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Daqo New Energy Corp. Announces Second Quarter 2014 Results

Date2014/8/20

"We are proud that the Company continues to deliver excellent performances in the second quarter of 2014 and records the second consecutive quarter of profitability," announced Dr. Gongda Yao, the Company's chief executive officer.

"We shipped 1,436 MT of polysilicon in the second quarter of 2014, increasing from 1,391 MT in the first quarter of 2014. Wafer shipment in the second quarter of 2014 was 17.6 million pieces, increasing from 16.8 million pieces in the first quarter of 2014. We expanded EBITDA margin to 34.9% from 32.5% in the previous quarter, and produced positive operating income of $8.3 million. We achieved $4.5 million net income attributable to Daqo shareholders, up from $2.6 million in the previous quarter, despite the costs relating to the non-operational Chongqing polysilicon plant of $3.4 million this quarter."

"In the second quarter of 2014, we continued our cost reduction road map and brought down our polysilicon production cost (including depreciation) to $14.13/kg with a cash cost of $11.48/kg (excluding depreciation). Although we conducted annual maintenance and preparation works for hydrochlorination in this April, which affected production for 5 days, we produced 1,504 MT of polysilicon in the second quarter, compared to1,517 MT in the first quarter of 2014. The annual maintenance time was down from 17 days in 2013 to the current 5 days in 2014. We expect that our actual polysilicon production volume in 2014 will be close to our nameplate capacity of 6,150MT and our annual average cash cost (excluding depreciation) and production cost (including depreciation) to be approximately $11.30/kg and $14.00/kg, respectively.

"In this May, we successfully raised $54.6 million through a follow-on offering in the public market. We will use the net proceeds mainly for the expansion and technology improvement at our Xinjiang polysilicon facility. The construction work started in this April and is on track with the schedule. We expect to finish the construction and installation by the end of November and start pilot production right away. We expect to fully ramp up the capacity to 12,150MT in the second quarter of 2015 and therefore reduce our cash cost (excluding depreciation) and production cost (including depreciation) to approximately $8.70/kg and $12.00/kg, respectively."

"In the second quarter of 2014, the average selling price, or ASP, for polysilicon was $22.04/kg, up from $21.63 in the first quarter of 2014. In the first half of 2014, China's domestic installation was reported to be around 3.3 GW which was lower than expected. Entering into the third quarter, the polysilicon ASP is relatively lower compared to the second quarter due to high downstream inventories. Nevertheless, on August 7, China National Energy Bureau increased the 2014's target of newly added installation to 13GW from the previously announced 10GW. We are optimistic that the trend will soon pick up in the fourth quarter due to rising installation not only in China but also in other major markets such as the US and Japan. We believe the continuously growing end-market demand will strongly support polysilicon ASP in the fourth quarter of 2014 and beyond. As a cost leader, with a doubled capacity under construction and a further cost reduction roadmap, the Company is very well positioned for the next rapid growing cycle which we believe has already started." concluded Dr. Yao.
 

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