Q4 2023 Daqo New Energy Corp Earnings Call

February 28, 2024

Operator: Good day, and welcome to the Daqo New Energy fourth quarter and fiscal year 2023 results conference call. All participants will be in the listen-only mode.

Good day and welcome to the Doc when you energy fourth quarter and fiscal year 2023 results conference call.

All participants will be in the listen only mode.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touchtone phone.

Should you need assistance. Please signal a conference specialist by pressing the star key followed by Seattle.

After todays presentation, there will be an opportunity to ask questions.

To ask a question you May Press Star then one on your Touchtone phone.

Operator: To withdraw your question, please press star 92. Please note that this event is being recorded. I would now like to turn the conference over to Ms. Anita Hsu. Please go ahead.

To withdraw your question. Please press Star then two.

Please note that this event is being recorded.

Okay.

Yeah.

I would now like to turn the conference so what do I mean tushar.

Please go ahead.

Thank you Hello, everyone I'm Anita sure the Investor Relations dropped off when you announce it.

Anita Hsu: Hello everyone, I'm Anita Xu, the investor relations manager of Daqo New Energy. Thank you for joining our conference call today. Daqo New Energy just issued its financial results for the fourth quarter and fiscal year 2023, which can be found on our website at www.dqsolar.com.

Thank you for joining our conference call today.

And if you just issued its financial results for the fourth quarter and fiscal year 2022 which can be found on our website at www dot DQ solar dot com.

Anita Hsu: Today, attending the conference call, we have our Chairman and CEO, Mr. Xiang Xu, our CFO, Mr. Ming Yang, and myself. The call today will begin with an update from Mr. Xu on market conditions and company operations. And then Mr. Yang will discuss the company's financial performance for the quarter and the year ahead. After that, we'll open the floor to Q&A from the audience. 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.

Today attending the conference call, we have our chairman and CEO, Mr. John <unk>, our CFO, Mr. Ming Yang and myself the call today will begin with an update from Mr. Hu on market conditions and company operations and then Mr. Yang will discuss the company's financial performance for the quarter and the year after that well open the floor to QM.

From the audience.

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.

Anita Hsu: These statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those containing any forward-looking statements. Further information regarding these and other risks is included in the reports or documents we have filed with or furnished to the Securities and Exchange Committee.

These statements involve inherent risks and uncertainties a number of factors could cause actual results to differ materially from those containing any forward looking statements.

Further information regarding these and other risks is included in the reports or documents, we have filed with or furnished to the securities and Exchange Commission.

Anita Hsu: These statements only reflect our current and preliminary view as of today and may be subject to change. Our ability to achieve these projections is subject to risks and uncertainties. All information provided in today's call is... As of today, we undertake no duty to update such information, except as required under applicable law. Also, during the call, we'll occasionally reference monetary amounts in 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.

These statements only reflect our current and preliminary view as of today and may be subject to change.

Our ability to achieve these projections are subject to risks and uncertainties.

All information provided in today's call it.

As of today, and we undertake no duty to update such information, except as required under applicable law.

Also during the call well occasionally well know Lee referenced monetary amounts are in 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.

Anita Hsu: Mr. Xu will make his remarks regarding current market conditions and company performance in Chinese, which I'll translate into English after he finishes. Now I'll turn the call over to our CEO. Thank you, Anita.

Mr Shore will make his remarks regarding current market conditions and company performance in Chinese, which I'll translate into English after he finishes.

Now I'll turn the call to our CEO.

Thank you Anita wasn't sure Douglas scenario, let's see you Guy here that you're on time, you're out there knocking them off we.

Xu Xiang: I am the CEO of Daqo New Energy Corp., Xu Xiang. Thank you for attending today's conference. 2020 is a year full of challenges for the solar industry; around the world, banyak is boarding the status quo from the frazione quickly. In 2023, we successfully achieved 19.7831 trillion tons of annual greenhouse gas emissions, reaching our goal of 41.6 to 19.9 trillion tons. Compared with the production in 2022, which was 3.812 million tons, it increased by 47.8 percent. The sales volume has also reached 200,000 tons. Compared with the production in 2022, which was 2.909 million tons, it has increased by 50 percent. 2023,,,,,,,,,,,,,,,,,,,,,,,, Although the average unit price has fallen significantly, our income has decreased from US$4.6 billion in 2022 to US$2.3 billion in 2023. However, the increase in sales volume has to a certain extent offset the decrease in unit price.

Oh, and you already answered town a hernia.

Thank you T D.

And you were trying to do they are probably I shouldn't you lose at tusa towards English was on tanker ships, reaching at least for you and then you can see on the foundry.

Well many times there is danger to the full.

Yeah.

Did you hear me okay.

Yeah.

Well, it's almost as yeah. So Julien Chabot, saying you went into the end of the third you can go to 10, now Buffalo and they're certainly not a new thought should you didn't you wondering if Saddam Hussein.

And now you're on your own and not so sound yeah semi your one one day unchanged from December.

So that you didn't buy shoveling or your thought on I also wanted to do on their own.

So sanya audio Ninja wondering sundar I'm never sure.

Can you tell us what time do you see you're not their only all Danielle onions, and well wishes on Jonathan that's what you knew that you did the board.

Oh, Yeah, Oh, yeah. So did we in going to sorry, how are you.

Tobey so they're convenient jogger chicken until you go with it you walk so all in all of their needs or to the Orange, Belgium Jogger Kai This is Doug.

English rather than yeah. So on your own and Magoon game sounds all deal with somebody but I wish I could answer on when you're going to.

Yes Obama.

So in my opinion.

I wish I had you on top of a woman that's little so on their own and that's what do you mean you at.

And I'll tell you my.

That's just another thing got so even some of the children shows a 10 day shutdown.

Of course, Oh, they're all done in the mall it is challenging.

You said that you didn't you.

The goals of that Oh.

Oh, yeah, well sit here you mean, where is it I can hand that Suzanne forgive me. It was Oh you asked you for that.

I was in India goes as I'm sure you're always trying to you made that change vehicle usual tells you you could you wish and the argument there.

Jesus you woman, Andy I'm, not touching with Gd. It shows you why he she's a citizen and doesn't it.

So that's all new again.

You didn't you didn't used to Linda John Sorry had you lived in Dallas Center on Saturday and Sunday.

He says you go Oh, my God I'm, not English Hindi so they'll know.

With that challenge yourself, well I'm going to time it right yeah buses are pretty daunting.

So it means that you can indeed.

Yeah sure can you just gotta enclosure.

So it actually was down in the cell phone calls it down to those children.

So again as John.

And she says you though.

I'm eager to glasses auction don't you do that.

You'll note that timber Hudson their phone minutes children niche Oh, my goodness impasse of the union on it well.

Well I mean, it that way so not too much.

Xu Xiang: The company got a very good record in Millionen in 2023 with a record 29.7 million, surpassed by that of 5 million. The company's cash inflows in 2020 were about $1.6 billion. We maintained a healthy asset-to-asset ratio without any negative debt.

Yeah Oh.

Jesus you do a job, Georgia junior towards your shot Shabu.

Maybe I'm equally well the aging grid are telling me and tell me is that sorry, Eugene Anderson Ginger Nat cat She answered answer I'll get you to that.

So as you like about you me and she said you had your journey is supposed to go because I understand you well.

Well my audio.

It wasn't easy took English only right now you would do well in our new D O N E.

Xu Xiang: By the end of 2023, the company's cash balance will be $3.1 billion, and the cash and transport ticket balance will be a total of $3.2 billion. In the 4th quarter, our two-story Doujinggui Base will continue to operate optimally and improve production capacity.

Oh.

Well the jewelry IMU vishal.

Yeah.

Oh, Hey, Osten, Yeah, China is something that now that all of the Boeing so it sounds I Wonder Joe Oh, there was an incident.

Yeah.

And yes, there's only two English isn't that yeah, Jeremy I suppose the ones that you got with just enough. So that you can see them well without Jamul you why are you surely she's changing crude I'll tell me what's under the.

Xu Xiang: The total production will reach 6.1 million tons. In 2014, it increased by 3,350 tons. In the past few years, our high-quality N-type polyethylene products have met the strong needs of our customers. Our product inventory has also remained at a very low level so that we can effectively combat the next storm by the end of the year. The price gap between high-quality manufacturers and newcomers is getting more and more obvious in the fourth quarter, although the market is competitive.

How is amir.

Awesome.

You don't just use your phone Oh quadrant Gordon.

Gosh, I didn't totally in Virginia as well Julien.

Jim you guys are maybe jon's disorder, often make when he was over there so.

So she goes okay. So yeah, yeah cool.

If we've been talking to the idea.

Shawn it's Kevin.

And you'll get bought out this year. So it was a footballer you guys. I mean me Mailer talent given the time you talked about you would begin to.

Yeah, So I'm going to get to why don't you just forgot someone doesn't really know what to.

I know the chisel chunky, so he hasn't gotten that much I know you all that you do this or not.

She's our bodies you seem to.

No.

And that's the last time that you are jumping on it it turns out you got D. C. So we've got a lot of them.

