Daqo IPO plans edge forward as company forecasts 50% leap in sequential revenue

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Surging polysilicon ASPs have led Daqo to forecast a 50% jump in sequential revenue in Q2 2021. Image: Daqo New Energy.

Polysilicon provider Daqo New Energy has seen its initial public offering (IPO) plans progress after its application was sent to China’s Securities Regulatory Commission (CSRC) last week.

Daqo first signalled its intent to list its major operational subsidiary Xinjiang Daqo New Energy on the Shanghai Stock Exchange’s science technology innovation board, otherwise known as the STAR Market, last summer in a bid to raise funds for planned expansions.

The company then revealed last September that its application had been submitted to the Shanghai Stock Exchange. Those application documents have now been submitted to the CSRC for registration, paving the way for the IPO to take place in the coming weeks and possibly as early as next month.

During Daqo’s Q1 2021 results disclosure last month, the firm’s chief executive Longgen Zhang told analysts that while it could not guarantee a timetable, it was Daqo’s intent to list in early July this year. The registration process is due to be completed within 20 working days after receipt of the documents by the CSRC.

Zhang added that processing of the listing could take around one month, allowing Daqo to feasibly list in July.

But Zhang would not be drawn onto the prospective valuation of Xinjiang Daqo given recent fluctuations in the market.

As part of the listing process, Daqo has revealed its Q2 2021 financial forecasts, placing quarterly revenue in the RMB2.46 – 2.51 billion (US$385 – 393 million) range and forecasted net profit to be between RMB1.3 – 1.33 billion (US$203 – 208 million).

By means of comparison, Daqo’s revenue in the first quarter came in at US$256.1 million, with the polysilicon provider hinting that soaring average selling prices of polysilicon would start to be felt in the company’s top and bottom lines from the next reporting period. Should Daqo’s Q2 revenue reach the top end of that forecast it would be representative of a 53% sequential increase.

Last week the average spot market price for mono-grade polysilicon breached the RMB200 barrier, exacerbating price spikes witnessed since the start of the year. Since late February 2021 when China’s market largely reopened following the Spring Festival, average prices have more than doubled.

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