Daqo New Energy Corp ADR

Good day and welcome to the DocuNew Energy second quarter 2021 results call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a 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 Ho. Please go ahead.

Hello, everyone. This is Kevin Ho, the investor relations of DarkQ New Energy. Thank you for joining our conference call today. DarkQ New Energy just issued financial results for the second 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 TPT presentation for your reference. Today, attending the conference call, we have Mr. Longbin Zhang, our Chief Executive Officer, and Mr. Ming Yan, 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 uncertainty. A number of factors could cause actual results to differ materially from those contained in 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 Securities and Exchange Commission. These statements only reflect our current and preliminary views 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 call, we will occasionally reference monetary amounts in U.S. dollar terms. Please keep in mind that our functional currency is 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 come in.

Thank you, Kevin. Hello, everyone. Thank you for joining our conference call today. We are very excited to report an excellent quarter with strong revenue growth and a better than expected profitability. As the company achieved record high production volume, gross profit, and net income, with a global focus on achieving the climate challenge with plans to reach carbon neutrality market conditions remain strong for the polysilicon sector. The strong increase in downstream demand has led to a shortage of polysilicon and the cost of polysilicon SP to rise significantly from $11.9 per kg in Q1 to $20.81 per kg in Q2. In July and August, the market price for monograde polysilicon has remained at approximately $26 to $28 per kg. And we expect the strong price momentum to continue into the second half of this year. Despite the rise in solar module prices in the first half of this year, we continue to see strong than expected market demand, even at the new market prices. Recently, the solar value chain has been stable at the new market prices and downstream manufacturers are currently able to pass through price increases to their customers. During the week of August 9, major solar waiver and solar sale manufacturers in China announced the price increases for solar waivers and sales. demonstrating the strong end market demand. We saw the uptick in polysilicon pricing in the last two weeks with a surge in orders from our diverse customer base. We expect the constrained polysilicon supply to be the main limiting factor to the size of the global solar market this year. Polysilicon production is a complex chemical process and has the highest barrier to entry in the solar value chain. Based on our research, we expect to see approximately 180 to 220,000 metric tons of additional polysilicon supply in 2022. Considering a potential six-month ramp-up period for other polysilicon producers, This total global polysilicon supply can be used to produce approximately 240 to 250 gigawatts of solar modules, which can support approximately 200 to 210 gigawatts of solar installations in 2022. So, the polysilicon sector will still be the one with most constrained supply. across the main solar PV manufacturing value chain in 2022. On the demand side, more and more countries have set up timetables for peak carbon and carbon neutrality targets that will significantly increase demand for renewable energies, including solar PV. In addition, there is still meaningful room for potential cost reduction across the value chain. which will effectively stimulate large demand, especially given that solar PV has already reached a great parity in many countries and regions in the world. As a result, we believe polysilicon pricing will remain healthy in 2022. Making our sector one of the most attractive sectors in the solar PV industry in the long run given its high entry barrier and operational complexity. On the policy front, during the Politburo Central Committee meeting on July 30 regarding economic activities in the second half of 2021 with China's President Mr. Xi Jinping presiding over the meeting, the central government reiterated the urgency for national coordination on carbon peak and carbon neutrality goals and development of the peak carbon 2030 action plans and related policies as early as possible. In addition, China recently announced an ambitious program to massively deploy distributed generation solar projects at the local government level, that is the county level. We believe solar will continue to be a strong beneficiary of the government policies and support. With regard to our ESG initiatives, we are in the process of incorporating environmental, social, and governance factors in all of our major business decisions. And we published our inaugural ESG sustainability report in July. We are already making substantial progress on the sustainability front, including installing new wastewater treatment facilities in 2018 that reduced our wastewater discharge density by 60 percent in 2020 compared to 2018. Furthermore, By increasing energy efficiency and energy recycling, as well as optimizing our production process, we reduced our comprehensive energy consumption density by 40 percent in 2020 compared to 2017. We will continue to work on our ESG efforts, including planning for greater renewable energy use as part of our energy sources in the future. We continue to focus on initiatives to strengthen the company's long-term competitiveness. Our major operational subsidiary, Xinjiang Daku New Allege, successfully completed its IPO listing on China's A-share market and started trading on Shanghai Stock Exchange's SciTech Innovation Board. The ticket code is 688303 on July 22nd, 2021. The total growth proceeds of the IPO approximately 6.45 billion RMB, which were funded Xinjiang Darko's polysilicon expansion project and provide additional capital for our future growth plans. Following the Xinjiang Daku's IPO, Daku New Allergy directly holds approximately 79.6% of Xinjiang Daku's share and indirectly holds 1.1% of Xinjiang Daku's shares, so Daku New Allergy wholly owns the subsidiary Chongqing Daku. For a total ownership of 80.7% of the A-share listed subsidiaries, There is no variable interest entity, VIE, structure between DaKu New Allege and Xinjiang DaKu. The successful IPO will offer an additional value to access the attractive capital market in China for future growth and expansion. With our advantages of competitive cost structure, quality, and technology advancement, Outstanding operational expertise and experienced management team, we have set up a roadmap to increase our capacity to 720,000 metric tons by the end of 2024, representing an approximately 50% annual average growth rate of our production capacity over the next three years to better serve the fast-growing global solar PV market. Now, I will discuss outlook guidance for the company for this year. The company produced 41,287 metric tons of polysilicon and sold approximately 42,531 metric tons of polysilicon in first half of this year, representing full utilization level of the company's production facilities. For the second half of this year, the company expects to remain the full utilization with sales volume similar to production volume. For the full year of 2021, the company raises its production guidance from the previous level of 81,000 to 83,000 metric tons to the level of approximately 83,000 to 85,000 metric tons of polysilicon for the full year. Inclusive of the impact of the company's anti-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. Thank you.