Xu Xiang: However, due to our continuous lead in cost and quality, we are still able to attract customers. Our unit production costs are gradually declining. In 2023, the fourth quarter was about 1.2 USD per kg, which was about the same as last year. In December, we sold about 60% of our new concrete materials.

Oh, Oh there he is.

I'm sorry.

[noise] opinion doesn't reach out got somebody to go and you know it was a little dog theres about yet that maybe co mingling. It was oh, yeah, well with all this all yeah and then just on the I was in the summer well means you can reach out and just sort of talk about changes that you're kicking you off at new vendor be argued that which we wouldn't do she didn't show it sounds odd shot and you can send you that well watch out right.

Xu Xiang: Overall, although the market conditions are challenging, we achieved 1.28 billion USD in the fourth quarter. We continue to save money and keep an objective cash flow. We expect that the total production of 1GW in 2020 will reach 60,000 tons, or 6.2 million tons. Compared to the fourth quarter of 2023, we plan to launch 5G projects in Mongolia in the second quarter. Therefore, we expect that the total production of 2020 will reach 280,000 tons or 300,000 tons, and the growth rate will be between 40% and 50% in 2023. With the 10th anniversary of the production experience of 1GW, a comprehensive digitalization strategy, and a highly integrated production system, we will further optimize operating efficiency. Even if the N-type material is more expensive in the Taiwan-U.S. combination, in 2024-2027, due to the slowdown in the demand for energy and the expansion of the stock market, the price of silicon has fallen. The price of silicon increased from RMB87 per kg in September to RMB65 per kg in December.

In public content.

She has imposed time in the courtyard downtown Philadelphia.

To shop as you tell me if I'm a Yankee will need you. She said she is on yours and it is.

Susan.

Challenge in that they go into Asia, and do you agree that huge whose job was the challenging we gotta go junior.

Oh yeah.

So now that's on a couple of the Chinese Yuan Codell Thiago gesture. She doesn't want that is almost is on the city of violence yourself when you're in the toilet.

Well, what you and the tragedy.

It's a new name for what you are talking at least there's some golf told me is there's not that many vessels about yogi dissolve it somewhat.

Yeah, well, Washington Trust.

Sure Yeah as I tried to I shouldn't say, John you know as soon as he should have gone well funded some of the Buda well you tell me did you just needed a follow up on you jumped hasn't panned out.

The way that we are done here, where it's almost all of that period of time, you get any of that.

Well Mitch Yankee.

John you like ancient timing to the higher does she was a day when Logan is only towards you're able to say it goes to the courtyard agent at a time.

Because it was supposed to watch and you'll watch a magical what my job my job I walk triangle called mortality. So he's done at that.

So don't you think if you go to a woman she.

Oh, Yeah, well my Daniele did you mention that concerns.

So just hold on I'm Gonna Ito.

Xu Xiang: From a demand point of view, in October, based on the process, the price will be lowered within a month. In terms of high-volume production, the effective production growth is lower than expected, and the price gap between the second and third-tier cities is directly reduced. The price of A-type and P-type energy is 65 to 68 RMB per kg and 55 to 62 RMB per kg, respectively. In the first half of 2020, we expect that the Dow Jones price will be negatively affected by China's economy and stable in the second quarter.

Well the J&J women that don't really usually you'll see that those English isn't necessarily what it's you'd see it well maybe you can just help US you know they're gonna doesn't usually jumps here soon he only.

She got time into little Angels go down.

Charlie you said that somewhat towards simply because this is all the other things again, a crunchy she's I'll use a gem with the doctor using the emotion that Super family just angle. So all of that well. If you don't want them until you come to the suite or the children younger a little to that.

What makes you what you have with you on your stomach she got shot at being she says.

I know that you will face.

Hello, everyone. This is I need Oh, now translate our CEO Mr. Xu remarks.

Slide 23, it was a year of unforeseen developments and challenges in the solar industry with record installation volumes worldwide, but also record low prices at the end of the year. Thanks to the dedication and invaluable contribution of her team we reached an annual lock on production volume of <unk>.

Xu Xiang: With downstream manufacturers stepping up to N-type top-con products, a high-priced P-type product will push the market to N-type products. We expect that in this trend, in 2020, the N-type market will be, 2023 will be a year of major breakthroughs in renewable energy growth. Globally, renewable energy has accelerated its transformation.

197.

831 metric tons in 2023 meeting our guidance of 196000 to 199000 metric tons, representing a 47, 8% year over year growth rate compared to 133812 metric ton produced in 2022, we sold 200.

Xu Xiang: The continuous growth of the solar energy industry in China has played a key role. In 2023, the amount of renewable energy was increased to 216.88 gigawatts, which is a historic increase, which is 148% higher than normal. In December, in particular, the amount of renewable energy was increased to 53 gigawatts.

And two metric tons, 50%, 50% higher than one three to 900 O nine much punting 2022.

Xu Xiang: This is one-fourth of the total amount of renewable energy increased in the past year. As the cost of renewable energy generation continues to decrease, renewable energy has become a highly competitive source of energy. It will continue to generate a large amount of additional historical energy supply. In 2023, we will gradually eliminate the foundation of P-type products.

Despite robust demand growth for solar PV product globally in 2023, the high poly prices driven by capacity mismatches between upstream and downstream players and the resulting supply shortages that we have seen in 2022, well alleviated by early 2023.

As a result, poly asp's decline significantly for the year to $11 per.

Curricula from $32 five for parochial again and not 2022.

Our revenue was $2 3 billion 2000, Twenty's do even compared to $4 6 billion in 2022 due to much lower E. S. P.

Xu Xiang: Therefore, we firmly believe that in 2020, a new era will come when N-type products will dominate the industry. Furthermore, we strongly believe that by further improving the quality of N-type products in companies and through digital transformation and optimization of product structures, we will ensure that the global mining industry will continue to receive long-term market opportunities and build a rivalry between our companies. In 2023, we will design more than 20 billion operating data in two Zoujingui production basins. We firmly believe that in China, we have the largest number of enterprises with Zoujingui production data. We have begun to try to use artificial intelligence technology to combine these data into N-type nomenclatures to reduce production costs and to use the relationship between the various manufacturing processes to finally predict the input range of the best-performing production models.

Decline was partially offset by the higher sales volume despite the challenging market market conditions gross margin still came in strong at 39, 9% for 2020.

The company has generated very strong operating cash flow of approximately $1 6 billion U S. Dollar for the year and continue to maintain a healthy balance sheet with no financial debt by the end of the year. The company had a cash balance of $3 billion and a combined cash and bank notes receivable balance of $2.2 billion Jane.

The fourth quarter continued optimization of operations and improvements in yields and throughput out of our two calling facilities resulted in total production volume of 61.

And 14 metric tons, an increase of 3003 350 metric tons compared to the previous quarter.

Fourth quarter saw solid demand from customers for our high quality untie poly and as a result, our finished goods inventory was at a very low level of which would have allowed us to effectively hedge against downside risks during the off season period close to the end of the year.

Anita Hsu: In the future, I believe that we will collect more data points and fully utilize artificial intelligence to enhance analysis. We hope to further reduce costs, improve efficiency, and improve production capacity. Now, I would like Anita to translate for me.

In Q4 as new capacity was released the price disparity became more apparent between high quality manufacturers and new entrance.

Despite fears market conditions due to the addition of poly supply will continue to maintain our leadership in both cost and quality.

Anita Hsu: I'll now translate our CEO, Mr. Jusk's remarks. 2023 was a year of unforeseen developments and challenges in the solar industry, with record installation volumes worldwide but also record low prices at the end of the year. Thanks to the dedication and valuable contribution of our team, we reached an annual public production volume of 197,831 metric tons in 2023, meeting our guidance of 196,000 to 199,000 metric tons and representing a 47.8% year-over-year growth rate compared to 133,812 metric tons produced in 2022. We sold 200,002 metric tons, 50% higher than 132,909 metric tons in 2022. Despite robust demand growth for solar PV products globally in 2023, the high poly prices driven by capacity mismatches between upstream and downstream players and the resulting supply shortages that we saw in 2022 were alleviated by early 2023. As a result, poly-ASPs declined significantly for the year to $11 per kilo from 32.54 per kilogram in 2022. Our revenue was $2.3 billion in 2023 compared to $4.6 billion in 2022 due to much lower ASPs, although the decline was partially offset by higher sales volume.

Compared to the end of last year, our production costs trended down quarter over quarter, reducing by approximately a 1.2 dollars per kilo from fourth quarter of 2022 compared to that in fourth quarter of 2023.

During the month of December our anti product mix reached approximately 60% overall, we maintain profitable despite the challenging market conditions generating $128 million in EBIDTA for fourth quarter and maintain a strong cash flow.

We expect our first quarter 2024 total power production volume to be approximately 60000 metric tons to 62000 metric tons similar to that for fourth quarter 2023, as the company maintains for production. We plan to begin and also production at our new inner Mongolia <unk> facility in the second quarter of 2020.

And as such we anticipate full year 2024 production volume to be approximately 280000 metric tons to 3000 to 300000 metric ton.

