On the evening of January 17, Daqo Energy (SH688303, stock price 23.29 yuan, market value 49.962 billion yuan), a leader in the polysilicon industry, announced that the company expects to achieve a net profit attributable to the owners of the parent company in 2024 with a loss of 2.6 billion yuan to 3.1 billion yuan, compared with 2023. In 2023, Daqo Energy's net profit attributable to its parent company will be 5.763 billion yuan.

Daqo Energy said that the performance loss was mainly due to the intensification of the mismatch between supply and demand in the domestic polysilicon market in 2024, the continuous decline in product prices, and even falling below the industry's cash cost, and the industry's overall gross profit and profitability fell sharply.

The reporter of "Daily Economic News" noticed that Daqo Energy announced on the same day that the company's controlling shareholder and actual controller issued a commitment to voluntarily extend the lock-up period of the restricted shares held by it for 6 months.

In the second and third quarters of last year, selling prices fell below the "unit cash cost".

Daqo Energy announced that the company's financial position remained stable and its cash reserves were abundant, laying a solid foundation for resisting cyclical fluctuations in the industry. However, as a core player in the industry, the company has directly borne the eroding pressure on profitability from the price downturn, and its performance has declined significantly compared with 2023.

In addition, affected by the above-mentioned market factors, the price of the company's main business polysilicon products continued to fall, and Daqo Energy made provisions for inventory price decline based on the principle of prudence, conducted impairment tests on non-current assets such as fixed assets, and made corresponding asset impairment provisions, which had a greater impact on the performance in 2024.

The reporter noted that in the first half of 2024, the total impairment losses of Daqo Energy were about 785 million yuan, the total impairment losses of the third quarter of 2024 were about 582 million yuan, and the total impairment losses in the first three quarters were 1.367 billion yuan.

In fact, Daqo Energy's performance has begun to decline since 2023. In 2023, the annual operating income and net profit attributable to the parent company decreased by 47.22% and 69.86% respectively, mainly due to the impact of the upstream and downstream supply and demand relationship of photovoltaics, and the price of polysilicon fell sharply.

The downward trend in the prices of the main products will continue into 2024. Daqo Energy's third quarter report for 2024 shows that in the first quarter, second quarter, and third quarter, the unit sales price of the company's polysilicon products was 54.92 yuan/kg, 37.09 yuan/kg, and 33.62 yuan/kg, respectively, and the unit sales price from January to September was 42.96 yuan/kg, down 52.93% year-on-year from the same period in 2023.

It is worth noting that from the second quarter of 2024, the selling price of the company's polysilicon products fell below the "unit cash cost". In the second and third quarters, the company's polysilicon product unit cash cost was 40.16 yuan/kg and 38.93 yuan/kg, respectively.

Daqo Energy said in the third quarter report of 2024 that based on the current market dynamics, changes in product prices and market trends, combined with the progress of the annual routine maintenance plan, the company expects to produce 31,000 tons ~ 34,000 tons of polysilicon in the fourth quarter of 2024 and 200,000 tons ~ 210,000 tons in 2024.

At present, Daqo Energy has two production bases in Shihezi, Xinjiang and Baotou, Inner Mongolia, and has formed an annual production capacity of 305,000 tons of high-purity polysilicon. On December 24, 2024, Daqo Energy said on its WeChat official account that in order to prevent "involution" vicious competition and promote the healthy and sustainable development of the photovoltaic industry, the company will gradually start the phased maintenance of high-purity polysilicon production lines, and orderly reduce and control production of some production lines.

There was another resignation of core technical personnel

At the same time as the announcement of the pre-loss of performance, Daqo Energy disclosed the announcement of the resignation of core technical personnel Wang Xiyu, and he will no longer hold any position in the company after his resignation.

According to the resume disclosed by the company, Wang Xiyu joined Chongqing Daqo New Energy Co., Ltd. (hereinafter referred to as "Chongqing Daqo"), a wholly-owned subsidiary of the company's controlling shareholder, in July 2007, and has worked in the company or its wholly-owned subsidiaries for a long time, and served as the director and general manager of Daqo Energy from August 2023 to October 2024; Since September 2024, he has served as the general manager of Inner Mongolia Daqo New Energy Research Institute.

Daqo Energy said that Wang Xiyu's resignation will not have a significant adverse impact on the company's ability to continue operations, research and development strength, and core competitiveness. The company has established a complete R&D system, and the R&D team members perform their own responsibilities and ultimately form collective results, and there is no single dependence on specific core technical personnel.

The reporter noticed that starting from 2023, a number of core technical personnel of Daqo Energy will resign. In June 2023 and November 2023, the company successively disclosed the resignation announcements of core technical personnel Tan Zhongfang and Zhao Yunsong, and successively identified Tian Xianrui and Ma Xiaoliang as the company's core technical personnel. In October 2024, Daqo Energy disclosed the resignation announcement of Hu Ping, deputy general manager and core technical personnel of the company, and identified Pan Heping and Mo Kezhang as the company's core technical personnel.

According to the announcement, after Wang Xiyu's resignation, Daqo Energy has a total of 5 core technical personnel, of which 4 will be identified in 2023 and 2024.

On the evening of January 17, Daqo Energy also announced that the company's controlling shareholder Cayman Daqo and its wholly-owned subsidiary Chongqing Daqo and the actual controllers Xu Guangfu and Xu Xiang issued a letter of commitment to voluntarily extend the lock-up period of the restricted shares held by them for 6 months.

The reporter noted that as early as July 2024, Xu Xiang, the controlling shareholder and actual controller of the company, has extended the lock-up period of restricted shares for 6 months, and the date of lifting the restriction will be until January 21, 2025; Xu Guangfu promised not to reduce his direct holdings of the company's shares for 6 months from July 23, 2024. At present, the above-mentioned shareholders and actual controllers continue to promise that the restriction period will be further extended to July 22, 2025. Daqo Energy said that the company's board of directors will continue to supervise the implementation of the above commitments and fulfill information disclosure obligations in a timely manner.

Cover image source: Visual China-VCG211415599071