Xinjiang Daqo New Energy Co.Ltd(688303) : China International Capital Corporation Limited(601995) about Xinjiang Daqo New Energy Co.Ltd(688303) 2021 annual continuous supervision and tracking report

China International Capital Corporation Limited(601995) about

Xinjiang Daqo New Energy Co.Ltd(688303)

2021 continuous supervision and tracking report

In accordance with the provisions of relevant laws and regulations such as the measures for the administration of securities issuance and listing recommendation business, the rules for the listing of shares on the science and Innovation Board of Shanghai Stock Exchange, and the guidelines for the continuous supervision of listed companies of Shanghai Stock Exchange, China International Capital Corporation Limited(601995) (hereinafter referred to as “the sponsor”) as the sponsor of the continuous supervision of Xinjiang Daqo New Energy Co.Ltd(688303) (hereinafter referred to as ” Xinjiang Daqo New Energy Co.Ltd(688303) ” and “the company”), is responsible for the continuous supervision after Xinjiang Daqo New Energy Co.Ltd(688303) listing and issues this annual report on continuous supervision. 1、 Continuous supervision

No. work content and continuous supervision

Establish, improve and effectively implement the continuous supervision system. The sponsor has established and effectively implemented a continuous supervision system, formulated a guidance system for specific continuous supervision work, and formulated corresponding work plans

Corresponding work plan

According to the relevant provisions of the CSRC, before the continuous supervision and recommendation institution and Xinjiang Daqo New Energy Co.Ltd(688303) signed the “discussion with listed companies or relevant parties before the commencement of the recommendation and guidance work”, the agreement specifies that both parties sign the continuous supervision agreement during the continuous supervision period, and defines the rights and obligations of both parties, Rights and obligations of Shanghai stock exchange during the period of continuous supervision and reporting

Stock exchange filing

Through daily communication, regular or indefinite 3. Through daily communication, regular return visit, on-site visit, regular return visit, on-site inspection and other means, the recommendation institution understands the business of continuous supervision by means of daquanneng due diligence, and has carried out continuous supervision on Xinjiang Daqo New Energy Co.Ltd(688303)

During the period of continuous supervision, the listed company shall be supervised in accordance with relevant regulations

If the company makes a public statement on the illegal and illegal matters, Xinjiang Daqo New Energy Co.Ltd(688303) in 2021 fails to 4 report to the Shanghai Stock Exchange before disclosure during the continuous supervision period, and there are illegal and illegal situations that require the recommendation institution to make a public statement and make a statement in the designated media after being reviewed by the Shanghai stock exchange according to relevant regulations

On body announcement

During the period of continuous supervision, the listed company or relevant parties

In case of violation of laws and regulations, breach of commitments and other matters,

Five working days from the date of discovery or should be found. Xinjiang Daqo New Energy Co.Ltd(688303) in 2021 did not report to Shanghai Stock Exchange within 5 days during the continuous supervision, and there were violations of laws and regulations or breach of commitments in the report

Including violations by listed companies or related parties

Details of violations of laws and commitments,

Supervision measures taken by the sponsor

Supervise the listed company and its directors, supervisors and senior managers. During the continuous supervision, the recommendation institution shall supervise the management personnel of the whole company to comply with laws, regulations and departmental rules. Energy and its directors, supervisors and senior managers shall comply with 6 and the business rules issued by Shanghai Securities Exchange and abide by laws, regulations, departmental rules and other normative documents delivered by Shanghai Securities, And earnestly fulfill the commitments made in the business rules and other normative documents issued by it, and earnestly fulfill the commitments made by it

Supervise listed companies to establish, improve and effectively implement the public sponsor institution, and urge Xinjiang Daqo New Energy Co.Ltd(688303) to implement the corporate governance system in accordance with relevant regulations, including but not limited to the general meeting of shareholders, improve and improve the corporate governance system, and strictly implement the rules of procedure of the board of directors and the board of supervisors, as well as the director and corporate governance system