I say, 40% to 50% higher than in 2023.

With more than a decade of experience in poly production as well as a fully digitalized, our integrated production system that optimizes operational efficiency, well fairly increase anti production and the product mix.

The briefing on the industry poly prices in the fourth quarter declined from approximately approximately 87 RMB per kilo for motto game Poly in September two approximately a 65 RMB parochial in December primarily due to a seasonally lower demand.

On the demand side in October the ingot segment reduced utilization rates due to accumulated inventory and lower wafer prices and November N type module prices dropped below one RMB per watt for the first time in solar cell manufacturers could hardly make a profit on the supply side pulling production volumes in China continue to increase.

The month over month basis in Q4, and tier two and tier three manufacturers, including your engine contributed most of the girls in poly supply however, leading high quality manufacturers produced less than anticipated why do you mean, the price gap between high quality manufacturers and tube and tier two companies.

Anita Hsu: Despite the challenging market conditions, growth margins still came in strong at 39.9% for 2023. The company generated a very strong operating cash flow of approximately $1.6 billion U.S. dollars for the year and continued to maintain a healthy balance sheet with no financial debt. By the end of the year, the company had a cash balance of $3 billion and a combined cash and bank notes receivable balance of $3.2 billion.

At the end of December and type of P type poly prices came in at around 65% to 68, RMB per kilogram and 55% to 62 RMB per kilograms, respectively.

Going to the first quarter of 'twenty 'twenty four we accept poly prices to rebound slightly in Q1 seasonally affected by the Chinese new year, and then stabilize in Q2.

Anita Hsu: During the fourth quarter, continued optimization of operations and improvements in yield and throughput at our two poly facilities resulted in a total production volume of 61.14 metric tons, an increase of 3,350 metric tons compared to the previous quarter. The fourth quarter saw solid demand from customers for high-quality anti-poly, and as a result, our finished goods inventory was at a very low level, which has allowed us to effectively hedge against downside risks during the off-season period close to the end of the year. In Q4, as new capacity was released, the price disparity became more apparent between high-quality manufacturers and new entrants.

The market transition to N type products have been accelerating our downstream producers continue to switch to anti products driven by the higher price premium for N type for anti popcorn products over P type PERC products. We expect this trend to continue throughout 2024 with strong demand for high purity and high quality in a market with tight supply.

Overall 2023 was an odd percent personal dentist ear, marking a step change for renewable energy growth.

Global acceleration in the transition to renewable energy was primarily driven by China's booming solar market with new solar PV capacity, reaching a record high at two six teen 0.8 Gigawatts.

Why not 48% year over year growth. This search was particularly evident in December when China out of 53 gigawatt, which is roughly a quarter of the entire year's additional capacity.

So what has become 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.

Anita Hsu: Despite fierce market conditions due to the addition of polysupply, we continue to maintain our leadership in both cost and quality. Compared to the end of last year, our production costs trended down quarter over quarter, reducing by approximately $1.2 per kilo from the fourth quarter of 2022 compared to that in the fourth quarter of 2023. During the month of December, our anti-product mix reached approximately 60 percent.

So what 2023 are setting the stage for gradually phasing out P type product, we believe that two.

2024 will mark the year, one anti product dominates the industry. We are optimistic that we'll capture the long term benefit of the growing global solar PV market and maintain our competitive advantage by enhancing our higher efficiency N type technology and optimizing our cost structure through digital transformation.

In 2023 alone we collected more than 20 billion manufacturing process data points at each of our poly production facility.

Anita Hsu: Overall, we remain profitable despite the challenging market conditions, generating $128 million in EBITDA for the fourth quarter and maintaining a strong cash flow. We expect our first quarter 2024 total poly production volume to be approximately 60,000 metric tons to 62,000 metric tons, similar to that for the fourth quarter 2023 as the company maintains for production. We plan to begin initial production at our new Inner Mongolia 5B facility in the second quarter of 2024. As such, we anticipate full year 2024 production volume to be approximately 280,000 metric tons to 300,000 metric tons. Approximately 40 to 50 percent higher than in 2023. With more than a decade of experience in polyproduction, as well as a fully digitalized and integrated production system that optimizes operational efficiency, we'll further increase end-time production in the product mix.

We believe that we have one of the largest pools of collected and stored poly production data amongst our peers in China.

So we have gone out to apply AI to the vast amount of data to help increase the proportion of N type in our product mix and reduce our production costs by identifying relationships across the street processes and ultimately are predicting the optimal important parameters that will yield the best production results, we expect that as we collect.

More data and further leverage our AI powered analytics to provide additional insights we'll be able to further reduce costs achieve higher efficiency and increase productivity.

So now I'll turn the call to our CFO, Mr. Ming Yang who will discuss the company's financial performance for the quarter and then please go ahead.

Thank you Anita Hello, everyone Who's Ming Yang CFO thoughtful new energy. We appreciate you joining our earnings conference call today I'll first go over the company's fourth quarter 2023 financial performance and follow with our full year 2020 financial result.

Revenue for the fourth quarter of 2023 were $477 million compared to $484 8 million in the third quarter of 2023, and $864 3 million in the fourth quarter of 2022.

Anita Hsu: Debriefing on the industry, poly prices in the fourth quarter declined from approximately 87 RMB per kilo for monograde poly in September to approximately 65 RMB per kilo in December, primarily due to seasonally lower demand. On the demand side, in October, the NGET segment reduced utilization rates due to accumulated inventory and lower wafer prices. In November, N-type module prices dropped below 1 RMB per watt for the first time as solar cell manufacturers could hardly make a profit.

The decrease in revenue compared to the third quarter of 2023 was primarily due to a decrease in sales volume mitigated by increasing S. P.

Mr. She mentioned earlier, there's people Q4 was $7.90 per kilogram, which was three 8% above Q3 ASP of $7 68 per kilogram.

Gross profit was $87 2 million compared to $67 8 million in the third quarter of 2023 and.

Anita Hsu: On the supply side, poly production volumes in China continued to increase on a month-over-month basis in Q4, and Tier 2 and Tier 3 manufacturers, including new engines, contributed most of the growth in poly supply. However, leading high-quality manufacturers produced less than anticipated, widening the price gap between high-quality manufacturers and Tier 2 companies. Near the end of December, n-type and p-type polymer prices came in at around 65 to 68 RMB per kilogram and 55 to 62 RMB per kilogram, respectively. Going into the first quarter of 2024, we expect Polly prices to rebound slightly in Q1, seasonally affected by the Chinese New Year, and then stabilize in Q2. The market transition to N-type products has been accelerating as downstream producers continue to switch to N-type products, driven by the higher price premium for N-type PropCon products over P-type PERC products.

669 million in the fourth quarter of 2022.

Gross margin was 18, 3% compared to 14% in the third quarter of 2023 and 77% in the fourth quarter.

Of 2022, the increase in gross margin compared to the third quarter of 2023 was primarily due to a higher average selling price and lower production costs.

Despite an 8% increase in silicon metal procurement costs in Q4, compared to Q3, well matched to reduce costs.

Slightly due to improvements in utilization as well as other improvements in manufacturing efficiency.

SG&A expenses were 39 million compared to $89 7 million in the third quarter of 2023, and 44 million in the fourth quarter of 2022.

<unk> expenses during the fourth quarter includes $19 6 million in noncash share based compensation expense related to the company's share incentive plan compared to $46 3 million in the third quarter of 2023.

R&D expenses were $3 3 million compared to $2 8 million in the third quarter of 2023, and $2 7 million in the fourth quarter of 2022.

Anita Hsu: We expect this trend to continue throughout 2024 with strong demand for higher purity and high quality in a market with high supply. Overall, 2023 was an unprecedented year, marking a step change for renewable energy growth. The global acceleration in the transition to renewable energy was primarily driven by China's booming solar market, with new solar PV capacity reaching a record high of 216.88 gigawatt, a 148% year-over-year growth. This surge was particularly evident in December when China added 53 gigawatt, which is roughly a quarter of the entire year's additional capacity. Solar power has become one of the most competitive forms of power generation.

R&D expenses can vary from period to period reflect R&D activities that take place during the quarter.

R&D activities for the quarter were primarily related to quality improvement and anti product research.

Foreign exchange loss was 0.8 million compared to a gain of $3 1 million in the third quarter of 2023 and vascular to the volatility and fluctuation in the U S. D C.

C N Y exchange rate during the quarter.

Income from operations was $83 3 million compared to $22 5 million in the third quarter of 2023, and 623 million in the fourth quarter of 2022.

Operating margin was 17, 5% compared to $4 six plus in the third quarter of 2023, and 72, 1% in the fourth quarter of 2022.

Anita Hsu: The continuous cost reduction in solar PV products and the associated reduction in solar energy generation costs are expected to create substantial additional green energy demand. So with 2023 setting the stage for gradually phasing out P-type products, we believe that 2024 will mark the year when n-type products dominate the industry. We are optimistic that we'll capture the long-term benefits of the growing global solar PV prop market and maintain our competitive advantage by enhancing our higher efficiency n-type tech technology and optimizing our cost structure through digital transformation. In 2023 alone, we collected more than 20 billion manufacturing process data points at each of our poly production facilities. We believe that we have one of the largest pools of collected and stored polyproduction data amongst our peers in China. So we have begun to apply AI to this vast amount of data to help increase the proportion of untyping in our product mix and reduce our production costs by identifying relationships across discrete processes and ultimately predicting the optimal input and parameters that will yield the best production results.

