Daqo New Energy Corp ADR

Good day and welcome to the DATO New Energy Second Quarter 2020 Results Conference Call. All participants are in a listen-only mode. 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 one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Kevin He, Investor Relations. Please go ahead.

Hello, everyone. I'm Kevin He, the Investor Relations of DarkQ New Energy. Thank you for joining our conference call today. DarkQ New Energy just issued its financial results for the second quarter of 2020, which can be found on our website at www.dqsolar.com. To facilitate today's conference call, We have also prepared a PPT presentation for your reference. Today attending the conference call, we have Mr. Longgen Zhang, our Chief Executive Officer, and Mr. Ming Yang, our Chief Financial Officer. The call today will feature an update from Mr. Zhang on market and operations, and then Mr. Yang will discuss the company's financial performance for the second quarter of 2020. After that, we will 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. These statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ maturely from those containing any forward-looking statement. Further information regarding these and other risks is included in the reports or documents we have filed with or furnished to the Security and Exchange Commission. 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 and we undertake no duty to update such information except as required under applicable law. Also during the law, we will 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. Without further ado, I now turn the call over to our CEO.

Thank you, Kevin. Hello, everyone. Thank you for joining our conference call today. The second quarter of 2020 was a particularly challenging time for the polysilicon industry. Beginning in the later March, the global spread of COVID-19 and related lockdowns particularly in the U.S., Europe, and certain emerging markets, resulted in significant disruptions to demand for solar PV products. End-of-market customers delayed module orders and shipments due to uncertainties about the duration and economic impact of the pandemic, as well as logistical challenges. This letter, too, should turn market uncertainty and volatility across the entire solar PV industry during the second quarter. As a result, our major waiver customers also delayed orders and product delivery in the month of April, creating a temporary oversupply in the market at the time. This abnormal market environment with its sharp and sudden drop in demand resulted in significant negative impact to policy comprising for the quarter. Fortunately, the impact was temporary, and the market began to recover in May with orders and demand normalizing in June, supported by a strong end market in China and abroad. We are pleased that despite such challenges, faced by the industry during the period, Dark Green New Energy was able to generate positive net income for the quarter, further demonstrating the strength and resilience of our business model and our proven lower cost structure. Towards the end of the second quarter, we began to see very positive momentum in solar PV demand in both domestic and overseas markets, supported by additional capacity expansions by downstream mono-weaver customers. This has translated into meaningful demand improvement for polysilicon, which has driven a significant increase in polysilicon SPs recently. From feedback from customers, their order book for the third quarter is four. And the module order volumes look stronger throughout the year end. This strong volume demand has led to a shortage within the polysilicon market. Current market ASPs for model grade polysilicon are approximately $11 to $12 per kg. A significant improvement from approximately 7.5 per kg in the second quarter. Our latest signed customers' orders and contracts reflect these pricing trends. We expect the polysilicon market to be extremely tightly supplied over the coming months, as there will only be very limited additional supply of polysilicon coming online over the next 15 months, while the end market demand for PV solar continues to be strong and growing. And in particular, there continue to be significant new additions of modern waiver production capacity. In the second quarter, we produced and sold 18,097 metric tons and 18,881 metric tons of polysilicon, respectively, exceeding our guidance. We conducted annual maintenance for our manufacturing facilities in the second quarter. However, some technology upgrade projects as well as equipment modification has been rescheduled to August due to delayed delivery of some key equipment and long lead time maintenance parts. This will have some impact on the third quarter production volume. As a result, we expect to produce approximately 17,500 metric tons to 18,000 metric tons of polysilicon during the third quarter. We expect to resume to 100% utilization rate in September after the completion of such projects. Our expected annual production volume for 2020 remains unchanged. at 73,000 metric tons to 75,000 metric tons. During the quarter, we continued to make strong progress towards quality improvement and cost structure. Approximately 95% of our polysilicon production reached the monograde quality during the quarter. At the same time, we continued to improve our cost structure with further reductions in allege and material usage per unit of production. Despite the impact of annual maintenance during the quarter, we achieved a historically lower cash cost of $4.87 per kg. In particular, we are making great progress in optimizing our process and manufacturing parameters for our new high-flowout polysilicon reactors, improving in production volume per round. and leading to lower unit energy usage. We expect cost to go even lower in Q4 as we ramp back up to full production level. We believe the solar PV market has entered a new phase of sustained growth as the grid parity has been achieved in many countries and regions around the world. Solar PV is one of the very few energy resources which are clean, sustainable, and cost-effective, even compared with traditional fossil fuel power generation methods. It is playing an increasingly important role in meeting the growing global energy demand and addressing critical environmental issues such as climate change and sustainable development. We will continue our commitment to provide high-quality polysilicon products to better save the fast-growing demand for solar PV energy. Let's move into our outlook and guidance for the company. The company expects to produce approximately 17,500 metric tons to 18,000 metric tons of polysilicon and sell approximately 7,000 metric tons to 7,500 metric tons of polysilicon to external customers during the third quarter of 2020. For the full year of 2020, the company expects to produce approximately 73,000 metric tons to 75,000 metric tons of polysilicon, inclusive of the impact of the company's annual facility maintenance. Now, I will turn the call over to our CFO, Mr. Yang. who will discuss the company's financial performance for the second quarter of 2020. Please.