大全新能源 (DQ) 2024 Q2 法說會逐字稿

Hello, and welcome to the Daqo New Energy second-quarter 2024 results conference call. (Operator Instructions) Please note, this event is being recorded.

您好，歡迎參加大全新能源2024年第二季業績電話會議。（操作員指示）請注意，此事件正在被記錄。

I would now like to turn the conference over to Anita Chu, Investor Relations, Director. Please go ahead.

現在，我想將會議交給投資人關係總監 Anita Chu。請繼續。

Hello, everyone. I'm Anita Chu, the Investor Relations of Daqo New Energy. Thank you for joining our conference call today.

大家好。我是大全新能源投資者關係部的 Anita Chu。感謝您今天參加我們的電話會議。

Daqo New Energy just issued its financial results for the second quarter of 2024, which can be found on our website at www.dqsolar.com.

大全新能源剛發布了2024年第二季的財務業績，可在我們的網站www.dqsolar.com上查閱。

So today attending the conference call, we have our Chairman and CEO, Mr. Xiang Xu; our CFO, Mr. Ming Yang; and myself. The call today will begin with an update from Mr. Xu on market conditions and company operations, and then, Mr. Yang will discuss the company's financial performance for the quarter and the year. After that, we'll open the floor to Q&A from the audience.

今天參加電話會議的有我們的董事長兼執行長徐翔先生；我們的財務長楊明先生；還有我自己。今天的電話會議將首先由徐先生介紹市場狀況和公司營運情況，然後楊先生將討論公司本季和全年的財務表現。之後，我們將開始觀眾的問答環節。

Before we begin the formal remarks, I would like to remind you that certain statements on today's call, including expected future operational and financial performance and industry growth, are forward-looking statements that are made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995.

在我們開始正式發言之前，我想提醒大家，今天電話會議上的某些聲明，包括預期的未來營運和財務業績以及行業增長，都是根據 1995 年美國私人證券訴訟改革法案的安全港條款做出的前瞻性聲明。

These statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement. Further information regarding these and other risks is included in the reports or documents we have filed with or furnished to the Securities and Exchange Commission.

這些聲明涉及固有的風險和不確定性。許多因素可能導致實際結果與前瞻性聲明中的結果有重大差異。有關這些風險和其他風險的更多資訊包含在我們向美國證券交易委員會提交或提供的報告或文件中。

These statements only reflect our current and preliminary view as of today and may be subject to change. Our ability to achieve these projections is subject to risks and uncertainties. All information provided in today's call is as of today and we undertake no duty to update such information except as required under applicable law.

這些聲明僅反映我們截至今天的當前和初步觀點，可能會發生變化。我們實現這些預測的能力受到風險和不確定性的影響。今天電話會議中提供的所有資訊均截至今天為止，除非適用法律要求，否則我們不承擔更新此類資訊的義務。

Also, during the call, we'll occasionally reference monetary amounts in US dollar terms. Please keep in mind that our functional currency is the Chinese RMB. We offer these translations into US dollars solely for the convenience of the audience.

此外，在通話過程中，我們偶爾會提及以美元計算的金額。請記住，我們的功能貨幣是人民幣。我們提供這些翻譯成美元只是為了方便觀眾。

Mr. Xu will make his remarks regarding current market conditions and company performance in Chinese, which I'll translate into English after he finishes.

徐先生將以中文就當前的市場狀況和公司業績發表講話，他講完後我會將其翻譯成英文。

So now, I'll turn the call to our CFO -- to our CEO. (spoken in foreign language)

現在，我將把電話轉給我們的財務長—我們的執行長。（用外語說）

(spoken in foreign language)

（用外語說）

(interpreted) Hello, everyone, this is Anita. I'll now translate our CEO, Mr. Xu's remarks. The solar industry experienced significant challenges during the second quarter, as market prices fell across the solar value chain to below production costs for nearly the entire industry.

(翻譯) 大家好，我是 Anita。我現在翻譯一下我們執行長徐先生的演講。太陽能產業在第二季經歷了重大挑戰，因為整個太陽能價值鏈的市場價格下跌至幾乎整個產業的生產成本以下。

As end-of-quarter polysilicon ASP fell below our production cost, we were required in accordance with accounting rules to record a non-cash inventory impairment expense of $108 million because our inventory market value fell below book value. This had a significant negative impact on our cost of revenue, gross loss, operating loss, and net loss.

由於季末多晶矽平均售價低於我們的生產成本，根據會計準則，我們需要記錄 1.08 億美元的非現金存貨減損費用，因為我們的存貨市場價值低於帳面價值。這對我們的收入成本、毛虧損、經營虧損和淨虧損產生了重大負面影響。

Nevertheless, we continued to maintain a strong balance sheet free of financial debt. By the end of the quarter, we had a cash balance of $997 million and a combined cash and bank note receivable balance of $1.1 billion.

儘管如此，我們仍然保持著強勁的資產負債表，沒有財務債務。截至本季末，我們的現金餘額為 9.97 億美元，現金及銀行應收票據餘額合計為 11 億美元。

To take advantage of higher interest rates compared to bank savings, we purchased $1.4 billion of short-term investments and fixed term deposits during the quarter. Inclusive of short-term investments and fixed term deposit, we had adequate liquidity with a balance of quick assets in the amount of USD2.5 billion.

為了利用比銀行儲蓄更高的利率，我們在本季購買了 14 億美元的短期投資和定期存款。加上短期投資和定期存款，流動性充足，速動資產餘額25億美元。

On the operational front, during the second quarter, we started initial production at our 100,000 metric tons Phase 5B polysilicon project in Inner Mongolia as planned, which contributed approximately 12% of our total production volume. Overall, the total production volume of our two polysilicon facilities for the quarter was 64,961 metric tons, exceeding our expectations and representing an increase of 2,683 metric tons compared to our production volume for the previous quarter.