Net income attributable to adopt the new energy shareholders was $44 9 million.

Compared to a net loss of $6 3 million in the third quarter of 2023.

Net income of $332 7 million in the fourth quarter of 2022.

Earnings per basic ads were 64 cents compared to loss per basic ads of license in the third quarter.

Earnings per basic ideas of $4.26 in the fourth quarter of 2022.

I'll just I'll just the net income attributable to <unk> shareholders, which excludes noncash share based compensation cost was 66 million compared to 44 million in the third quarter of 2023 and $263 million in the fourth quarter of 2022.

Adjusted earnings per basic Ats was 94 cents.

59% in the third quarter of 2023 and $4.65 in the fourth quarter of 2022, EBITDA was $128 2 million compared to 70 million in the third quarter of 2023.

649 million in the fourth quarter of 2022, EBITDA margin was 26, 9% compared to 14, 5% in the third quarter of 2023 and 75% in the fourth quarter of 'twenty two.

'twenty two.

Now I will go over the company before year 2023 financial results.

Anita Hsu: We expect that as we collect more data and further leverage our AI-powered analytics to provide additional insights, we'll be able to further reduce costs, achieve higher efficiency, and increase productivity. So now, I'll turn the call over to our CFO, Mr. Ming Yang, who will discuss the company's financial performance for the quarter. Ming, please go ahead. Thank you, Anita.

New for 2023 was $2 3 billion compared to $4 6 billion in 2022, the decrease was primarily due to lower.

Polysilicon average selling prices and partially mitigated by higher sales volume.

Gross profit was $920 7 million.

23 <unk>.

234 billion in 2022 gross margin was 39, 9% compared to 74% and 20 point to the decrease in gross profit was primarily due to lower average selling price.

Ming Yang: This is Ming Yang, CFO of Daqo New Energy. We appreciate you joining our earnings conference call today. We'll first go over the company's fourth quarter 2023 financial performance, then follow with our full year 2023 financial results. Revenue for the fourth quarter of 2023 was 477 million compared to 484.8 million in the third quarter of 2023 and 864.3 million in the fourth quarter of 2022. The decrease in revenue compared to the third quarter of 2023 was primarily due to a decrease in sales volume, mitigated by an increase in ASP.

G&A expenses were $213 million compared to 254 million in 2022. The decrease was primarily related to a reduction in noncash share based compensation costs related to the company's share incentive plan.

R&D expenses in 2023 were 10 million compared to $10 million in 2022.

And income operations was $783 4 million compared to <unk> 3 billion in 2022 operating margin was 33, 9% compared to 66% in 2022.

Net interest income was $2 3 million compared to $14 5 million in 2022. The increase in interest income for 2023 was due to the company's higher cash balance I think.

Ming Yang: As Mr. Xu mentioned earlier, ASP for Q4 was $7.90 per kilogram, which was 3.8% above Q3 ASP of $7.68 per kilogram. Gross profit was $87.2 million, compared to $67.8 million in the third quarter of 2023 and $669 million in the fourth quarter of 2022. Gross margin was 18.3 percent, compared to 14 percent in the third quarter of 2023 and 77 percent in the fourth quarter of 2022. The increase in growth margin compared to the third quarter of 2023 was primarily due to higher average selling prices and lower production costs. Despite an 8% increase in silicon metal procurement costs in Q4 compared to Q3, we managed to reduce costs slightly due to improvements in utilization as well as other improvements in manufacturing. SGA expenses were $39 million compared to $89.7 million in the third quarter of 2023 and $44 million in the fourth quarter of 2022.

Income tax expense was 174 million compared to 577 million in 2022.

Net income attributed to Dr. <unk>, new energy shareholders for the full year of 2023 was $421 million compared to $1 8 billion in 2022.

Earnings per basic Ats were $5.64 compared to $24 in 2022.

non-GAAP adjusted net income attributable to alcohol nuance to shareholders with $554 million compared to $2 1 billion in 2022.

Earnings per basic 80 S were $7.42 in 2023.

To $27.97 in 2022, EBITDA was $918 6 million compared to 3.15 billion in 2022, EBITDA margin was 39, 8% compared to 68, 4% point in 'twenty two.

And now on the company's financial condition.

As of December 31, 2023, the company had $3 billion in cash cash equivalents and it's just the cash compared to 3.28 billion as of September 32023, and two.

$2 5 billion.

As of December 31, 2022.

Ming Yang: H&A expenses during the fourth quarter included 19-point-6 million in non-cash, share-based compensation expense related to the company's sharing incentive plan compared to 46-point-3 million in the third quarter of 2023. R&D expenses were $3.3 million compared to $2.8 million in the third quarter of 2023 and $2.7 million in the fourth quarter of 2022. R&D expenses can vary from period to period and reflect R&D activities that take place during the quarter.

At the end of 2023, the bank notes receivable balance was $116 million compared to $275 8 million as of September 30 of 2023 and $1 one 3 billion.

31 2022.

Notes receivable, representing bank notes with maturity within six months now.

Now on the company's cash flow.

12 months ended December 31, 2023, net cash provided by operating activities was 1.61 billion compared to 2.46 billion in the same period of 2022.

Ming Yang: Our activities for the quarter were primarily related to quality improvements and end-type product research. Foreign exchange loss was 0-point-8 million compared to a gain of 3-point-1 million in the third quarter of 2023, and this was attributed to the volatility and fluctuation in the U.S. dollar and the CNY exchange rate during the quarter. Income from operations was $83.3 million, compared to $22.5 million in the third quarter of 2023 and $623 million in the fourth quarter of 2022. Operating margin was 17.5 percent, compared to 4.6 percent in the third quarter of 2023 and 72.1 percent in the fourth quarter of 2022. Net income attributable to Daqo New Energy shareholders was $44.9 million compared to a net loss of $6.3 million in the third quarter of 2023 and net income of $332.7 million in the fourth quarter of 2023.

For the 12 months ended December 31 2023.

Cash used in investing activities was $1, one 9 billion compared to 998 million in the same period of 2022 net cash used in investing activities. In 2023 was primarily due to the companies have to expenditures on the company's five might be a pause of expansion projects and capital city in Mongolia.

And for the 12 months ended December 31st 2023, net cash used in finance activities was 295 million compared to 1.47 billion of net cash provided by financing activities in the same period of point in 'twenty two.

Net cash used in finance activities was 23 pound mainly related to 486 million in share repurchases and $303 million in dividend payments made by the company subsidiary Chignon Darko to its minority shareholders on the China's Asia market.

And that concludes our prepared remarks, we will now open the call to Q&A from the audience operator, please begin.

Thank you.

We will now begin the question and answer session.

To ask a question you May Press Star then one on your Touchtone phone.

If youre using a speakerphone.

Please pickup your handset before pressing the keys.

Ming Yang: Earnings per basic ADS was 64 cents, compared to a loss per basic ADS of 9 cents in the third quarter and earnings per basic ADS of 4 dollars and 26 cents in the fourth quarter of 2022. The net income attributable to Daqo New Energy's shareholders, which excludes non-cash share-based compensation costs, was $66 million, compared to $44 million in the third quarter of 2023 and $3 Adjusted earnings per basic ADS was 94 cents compared to 59 cents in the third quarter of 2023 and $4.65 in the fourth quarter of 2022.

If at any time. Your question has been addressed and you would like to withdraw your question. Please.

Please press Star then two.

At this time.

We will pause momentarily to assemble our roster.

Okay.

Oh.

Yeah.

The first question comes from Phil Shen.

With Iraq.

Jim.

Please go ahead.

First one is on the outlook for price.

You said in your prepared remarks that poly prices could rebound in Q1, and then stabilize in Q2 can you quantify what N type and PCI pricing could be in Q1, you know when you say rebound slightly you know what does that mean and then would you expect that to just be flat in Q2.

Then if you have any view on what poly pricing does in the back half of 'twenty four.

That would be very helpful. Thanks.

Yeah.

Uh huh.

So my name is Jacqueline.

Ming Yang: EBITDA was $128.2 million compared to $70 million in the third quarter of 2023 and $649 million in the fourth quarter of 2022. EBITDA margin was 26.9 percent compared to 14.5 percent in the third quarter of 2023 and 75 percent in the fourth quarter of 2023. 20 points.

He did all marching.

Martha.

Okay.

Someday.

Oh, Oh Oh.

They're all of a sudden and the jogger well, Michael Sousa, who will misgender will need to go.

On the future, who am I going in there.

Well you don't want to sell many of those are the Chugger H two degree.

So does that mean.

It's a J P J.

So your Chevron and.

Ming Yang: Now I will go over the company's full year 2023 financial results. Revenue for 2023 was $2.3 billion, compared to $4.6 billion in 2022. The decrease was primarily due to lower polysilicon average selling prices, and partially mitigated by higher sales volume.

