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Daqo (DQ)

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6 hours ago, Klothilde said:

China's polysilicon capacity at the end of 2018 to meet global demand
http://guangfu.bjx.com.cn/news/20180515/897820.shtml

Means fuk Wacker, fuk Hemlock, fuk OCI.  But it also means fuk DQ earnings.

 

We shall see.  Polysilicon is not polysilicon.  DQ makes a point of stating how in-demand their high-quality product is.  LDK is still producing polysilicon, but they are obviously no competition to DQ.

After the LDK debacle, and the not-much-better CSIQ experience, I'm always ready to listen to tales of caution.  But so far, DQ has proven themselves adaptable.  During times of falling ASPs and the historically weak part of the annual cycle, they have maintained both margins and profits.  And while they only give detailed guidance out one quarter ahead, that guidance continues to point to continued profitability.

I've certainly learned not to put all my eggs in one basket in solar, so I will trade DQ with caution.  But for now, I'm a buyer on any dips.

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On 5/18/2018 at 10:13 AM, Klothilde said:

China's polysilicon capacity at the end of 2018 to meet global demand
http://guangfu.bjx.com.cn/news/20180515/897820.shtml

Means fuk Wacker, fuk Hemlock, fuk OCI.  But it also means fuk DQ earnings.

 

Your ignorance and foolishness regarding the poly sector are shocking.

Watch out for 120, daqo heading there in the next few months.

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Sorry hon, poly prices on sunsirs are falling because of market softness in China. And get ready for a further slump once the June30th rush is over.

Let's be nice to each other and discuss what we learn from guangfu, sunsirs, pvinsights, and energytrend, will we? I'm sure you are not a reckless pumper who doesn't care about facts.

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2 hours ago, Klothilde said:

Sorry hon, poly prices on sunsirs are falling because of market softness in China. And get ready for a further slump once the June30th rush is over.

Let's be nice to each other and discuss what we learn from guangfu, sunsirs, pvinsights, and energytrend, will we? I'm sure you are not a reckless pumper who doesn't care about facts.

You have been given the facts about daqo many times and yet you continue to ignore them.

It won´t be pvinsights that will prove anyone here right or wrong, it will be the market. But most importantly, trading and investing isn´t about being right or being wrong, it´s about making money.

Watch out for 120 USD

Edited by tupapa

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6 hours ago, tupapa said:

You have been given the facts about daqo many times and yet you continue to ignore them.

It won´t be pvinsights that will prove anyone here right or wrong, it will be the market. But most importantly, trading and investing isn´t about being right or being wrong, it´s about making money.

Watch out for 120 USD

I don't know about $120 at least this year. Maybe come 2021 when they are the 60,000MT added online. For now, they are running fine and making good margins. The fact they are shifting to more high grade poly should allow them to have an ASP higher than the PV insights spot prices. They are under contract with 1 Big customer that is taking some 60% or more of their inventory. Pricing from the PR would suggest decent ASP for the year in the $15-$16 range. The risk  comes as new capacity comes online at the end of the year in low power cost regions, does the ASP trend lower by 10% or 20%. Many estimates for Poly come early 2019 is for Poly to drop to the $13 range for higher grade poly. That level of drop takes out 50% of their net profits. 50% of their net drops to $6 or less in earnings for the year based on current production levels and closer to $9 with future capacity. Slap a 6 or 7 PE and the stock is fair priced for 2 years out after the recent run up.

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6 minutes ago, solarpete said:

This was totally expected as I pointed out a few months ago...

1- They know this is the best solar stock but they don't have a piece of the pie so they get their  pet analysts to downgrade it so the amateurs panick sell.

2- they agree with daqo that they will keep a large percentage of the announced new stock issuance.

3- once they have accumulated their piece, they announce they have a stake in the company and soon they will be announcing the upgrades.

We must always keep in mind that we are paying THEIR game, THEY own it.

Edited by tupapa

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48 minutes ago, tupapa said:

This was totally expected as I pointed out a few months ago...