營運方面，第二季度，我們位於內蒙古的10萬噸五B期多晶矽專案按計畫開始投產，約占我們總產量的12%。總體而言，本季我們兩家多晶矽工廠的總產量為 64,961 公噸，超出我們的預期，與上一季的產量相比增加了 2,683 公噸。

Through continued investments in R&D and dedication to purity improvements at both facilities, our overall N-type product mix reached 73% during the quarter. Remarkably, even our Phase 5B, which was still in the ramping up stage, had 70% N-type in the product mix, strengthening our confidence in achieving 100% N-type by the end of next year. In addition, our production cost trended down further in the second quarter, decreasing by 3% from Q1 2024 to an average of $6.19 per kilogram.

透過對研發的持續投資以及對兩個工廠純度改進的投入，我們在本季的整體 N 型產品組合達到了 73%。值得注意的是，即使我們仍處於加速階段的第 5B 階段，產品結構中也有 70% 是 N 型，這增強了我們在明年年底前實現 100% N 型的信心。此外，我們的生產成本在第二季進一步下降，較 2024 年第一季下降 3% 至平均每公斤 6.19 美元。

In light of the current market conditions and pricing, we have adjusted our target production utilization rate for the third quarter and our production plan for the full year. We expect our Q3 2024 total polysilicon production volume to be approximately 43,000 metric tons to 46,000 metric tons, as we started maintenance and lowered our production utilization rate to manage support pricings and reduce our cash burn. As a result, we anticipate our full-year 2024 production volume to be in the range of 210,000 metric tons to 220,000 metric tons.

根據目前的市場狀況和價格，我們調整了第三季的目標生產利用率和全年的生產計劃。我們預計 2024 年第三季多晶矽總產量約為 43,000 公噸至 46,000 公噸，因為我們開始維護並降低生產利用率以管理支援價格並減少現金消耗。因此，我們預計 2024 年全年產量將在 21 萬公噸至 22 萬公噸之間。

During the second quarter, solar market sentiment was depressed and customers showed little interest in purchasing for products. As a result, polysilicon prices kept setting new lows, below production costs and even below cash costs. Polysilicon prices plummeted from slightly above RMB60 per kilogram on average in early April to RMB40 to RMB55 per kilogram in late April, and further dropped below RMB40 per kilogram near the end of May through the end of June.

第二季度，太陽能市場情緒低迷，顧客對購買產品的興趣不大。因此，多晶矽價格不斷創下新低，低於生產成本，甚至低於現金成本。多晶矽價格從4月初的平均每公斤略高於60元人民幣，暴跌至4月下旬的每公斤40至55元人民幣，5月底至6月底進一步跌至每公斤40元人民幣以下。

Overall, sales pressure intensified as industry-wide polysilicon inventory increased from approximately 18 days to 20 days of production in early April to more than a month of production by the end of June.

總體而言，隨著全行業多晶矽庫存從4月初的約18天至20天的生產量增加到6月底的超過一個月的生產量，銷售壓力加劇。

With prices declining for weeks to below the industry's cash cost and inventory accumulating, we began to see maintenances and production cuts across the industry. Based on industry statistics, the total polysilicon production volume in China dropped about 16% from approximately 192,000 metric tons per month in April to approximately 162,000 metric tons in June.

隨著價格連續數週下跌至產業現金成本以下，且庫存不斷增加，我們開始看到整個產業進行維護和減產。根據行業統計數據，中國多晶矽總產量從4月份的每月約19.2萬噸下降到6月份的每月約16.2萬噸，下降約16%。

However, the supply of polysilicon still exceeded the wafer customer demand, which has dropped to around 50 gigawatts in June due to lower utilization rate. In July, although there have been further industry polysilicon production cuts, an uptick in demand from downstream manufacturers will be needed to drive inventory reduction and price recovery.

不過，多晶矽的供應量仍超過矽片客戶的需求，由於利用率較低，6月矽片需求量已降至50吉瓦左右。7月份，雖然產業多晶矽產量進一步縮減，但需要下游廠商需求回升才能帶動庫存去化和價格回升。

The solar industry has gone through multiple cycles in the past, and based on our previous experience, we believe the current low prices and market downturn will eventually result in a healthier market, as poor profitability, losses and cash burn will lead to many industry players exiting the business, with some possible bankruptcies. This will bring the inevitable capacity rationalization, eventually solve the current overcapacity, and ultimately bring the solar PV industry back to normal profitability and better margins.

太陽能產業過去經歷了多個週期，根據我們以往的經驗，我們認為當前的低價和市場低迷最終將帶來更健康的市場，因為盈利能力差、虧損和現金消耗將導致許多行業參與者退出該行業，甚至可能出現破產。這將帶來不可避免的產能合理化，最終解決當前的產能過剩問題，最終使太陽能光電產業恢復正常的獲利能力和更好的利潤率。

This year will be challenging for China's solar PV industry as solar manufacturers along the value chain experience weak margins driven by oversupply, excessive inventory, and lower prices. At this point, we may have reached a cyclical bottom but do not yet see clear signs of potential improvement.

今年對中國太陽能光電產業來說將是充滿挑戰的一年，因為價值鏈上的太陽能製造商因供應過剩、庫存過高和價格下跌而利潤率較低。目前，我們可能已經觸及週期性底部，但尚未看到潛在改善的明顯跡象。

We believe that the current situation of selling below cash cost is unsustainable and that many solar firms are facing significant cash flow challenges leading to delays in loan repayment and order deliveries. Therefore, we are likely to see market consolidation with higher-cost manufacturers gradually phasing out capacity and exiting the business.

