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Daqo (DQ)

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Why on earth do we have to make this about FSLR again?  FSLR is just fine, they have the cost, the balance sheet, and the ASP.   What else could you possibly ask for?

And what's up with that constant whining about the injustice of tariffs?  When have I heard you saying that the CNs would be dead by now were it not for the zillions of cheap state financing and subsidies thrown at them over the years?  Never.  Either way it's not our job to whine and judge.  Our job is to analyze the facts and derive insights as to where EPS and SPs are headed!

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15 minutes ago, Klothilde said:

Our job is to analyze the facts and derive insights as to where EPS and SPs are headed!

Agreed.  And right now, DQ's SP is absolutely BURYING FSLR's.

Anybody got any idea what's driving this sudden tremendous surge?  I actually fear this is overdone, without confirmation of stellar earnings for last quarter and robust guidance for next.

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47 minutes ago, Klothilde said:

Why on earth do we have to make this about FSLR again?

Why because at times it is just fun at times. Sorry if I did not like your posting and information I would not needle on you at times. That is a sign of respect.

 

You gotta admit, with production costs where they are today,  and only going lower over the next 4 years, really hurts that FSLR story of low cost leadership they used to preach. even the analysts have recognized that these days.

 

By 2024  with new technology that has better low light absorption and angle absorption and heat response is going to eat into the final selling points of CDTE. The same way their claim of lower installation costs have been shot  with larger lighter more powerful panels made from Csi

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54 minutes ago, Klothilde said:

Why on earth do we have to make this about FSLR again?  FSLR is just fine, they have the cost, the balance sheet, and the ASP.   What else could you possibly ask for?

And what's up with that constant whining about the injustice of tariffs?  When have I heard you saying that the CNs would be dead by now were it not for the zillions of cheap state financing and subsidies thrown at them over the years?  Never.  Either way it's not our job to whine and judge.  Our job is to analyze the facts and derive insights as to where EPS and SPs are headed!

I am fully aware of the incentives China gave their manufacturing base. The policies implemented back in 2012 that spurred the massive build outs was put in place to save what would have been a death to their solar manufacturing. They are trying like hell to back out those incentives now. We have seen the impact of pricing when the Government backs out of the protectionism.

 

I just wish the U.S. would get smart and get rid of the protectionism. I mean we do not have a solar industry in this country. First Solar has what 1Gw of production and the rest is in Malaysia. Sunpower is contract manufacturing overseas and have manufacturing over seas. To me the tariff costs does not justify the indusry. The only thing the Tarrifs have done is create at most 1,000 low skilled low level assembly jobs that is only temporary. They will be lost once solar subsidies are removed.

 

it is different if the tariffs were in place to foster an industries growth like China did, but we have zero industrial policies in this contry design to make a thriving industrial base.

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Corona disrupting polysilicon production in Xinjiang.  Just sayn'.
http://guangfu.bjx.com.cn/news/20200226/1048014.shtml

"...second, polysilicon enterprises in Xinjiang are restricted by insufficient supply of raw and auxiliary materials and poor logistics. , The operating rate further reduced..."

"...third, the supply of raw and auxiliary materials in short supply, prices rose sharply, and the cost of polysilicon production increased accordingly..."

Here's corroboration that the price of metallurgical silicon is spiking:
http://www.sunsirs.com/uk/prodetail-238.html

Could someone please connect the dots and tell us how all this will affect Daqo's Q1 and Q2 earnings please??

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Of course DQ's earnings will take a hit, as will the earnings of EVERY SINGLE OTHER INDUSTRY based in those areas.

That's not a surprise.  What IS a surprise is FSLR's recent revelations about the results of their operations.  If I were you, I'd worry less about companies I'm not invested in, and more about the single one I am.

Just sayin'....

 

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47 minutes ago, Klothilde said:

Tongwei's Leshan Phase II polysilicon project signing ceremony.  35kt, construction start Mar 2020, commissioning Sep 2021.  Look how cute they all look in their corona masks!
http://guangfu.bjx.com.cn/news/20200228/1048924.shtml

That is going to be the next hot Xmas item, the Corona Doll complete with accessorised N95 masks

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Daqo crushed it, almost 30% GM, cost lower than guided and heading significantly lower. Utilization at capacity with production volumes and shipments increasing significantly.

 

https://finance.yahoo.com/news/daqo-energy-announces-unaudited-fourth-092700325.html

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"...For overseas markets, polysilicon prices for mono- and multi-Si wafer have spiraled downwardly alongside Chinese prices, with the average price sitting at USD 6.9/kg and USD 5.2/kg, respectively..."
https://www.infolink-group.com/en/solar/spot-price/2020-05-13-spot-price

Can anybody tell me if a spread of $0.8/kg is enough for DQ to turn a profit?  Looks like they'll have a terrific Q1 and a lousy Q2.  Whatcha think SC?  

Edited by Klothilde

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3 hours ago, Klothilde said:

"...For overseas markets, polysilicon prices for mono- and multi-Si wafer have spiraled downwardly alongside Chinese prices, with the average price sitting at USD 6.9/kg and USD 5.2/kg, respectively..."
https://www.infolink-group.com/en/solar/spot-price/2020-05-13-spot-price

Can anybody tell me if a spread of $0.8/kg is enough for DQ to turn a profit?  Looks like they'll have a terrific Q1 and a lousy Q2.  Whatcha think SC?  

