Daqo New Energy Corp ADR

Go New Energy First Quarter 2021 Results Conference Call. Our participants will be in 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. Please know this event is being recorded. I would now like to turn the conference over to Kevin Herr from Investor Relations. Please go ahead.

Hello, ladies and gentlemen. I'm Kevin He, the investor relations of DaQ New Energy. Thank you for joining our conference call today. DaQ New Energy just issued its financial results for the first quarter of 2021, 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, we have Mr. Longgen Zhang, our Chief Executive Officer, and Mr. Min 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 quarter. 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 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. 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 conference call is as of today and We undertake no duty to update such information except as required under applicable law. Also, during the call, we will occasionally reference monetary amounts 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, Mr. Zhang, please.

Thank you, Kevin. Hello, everyone. Thank you for joining our conference call today. During the quarter, we continue to see strong momentum in customer demand for high-purity polysilicon, which led to a significant shortage of polysilicon and high polysilicon SPs. Our ASP in the first quarter of 2021 was $11.90 per kg, approximately 10% higher than Q4 2020. Due to the elapsed time from contract signing product shipment to revenue recognition upon product's arrival at customer sites, It takes time for market prices to be fully reflected to our SPs during the periods of rapid price change. Based on current customer contracts and product deliveries, we expect our SP in the second quarter of 2021 to be in the range of $19 to $20 per kg, a significant improvement compared to Q1. that better reflects recent market pricing trends. As of today, current market pricing for high-pure monograde polysilicon has already reached the level of $23 to $25 per kg. With strong end-market demand, driven by global carbon neutrality commitments by all major economies, major Weaver manufacturers continue their capacity expansion, and new entrants build new Weaver capacity. As a result, we believe that supply in the polysilicon market will remain tight until the middle of 2022, when the market will finally see some additional supply of polysilicon. During the quarter, we produced 20,185 metric tons of polysilicon, which lays a solid foundation for achieving our production target this year, and also gives us the confidence to raise our guidance for annual production volume to the range of 81,000 to 83,000 metric tons, from 80,000 to 81,000 metric tons. During the quarter, approximately 99% of our polysilicon products were sold to mono-weaver customers, and we already began commercial shipments of N-type polysilicon to our four major clients. Our production cost was up by 4% in the B10s in the quarter as compared to Q4 2020, primarily due to the rise in the cost of silicon raw material and the impact of lower production volumes. We expect production costs to stabilize in the coming quarters as the cost of silicon raw material has stabilized for the time being. As we continue our efforts to reduce cost and improve quality, as we expect to see the benefits from our newly implemented digital manufacturing system to stabilize production, maximize output, and optimize efficiency. On the business development front, we have already sold out our production volume of this year through the long-term supply agreements with customers that span all the major mono-weaver manufacturers as well as major integrated solar manufacturers. More importantly, In connection with these long-term supply contracts, we have received $800 million of prepayment from customers this year to date, which will help us find our future expansion plans and ensure our future market share. This shows the tightness of our political market and the strong momentum in demand growth, as well as the fact that our customer's mind. DaKu is the leading supplier of high purity monograde and anti-polysilicate with high reliability, stability, and consistency. In middle March, we began construction for our new Phase 4B project, which which will add 35,000 metric tons capacity for high purity polysilicon. We expect to complete the project by the end of 2021 and ramp up to full capacity by the end of Q1 2022. Our Phase 4B project and the potential IPO on China's stock market will bring us into a new phase of development and enable us to quickly expand capacity to address the fast-growing demand from the global solar PV market for ultra-high-purity polysilicon. In the present context of global carbon neutrality goals, major economies in the world, including China, are launching ambitious policies to mandate the use of clean energy and address climate change, with the megatrend of the transformation to lower carbon economy and decarbonization of the energy sector. We are entering a new era of accelerated growth for the solar industry. We believe Darko New Energy is very well positioned to benefit from this tremendous opportunity. Now let's move to our outlook and the guidance for our company. The company expects to produce approximately 20 to 21,000 metric tons of polysilicon and sell approximately 20 to 21,000 metric tons of polysilicon to external clients during the second quarter of 2021. For the fall year of 2021, the company expects to produce approximately 81,000 to 83,000 metric tons of polysilicon. 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 quarter.