Daqo Q1 2018 results: Continued growth allows expanding production base

Sales in the Q1 2018 went up to 5,411 MT from 4,730 in the last quarter and from 4,223 by year-on-year comparison. Production also went up from 5,339 MT in Q4 2017 to 5,657 in Q1 2018 and is now more aligned with actual sales volumes.

Even though Daqo managed to increase its sales volume, revenue has not grown by the same margin. This is primarily a result of falling polysilicon ASPs, from $19.09/kg in Q4 2017 to $17.68/kg in Q1 2018. Menawhile, operating income has slightly decreased quarter-on-quarter from $43.6 million to $41.7 million but has increased significantly year-on-year from $32.2 million, demonstrating that despite decreasing ASP the increased production volumes are stabilizing the company.

Meanwhile, revenues have remained stable compared to those from the last quarter of 2017, though it is noticeable that the $103 million area was reached from a soaring increase as in the same period 2016 revenues were around $42 million. Income from operations more than four-folded from 2016 to 2017 and remained stable now from 2017 to 2018.

While Daqo has not presented the same growth numbers as it could last year, it should be noted that a) the current financials have improved and b) the large capacity expansion plans have been executed – primarily through increased production at a new plant.

In its latest financial statement, Daqo has demonstrated that its expansion plans are far from over.  Daqo plans to increase production to an annual capacity of 25,000 MT from current 18,000 MT over the course of 2018. Continued “debottlenecking” is expected to raise production levels to 30,000 MT annually by the end of 2019.

The increased production and stable financials should come as good news for the recently appointed CEO Longgen Zhang, who took over from the companies founder Guangfu Xu in January. Zhang brings experience of the solar PV market as he served as CFO of Jinko Solar between 2008 and 2014.