Daqo New Energy (DQ) Tops Q2 EPS Views; Updates Outlook

Daqo New Energy (NYSE: DQ) reported Q2 EPS of $2.10, $1.08 better than the analyst estimate of $1.02. Revenue for the quarter came in at $71 million versus the consensus estimate of $60.35 million.

• Polysilicon production volume of 3,570 MT in Q2 2016, compared to 3,405 MT in Q1 2016
• Polysilicon external sales volume(1) of 2,931 MT in Q2 2016, compared to 2,905 MT in Q1 2016
• Polysilicon average total production cost(2) of $9.43/kg in Q2 2016, compared to $9.65/kg in Q1 2016
• Polysilicon average cash cost(2) of $7.42/kg in Q2 2016, compared to $7.62/kg in Q1 2016

Outlook and Q3 2016 guidance

Since the ramp up of our Phase 2B capacity at the end of June 2015, we have produced a total of over 13,200 MT of polysilicon over the past four quarters, above our nameplate capacity of 12,150 MT. As our Xinjiang polysilicon manufacturing facilities have been operating continuously for more than 12 months, it is necessary that we conduct our annual scheduled maintenance during the third quarter to ensure safe and smooth operations. We also plan to take this opportunity to do preparation work for the interconnection between existing facilities and Phase 3A facilities which are expected to start pilot production early next year. The entire annual maintenance schedule is expected to result in 15 to 20 days of suspension to polysilicon production for 2016. Due to the long lead-time for procuring the specialty materials and equipment required for the annual maintenance, we anticipate that we would start the annual maintenance work in the second half of September 2016. However, the start date of the annual maintenance work depends on the scheduled delivery of such specialty materials and equipment. Therefore, it is possible that the annual maintenance start date may be delayed.

As a result of the above mentioned factors, the Company expects to sell approximately 2,550 MT to 2,600 MT of polysilicon to external customers during Q3 2016. The external sales guidance excludes shipments of polysilicon to be used internally by our Chongqing solar wafer facility, which is expected to utilize approximately 550 tons of polysilicon during the quarter for its wafer manufacturing operation. Wafer sales volume is expected to be approximately 24.0 million to 25.0 million pieces for Q3 2016.

For earnings history and earnings-related data on Daqo New Energy (DQ) click here.

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