我們認為，目前低於現金成本的銷售狀況是不可持續的，許多太陽能公司面臨巨大的現金流挑戰，導致貸款償還和訂單交付延遲。因此，我們可能會看到市場整合，高成本製造商將逐步淘汰產能並退出業務。

So recently, the China Photovoltaic Industry Association has urged central and local governments, financial institutions and companies to coordinate to accelerate industry consolidation. Chinese policymakers are also calling for the healthy expansion of the solar industry. China's Ministry of Industry and Information Technology issued a draft in early July that sets rules for solar projects, such as meeting specific electricity consumption requirements and minimum capital ratio for new and expansion projects, to ensure the high-quality development of the solar PV industry and eliminate outdated capacity.

因此，近期中國光伏產業協會呼籲中央和地方政府、金融機構和企業協調配合，加速產業整合。中國政策制定者也呼籲太陽能產業健康發展。中國工業和資訊化部於 7 月初發布了一份徵求意見稿，為太陽能專案製定了規則，例如滿足特定的用電量要求和新建和擴建專案的最低資本比例，以確保太陽能光電產業的高品質發展並淘汰落後產能。

On the demand side, we continued to see strong growth in new solar PV installations in China during the first half of 2024, which reached 102.48 gigawatts, representing a 30.7% year-over-year growth rate. Overall, in the long-run, solar PV is expected to be one of the most competitive forms of power generation in China, and the continuous cost reductions in solar PV products and the associated reductions in solar energy generation costs are expected to create substantial additional demand for solar PV.

在需求方面，我們持續看到2024年上半年中國新增太陽能光電裝置容量強勁成長，達到102.48吉瓦，年增30.7%。總體而言，從長遠來看，太陽能光電有望成為中國最具競爭力的發電形式之一，而太陽能光電產品成本的持續下降以及隨之而來的太陽能發電成本的降低預計將為太陽能光電創造大量額外需求。

We believe we are well positioned to weather the current market downturn and emerge as one of the leaders in the industry to capture future growth.

我們相信，我們有能力度過當前的市場低迷時期，並成為行業領導者之一，抓住未來的成長機會。

So now, I'll turn the call to our CFO, Mr. Ming Yang, who will discuss the company's financial performance for the quarter. Ming, please go ahead.

現在，我將把電話轉給我們的財務長楊明先生，他將討論公司本季的財務表現。明，請說。

Thank you, Mr. Xu and Anita. Hello, everyone. This is Ming Yang, CFO of Daqo New Energy. We appreciate you joining our earnings conference call today. I will now go over the company's second-quarter 2024 financial performance.

謝謝徐先生和Anita。大家好。我是大全新能源財務長楊明。感謝您今天參加我們的收益電話會議。現在我將回顧公司2024年第二季的財務表現。

Revenues were $220 million, compared to $415.3 million in the first quarter of 2024 and $637 million in the second quarter of 2023. The decrease in revenue compared to the first quarter of 2024 was primarily due to a decrease in the ASP as well as decreased sales volume.

營收為 2.2 億美元，而 2024 年第一季為 4.153 億美元，2023 年第二季為 6.37 億美元。與 2024 年第一季相比，營收的下降主要是由於平均售價下降以及銷售量下降。

Gross loss was $159 million, compared to our gross profit of $72 million in the first quarter of 2024 and $259 million in the second quarter of 2023. Gross margin was negative 72%, compared to 17.4% in the first quarter of 2024 and 40.7% in the second quarter of 2023.

毛虧損為 1.59 億美元，而 2024 年第一季的毛利為 7,200 萬美元，2023 年第二季的毛利為 2.59 億美元。毛利率為負72%，而2024年第一季為17.4%，2023年第二季為40.7%。

For the second quarter of 2024, the company recorded $108 million in inventory impairment expenses as the company's inventory's market value falls below book value. The decrease in gross margin compared to the first quarter of 2024 was also due to lower ASP, which was partially mitigated by lower production cost.

2024 年第二季度，由於公司庫存的市場價值低於帳面價值，該公司記錄了 1.08 億美元的庫存減損費用。與 2024 年第一季相比，毛利率的下降也是由於平均售價較低，但生產成本的降低在一定程度上彌補了這一影響。

SG&A expenses were $37.5 million, compared to $38.4 million in the first quarter of 2024 and $43.3 million in the second quarter of 2023. SG&A expenses during the second quarter included $19.6 million in non-cash share-based compensation cost related to the company's share incentive plans compared to $19.6 million in the first quarter of 2024.

銷售、一般及行政費用為 3,750 萬美元，而 2024 年第一季為 3,840 萬美元，2023 年第二季為 4,330 萬美元。第二季的銷售、一般及行政費用包括與公司股權激勵計畫相關的 1,960 萬美元非現金股權激勵成本，而 2024 年第一季為 1,960 萬美元。

R&D expenses were $1.8 million, compared to $1.5 million in the first quarter of 2024 and $2.2 million in the second quarter of 2023. R&D expenses vary from period to period and reflect R&D activities that take place during the quarter. Most of our R&D activities has been around increasing our N-type percentage.

研發費用為 180 萬美元，而 2024 年第一季為 150 萬美元，2023 年第二季為 220 萬美元。研發費用在不同期間有所不同，反映了該季度發生的研發活動。我們的大部分研發活動都圍繞著提高 N 型百分比。

As a result of the foregoing, loss from operations was $196 million, compared to income from operations of $30.5 million in the first quarter of 2024 and $214 million in the second quarter of 2023. Operating margin was negative 89%, compared to 7.3% in the first quarter of 2024 and 33.6% in the second quarter of 2023.

由於上述原因，營業虧損為 1.96 億美元，而 2024 年第一季的營業收入為 3,050 萬美元，2023 年第二季的營業收入為 2.14 億美元。營業利益率為-89%，而 2024 年第一季為 7.3%，2023 年第二季為 33.6%。

Foreign exchange loss was $1.4 million, compared to $0.3 million in the first quarter of 2024, which is attributable to the volatility and fluctuation of the US dollar and Chinese Yuan exchange rate during the quarter.