1- They know this is the best solar stock but they don't have a piece of the pie so they get their  pet analysts to downgrade it so the amateurs panick sell.

2- they agree with daqo that they will keep a large percentage of the announced new stock issuance.

3- once they have accumulated their piece, they announce they have a stake in the company and soon they will be announcing the upgrades.

We must always keep in mind that we are paying THEIR game, THEY own it.

If it was totally expected, then why'd you sell during the selloff?  Seems like THEY got ya, though I assume you got back in.  

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2 hours ago, Mark said:

If it was totally expected, then why'd you sell during the selloff?  Seems like THEY got ya, though I assume you got back in.  

I believe I already told you why and when I got back in.

Nothing wrong with exiting a position if the winds direction seems unclear, but you gotta remember to get back in once its back in your favor.

The JP Morgan downgrade was the confirmation that the sell off was a manipulation and it was time to re-enter long

 

Edited by tupapa

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On 5/21/2018 at 10:01 AM, tupapa said:

Watch out for 120 USD

Now you've been singing the $120 song for quite a while now but fact is the stock has lost its mojo since the beginning of the year. Now what is not so clear is the why.  If you ask me the market has grown increasingly worried about a poly glut developing.

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4 hours ago, Klothilde said:

Now you've been singing the $120 song for quite a while now but fact is the stock has lost its mojo since the beginning of the year. Now what is not so clear is the why.  If you ask me the market has grown increasingly worried about a poly glut developing.

If you ask me, it's because the price has already tripled over the past year.  It's perfectly natural for the price to level off at some point.  $120/share means a 10 PE on $3 quarterly EPS.  That's a pretty high PE for a solar stock and an optimistic view of continued high earnings.  I do look for earnings to shrink somewhat as more poly supply comes online, although as I've said before because of their production of high-grade material and ability to further cut costs I don't think their earnings will collapse.  So in about a year, I think a more realistic view is a 7 PE on $2 quarterly earnings, which results in $56/share.  Between now and then, I look for more volatility, which I will attempt to exploit by trading.

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Good news about DQ's ability to lower their future costs:

"As part of our investment agreement with the local government, our electricity rate will decrease to RMB0.20/kwh (VAT included) when we fully ramp up our Phase 4A project in Q1 2020.  Our current electricity rate is RMB0.29/kwh (VAT included), which is expected to decrease to RMB0.24/kwh (VAT included) when we fully ramp up our Phase 3B project in Q1 2019."

https://finance.yahoo.com/news/daqo-enery-receives-government-approval-110600999.html

So they are forecasting a 30% decrease in what is probably their main cost driver.  So yes, other facilities with low-cost electricity are coming online, but DQ is well-positioned to remain competitive and be able to absorb any ASP decreases and still maintain profit margins.

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4 hours ago, solarpete said:

Good news about DQ's ability to lower their future costs:

"As part of our investment agreement with the local government, our electricity rate will decrease to RMB0.20/kwh (VAT included) when we fully ramp up our Phase 4A project in Q1 2020.  Our current electricity rate is RMB0.29/kwh (VAT included), which is expected to decrease to RMB0.24/kwh (VAT included) when we fully ramp up our Phase 3B project in Q1 2019."

https://finance.yahoo.com/news/daqo-enery-receives-government-approval-110600999.html

So they are forecasting a 30% decrease in what is probably their main cost driver.  So yes, other facilities with low-cost electricity are coming online, but DQ is well-positioned to remain competitive and be able to absorb any ASP decreases and still maintain profit margins.

Due to efficiencies in reactor technology, energy consumption has fallen from 120Kwhrs to less than 30KwHrs. The old 2010 GT SDR400 used less than 45KWhrs per Kg. Adding in plant power, the total energy in the production is likely  $3/Kg. That is roughly 40-45% of the   cash cost reported over the past 1.5 years.