She doesn't go so this is on the boiler.

Partially answer your peers, you know conjecture.

So based on our understanding of the market supply and demand and our own forecast we.

I expect that in the first half and type will range between 70 to 73 RMB per kilogram, while P type will be around 65, RMB per kilogram and in the second half depending on demand whether it will exhibit a.

Ming Yang: Gross profit was $920.7 million for 2023 compared to $3.4 billion in 2022. Gross margin was 39.9% compared to 74% in 2022. The decrease in gross profit was primarily due to a lower average selling price.

My recovery and the growth, we expect that and tied might rebalance to 80 RMB per kilogram in P type around 75 RMB per kilogram.

Ming Yang: H&A expenses were $213 million compared to $354 million in 2022. The decrease was primarily related to a reduction in non-cash share-based compensation costs related to the company's share incentive plan. On the other hand, the expenses in 2023 were $10 million compared to $10 million in 2022. The income operations were $783.4 million compared to $3 billion in 2022. Operating margin was 33.9% compared to 66% in 2020. Net interest income was $52.3 million compared to $14.5 million in 2020. The increase in interest income for 2023 was due to the company's higher cash balance at the bank. Income tax expense was $174 million, compared to $577 million in 2020.

Got it and can you explain the dynamics for what's going on and why there could be that or expansion of price is it have you seen.

From an industry structure standpoint have you seen many players exit or shut down and.

Do you expect utilization.

<unk> to be lower tried it.

Having limited supply or do you expect the demand to be you know the offsetting.

Factor, resulting in you know.

The higher price.

Oh sure sure.

Yeah.

Unfortunately, you were kind of possibility for me I'm sure tonnage routine hydrosol rely heavily shopped y'all in Sweden.

Sure.

Hum.

I'm Gonna tool.

Yeah.

That's helpful.

Okay.

So oh, so therefore, Mr sheet, Okay in terms of dynamic right. So if we look at the current market. We are actually in a share at a relatively low end market demand.

We think.

The current end market movement in terms of our module production utilization is probably only.

Ming Yang: Net income attributable to Daqo New Energy shareholders for the full year of 2023 was 421 million compared to 1.8 billion in 2022. Earnings per basic ADS were $5.64 compared to $24 in 2022. Non-GAAP adjusted net income attributable to Daqo New Energy shareholders was $554 million compared to $2.1 billion in 2022. Adjusted earnings per basic ADS was $7.42 in 2023 compared to $27.97 in 2022.

60 to 70 per cent compared to say the September level.

Last year, so and but this already brings us to N type poly in the 70 to 73 RMB range M. P type.

In the sixties range right.

Much.

The improvement from the December.

The level of pricing. So we do think going into the summer when their demand level recover rather than let's say that they can recover to the level that we saw in the August September timeframe. That's certainly we think you know.

It can easily go back to the 80 RMB level, while P type policy the 70 RMB.

And in terms of what we're seeing the market well overall, we are seeing a relative oversupply of poly relative to demand.

Specifically, we will look at the N type poly, we based on industry statistics.

Ming Yang: EBITDA was $918.6 million compared to $3.15 billion in 2022. EBITDA margin was 39.8% compared to 68.4% in 2022, and now on the company's financial condition. The company had $3 billion in cash, cash equivalents, and interested cash compared to $3.28 billion as of September 30, 2023, and $3.5 billion as of December 31st, 2020. At the end of 2023, the bank note receivable balance was $116 million, compared to $275.8 million as of September 30, 2023, and $1.13 billion as of December 31, 2022. Notes receivable represent bank notes with maturity within six months, now in the company's cash flow.

There's only around 60 to 70000 metric ton of supply per month, while our the demand we think actually exceeds a 100000 metric tonnes a month based on the amount of N type cell capacity that has been.

Put in place in the market. So we do believe we will continue to see a very strong demand robust email for N type.

A tight supply market.

Going forward and actually that's what we're seeing today, even if our N type <unk>.

Products.

Great. Thank you I mean do you think.

From a capacity standpoint friendship or do you see others trying to ramp up that.

Type of poly capacity and do you think they can be successful to try to close the gap or.

Do you expect this.

Difference between supply and demand.

Understood.

Supply situation, but how long could that last you know cause that lost about a year or do you think if it's a yes.

Maybe just six months or could it last for.

Number of years. Thanks.

One of those yet.

So shouldn't that be also seen huge niche at Hong Kong tenants in there you should see most of the bedroom.

Ming Yang: For the 12 months ended December 31st, 2023, net cash provided by operating activities was 1.61 billion compared to 2.46 billion in the same period of 2022, and for the 12 months ended December 31, 2023, net cash used in investing activities was $1.19 billion compared to $998 million in the same period of 2020. Net cash used in investing activities in 2023 was primarily due to the company's capital expenditures on the company's 5A and 5B policy expansion projects in Mongolia. And for the 12 months ended December 31st, 2023, net cash used in financing activities was 795 million compared to 1.47 billion of net cash provided by financing activities in the same period of 2020.

Promotions anxious to Tim Evans.

You'll still feels like she is.

Yeah, well I'm, a digestion that the woman tenants has there been unusual touches to Jack.

Engine engine as your tenant woman has a good pohang Jana, let you down so don't worry about when they talk about Goldman capital.

Now shifting gears.

Ancient Guido.

Awesome.

Well Jeremy.

So angie.

Well Julia owning Austin, you actually don't complaint combined.

Convenient.

So you should think Susanna just based on that.

So our N type.

Production in our product mix has been between 60% to 70% as of now and based on our awareness our peers.

We have a top players like <unk>, it's somewhat similar to our.

Entire production level.

But for the new players they have they are almost incapable of producing that type at the current stage. So we believe that this year it will still be a market, where there is tight and tight supply.

Okay, great. Thank you one last one and I'll pass it on.

Operator: The net cash used to invest in finance activities in 2023 was primarily related to 486 million insured purchases and 303 million in dividend payments made by the company's subsidiary Xinjiang Daqo to its minority shareholders in China's Asian market. And that concludes our prepared remarks. We will now open the call to questions from the audience. Operator, please begin.

<unk> is down 30% year to date.

What's your view or thinking around another buyback program could you add more to the program or restarted and is that something that you're interested in doing.

Oh, okay.

Fabulous.

So everybody in the home.

There was a lot of cellphone Waygal has got off we go.

It wasn't just for Gigamon.

Gigamon jogger.

Question is Randy as it goes those are in oncology, where a woman who goes of the fleet unchanged generally agricultural Virginia, well near you soon.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone, if you're using a speakerphone.

And you do go to women to see several young and if we can dive Shanghai just outperform in the future.

When do you if at all.

The total net Yana, what Virginia goes away as they are called.

Susana This is a chart that Luna.

Luna.

So does it go so goes on ground as it got.

Operator: Please pick up your handset before pressing the key. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our operating system, www.qa.gov.au. The first question comes from Phil Shen with Roth MKM. Please go ahead.

Chihuahua I mean now you said that you want so you know when we get those really and as you know John as you saw when we are kind of just Susanna.

She doesn't want.

You may wish it Schindler charter doesn't a woman with a whole Mrs.

With all of them.

Good to go.

Of course, it is a good thing underpins all women all youll figure out how does it go up and this is after the bill so Amazon that women's only warmer.

Uh huh.

Well now youre going to monitor your woman.

Phil Shen: The first one is on the outlook for price. You said in your prepared remarks that polyprices could rebound in Q1 and then stabilize in Q2. What does rebound slightly mean? And then, do you expect that to just be flat?

It's.

It's a good phone that's a good choice for that one major carrier.

Because of the woman that those will move Atala <unk> <unk> pools.

Close enough she didn't want necessarily.

And essentially our political front would you want well manage it well.

Xu Xiang: If you have any view on what poly-pricing does in the back half, that was. Thank you. Thank you, http://www.qq.gov.au. What do you think of the price? According to market demand and research of the supply chain, I think the price of N-type is between 70 and 75 cents, and P-type is between 65 cents.

Hello.

We go home phone is javan.

Yeah.

Well. Thank you. Thank you felt so we are first of all we are very confident in our company's operations and we have sufficient cash flows that man has mentioned previously.

However, as the market is currently undergoing tremendous challenges and there are a lot of unforeseeable market dynamics happening. The board is keeping a close eye on the current market conditions and see how it evolves as time goes and we believe that we.

Xu Xiang: In the second half of the year, according to the market's warm-up, A-line should be around 80 yuan, and B-line may be around 75 yuan. So, based on our understanding of the market supply and demand and our own forecast, we expect that in the first half, n-type will range between 70 to 73 RMB per kilogram, while p-type will be around 65 RMB per kilogram. And in the second half, depending on demand and whether it will exhibit a slight recovery and growth, we expect that n-type might rebound to 80 RMB per kilogram and p-type to around 75 RMB per kilogram. And can you explain the dynamics of what's going on and why there could be that expansion of price? Is it, have you seen from an industry structure standpoint? Many players exit or shut down and...