外匯損失為 140 萬美元，而 2024 年第一季為 30 萬美元，這歸因於本季美元和人民幣匯率的波動。

Net loss attributable Daqo New Energy shareholders was $120 million, compared to net income of $15.5 million in the first quarter of 2024 and $103.7 million in the second quarter of 2023. Loss per basic ADS for the quarter was $1.81, compared to earnings per ADS of $0.24 in the first quarter of 2024 and $1.35 in the second quarter of 2023.

歸屬於大全新能源股東的淨虧損為 1.2 億美元，而 2024 年第一季的淨收入為 1,550 萬美元，2023 年第二季的淨收入為 1.037 億美元。本季每股基本美國存託憑證虧損 1.81 美元，而 2024 年第一季每股基本美國存託憑證虧損為 0.24 美元，2023 年第二季每股基本美國存託憑證收益為 1.35 美元。

Non-GAAP adjusted net loss attributable to Daqo New Energy shareholders, excluding non-cash share-based compensation cost, was $98.8 million, compared to adjusted net income non-GAAP attributable to Daqo New Energy shareholders of $36 million in the first quarter of 2024 and $134.5 million in the second quarter of 2023. Adjusted loss per basic ADS was $1.50, compared to adjusted earnings per basic ADS of $0.55 in the first quarter of 2024 and $1.75 in the second quarter of 2023.

不計非現金股權激勵成本，非美國通用會計準則調整後歸屬於大全新能源股東的淨虧損為 9,880 萬美元，而 2024 年第一季非美國通用會計準則調整後歸屬於大全新能源股東的淨利為 3,600 萬美元，2023 年第二季為 1.345 億美元。調整後每股基本 ADS 虧損為 1.50 美元，而 2024 年第一季調整後每股基本 ADS 收益為 0.55 美元，2023 年第二季調整後每股基本 ADS 收益為 1.75 美元。

EBITDA was negative $145 million, compared to $76.9 million in the first quarter of 2024 and $230 million in the second quarter of 2023. EBITDA margin was negative 66%, compared to 18.5% in the first quarter of 2024 and 36% in the second quarter of 2023.

EBITDA 為負 1.45 億美元，而 2024 年第一季為 7,690 萬美元，2023 年第二季為 2.3 億美元。EBITDA 利潤率為負 66%，而 2024 年第一季為 18.5%，2023 年第二季為 36%。

Now on the company's financial condition. As of June 30, 2024, the company had $1 billion in cash and cash equivalent and restricted cash, compared to $2.7 billion as of March 31, 2024, and $3.17 billion as of June 30, 2023. And as of June 30, 2024, the notes receivables balance was $80.7 million, compared to $194 million as of March 31, 2024, and $798 million as of June 30, 2023. Notes receivables represent bank notes with maturity within six months. And as of June 30, 2024, fixed term deposits within one year balance was $1.2 billion compared to nil in previous periods.

現在談談公司的財務狀況。截至 2024 年 6 月 30 日，該公司擁有 10 億美元現金、現金等價物和受限現金，而截至 2024 年 3 月 31 日為 27 億美元，截至 2023 年 6 月 30 日為 31.7 億美元。截至 2024 年 6 月 30 日，應收票據餘額為 8,070 萬美元，而截至 2024 年 3 月 31 日為 1.94 億美元，截至 2023 年 6 月 30 日為 7.98 億美元。應收票據為六個月內到期的銀行票據。截至 2024 年 6 月 30 日，一年內定期存款餘額為 12 億美元，而前期為零。

For the six months ended June 30, 2024, net cash used in operating activities was $278.6 million compared to net cash provided by operating activities of $786 million in the same period of 2023. And for the six months ended June 30, 2024, net cash used in investing activities was $1.7 billion compared to $496 million in the same period of 2023.

截至 2024 年 6 月 30 日的六個月，經營活動所用淨現金為 2.786 億美元，而 2023 年同期經營活動提供的淨現金為 7.86 億美元。截至 2024 年 6 月 30 日的六個月，投資活動所用淨現金為 17 億美元，而 2023 年同期為 4.96 億美元。

The net cash used in investment activities in the second quarter was primarily related to purchase of short-term investments and fixed term deposits, which amounted to $1.4 billion. And regarding the company's purchase of property, plant and equipment, for the first six months of this year, this amounted to $292 million.

第二季投資活動所用淨現金主要用於購買短期投資和定期存款，總額為14億美元。至於公司購買的物業、廠房和設備，今年前六個月的總額為 2.92 億美元。

We currently anticipate full-year capital expenditures in the range of $550 million to $600 million, which is a further reduction from our earlier plans. Capital expenditure for the second half of 2024 is, therefore, expected to be in the range of $260 million to $310 million. Capital expenditure for the year is primarily related to our Inner Mongolia polysilicon project, Phase 1 and Phase 2.

我們目前預計全年資本支出將在 5.5 億美元至 6 億美元之間，這比我們先前的計畫進一步減少。因此，預計 2024 年下半年的資本支出將在 2.6 億美元至 3.1 億美元之間。本年度資本支出主要與內蒙古多晶矽項目一期、二期有關。

And for the six months ended June 30, 2024, net cash used in finance activities was $43 million compared to $477 million in the same period of 2023. The net cash used in financing activity in the second quarter of 2024 was primarily related to dividend payments and share repurchases by our company's finance subsidiaries.

截至 2024 年 6 月 30 日的六個月，財務活動所用淨現金為 4,300 萬美元，而 2023 年同期為 4.77 億美元。2024年第二季融資活動所使用的淨現金主要與我們公司金融子公司的股利支付及股票回購有關。

And that concludes our prepared remarks. We will now open the call to Q&A from the audience. Operator, please begin.

我們的準備好的演講到此結束。我們現在開始觀眾問答環節。接線員，請開始。

We will now begin the question-and-answer session. (Operator Instructions)

我們現在開始問答環節。（操作員指示）

Phil Shen, ROTH Capital Partners.

