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Daqo (DQ)

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REC Silicon out with Q3 numbers today.  FUBAR:
https://ml-eu.globenewswire.com/Resource/Download/e90a8646-e099-4359-94a2-9816fbe11b0e

OCI out with Q3 as well today.  Polysilicon EBITDA: -4%
https://www.oci.co.kr/eng/sub/investment/ir_view.asp?idx=664&pageNo=1

Wacker published Q3 numbers one week ago.  Polysilicon EBITDA:-15% excluding special income from insurance
https://www.wacker.com/cms/media/documents/investor-relations/q3_19/WACKER_Q3_2019_Presentation.pdf

Both OCI and Wacker have slipped below cash cost in Q3, however both are committed to fight.  Means this supply (160kT) is not going away anytime soon...

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Daqo New Energy to Announce Unaudited Third Quarter 2019 Results on November 12, 2019

Will they repeat their BS about polysilicon prices about to surge?  My guess is yes...

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Tis earnings season again you guys.  I'm getting peanuts again in Q3.  Sorry.

Rev $82.7M
GP $13.3M
OPEX & Net Int $11.4M
EBT $1.9M
Tax $0.3M
NI $1.6M
#shares 13.94M
EPS $0.11

How bout you guys, anybody seeing more than peanuts?  SCSolar, you had them break-even, right?

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4 hours ago, Klothilde said:

Tis earnings season again you guys.  I'm getting peanuts again in Q3.  Sorry.

Rev $82.7M
GP $13.3M
OPEX & Net Int $11.4M
EBT $1.9M
Tax $0.3M
NI $1.6M
#shares 13.94M
EPS $0.11

How bout you guys, anybody seeing more than peanuts?  SCSolar, you had them break-even, right?

Not certain about break even, but a $9 ASP and target costs of $7.5 puts them at $13.75M gross on mid range volume shipments. That suggests about $0.18 in EPS before 1 time adjustments.

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13 minutes ago, Klothilde said:

Their production cost came in way below guided, that screwed up my estimate.  I'm so mad.

Look on the bright side, their ability to cut costs dramatically will slow down while the ASP should fall faster than the cost savings for Q4.

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Thanks for the encouragement. 👍

One thing I got right is that they keep bulls***ting us with increasing prices:

"...we believe this will lead to continued increase in mono-grade polysilicon demand, which should lead to improvement in the price of mono-grade polysilicon for next year..."

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37 minutes ago, Klothilde said:

Thanks for the encouragement. 👍

One thing I got right is that they keep bulls***ting us with increasing prices:

"...we believe this will lead to continued increase in mono-grade polysilicon demand, which should lead to improvement in the price of mono-grade polysilicon for next year..."

$8.75 per KG on PVinsights for this week. This suggests an ASP that is not dropping for Q4 as of yet even with the slower demand in China. NExt Q could be a bang up quarter with a price spread over $2. They could be looking at $25-$30M gross this upcoming quarter before the capacity expansion hits the pricing.

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China polysilicon output ramping to 35000 tons in December you guys.  That's roughly 40% more yoy.
http://guangfu.bjx.com.cn/news/20191127/1024130.shtml

Also that's a yearly runrate of 420kt and would be enough for roughly 117GW of PV.  Assuming global demand goes to 140GW next year there's only a gap of 83kt which is roughly the capacity of either OCI or Wacker.  Means one needs to exit the market or both need to curtail production by 50%.  

Exciting times ahead you guys!  I see prices hitting rock bottom over the next months and the western polysilicon makers starting to shut down their most expensive lines.  Hard to believe we've come to this point but it's simple math 101.

 

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32 minutes ago, Klothilde said:

Polysilicon crashing in China, especially the multi-grade one.  Guangfu shows a 7% drop to an avg. of 51.5RMB/kg incl. VAT:
http://guangfu.bjx.com.cn/news/20191204/1025932.shtml

Great news for DQ, The mono Poly is between $8.50-$9/KG. With their costs dropping to $6.50 that is a $2.25 price spread. When you look at their volume shipments, they are going to generate 60% more gross profit with minimal Operational and Interest increases. That is $11M more in gross profits or what ~$1 a share more in EPS. Good times coming.

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Question is what will happen with mono-grade prices.  Q4 is fine for sure but let's see how that spread behaves over the next weeks.  Fact is mono-grade has been relatively stable for months and has started sliding over the last coupla weeks.  Just sayn'.

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