better.
We entered the first half of 'twenty four thank you Dan.
Okay.
Let's turn that canceled.
Yeah.
T J C. Nolan clients, so if we can't get to below.
Hello <unk>.
Please go to Australia.
John Glass.
The other tenant with John on the patterns of a so so let opinion, where you can't attack.
<unk>, which is about two patents.
You can find a solution.
So you're going to do that in our future.
Oh My Gosh, Richard how are you doing what as you Joe and good job.
The good news is a good tool Janet Jackson a day shutdown.
I have stated on prior work, but are you also with <unk>.
So you just have to go through <unk>.
Congrats <unk> intuitive.
So more to go.
So <unk> seen a linear feed.
Can you just want to ask obviously loss as a result.
Sure.
Zooming media doing what he did with turbo down there.
Washington at 1% so it is for Sam Moore.
So we finished the conversion to visit some of us.
Yeah.
Cancel.
Once again.
Thank you Thomas.
Davidson.
Yes.
Okay.
<unk>.
Which originally and its one that <unk>.
Okay.
It was totally Yokohama, the accretion as well.
So as you know JJ you tack on there, but it really just has a good trend yeah. So thats what im sure that you should see ebbs and agenda actually disappear.
Yes. So for this quarter, we have seen that wafer has some inventory due to seasonality reason. So for instance, our downstream players are customers like xiaomi on Tcl.
Alan Lau: So it is a comforting tension that I think by year-end, we would cancel off the shares that we have repurchases. So the company tension is to cancel those shares, the purchase shares. That would definitely help a lot in increasing the ETS as well. So yeah, that's a lot.
We from what we know that their utilization rate has dropped to 50% for overall for wafer utilization.
Utilization rate is still around 78% and up because module price has kept falling down.
Ming Yang: So I think the last question here is, so what is your view on the next year? Like, what do you think you will be your production plan? Is it full capacity based on the current capacity? And lastly, what is the progress on your semiconductor grade policy? [inaudible] Thank you very much. Regarding the share we purchased, yes, I think we can purchase based on the rule, we can be purchased around 220 to 250 million US dollars in the last quarter and it will definitely accelerate, we'll keep that pace.
Seeing that there should be around 20 gives a lot of inventory by year end.
And also at the beginning of the year, but there should be some new changes going forward into next year, and we forecast that China should be able to reach and even exceed 2200 gigawatt next year. Because there are some new policies launch is in gallon gone through inner Mongolia et cetera.
Regarding the question on <unk>.
Our competitors those who don't have any competitive advantage what have no edge in this market given the low price and.
Yes, they would be they would have some struggles.
Sorry, I think shutdown equally minutes shutdown and idling of some capacity is actually a likely situation.
Noncompetitive players.
Industry.
Financial water systems are having somebody will add some legacy you've got somebody youll see Disney.
Just need it to now use did you show a <unk>.
Doing well.
We were multimedia control.
And we see a fantastic. Thank you.
Yes.
Yes, first players and our industry costs and quality are the two primary and the key factors and gain an edge in the competitive landscape and as a company we have the lowest cost and there are high quality. So we believe that we can sustain works.
<unk> position in the market.
Thanks again guys.
Great. Thank you. Thank you.
We will take our last question, there's one more.
Thank you the next and final question will be from Frank Barlow of Nomura. Please go ahead.
Thanks, Mr Hu.
Mr. Yao for taking my question.
Just I think this question has been addressed.
To.
Reconfirms that we do not consider.
Amortization.
I'll speak to you today.
And then the second question.
The voting rights of shares hold them I imagine hold by management is equal to those.
Hello, Amit.
Or to your common shareholders. Thank you.
Frank can you repeat the second question.
Yes. My second question is about voting rights of shares hold my hold by management.
All the board members I wonder if the low teens.
One one to one ratio.
Holding by minority shareholders. Thank.
Thank you.
Is that correct.
Hey, guys just a bunch of Hanmi is good you can see a weather issue.
Candidly the Sudan.
Yeah, we don't have any plans in terms of prioritization of the point, but we all see how the market evolves, but as of now we don't have any plans in terms of prioritization this year and in the coming years.