Still want to maintain a very healthy balance sheet to survive in this market and two under the current conditions.

That being said we have we are still considering the share repurchase plan, but that will be contingent upon.

The ACO dividend plan, which the ACR board will discuss and oppose they decide on the Asia dividend planned for 2023, we believe that we will get back to our investors about whether it will release another share repurchase program or via.

Uh huh.

Methods to increase shareholder confidence like dividends.

Okay. Thank you very much I'll pass it on.

Xu Xiang: Thank you. Will prices be lower as a result of having limited supply? Or do you expect demand to be offsetting?

Okay. Thanks, Phil.

Thank you.

The next question comes from Alan Lowe.

Xu Xiang: Resulting in, Thank you. For more information, visit www.qa.gov. How do you feel about the current market? We think the current end market movements in terms of module production utilization are probably only an R&B sector improvement from the December level of pricing. So, we do think going into the summer, when the demand level recovers, let's say that it can recover to the level that we saw in the August-September time frame, then certainly we think n-type can easily go back to the 80s R&B level, while p-type is probably at the 70s R&B level.

From Jefferies. Please go ahead.

Thanks, a lot for taking my question.

And actually before we can restart is decent.

The challenging market situation. So a couple of questions. So first of all so what is the Capex plan for 2024.

Yeah.

Okay.

Hi, Alan does this mean.

So regarding the Capex plan. This year. So you have to look at are ongoing.

Capex projects right. So primarily those share it will be for the inner Mongolia phase two that's where we're spending most of our capex.

As well as some of the remaining payments on the inner Mongolia of phase one.

Xu Xiang: In terms of what we're seeing in the market, overall, we are seeing a relative oversupply of poly relative to demand, but specifically, when we look at n-type poly, based on industry statistics, we think there's only around 60,000 to 70,000 metric tons of supply per month while the demand, we think, actually exceeds 100,000 metric tons a month based on the amount of n-type cell capacity that has been produced We do believe we will continue to see robust demand for n-type in the Thai supply market going forward, and actually, that's what we're seeing today even for our n-type product. Great, thank you, Ming. You know, from a capacity standpoint for the n-type.

And there is.

Uh huh.

On the small payments on their semiconductor project that is expected to start production in this year and then our silicon metal.

Projects in both in the Mongolia inner Mongolia in Xinjiang, So from that perspective, our current capex budget for the year is around.

<unk> 8 billion to 9 billion RMB for 2020 four to implement the above projects and we're expecting that so in terms of U S dollars roughly 1.1213 billion in U S dollars and certainly the Capex fully funded.

Yeah.

Thanks, a lot. So following the question from so because some of the fastest also asking us to.

Xu Xiang: Do you see others trying to ramp up that n-type polycapacity, and do you think they can be successful in trying to close the gap, or do you expect this to continue? Supply and demand, the under-supply situation, how long could that last? Did that last about a year, or...

Yes 200 million.

Remaining from $700 million.

Buyback program last year. So this amount of cash is sitting offshore.

Xu Xiang: Maybe just six months, or could it last longer? I want to ask about the production capacity of N-type energy. For example, the new enterprises and our peers, what is the current capacity of N-type energy? We are now 10% of N-type energy. Thank you. Our production capacity is between 60% and 70%. Our peers, including Tongwei, are about the same as us. But there are relatively few new engineers. Very few.

And so Clinton Gen to any of the distribution from the Asia levels. So is there any preliminary plans like if dividend. This is open for full consideration because some of the key as some of the 80 hours have also announced.

Dividend payout, which has resulted in good.

Reaction from the market.

Yeah.

Npls landscape.

Got.

You'll never get Triple the coupon moved about Hollywood.

Well, what's critical here.

Susanna probably.

This is a good junior and Andy I think of me, yeah, well my email.

Xu Xiang: We have not yet reached production capacity. So far, I think the N engine is still in a state of public demand. So our untyped production in a product mix is between 60% to 70% as of now, and based on our awareness, our peers, especially the top players like Tongwei, it's somewhat similar to our untyped production level, but for the new players, they are almost incapable of producing untyped at the current stage, so we believe that this year it will still be a market where there's tight untyped supply.

I mean, that's a good one.

Does it go down when.

We got into June So you know what Michelle come their way still water to go under that jungle cruise look.

Foods.

Well most of it call it you'd been call it four months ago.

I'm on the phone with July until you're a woman doesn't go we go put them on July <unk>.

With the onslaught immediate withdrawal that she has done well. This was a machine I can assure you, though woman-to-woman why are you, saying that goes with it.

Regarding the 200 million remaining of our 700 million share repurchase program announced.

Phil Shen: Okay, great. Thank you. One last one, and then I'll pass it on.

Like Mr. Hu has mentioned previously that will be discussed after the a share dividend plan is set in stone.

Phil Shen: You know, the stock is down 30% year-to-date. What's your view or thinking around another buyback? Should we add more to the program or restart it?

And we will definitely consider whether to give off dividends or to rollout another share repurchase we believe that we will definitely consider it.

Xu Xiang: And is that something that you're interested in? I am very optimistic about the company's stock price. I think our company is a very healthy company. At present, we have sufficient cash flow. Our CEO, Yang, will discuss this issue with you in detail. Some questions can be asked of Mr. Yang.

One to increase confidence in our company and our management team here with aggregate incidentals.

Constant phone almost.

And.

And then maybe what you're doing before when it didn't sue washer dryer.

Does it meet your shelf says uncle Bob woman that's quick.

Xu Xiang: But at the same time, we are also considering this year's board meeting because the market is facing challenges. There are many unforeseen situations.

<unk> been a phone with your iPhone.

But what's your tenure at holiday and Blue Zone.

Oh I'm in touch with Dubai, you'll know pools with all my phone with students.

Xu Xiang: So our board of directors is now saying that we need to look at the changes in the market. See if there are any new challenges in the market. But we need to maintain our market. We need to maintain our company's healthy growth. We need a very good asset-asset ratio. So we, as Daqo New Energy Corp., need to look at our share price. The comment was, Thank you. Thank you. Thank you, Phil.

It's an H and Tunisia.

Well look on the auto dental carnival.

This issue is also a board member and she in Shandong Darkle and the payout ratio for 2023 is still not decided yet they have not convinced to have the board meeting for the Asia, all given that we cannot say for sure.

Anita Hsu: So, first of all, we are very confident in our company's operations, and we have sufficient cash flows as Minh has mentioned previously. However, as the market is currently undergoing tremendous challenges, and there are a lot of unforeseeable market dynamics happening, the board is keeping a close eye on the current market conditions and seeing how it evolves as time goes by. And we believe that we still want to maintain a very healthy balance sheet to survive in this market and to withstand the current conditions. That being said, we are still considering the share repurchase plan, but that will be contingent upon the A-share dividend plan, which the A-share board will discuss, and once they decide on the A-share dividend plan for 2023, we believe that we will get back to our investors about whether we'll release another share re Okay, thank you very much.

Sure.

What programs, we are going to roll out or what the amount will be but.

We hope that our investors could understand and once.

Our Xinjiang ductile analysis their dividend plans for the year, we it was announced at the same time and our board.

Scott.

Yeah.

Thanks, a lot that's very clear so switching gear two somewhat technical questions.

<unk> seen recently, there's some Ah trial in the downstream players in regards to our.

Cauliflower type anti poorly so.

I Wonder if that may help to believe be.

Shortage in anti Pony oral.

And also a new players.

Phil Shen: OK. Thanks, Phil. www.qa.gov Thank you. The next question comes from Alan Lau. From Jeffries, please go ahead.

To achieve.

That type of pure to even for the cauliflower type policy.

Thanks.

So two questions.

Alan Lau: Thanks a lot for taking my question. Actually, the 4K result is decent amid the challenging market situation. So, I have a couple of questions.

Scioto that shale, how helios and pencil M C C.

When youre buying from existing ones that civil cases will knock out and do that.

Yes.

Ming Yang: First of all, what is the CAPEX plan for 2024? Thank you. Thank you. Okay. Hi Alan, this is Ming.

But the rush of English as a cleanup.

Cleanup Hudson as usual well none of this shows you how.

How do you choose with us.

Southern Ohio, and Minnesota, Yeah, our Merrill Lynch one of them.

And until you wouldn't you you didn't know who I'm not shy to them look we don't talk women of premiums. So neither do the Jordan well, it's Atlanta, Georgia.

Ming Yang: So regarding the CapEx plan this year, so if you look at our ongoing CapEx projects, primarily this year will be for the Inner Mongolia Phase 2. That's where we're spending most of our CapEx, as well as some of the remaining payments for Mongolia phase one. And there are some small payments on the semiconductor project that's expected to start production this year. And then there are our silicon metal projects, both in Mongolia and Xinjiang. So from that perspective, our current CapEx budget for the year is around 8 billion to 9 billion RMB for 2024 to implement the above projects. And we're expecting that

Sure.

Well my gradual and more generally as well.

With that I'll show you how many.

So I'm going to add.

So we have been talking with our downstream players.

T C L O you're all very appropriately.