羅斯資本合夥公司的 Phil Shen。

Hi, this is Matt Ingraham on for Phil. Thank you for taking our questions. Looking ahead, can you give us a sense of pricing and cost structure beyond this year? Do you think that there could be some recovery in price next year? And how much room -- how much more room do you have to lower the cost structure?

大家好，我是馬特‧英格拉漢姆 (Matt Ingraham)，代表菲爾 (Phil) 報道。感謝您回答我們的問題。展望未來，您能否向我們介紹今年以後的定價和成本結構？您認為明年價格會回升嗎？還有多大的空間──還有多少空間可以降低成本結構？

Hello. This is Ming, CFO of Daqo New Energy. Thank you for your question. I think in recent months, particularly in August, we've already seen some pickup and recovery of pricing. As Anita said at the bottom, I guess, in terms of June and July, pricing was below RMB40 per kilogram.

你好。我是大全新能源財務長明。感謝您的提問。我認為最近幾個月，特別是八月份，我們已經看到價格有所回升和復甦。正如 Anita 在底部所說，我猜，就 6 月和 7 月而言，價格低於每公斤 40 元。

And as of now, pricing is in the range of RMB41 to RMB42 per kilogram. So we saw a range somewhere in between RMB2 to RMB3 per kilogram in terms of price recovery. And this is primarily a result of the industry's production reduction and a slight uptick in demand from customers.

目前價格在每公斤41元至42元人民幣之間。因此，我們看到價格回升幅度在每公斤2元至3元人民幣之間。這主要是由於行業產量減少和客戶需求略有上升所致。

So we do not think the current pricing is sustainable. We do believe that, say, over the rest of the year, we should continue to see likely between RMB2 to, let's say, RMB4 kind of price recovery as production continue to remain at a lower level.

因此我們認為目前的定價是不可持續的。我們確實相信，在今年剩餘時間內，由於產量繼續保持在較低水平，我們應該繼續看到 2 元人民幣到 4 元人民幣之間的價格回升。

And while for next year, we do believe that as demand continue to improve, especially from new markets like Middle East, Latin America, Africa and, again, I think, further market developments in China and Europe, for example, so we do think that pricing should recover to at least production costs or maybe normalize to higher production costs -- higher than production costs. So we think maybe mid next year is when we will see normalized pricing for polysilicon.

而對於明年，我們確實相信，隨著需求的持續改善，特別是來自中東、拉丁美洲、非洲等新興市場的需求，以及我認為中國和歐洲等市場的進一步發展，我們確實認為價格應該至少恢復到生產成本，或者可能正常化到更高的生產成本——高於生產成本。因此我們認為也許明年年中我們就能看到多晶矽價格恢復正常。

Great. Thank you.

偉大的。謝謝。

And then, quickly following up on your cost structure, sorry, we do think there continue to be opportunity to reduce cost. I think we're seeing very successful cost trends from Inner Mongolia Phase 2 facility.

然後，快速跟進您的成本結構，抱歉，我們確實認為仍然有機會降低成本。我認為我們看到內蒙古二期工廠的成本趨勢非常成功。

I think you saw approximately 3% reduction of cost from Q2 to Q1. And we do expect that Q3 costs should be flat to slightly lower than Q2. So we think in the second half, we should -- overall we should see costs somewhere around $6 or even slightly lower than $6. And we think this cost structure should continue through next year.

我認為您看到第二季度與第一季相比成本降低了約 3%。我們確實預計第三季的成本應該與第二季持平或略低。因此我們認為在下半年，我們應該——總體而言，我們應該看到成本在 6 美元左右，甚至略低於 6 美元。我們認為這種成本結構應該會持續到明年。

Really appreciate the color there. And then, can you just talk about the channel inventory in the market? Do you expect that to continue to grow near term? And where do you think that peaks?

真的很欣賞那裡的色彩。然後，您能談談市場上的通路庫存嗎？您預計短期內該數字還會持續成長嗎？您認為這個高峰在哪裡？

Okay. Actually, channel inventory has already peaked. So inventory is actually coming down as of August, and we think this should continue to go down, I think primarily as a result of continued reduction in supply.

好的。事實上，渠道庫存已經達到高峰。因此，截至 8 月份，庫存實際上正在下降，我們認為庫存應該會繼續下降，我認為這主要是由於供應持續減少。

So we think it should probably reduce to a much more reasonable level by, say, Q4 or by the end of the year, right? So unless we see some kind of meaningful price recovery, at least above the industry cash cost, we're very unlikely to see improvements in production.

因此我們認為到第四季度或年底它應該會降至更合理的水平，對嗎？因此，除非我們看到某種有意義的價格回升，至少高於產業現金成本，否則我們不太可能看到產量的改善。

Okay, great. Thank you for the color. I'll pass it on.

好的，太好了。謝謝你的顏色。我會傳達的。

Great. Thank you.

偉大的。謝謝。

Alan Lau, Jefferies.

傑富瑞 (Jefferies) 的艾倫劉 (Alan Lau)。

Thanks for taking my question. So I would like to know about what is the breakdown on the impairment of $108 million, because -- and also the inventory level at the end of 2Q, because it appears that the production volume is higher than sales volume for 20,000 metric tons. So is 20,000 a fair assumption on the inventory level by end of 2Q? And if that is the case, an impairment of $108 million seems huge. So we'd like to know the basis on that.

感謝您回答我的問題。因此，我想知道 1.08 億美元減損的明細，因為——以及第二季末的庫存水平，因為看起來生產量高於 20,000 公噸的銷售量。那麼，20,000 是第二季末庫存水準的合理假設嗎？如果事實確實如此，那麼 1.08 億美元的減損金額似乎非常巨大。因此我們想知道其依據。

Okay. So the reality is, the $108 million is a reduction in not just finished goods, but also work-in-process inventory and raw material, which reduces our cost from our production cost, say, around $6.19 per kilogram to, really, the current market pricing, which is below RMB40 per kilogram. And about 60% of that is related to finished goods inventory.