Okay.
Regarding your second question regarding voting right. So.
The majority shareholder does not have super voting rights. So they do have the same one to one voting right.
The minority shareholders or the public shareholders.
Ordering rates are the same amongst shareholders.
Thank you Mr. Chen.
Thanks, Steve.
Great. Thank you Frank.
Okay, operator, I think that concludes the session.
Yes. So that concludes the question and answer session now I'll turn it back to management side for closing remarks.
Ming Yang: Okay, and how many in quarter four, I don't know the exact number but if you have it on the top of your head or something around that, what how many shares will be issued for share best compensation, if I'm not wrong this quarter it was like 45 million but last quarter so Q2, you had like 120 million or something like that, you had a larger one time. So, my question is for Q4, how many shares will be issued for share best compensation for management?
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Ming Yang: 300,000 shares, something like that, so that's around 300,000 times $24 today's price, okay, not even $1 million in share best compensation, okay, last question is actually I have two questions left, you stated in last quarter and I really like that in the transcripts and the earnings call, you stated in August that you will consider issuing shares in 2024 in the Shanghai listed shares, the 75% ownership that new energy has and you would consider selling shares there to buy shares on the international exchange, so my question is when will that be available, is it two years after IPO or in what month of next quarter, next year, starting? [inaudible] Do you have any idea, not an estimate of what this sharey purchase after you finish this sharey purchase of this year, the 750 million, so you have like 300 million left or 300 million left.
Ming Yang: So my question is what will the scale of the 2024 report just program be or other dividend yield for investors in the New York Stock Exchange shares I'm talking in DQ on New York Stock Exchange. If you have any idea or easy could comment on that. And thank you very much for all your answers. It's very, very nice for you. Thanks for your question. So it is still early to say or to know what the program size might be like.
Ming Yang: But you know starting in July of 2024, after the three year lock up period for our Asia listing. So the US, Daqo New Energy is able to start to sell down some of its shares of the Asia listing. So I'll just start on numbers. So let's assume that we say sell down even a minor 10% stake, you know, based on the current valuation of the Asia listing, which is roughly 70 billion RMB, right?
Ming Yang: So we could potentially raise in a somewhere in the range of 7 million on be also in capital. And I would expect the majority of this could be used for sure, which is in the US, NYFC listing. That's the current. Very nice way how you stated it.
Ming Yang: So Daqo New Energy, just for all shareholders and for me also to understand, we own 75% of the sharing high listings, right? It's such a rudimentary question, but I just want to make it clear and it's the stupidest question ever. But yeah. That's right. I certainly 2.4% to be exact. Yeah, but that's right. Yeah, the discount is insane. Okay.
Ming Yang: And the last question and final one, what will the free cash flow be for 2024 or how much capital has last quarter? I really like how management talked in earnings hole. And I just want to make a revamp of what happened last quarter. So capital stocks last quarter, actually Ming Yang stocked, I think the last CEO, if I'm or whatever, she talked that how much capital is left in 2024? What will the outflow, what will the capital be for the data before around how much is left in this?
Ming Yang: Okay. So also the end of the third quarter. So total cash package remaining for the company's major projects, including in the Mongolia phase one, in the Mongolia phase two, and our semi-project is approximately 6.5 billion RMB or approximately $900 million or so. And of that, we expect for the third quarter total of the capital's plan is around $2.7 billion RMB or roughly $300 million, and the remaining would be spent for the next year. So that's the total capex plan right now. So what is left in 2024 is the $900 million, right? Or that is minus the 300? That? That's $6,700 million, approximately. Okay.
Ming Yang: And in 2025, do you have any major plans yet? Or is there any capex in 2025 which is eccentric like about $500 million? No, no plan right now, currently. Okay, so Mongolia phase two or phase one, whatever is the last thing.
Ming Yang: Okay, thank you very much. You are very kind, very nice to hear you. Thank you.
Operator: Next question will be from Jackie. I will see Capitol, please go ahead.