Based on our understanding there's still it's still very difficult to produce on time with other let's.

Let's say cauliflower hype poly there still.

A very high barrier to.

To tackle.

And we are keeping an eye on the new technology, but based on our understanding it there's still a huge step toward.

Alan Lau: So in terms of U.S. dollars, roughly 1.1 to 1.3 billion U.S. dollars. And certainly the CapEx is fully funded. Thanks a lot.

I'm, making on type of cauliflower Holly.

Thank you that's very clear my.

Xu Xiang: So, following the question from Phil, because some investors are also asking as to whether there's $200 million remaining from the $700 million buyback program last year. So, this amount of cash is sitting offshore already, and it's not contingent on any distribution from the A-share level. So, are there any preliminary plans, like if dividends are open for consideration, because some of the peers, some of the ADRs, have also announced dividend payouts, which has resulted in a good reaction from the market? Thank you. Do you have any preliminary plans? We can all consider them. We can all consider it. Last year, we were not able to fulfill our original plan of $200 million in returns.

My last question is in regards to the power tariff.

Because I think quite a lot of investors test and quiet.

Power tariff hiking, Sichuan and actually that's a general situation in China.

Pulp prices have been increasing so we'd like to know in relation to our deal in Xinjiang and also power prices in inner Mongolia, what's our view on that and we'll defer to would that be risk of further power hike.

Oh tariff hike and where would that lead to increasing production costs.

Yeah.

Thank you.

Oh, okay.

Yeah.

Hey, Morgan basketball.

Xu Xiang: I have already said that after China's stock market and shares go public, we will consider our return plan, and I believe that we will do this. We will do this to boost our confidence in the market, as well as to boost our confidence in our management. So regarding the $200 million remaining of our $700 million share repurchase program announced, like Mr. Hsu has mentioned previously, that will be discussed after the A-share dividend plan is set in stone, and we will definitely consider whether to give up dividends or to roll out another share repurchase. We believe that we will definitely consider these plans to increase confidence in our company and in our management.

Okay.

Sure.

Rather the tornadoes.

So if we got them all but I don't Wanna children as you pointed out those Ahmad parallel Dan Yeah familiar to go solar solution tons at a major Chinese and then go to Julian again, yeah. So agenda, that's getting into charka. So in some areas.

What are they on one point idea, yeah, Oh, Matt So she answer so that.

Yeah, well, let me one minutes ago from.

Going then to go to them.

So to try and deal with them, but yeah. So this is Joe you know on the ocean of J&J autonomous cars.

So don't worry about 10 months and yet you're talking about.

So yeah.

And so we don't want to own them and then they moved to a portal.

Xu Xiang: I am also the CEO of Aigu Group. We are certain that Aigu Group is going to go public. However, we have not confirmed the exact date yet.

Well I'm looking at the Brooklyn, Yamana, Bolivia towards the woman.

Positive Dania you believed in Porto, Yes, we give on the Delaware, So I'd hate to do the Chinese so amortization as opposed to just yet for two.

Xu Xiang: When Aigu Group is confirmed, we will announce it to the market together. We will announce our return plan and our publicity plan. If we discuss the $200 million right now, it will make our discussion repeated, right? Because we don't know what our publicity plan is.

So those are the R&D Yvonne.

Steve Voskuil, along Susan woman that yeah. So you took the India John.

We are aware of the electricity cost increase dosing so trying to however, because to try and use of state grid and D. A.

Xu Xiang: Thank you. This issue is also a board member in Xinjiang Daqo, and the payout ratio for 2023 is still not decided yet, as they have not convinced the government to have the board meeting for the 8th year. Given that, we cannot say for sure what program we are going to roll out or what the amount will be, but we hope that our investors can understand. When Xinjiang Daqo announces its dividend plan for the year, we will announce at the same time, and our board will continue to discuss this topic further. Thanks a lot, that's very clear. So, switching gears to some of the technical questions. Seems recently there's been some trial by downstream players in regards to cauliflower-type anti-poly. So, I wonder if that may help to release the shortage of anti-poly? And also, are new players able to achieve that type of purity, even in the cauliflower-type poly circuit?

Local government had to live their power on the electricity cost.

Cost.

And with all our information yeah increase in electricity costs will increase production costs for our players to locate and that are located in that region.

By 7000 RMB.

However for our.

Uh huh.

Yeah 707000 per ton.

However for Us Hudson, Jon I use this local grid and we signed an exclusive somebody agreement with the government. We are not very worried about electricity costs. Similarly for inner Mongolia, they rely on local good as well.

Actually the primary reason why we chose these two location at the first place was because they use local grid. So we can enjoy the preferential electricity agreement and below actually cost.

Thanks, a lot Mr Hu anytime.

Very clear answer.

First of all thanks.

Thank you Ella.

Alan Lau: Thanks. Is the, So I would like to ask Xu Rongguang and Yicheng, can these new players do high-level NCS? I'm going to show you. I mean, well.

Thank you.

Okay.

The next question comes from Andrew corporate.

But private Investor. Please go ahead.

Yeah.

Hello.

Xu Xiang: So I'm going to end. So we have been talking with our downstream players, like TCL, and Longyi, very fervently. Based on our understanding, it's still very difficult to produce and type with other, let's say, cauliflower-type polymers.

So my question is when is exactly the Xinjiang <unk> eight type dividend declared like what months. This year as it may is it April July and this is my first question.

And so I told him that John's with all equal.

I wish all of which were absolutely right.

Joshua.

Xu Xiang: There's still a very high barrier to tackle, and we are keeping an eye on the new technology, but based on our understanding, there's still a huge step toward making and type of call as well. Thank you. That's very clear.

Decided to you Bob.

And then somewhat of a woman has a good value good humor.

Shai It Saturday Saturday too so.

Yeah.

And I'll go through that so now I'm going to push us with Angola, well then that's a good thing.

Uh huh.

Alan Lau: My last question is in regards to the power tariff, because I think quite a lot of investors have inquired about the power tariff hike in Sichuan, and actually, that's a general situation in China. Power prices have been increasing. So we'd like to know in relation to our deal in Xinjiang and also our power prices in Inner Mongolia. What is our view on that, and will there be a risk of further power hikes, power tariff hikes, and will that lead to an increase in production costs? Thanks.

A critical part of the phone with you.

So based on the Asia regulation and disclosure.

Requirements are we.

Back to announce some time near the end of March.

After a.

We have said previously after the a shares and John Dacko analysis their dividend flat for the year.

Well discuss among our board again, I know whether to rollout another share repurchase program or to distribute dividends.

Xu Xiang: The price of electricity in Sichuan has increased. Investors want to know more about the prices in Xinjiang and Inner Mongolia. But I don't know.

Yeah.

Okay. So like in March April we should hear are also from the dock or New York Stock Exchange listed company a response on the dividend or the extended buyback or special dividend from the cash balance or something like that so April let's say April starts to meet April.

Xu Xiang: Because the current market power is unified, because the market power network is a state-owned power network. The state-owned power network is now a unified big market, its price, it does not have this so-called market power; it does not have the power to decide the price of the power. So it is normal to raise it because it is the unified price of the state power network. In Xinjiang, we have our own power grid. We have our own power grid contract. It's different from the Sichuan power grid.

Yeah that will be the likely timeline, yes, after Asia down there their dividend.

Level.

Okay. Thank you very much also I want to congratulate you for the <unk> Inc.

<unk> production I think it was 50% to 60% I remember in most of the guidance very great well, whilst also decreasing the cost so very great results my.

Xu Xiang: In my opinion, the price of Sichuan power has increased. It is said that the cost will increase by 7,000 yuan. Thank you. I think that our electricity price will not change in Limu and Shouhezi. At the same time, our electricity price in Baotou will not change either. Because Baotou also belongs to the local power grid, it has its own rights. So we chose to invest in Baotou and Shouhezi because both are supported by the local power grid.

My last question is for Tom.

25, Capex investments are there.

Any.

How much would capex be in 2025, so in 'twenty than before we have a eight eight.

A beat on two 9 billion RMB, so $1 $1 billion of one point to whatsoever.

So what would be 2025.

Yeah.

What do you expect to increase Capex to have huge products late this year.

Lower Capex 500 meter downwards.

Okay. So so those are the main so I will address the capex issue as to when the unknown yet so.

Xu Xiang: So this should not change. We are aware of the electricity cost increases in Sichuan, however, because Sichuan uses the state grid and the local government has limited power on the electricity cost, and based on our information, the increase in electricity cost will increase production costs for players located in that region by 7,000 RMB. However, for us, Xinjiang uses the local grid, and we signed an exclusivity agreement with the government. We are not very worried about electricity costs. Similarly, for Inner Mongolia, they rely on the local grid as well. Actually, the primary reason why we chose these two locations in the first place was because they use the local grid, so we can enjoy the preferential electricity agreement and the lower cost.

So I think 2025 Capex is will be mostly the remaining payments on the inner Mongolia or phase two.

And then some of the many payments on our silicon metal project.

The current estimate is roughly.

324 billion and RMB.

So I think that's maybe 400 to 610 million U S dollar yeah, yeah yeah.