好的。所以實際情況是，這 1.08 億美元不僅減少了成品，還減少了在製品庫存和原材料，從而將我們的生產成本從每公斤 6.19 美元左右降低到了目前的市場價格，即每公斤 40 元人民幣以下。其中約60%與成品庫存有關。

Okay. And then, looking at our inventory at the end of the quarter -- give me a minute, let me just quickly look that up. Okay. Approximately 28,000 metric tons, okay? So we built roughly 20,000 metric ton of inventory, like you said, during the quarter because of the market conditions and the weak demand. Although I think, starting in August, we're starting to see reduction in inventory right now.

好的。然後，查看本季末的庫存——給我一點時間，讓我快速查看一下。好的。大約 28,000 公噸，好嗎？因此，正如您所說，由於市場狀況和需求疲軟，我們在本季建立了約 20,000 公噸的庫存。不過我認為，從八月開始，我們就開始看到庫存減少。

Thank you. So if 60% is finished goods, so it's basically around, I guess, $60 million to $70 million of the impairment is related to the impairment on 28,000 tons, right? So that's still like around $2 to $3 per kilogram. So does this seem huge? Because the production cost -- the spread between the ASP and the production cost appears to be only $1 per kilogram. So I would like to know did I miss anything from this front.

謝謝。因此，如果 60％ 是成品，那麼基本上大約有 6,000 萬至 7,000 萬美元的減值與 28,000 噸的減值有關，對嗎？所以價格仍然約為每公斤 2 至 3 美元。那麼這看起來是不是很大呢？因為生產成本——平均售價和生產成本之間的差價似乎只有每公斤 1 美元。所以我想知道我是否錯過了這方面的任何事情。

Okay. I think, realistically, if you look at pricing, especially, what it looks -- where we have to reduce our inventory to, like somewhere in the range of, say, RMB37 to RMB38 per kilogram. So that's what -- let me do a quick math.

好的。我認為，現實地講，如果你看一下定價，特別是它看起來的樣子——我們必須將庫存減少到每公斤 37 元至 38 元人民幣左右。所以這就是——讓我做一個快速的計算。

Okay. So the ASP is RMB37 or RMB38, but your production cost is only at around RMB40-something. So if the impairment --?

好的。所以平均售價是37、38元，但你的生產成本只有40多元。因此，如果--？

Right now, RMB45, right, RMB45 per kilogram --

現在45元，對，45元一公斤--

Yeah. So that's around -- yeah, so that's around RMB12. And then -- but if it's 28,000 metric tons, then it's still -- at most, it should be like $300 million maybe. So since the impairment amount --?

是的。大約是——是的，大約是 12 元。然後 — — 但如果是 28,000 公噸，那麼它仍然 — — 最多應該是 3 億美元。因此，由於減損金額--？

(technical difficulty) And then, there's also raw materials, right? And then, work-in-process inventory, that's also being reduced.

（技術難度）然後，還有原料，對吧？然後，在製品庫存也正在減少。

I see. So maybe, we'll move on to the guidance. So I have noted that the production volume guidance on 3Q and second half has reduced significantly. So would like to know, first of all, the thinking behind this, is this to preserve cash? And secondly, what do you see -- like, the utilization rates of your peers, do they also cut their production volume as well?

我懂了。因此，也許我們會繼續進行指導。因此我注意到第三季和下半年的產量預期已大幅減少。所以首先想了解一下，這背後的想法是為了保住現金嗎？其次，您看到了什麼——比如，您的同行的利用率，他們是否也削減了產量？

I would say, yes. So for most of our peers, I think with the exception of maybe one -- of the main one, I think most have reduced utilization significantly, I think, in light of the current market pricing environment. I think, certainly, the -- I think in the current market condition, I think we have to balance, right, I think in the most economical way in terms of maintaining production while at the same time minimizing cash burn and cash loss.

我想說，是的。因此，對於我們的大多數同行來說，我認為除了一個主要同行之外，考慮到當前的市場定價環境，我認為大多數同行都已大幅降低了利用率。我認為，當然，在目前的市場條件下，我們必須以最經濟的方式維持生產平衡，同時盡量減少現金消耗和現金損失。

So we do believe that the current utilization level that we have in -- that we're operating in, in light of pricing remains at below cash cost is the most prudent, I think also the most effective way of minimizing the cash burn on the company.

因此，我們確實相信，我們目前的利用率水準——考慮到定價仍然低於現金成本，是最謹慎的，我認為也是最大限度地減少公司現金消耗的最有效方法。

So there is effectively around 70% of utilization, right? So will this impact the production cost or is okay -- is fine?

那麼實際利用率大約是 70% 吧？那麼這會影響生產成本嗎？或者可以嗎？

It's actually, I would say, overall, very minimal impact on production cost. I think only RMB1 to RMB2 because almost 80% of our cost is what we call variable costs, which is electricity and energy and other consumables like steam and graphite and the silicon seed rod.

實際上，我想說，總體而言，這對生產成本的影響非常小。我認為只有 1 到 2 元人民幣，因為我們幾乎 80% 的成本都是所謂的變動成本，即電力、能源和其他消耗品，如蒸汽、石墨和矽籽晶棒。

Understood. So regarding to the fixed deposit of an investment in -- of RMB1.4 billion, so would like to know, how long is those investment and how liquid are those? So basically, the question is related to buybacks, because I'd like to know the liquidity of the company on that front.

明白了。那麼關於 14 億元的定期存款投資，我想知道這些投資的期限是多長，流動性如何？所以基本上，這個問題與回購有關，因為我想知道公司在這方面的流動性。

Okay. Almost all of the fixed investment and term loans were purchased by the Xinjiang Daqo subsidiary, right? So in terms of the US ListCo and our cash balance, it's -- virtually all of it is in liquid savings account or money market funds. So -- and then that $1.4 billion is primarily in either six months, I could call it, fixed term deposits with Chinese domestic banks or a higher interest savings product offered by the banks.