They are not selling at spot. Last Q they were significantly higher than the average for the quarter. They have guided significantly higher for this quarter than average. They have been getting near the high end range of the price spread. I would expect that to continue as their quality is there and the demand for good quality mono is still there. Thus the High end range in May is still $9+. This would suggest they will pull down $8-$8.50. With their costs at $6 or less, they will be doing just fine.

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Actually I found a terrific correlation between DQ`s quarterly ASP and the quarterly spot average on PVIL (taking into account the mono/multi mix). And DQ's quarterly ASP has been consistently 10-20 cents lower than the corresponding spot average on PVIL, so I don't buy the premium mumbo jumbo.

Based on PVIL DQ's ASP in Q1 should be $8.8/kg, resulting in a record spread of $2.72 if their cost is $6.1 as guided.  Their EPS in Q1 will be humongous.

However given the recent polysilicion price crash their calculated Q2ASP to date is around $7.7, and if prices stay where they are the full quarter ASP may be around $7.3 or less.  Would need to crunch the numbers to see if this means a loss but it for sure points to a heavy EPS hit.

Edited by Klothilde

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On 5/16/2020 at 4:57 PM, Klothilde said:

Based on PVIL DQ's ASP in Q1 should be $8.8/kg...

See?  Why didn't you trust me?

Good Lord, they posted $2.57 in EPS.

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On 5/16/2020 at 4:57 PM, Klothilde said:

However given the recent polysilicion price crash their calculated Q2ASP to date is around $7.7, and if prices stay where they are the full quarter ASP may be around $7.3 or less.  Would need to crunch the numbers to see if this means a loss but it for sure points to a heavy EPS hit.

 

i found an analysis (china board),

looks like yours...:

" 20Q1: sales of 19,000 tons, excluding tax average price of about 61,300 yuan / ton The gross profit per ton is about 20,000 yuan, and the net profit per ton is about 12,000 yuan. We estimate that the cost per ton is about 0.6 million yuan; the cash cost / production cost / total cost per ton is about 3.5 / 4.1.

20Q2: estimated sales of 145-1155 thousand tons, according to the PVINFOLINK price, according to the density: cauliflower 9: 1 ratio, the average price of the company's shipments from April to now without tax is about 54,700 yuan / ton; estimated Q2 The final average price is about 52-53 thousand yuan / ton, considering the impact of maintenance on costs, Q2 or the year's low profit, Q3 is expected to usher in a turning point;"

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On 5/15/2020 at 6:23 PM, SCSolar said:

...Thus the High end range in May is still $9+. This would suggest they will pull down $8-$8.50. With their costs at $6 or less, they will be doing just fine.

They are throwing out horrible numbers for Q2.  It's not me speaking here, it's the transcript.

"...we expect to... ...sell approximately 14,500 metric tonnes to 15,500 metric tonnes of polysilicon to external customers during the second quarter of 2020..."

"...And in May, we see the price continue go down to $7 to $7.20..."

"...So, basically, I think Q2, the cost maybe keep the same or even slightly go up..."

"...I think, going forward, interest expense will be approximately $5.5 million to $6 million per quarter run rate..."

This is what I come up with for Q2, please chime in with your own numbers:

ASP: $7.27/kg
VOL: 15000 mt
REV: $109.1M
CPKG: $6.06/kg (incl. underutilization)
COGS: $90.9M
GP: $18.2M
SG&A: $8.9M
R&D: $1.7M
INT: $5.75M
TAX: $0.45M
NI: $1.3M
EPS: $0.09

For the haters among you please note that Philip Shen recently updated his Q2 EPS estimate on estimize to -$0.03, i.e. he is even forecasting a loss in Q2 now.

 

 

Edited by Klothilde

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Wow love this comment from the DQ transcript on Seeking Alpha

 

https://seekingalpha.com/article/4349119-daqo-new-energy-corp-dq-ceo-longgen-zhang-on-q1-2020-results-earnings-call-transcript?part=single

 

"If, let's say, two years ago, maybe consumed 4.5 grams in our silicon per watt. So, that's why the module cost is not number one cost right now. The number one cost is gases. Okay? So, basically, we believe on a module right now per watt cost for silicon is around right now like 3 grams to 3.2 grams"

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The big question is if there's room for polysilicon prices to climb back to $8-$9/kg.  If the market is balanced at the current level for the foreseeable future then DQ seems overpriced from a fundamentals point of view...

Can anybody explain to me why Yahoo is still showing a consensus of $1.28 for Q2 and $9.69 for FY20 ???

P.D. Oh just saw that marketwatch has newer estimates, which also include the loss projection of Philip Shen for Q2.

Can anyone recommend a free site with the latest analyst estimates?  Been using Yahoo but I kinda get a feeling that their data is stale sometimes...

 

Edited by Klothilde

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On 5/23/2020 at 9:56 AM, Klothilde said:

The big question is if there's room for polysilicon prices to climb back to $8-$9/kg.  If the market is balanced at the current level for the foreseeable future then DQ seems overpriced from a fundamentals point of view...

Can anybody explain to me why Yahoo is still showing a consensus of $1.28 for Q2 and $9.69 for FY20 ???

P.D. Oh just saw that marketwatch has newer estimates, which also include the loss projection of Philip Shen for Q2.

Can anyone recommend a free site with the latest analyst estimates?  Been using Yahoo but I kinda get a feeling that their data is stale sometimes...

 

 

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