(Yicai) Aug. 7 -- Daqo New Energy, a major Chinese maker of solar panel materials, recorded a 54 percent decline in net profit in the first half as the trend of surging product prices is over.

Net profit fell by more than half to CNY4.4 billion (USD611.7 million) from a year ago, the supplier of photovoltaic materials announced in its latest earnings report. Revenue dropped by 43 percent to CNY9.3 billion. Cash flow from operating activities fell by 21 percent to CNY5.4 billion.

The supply of polycrystalline silicon in China surged so prices quickly dropped, the firm explained. Daqo's gross profit margin was still almost 57.7 percent while its main product, polycrystalline silicon, became about 70 percent cheaper than the historic high seen last year. That year, the average margin was around 74.8 percent.

From January to June, Daqo produced 792,00 tons of polycrystalline silicon, up by 19 percent, while making up nearly 12.2 percent of the domestic total. Sales reached 76,800 tons, rising by less than 1 percent. The company has been adding capacity to reach 205,000 tons per year as of June 30.

In the six months, products were priced at CNY120,500 (USD16,753) pre-tax per ton, down 43 percent. In the first quarter, the average price was CNY190,400 whereas in the second quarter, it was CNY86,400 (USD12,012).

However, the company is confident about the future as it predicts its 2023 output will rise to a point between 193,000 and 198,000 tons. The third quarter should contribute 55,000 tons or even 57,000 tons to the total.

The worst slump might be over as prices of the major solar panel material have stabilized to stand above CNY70,000 per ton, following a big decline in the second quarter, according to data from the Silicon Industry of China Nonferrous Metals Industry Association.

Daqo's performance is reversing as in 2022, the company more than tripled its net profit to CNY19.1 billion (USD2.7 billion) from 2021 while revenue grew almost threefold because demand and prices jumped, according to the annual report. The firm even distributed CNY7.7 billion of dividends, based on a document released in March.

Daqo's stock price [SHA: 688303] closed 1.1 percent lower at CNY39.40 (USD5.50), or 18 percent down since the beginning of the year. The shares debuted on the Star Market in July 2021 and surged to an all-time high of CNY87.99 seven weeks after that, but has been almost completely trapped in a downward trend since then.

Editors: Tang Shihua, Emmi Laine