好的。幾乎所有的固定投資和定期貸款都是由新疆大全子公司購買的，對嗎？因此，就美國上市公司和我們的現金餘額而言，幾乎所有現金都在流動儲蓄帳戶或貨幣市場基金中。那麼 — — 這 14 億美元主要是以六個月（我可以稱之為）定期存款的形式存入中國國內銀行，或者是銀行提供的更高利息的儲蓄產品。

I see. So --?

我懂了。所以--？

The maturity age is within three months.

成熟年齡為三個月以內。

Oh, within three months, right?

哦，三個月之內，對嗎？

Yes.

是的。

I see. So my last question is basically on the buyback. So the company has launched $100 million buyback program. So I'd like to know if the company is going to continue on the buyback and what is the planning of the buyback. Like, which price do you think it's appropriate or do you think the current stock price is to the level where you think the company will actually accelerate the buyback?

我懂了。我的最後一個問題基本上是關於回購的。因此該公司啟動了1億美元的回購計畫。所以我想知道公司是否會繼續回購以及回購計劃是什麼。例如，您認為哪個價格合適，或者您認為當前股價是否達到了公司實際上會加速回購的水平？

Yeah. Thank you, Alan. So in terms of the share repurchase program, so we are authorized in the amount of USD100 million back in July. So in terms -- so we definitely think that our stock is undervalued, but in terms of the pace, I would say that it will be contingent upon the market conditions and we'll be more opportunistic in terms of the repurchase.

是的。謝謝你，艾倫。因此，就股票回購計畫而言，我們在 7 月獲得了 1 億美元的授權。因此，就回購而言，我們確實認為我們的股票被低估了，但就回購速度而言，我認為這將取決於市場狀況，而且我們在回購方面將更加抓住機會。

So we're going to look opportunities to repurchase as many shares as possible for the company to maximize the money that we spend in terms of its effectiveness.

因此，我們將尋找機會回購盡可能多的公司股票，以最大限度地提高我們花費的資金的有效性。

I see. And yes, you have explained, so the cash is already there in the US level. So probably, it's going to still go ahead in this year.

我懂了。是的，您已經解釋過了，所以美國層面已經存在現金了。因此，今年這一進程很可能還會持續。

That's our current assumption, yes.

是的，這是我們目前的假設。

I see. Thank you. So I'll pass on. Thank you.

我懂了。謝謝。所以我會繼續下去。謝謝。

Great. Thank you, Alan.

偉大的。謝謝你，艾倫。

(Operator Instructions)

（操作員指示）

Rajiv Chaudhri, Sunsara Capital.

Rajiv Chaudhri，Sunsara Capital。

Good morning. My question -- the first question relates to the fully-loaded cost that you will incur in Q3 and Q4. If you are reducing the utilization rate, shouldn't that actually increase your fully-loaded costs relative to the fourth -- relative to the third quarter?

早安.我的問題——第一個問題與您在第三季和第四季將產生的全部成本有關。如果您降低利用率，那麼相對於第四季度或第三季而言，這實際上不應該增加您的全部成本嗎？

Well, I think, interesting, that has to do with the cost structure of polysilicon production, right? So roughly 35% to 40% is electricity and then another 35% is silicon metal. And then, majority of other costs is actually mostly consumables like graphite, with the silicon seed rod and the packaging.

嗯，我認為有趣的是，這與多晶矽生產的成本結構有關，對嗎？因此大約 35% 到 40% 是電能，另外 35% 是金屬矽。然後，其他大部分成本實際上主要是石墨等消耗品，以及矽籽晶棒和包裝。

So if I look at what these we would call -- you can call it variable costs, where we don't produce, right? We don't buy silicon metal, we don't buy the consumables. So these represent actually more than 80% of the cost, okay?

因此，如果我看一下我們所說的話——您可以稱之為可變成本，我們不生產，對嗎？我們不買金屬矽，也不買消耗品。所以這些其實佔了成本的 80% 以上，好嗎？

The remaining 20%, approximately 13% is depreciation, right, which is the non-cash portion. So yes, right, depreciation will -- the overall depreciation expense will be aggregated over a smaller volume, but I think the overall impact is not that much, right, because it's not a huge portion of our costs and while -- in terms of -- the rest is labor. Labor, let me see, is roughly 6% of our cost. And then, we're reducing labor cost by between 10% to 20%. We're optimizing our staffing level, for example.

剩下的20%，大概13%是折舊，對，也就是非現金部分。是的，折舊將——整體折舊費用將匯總到較小的金額上，但我認為整體影響不是那麼大，因為它不是我們成本的很大一部分，而——就——其餘部分而言，是勞動力。我看，勞動力大約占我們成本的 6%。然後，我們將勞動成本降低 10% 到 20%。例如，我們正在優化我們的人員配置水準。

So I think the overall impact is actually not that significant as we maintain production, right, because we're reducing production by what, maybe 30%, 35%, something like that relative to previous levels, yeah.

所以我認為，由於我們維持生產，整體影響實際上並不那麼顯著，因為相對於以前的水平，我們正在減少產量，大概 30%、35% 左右，是的。

A second question is related to the difference between production and sales. So you will produce 210,000 tons to 215 -- 220,000 tons, but the sales are likely to be higher than that, right? I mean, if you expect inventories to get back to normal by the end of the year, then sales are likely to be, I don't know, 240,000 tons to 250,000 tons? Is that the right way to look -- think about it?