A lowering of the energy cost will save them around $0.90 per Kg. That is 14% energy cost savings based on their Q1 2017 low cash cost to produce of $6.88. I am presuming that the increase in cash cost to produce from $6.88 to current $7.53 is primarily due to material supply costs from tight demand of TCS and other materials used in the manufacturing process. That increase in cash cost then would suggest that there is another $0.70-$0.75 that could be trimmed off the current cost to produce.  A total of $1.65 or more in cost savings would drive the cash cost to under $6/KG.  That lines up with this comment in the Q1 con call  

 

"This additional capacity will improve manufacturing efficiency and is expected to further reduce costs by approximately USD1.70 per kilogram from current levels"

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Yes, DQ costs are likely to go down nicely.  However the big picture to keep in mind is that the industry as a whole is set to experience a step change downwards in cost soon, with massive cheap capacity being built out as we speak by several Chinese big gorillas.  Namely GCL going to 110kT, Tongwei to 120kT, and East hope to 120kT, apart from DQs own expansion plus the expansion of smaller players.  This will change the global supply stack radically in a matter of 2 years.  New poly economics coming, you guys.  Prices at the valleys and peaks of the industry cycles will adjust downwards, with poly falling to the single digits during sour times.  And it looks like with the current massive built-out of capacity we are first headed to sour times before global demand can catch up and stabilize prices again...

Whatever you do, please do not project DQ earnings into the future based on old supply stacks and price trends.  Please.  And keep in mind that it takes just a small drop in poly prices to wipe off a big chunk of earnings.  For example if Daqo's ASP right now drops to $15 then earnings go down by half roughly.  Be careful you guys...

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5 hours ago, Klothilde said:

For example if Daqo's ASP right now drops to $15 then earnings go down by half roughly.

Not if, as you yourself put it, "DQ costs are likely to go down nicely" as well.  The question will be the relationship between a decrease in costs and a decrease in ASP.  Which one will dominate, and by how much?  So no, we can't just project earnings into the future using "old supply stacks and price trends."  But neither should we project future price trends without taking into account future cost trends.

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On 5/23/2018 at 11:52 AM, Klothilde said:

Now you've been singing the $120 song for quite a while now but fact is the stock has lost its mojo since the beginning of the year. Now what is not so clear is the why.  If you ask me the market has grown increasingly worried about a poly glut developing.

"Daqo has Lost it's mojo"

Lol you are joking right? Do you realize it's trading at near all time highs, find me another solar stock that is doing this well that ain't solaredge.

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On 5/22/2018 at 5:42 PM, tupapa said:

This was totally expected as I pointed out a few months ago...

1- They know this is the best solar stock but they don't have a piece of the pie so they get their  pet analysts to downgrade it so the amateurs panick sell.

2- they agree with daqo that they will keep a large percentage of the announced new stock issuance.

3- once they have accumulated their piece, they announce they have a stake in the company and soon they will be announcing the upgrades.

We must always keep in mind that we are paying THEIR game, THEY own it.

Its happening, the fraudsters come again, here come the upgrades folks! Roth capital 75 USD PT.

https://kldaily.com/2018/05/24/roth-capital-has-just-reaffirmed-75-0000-target-price-per-share-on-daqo-new-energy-nysedq-stock-while-theyve-also-reiterated-their-buy-rating/

More to come now that jpmorgan and Morgan Stanley have their piece of the cake.

Edited by tupapa

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Longi's CEO saying that high-purity polysilicon is readily available in China.  Remember how Daqo has been saying that high-purity polysilicon was scarce? Who is pulling our leg here?
https://www.digitimes.com/news/a20180508PD201.html

Q: ...Is limited supply of high-purity polysilicon hindering China-based mono-Si wafer makers' capacity expansion?

A: Low-purity polysilicon can also be used to produce mono-Si wafers but the degree of purity affects performance of mono-Si solar cells made from such wafers in terms of energy conversion rate, light-induced degradation and service life.

Currently, international makers generally produce polysilicon above 9N and at least 90% of China-based makers' output is 9N. Therefore, polysilicon purity is not an issue as far as mono-Si wafer capacity expansion is concerned.

