Daqo New Energy posts higher revenue and income for Q1; company holds conservative outlook for Q2

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Daqo New Energy’s first quarter 2011 financials show the company increasing their revenues, income and polysilicon shipments over 2010’s fourth quarter results, but the company still holds a conservative outlook for its second quarter 2011. Revenues for Q1 amounted to US$87.3 million, a 6.6% increase over Q4 2010. The company acknowledges that its revenue growth can be credited to an escalation in its polysilicon sales, which amounted to 1,089MT during Q1.

Daqo’s Q1 polysilicon shipments brought in US$77.7 million in revenue, compared to Q4’s US$73.4 million revenue from 966MT of polysilicon shipments. Additionally, the company notes that the increase in revenues for Q1 over Q4 can be attributed to a higher sales volume for its polysilicon product, which was partially offset by a lower average selling price (ASP) in Q1 2011.

The first quarter revenues were additionally supported by 4.8MW of PV module shipments, which brought in US$8.6 million in revenues, 8MW of outsourcing for its customers and 8MT of polysilicon for the production of PV wafers through a trolling agreement, which provided an additional US$1 million in revenues.

Daqo’s gross profit for the first quarter totaled US$44.5 million, slipping 2.8% from US$45.8 million Q4 in 2010. The company’s gross margin for Q1 was 51%, down from 55.9% in Q4. The company maintains that the decrease in both the gross profit and gross margin are features of a lower ASP for their polysilicon product combined with higher production cost per kilogram of the polysilicon product.

The company reported an operating income of US$43.5 million for quarter one, which demonstrates a 5.4% increase from the 2010’s fourth quarter result of US$41.3 million. Operating margin was 49.8%, slightly less than Q4’s 50.4%.

When providing guidance for 2011’s second quarter, Daqo advised that it anticipates total revenue to fall between US$92 million to US$95 million. Shipments for the second quarter are expected to reach between 950MT to 1000MT of polysilicon, which will lead to sales revenues for polysilicon of US$64.5 million to US$67.5 million.

Wafer shipments of should amount to around 7MW and are speculated to bring about US$4.5 million in revenue, while PV module sales should generate US$23 million in revenue with 14MW shipped under Daqo’s brand and 2.5MW of PV modules outsourced for its customers.

“We are happy to announce another record quarter in terms of revenue and profitability. Our ability to control our production cost, combined with ongoing favorable polysilicon pricing environment helped us to achieve this record result. During the quarter, we also successfully progressed the construction of our Shihezi, Xinjiang polysilicon phase 2 facility as planned. Our wafer production facility in Wanzhou also commenced production in April. Initial output product quality met our expectations” said Dr. Gongda Yao, CEO of the Daqo New Energy, “With a good start in the first quarter of the year, we are confident that we can execute on our business plan for the year. We are also reaching out to our current and potential polysilicon material customers to secure our polysilicon output for the year of 2012 through 2014 with the signing of supply agreements with advance deposits. We will continue to work hard and deliver value and return for our investors”.

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