第二個問題與生產和銷售之間的差異有關。所以你們的產量將在 21 萬噸到 21.5 萬噸之間，但銷售量可能會更高，對嗎？我的意思是，如果您預計庫存到年底會恢復正常，那麼銷售量可能會達到 240,000 噸到 250,000 噸？想一想，這是正確的看法嗎？

I can only say we -- well, that's -- you're talking about the full year, right? But I think, realistically, in the first half, we did build inventory, so volume was less than production. And we expect, the second half, we will see more sales than production, right?

我只能說我們——嗯，那是——你說的是全年，對嗎？但我認為，實際上，在上半年，我們確實建立了庫存，因此產量低於產量。我們預計下半年的銷售量將超過產量，對嗎？

Right.

正確的。

But, again, it's early, right? It's only August. So it really depends on how much more sales we can achieve relative to production, yeah.

但是，現在還太早，對吧？現在才八月。所以這實際上取決於我們相對於產量能實現多少銷售額，是的。

I see. But for the year as a whole, you expect sales to be greater than productions, right?

我懂了。但就全年而言，您預計銷量將高於產量，對嗎？

It's difficult to tell. To be honest, difficult to tell. It's really up to Q4 performance.

這很難說。說實話，很難說。這確實取決於第四季的表現。

I see. Okay. And can you give us any specific examples of companies that are of competitors who are actually closing shop as distinct from just reducing their output right now?

我懂了。好的。您能否給我們舉出具體例子，說明競爭對手實際上正在關閉工廠，而不是只減少產量？

Well, I think one well-known case that happened recently is a company called Runyang, which I think they have a nameplate of over 100,000 metric tons. And that company was in financial crisis, where they had problems repaying their bank loans. And they have major issues repaying their suppliers and even pay interest.

嗯，我認為最近發生的一個著名案例是一家名為潤陽的公司，我認為他們的銘牌超過 10 萬公噸。該公司正陷入財務危機，無法償還銀行貸款。他們在償還供應商款項甚至支付利息方面都遇到了重大問題。

So our understanding is they're being consolidated by Tongwei. And Tongwei is doing due diligence on them right now, yeah. So I think they have significantly reduced production.

因此我們的理解是，它們正在被通威集團整合。是的，通威現在正在對他們進行盡職調查。所以我認為他們已經大幅減少了產量。

And then, we know of two other cases where -- we're not going to say the companies' name, but one new entrant actually built a 50,000 metric ton facility, actually, never even started that facility. That facility remains idle. It's complete and idle.

然後，我們知道另外兩個案例——我們不會透露公司的名稱，但其中一個新進入者實際上建造了一個 50,000 公噸的設施，但實際上，該設施從未啟動過。該設施目前仍處於閒置狀態。完整且閒置。

And then, there's another peer competitor, I think they've built -- they've claimed they built approximately 100,000 metric tons to 200,000 metric tons of capacity, but we -- our understanding is the volume that they're selling to the market is actually fairly trivial. So those are the cases that we know of right now.

然後，還有另一個同行競爭對手，我認為他們已經建成了——他們聲稱他們建造了大約 10 萬公噸到 20 萬公噸的產能，但我們——我們的理解是，他們向市場銷售的數量實際上相當少。這些就是我們目前所知的案例。

So when you look at -- I mean, when you look at the year as a whole, 2024 as a whole, do you think that with the sales that you will do, which will be, let's say, around your total production levels, that you would have gained or lost market share in 2024?

所以當你看的時候——我的意思是，當你看一整年，整個 2024 年，你是否認為，以你的銷售額（比方說，在你的總生產水平左右）來看，你會在 2024 年獲得或失去市場份額？

I think, at least based on the latest industry production, so even though we reduced utilization, I think we're still maintaining market share. I think based on our current production level we're roughly, say, 15%, approximately 15% of the market.

我認為，至少根據最新的行業產量，即使我們降低了利用率，我認為我們仍然保持著市場份額。我認為，根據我們目前的生產水平，我們大約佔據了 15% 左右的市場。

But your total output would be about 10% higher than last year or, I should say, maybe your total sales will be about 10% higher than last year, right? So do you think that that is roughly the growth rate of the market this year, 10%?

但你們的總產量會比去年高出10%左右，或者說，你們的總銷售額會比去年高出10%左右，對嗎？那您認為這大概就是今年市場的成長率，10% 嗎？

Well, I think it really depends on, especially, Q4, because if you look at our production and sales volume in the first half, especially for Q1, it's still relatively healthy. It's really -- Q2, it came down. And then, at this point, we're expecting our Q3 sales volume and shipment to be above Q2. And then, Q4 is looking -- at least for now is looking at a positive trend. So I would say, if I look at industry statistics, I think it's still expecting roughly 20% kind of improvement.

嗯，我認為這真的取決於，特別是第四季度，因為如果你看看我們上半年的產量和銷售量，特別是第一季度，它仍然相對健康。確實如此——Q2，它下降了。然後，目前，我們預計第三季的銷售量和出貨量將高於第二季。然後，第四季度看起來——至少現在看起來是一個積極的趨勢。因此我想說，如果我看一下行業統計數據，我認為我們仍然預計會有大約 20% 的改善。

Okay.

好的。

Maybe more than 20%.

可能超過20%。

Thank you.

謝謝。

Yeah. Okay, thank you.

是的。好的，謝謝。

Okay. Thank you.

好的。謝謝。

This concludes our question-and-answer session. I would like to turn the conference back over to Anita Chu for any closing remarks.

我們的問答環節到此結束。我想將會議交還給 Anita Chu 做最後一次演講。

Thank you, everyone, again, for participating in today's conference call. Should you have any further questions, please don't hesitate to contact us. Thank you, and have an awesome day. Goodbye.

再次感謝大家參加今天的電話會議。如果您還有其他問題，請隨時與我們聯絡。謝謝您，祝您有個愉快的一天。再見。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the company sponsoring this event.

本記錄中標記（翻譯）的部分是由現場通話中的翻譯人員說的。翻譯由贊助此活動的公司提供。