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On 1/12/2018 at 10:17 AM, tupapa said:

I disagree with both of you, I think you are both overestimating the potential for a large drop in poly prices and you are underestimating Daqos competitive advantage and growth story.

1- Competitive Advantage (Thanks H20)

poly.thumb.png.cb44f32550b2c8293074cc39d6400fa5.png

2-Daqo Growth to continue to 30 MT and 7,5 $/KG in 2020

image.png.5db26482293249ab28dbd505b1b84600.thumb.png.9158a41f1b003cc5c3c2bd88327d973f.png

3- Solar PV Growth to Accelerate and pump up demand for Poly, keeping prices "high" or higher, even with more efficient tech such as Diamond Wire

5a587c45d9f20_SolarPV.thumb.png.73fc971ed4f97e0a3a923249f4927041.png

 

I believe that even if poly comes down slightly or remains table, Daqo is still a 120-200 USD company because of production expansion and cost reduction by 2020.

This is why I am not selling a single share until I see price above 100, AND I find a more suitable invextment.

....

For those interested, this is my case for Daqo.

Edited by tupapa

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41 minutes ago, pg6solar said:

"Nice" price action on DQ. A roller coaster.

Yeah, can't find any news anywhere, but volume is high, for DQ at least.  But then, we've also seen 10% up days on (relatively) high volume and no news.  So this just looks like more of their well-known volatility.

I bought more.  I made good money on their last rise from the mid-50s to the high 60s.

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29 minutes ago, solarpete said:

Yeah, can't find any news anywhere, but volume is high, for DQ at least.  But then, we've also seen 10% up days on (relatively) high volume and no news.  So this just looks like more of their well-known volatility.

I bought more.  I made good money on their last rise from the mid-50s to the high 60s.

PVinsights has solar grade poly down 3.24% in 1 week. The high price is now $16.43. This is not an especially positive sign for a period of what is supposed to be higher demand.

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19 hours ago, tupapa said:

For those interested, this is my case for Daqo.

How long do you think polysilicon prices will keep falling?

I'm asking because both PVInsights and Guangfu see poly falling over the next weeks...

"It is expected that the price of silicon materials will fall sharply in the next one to two weeks."
http://guangfu.bjx.com.cn/news/20180531/902221.shtml

"...the bearish sentiment in the downstream should further enlarge the price downtrend to the polysilicon sector."
http://pvinsights.com/Report/WReportDisplay.php

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GCL-Poly wants to sell polysilicon subsidiary stake for US$2 billion

GCL-Poly said in a financial statement that it entered into a framework agreement with Shanghai Electric Group Company to sell a 51% stake in polysilicon production subsidiary Jiangsu Zhongneng Polysilicon.

the a majority stake disposal in Jiangsu Zhongneng Polysilicon had been driven by the recent Chinese government’s decision to cap solar growth in the country:

https://www.pv-tech.org/news/gcl-poly-wants-to-sell-polysilicon-subsidiary-stake-for-us2-billion

What this means is that GCL-Poly believe that they will be better off buying poly (or sharing the loss of making it) for their wafers now rather than making it themselves. The situation seems so dire that what I used to call the "big daddy" of US listed CN solars are willing to give up the majority stake in their polysilicon business. They will sell their wafers first due fixed volume contracts with the biggest CN solars.

We've talked a lot about potential general market problems hitting partly insulated FSLR. That is nothing compared to the problems faced by CN polysilicon industry. Keep a watch out for moves by LONGi if you are DQ holder.

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On 5/30/2018 at 4:55 AM, tupapa said:

For those interested, this is my case for Daqo.

DQ has dropped a lot from its high a month ago.  Granted that the situation has changed, do you see that it is cheap enough now or this is a broken stock and should be avoided?  Are you still holding or you had sold out already and moved on to next company?  Currently, I don't have the stock but may enter if it drops further (to low $30's maybe).

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