Yeah.

So and.

Of course, you're learning do so at the end of 'twenty 'twenty four.

Your training or the quick ratio four five or 4.5, I don't always see decreased a bit because some of your cash.

It's a huge quickly so you've never had the quick ratio is high.

So my question is after this $1 $1 billion in topics integrated before.

Alan Lau: Thanks a lot, Mr. Xu, Anita, and Ming. Very clear answer. I'll pass on.

Operator: Thanks. Great. Thank you, Ola.

With the cash decrease let's say, we're staying at current prices or are there kind of forecast the polysilicon will not increase.

Andrew Corporate: Thank you. The next question comes from Andrew Corporate, with Private Investor. Please go ahead.

Anita Hsu: Hello, so my question is, when is the Xinjiang A-type dividend declared? Like, what month this year? Is it May? Is it April? July? This is my first question.

50% or something so I think at the current prices how.

How much would cash equivalent and equivalents a decrease this year.

The $2 $5 billion, so now they're pretty beat up to $2 5 billion to $2 $1 billion.

Anita Hsu: For more information, visit www.fema.gov. According to Chinese law, Aigu will be released around the end of March. We will report to the mayor as soon as he is released. So based on the A-share regulation and disclosure requirements, we expect to announce it some time near the end of March. And after, as we have said previously, after the A-share Xinjiang Daqo announces its dividend plan for the year, we will discuss with our board again whether to roll out another share purchase program or to distribute dividends. So, like in March-April, we should also hear from the Daqo New York Stock Exchange listed company a response to the dividend or the extended buyback or special dividend from the cash balance or something like that. So, April, let's say, April, start to meet April.

I'm.

The $1 $1 billion Capex this year yeah.

I'm not sure there's going to be a really rough.

It's much more subject to pricing.

Of the year.

I think.

Based on our estimate of operating cash flow should be in the range of maybe four two.

$4 5 billion to RMB something in that ballpark.

So.

So we should we should be close to say $2 5 billion.

Uh Huh RMB.

Yeah, Yeah, No U S dollar as well.

Bill in U S dollar.

Something on that range okay.

Okay, and considering the discount from our Shanghai at least at the Duckwall, which we own 70 245, I remember so much.

That's correct.

Oh, you're repurchasing did you continue it into Q1 like nowhere in February 28, so.

Andrew Corporate: Yeah, that will be the likely timeline, yes, after Asia announces their development. Thank you very much. Also, I want to congratulate you on the increase in production. I think it was 50-60%, but I don't remember. And also for the guidance. Very great results while also decreasing the cost. So, a very great result. My last question is, for 2025 CapEx investments, are there any? And how much would CapEx be in 2025? So, in 2024, we have 8 billion to 9 billion RMB, so 1.1 billion dollars or 1.2 whatever. So, what will it be in 2025? What do you expect to increase capex to have huge products like this year or lower capex by 500 million downwards? OK, so this is Ming.

650 days past.

Did you repurchase any shares in the current gold prices.

So what's 'twenty.

'twenty, one 'twenty $4 today.

For the U S share.

For Q1, yes shares did you repurchase like yourself.

Our repurchase program ended at the end of last year and are applying 23. So we don't have a repurchase plan right now.

But I think the board is considering a repurchase plan for the full year. So that's why we would want to see what the dividend looks I follow okay she'd gone dark pool. So it's a wise now come out than you had before.

You had 20% left or 40% of out of the first Q.

Oh, the several hundred million dollars of what you had $200 billion. There's another the first time that he said.

Yes.

Regarding the share repurchase plan when it was announced in November 2022.

Ming Yang: So I will address the CapEx issue to win in 2025. So I think 2025 CAPEX will be mostly the remaining payments on the Inner Mongolia Phase 2 and some of the remaining payments on our Silicon Metal project. The current estimate is roughly 3 to 4 billion RMB. So I think that's maybe 400 to 600 million U.S. dollars. Yeah, yeah.

Exploration date of this program is until the December 31, 2023, yeah, so that'd be it.

Because of the day the program ended end of 2023.

And we have with them.

Right.

You said 100 million share repurchase program.

Yeah can you repeat again you have repeated you have completed.

Andrew Corporate: Yeah. Considering this, at the end of 2024, you're trading at a quick ratio of 5 or 4.5. I don't know. It decreased a bit because you used some of your cash. It's a huge quick ratio. You've never had a quick ratio this high.

Before the program expired by the end of 2022 here, we have completed almost summit approximately 70 per fund.

Okay.

Okay, and I think just so investors know I think this was due to not being able to buy more at current prices because you're limited like you can buy only 25% of the volume on New York Stock Exchange I think.

Ming Yang: My question is, after this $1.1 billion in Capex in 2024, will cash decrease? Let's say we're staying at current prices or at your current forecast; polysilicon will not increase by 50% or something. At current prices, how much would cash and equivalents decrease this year?

You could have you could have bought more right.

Yeah.

Yes, primarily.

Okay. So you.

Andrew Corporate: To $2.5 billion? So now they're $3 billion, right? To $2.5 billion or to $2.1 billion? After the 1.1 billion dollars in capex this year. This is going to be a really rough estimate because it's very much subject to pricing at the beginning of the year.

Yes.

Last question unless actually recommendation would be if you could do a special dividend or dividend yield maybe it will attract investors I think backwards very underpriced. So considering you have net debt zero and.

Ming Yang: We think, based on our estimate, operating cash flow should be in the range of maybe 4 to 4.5 billion RMB, something in that ballpark. So we should be close to, say, 2.5 billion RMB. Yeah, yeah. Oh, U.S. dollar, actually. If I go in U.S. dollars, it's like half a dollar, something in that range.

You own the Shanghai listed.

Chairs so dividend the big dividend would do a big yield like 10 to 12 per cent special dividend.

Normal dividend I think it would attract investors.

Yeah, Doug.

Oh I see.

Okay. After.

Recent film to Shanghai.

Andrew Corporate: Okay, and considering the discount from Shanghai-listed Daqo, which we own 72.4% if I remember, or 73%... Yes, that's correct. You're repurchasing, did you continue it in Q1? Like, now we're on February 28th, so 50 days past.

Okay, and that's all notice little we'll share those with our board as well.

Sure Joe.

Oh, yeah okay.

Right.

Because you're trading at a 0.3 price to book, so and you're increasing revenue by 40% to 50% actually volume. So you should you should big dividends detracting, Mr. Thank you very much and have.

Anita Hsu: Did you repurchase any shares at the current Daqo prices? $21.00 $24.00 today, for the U.S. share. Did you repurchase any U.S. shares? Regarding the shared personal plan, when it was announced in November 2022, the expiration date of this program is December 31, 2023.

Have a wonderful year and continue doing what you're doing.

Great. Thank you so much. Thank you for your interest in the company.

Okay.

Yeah.

Thank you.

This concludes our question and answer session.

I would.

I'd like to turn the conference back to Mr. Shaw for any closing remarks.

Thank you everyone again for participating in today's conference call should you have any further questions. Please do not hesitate to contact us. Thank you and I have and often say goodnight.

Andrew Corporate: So that being said, because of the date, the program ended in 2022. Okay. Thank you, for the $700 million. Can you repeat again that you have repeated, you have completed? Before the program expired by the end of 2023, we had completed almost approximately 70% of the entire program. Okay, and I think, just so investors know, I think this was due to not being able to buy more at current prices because you are limited, like you can only buy only 25% of the volume on your stock exchange, I think. You couldn't have bought more, right?

Good luck.

To be really fun.

The conference has now concluded.

Thank you for attending today's presentation you may now disconnect.

Okay.

[music].

Yeah.

[music].

Andrew Corporate: Yeah, primarily. If you could do a special dividend or a dividend yield, maybe it will attract investors. I think Daqo is very underpriced considering you have net debt zero and you own the Shanghai listed shares. So, a dividend, a big dividend with a big yield like 10, 20%, a special dividend or a normal dividend, I think it would attract investors.

Andrew Corporate: Yeah, that's the rest. After, of course, you've returned from Shanghai. That's well noted. We'll share that with our board, http://www.qq.com. Yeah. Okay, because you're trading at a 0.3 price to book and you're increasing revenue by 40-50% volume, so you should issue a big dividend to attract investors.

Okay.

[music].

Andrew Corporate: Thank you very much, and have a wonderful year and continue doing what you do. Great. Thank you so much. Thank you for your interest in the company. Thank you. So this concludes our question and answer session. I would like to turn the conference over back to Ms. Anita Shu for any closing remarks. Thank you everyone again for participating in today's conference call. If you have any further questions, please do not hesitate to contact us.

Anita Hsu: Thank you, and have an awesome day! Good night. Good night. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. BF-WATCH TV 2021 BF-WATCH TV 2021 BF-WATCH TV 2021, www.qq.com www.qq.gov.au BF-WATCH TV 2021 BF-WATCH TV 2021 BF-WATCH TV 2021, BF-WATCH TV 2021

Okay.

Q4 2023 Daqo New Energy Corp Earnings Call

Request a DemoDemo

Daqo New Energy

Earnings