Jackie: Hello, I want to tell you about the cancellation of the shares. Just now, you said that at the end of the year, there might be cancellation of the shares. We would like to know, will you cancel all of it by the end of the year or at the end of the year, you will start the chance. So what is the schedule of the cancellation of the shares in details? Do you have plans?
Jackie: Okay, most likely, it will be one time around the end of the year and we would likely cancel almost all if not all. The majority is not all of the shares that we would purchase. I think most likely all of the shares that we would purchase at that time will be canceled.
Jackie: Okay, thank you. And we also want to know, do you consider any dividend option for the company? For this year, we are, our priority this year will still be the share of repurchase plan. We, as we just stated, will continue to repurchase our shares as much as we can. And for next year, we will contemplate between another share repurchase program or issuing dividends. That will be contingent of palm board approval and we will need to delve deeper into that and consider the plan. But as of now, our primary goal is to complete as much as we can in terms of the share repurchase plan.
Jackie: Okay, okay, thank you. That's all my questions.
Operator: Thank you.
Gordon Johnson: Our next question will be from Gordon Johnson, GLJ Research. Please go ahead. [inaudible] Hi. Hi. Hey, thanks. Thanks for taking the question.
Gordon Johnson: So a lot of my questions have been answered, but there seems to be some concern amongst some of our on the ground contacts in China that there could be grid issues with respect to the massive amount of solar that's been installed this year. I mean, I think over the first nine months, we're supposed to 130 gigawatts in China, suggesting we could get 172 gigawatts for the four year 2023. That's amazing. That's great for you guys, but what we're hearing is that could potentially cause issues with respect to grid to next next year, and thus you could get flat to down installs in China.
Xiang Xu: Two questions. Number one, have you heard this. Number two, if you have, what are your thoughts in a follow up? Thank you. [inaudible] I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry[inaudible] I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry for next year. Okay, that's helpful.
Xiang Xu: And then one last one for me. And again, congratulations on your prior execution, guys. We're really good in the polymarket. So we've heard that there was in September, there was roughly 60 gigawatts of output, yet the market only absorbed 40 gigawatts. And again, we're hearing that there could be caps on the market of 200 gigawatts in 2024. So just wanted to hear your thoughts on, if indeed those numbers are accurate, is there the potential for some of your competitors to potentially shut down capacity slash idle capacity, that's making the market better as we enter the first half of 24?
Xiang Xu: Thanks again. [inaudible] So I think you know Shadang in coming minutes, Shadang, an island of some capacity. It is actually a likely situation for non-competitive players, looking at industry. The four players in our industry, cost and quality are the two primary key factors in getting an edge in this competitive landscape. And as a company, we have the lowest cost and there are high quality, so we thought we can do same work, position in the market. Thanks again, guys. Great. Thank you.
Operator: We'll take our last question. There's one more.
Frank Vaughan: Thank you.
Frank Vaughan: Next, the final question will be from Frank Vaughan of No Romance. Please go ahead. Thanks Mr. Xu and Mr. Yang for taking my question. I think this question has been addressed in Singapore. I just want to reconfirm that we do not consider any privatization planning this year and also being the next year, right? And there's a second question is, are the voting rights of shares hold my management is equal to those voting rights hold my minority commission holders?
Frank Vaughan: Thank you. Sorry Frank, can you repeat the second question? Yeah, my second question is about voting rights of shares hold my hold my management or the board members. I wonder if the voting rights is similar as one to one ratio to those shares hold my minority share holders. Thank you. We don't have any plans in terms of privatization at the point, but we will see how the market goes. But as of now, we don't have any plans in terms of privatization this year and in the coming years.
Frank Vaughan: Okay. And regarding your second question regarding voting rights, so the majority shareholder does not have super voting rights. So they do have the same one to one voting right as the minority shareholder or the public shareholder, on the street. Thank you. Thank you, Frank. Okay.
Operator: Operator, I think that concludes the session. Yes, I conclude the question answer session. I'll turn back the management side for closer and more. Thank you, everyone, again for participating in today's conference call. So, should you have any further questions? Please do not hesitate to contact us. Thank you and have an awesome day. Goodbye. Thank you, Mr. Duke. Conference call today. Thank you for attending the presentation. You may now disconnect.