What's Going On With Polysilicon Company Daqo New Energy's Shares Today?

Daqo New Energy Corp DQ shares are trading higher after the company reported Q3 FY23 results.

DQ reported revenue of $484.8 million vs. $1.219 billion a year ago, missing the consensus of $672.30 million.

Polysilicon average selling price (ASP) was $7.68/kg in Q3 2023, compared to $12.33/kg in Q2 2023. The company attributed the sequential revenue decrease primarily to the decline in ASP mitigated by increased sales volume.

Gross profit declined substantially to $67.8 million from $978.6 million a year ago, with margins contracting to 14.0% (vs 80.2% prior year).

Total production volume stood at 57,664 MT, up 27% Q/Q, on continued optimization of operations at its two polysilicon facilities.

DQ shipped 62,967 MT of polysilicon in Q3, significantly higher than its quarterly production volume. 

The company's production cost declined 5.8% Q/Q to $6.52/kg, on improvements in manufacturing efficiency and reduction in the cost of raw materials (mainly metallurgical-grade silicon). 

Adjusted EBITDA stood at $70.2 million, significantly lower than $720.0 million the prior year. 

Adjusted EPS per ADS of $0.59 missed the consensus of $0.94.

At the end of Q3, operating cash flow stood at $1.5 billion and had a combined cash and banknote receivable balance of $3.6 billion.

Outlook: DQ expects polysilicon production volume of around 59,000 MT to 62,000 MT in Q4 and 196,000 MT-199,000 MT (+46% to 49% Y/Y) in FY23. The company expects Q4 costs to continue to trend downwards from the Q3 levels.

Repurchase: By the end of September, DQ had repurchased 8.10 million ADSs for about $328.8 million and had 71.8 million outstanding shares at the end of Q3 FY23.

Mr. Xiang Xu, Chairman and CEO said, "As 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 green energy demand, which we believe is likely to exceed most analysts' expectations." 

"We are optimistic that as the solar end market continues to grow, and as our customers continue to transition to higher-efficiency N-type technology, we will benefit from this trend. Daqo will continue to strive to maintain solid growth and capture the long-term benefits of the growing global solar PV market."

Price Action: DQ shares are up 10.6% at $25.81 on the last check Monday.