Code of conduct of supervisors and senior managers, etc

Supervise listed companies to establish, improve and effectively implement the control system of the internal control system of Xinjiang Daqo New Energy Co.Ltd(688303) , including but not limited to the verification of the financial management system, planning, implementation and effectiveness, daquanneng 8 accounting system, internal audit system and source internal control system, which meet the requirements of relevant laws and regulations, and can be used to raise funds Related party transactions, external guarantees and effective implementation can ensure the company’s standardized foreign investment, control over subsidiaries and other major economic operations

Procedures and rules for business decision-making, etc

Supervise listed companies to establish, improve and effectively implement letter of credit

Information disclosure system, review the information disclosure documents and their recommendation institutions, urge Xinjiang Daqo New Energy Co.Ltd(688303) strictly implement the information 9 and other relevant documents, and have sufficient reasons to believe that the listing disclosure system, review the information disclosure documents and other documents submitted by the company to Shanghai Stock Exchange

There are false records, misleading statements or material omissions

leak

Information disclosure documents of listed companies and to China

Other documents submitted by CSRC and Shanghai Stock Exchange

The documents shall be reviewed in advance and the letters with problems shall be

The listed company shall be urged to disclose the interest disclosure documents in a timely manner

If the listed company does not correct or supplement the information disclosure documents of Xinjiang Daqo New Energy Co.Ltd(688303) , the recommendation institution shall report to Shanghai Stock Exchange in time; After review, there is no situation that the listed company does not change the information disclosure documents of the listed company. If the listed company does not correct or supplement the information disclosure documents of the listed company and should review them before reporting to the Shanghai Stock Exchange, the listed company should fulfill the information disclosure

Within five trading days after the disclosure of obligations, complete the relevant

Review of documents and information on Problems

The disclosure documents shall timely urge the listed company to correct or

If the listed company does not make corrections or supplements,

It shall report to Shanghai Stock Exchange in time

Pay attention to the listed company or its controlling shareholders and actual controlling shareholders

In 2021, Xinjiang Daqo New Energy Co.Ltd(688303) and its controlling shareholder, 11 went to the CSRC for administrative punishment, the actual controller of Shanghai Stock Exchange, directors, supervisors and senior managers were disciplined by the exchange, or such matters did not occur by the members of Shanghai Stock Exchange

Issue the supervision attention letter and urge its completion

Improve the internal control system and take measures to correct it

Continue to pay attention to listed companies, controlling shareholders and actual

12. The fulfillment of commitments by the controllers, etc. in 2021, if the listed company, Xinjiang Daqo New Energy Co.Ltd(688303) and its controlling shareholders, controlling shareholders, actual controllers and other actual controllers failed to fulfill their commitments, and there are no promises that have not been fulfilled, the listed company shall report to the Shanghai Stock Exchange in time

Sue

Pay attention to public media reports on listed companies,

Timely check market rumors.

Verified

After that, it is found that the listed company has the year 2021 that should be disclosed but not disclosed. After verification by the recommendation institution, there are no 13 major events or the information disclosed is inconsistent with the facts. If the situation that should be reported to the Shanghai Stock Exchange mentioned above is found, the listed company shall be urged to disclose or disclose truthfully in time

To clarify; If the listed company does not disclose or clarify,

It shall report to Shanghai Stock Exchange in time

In case of any of the following circumstances, supervise and urge the listed company

Make explanations and make corrections within a time limit, and report to Shanghai Securities Regulatory Commission at the same time

The stock exchange reported: (I) suspected of violating the listing

Rules and other relevant business rules; (II) securities service

Professional opinions issued by the competent authority and its signatory

14 there may be false records, misleading statements or repeated 2021, and Xinjiang Daqo New Energy Co.Ltd(688303) there are no violations of laws and regulations or other improper circumstances such as major omissions

Shape; (III) the company appears in Article 7 of the recommendation measures

11. The circumstances stipulated in Article 72; (Ⅳ)

The company does not cooperate with continuous supervision; (V) Shanghai

The stock exchange or the sponsor deems it necessary to report

Other circumstances

Formulate the on-site inspection plan for listed companies

Plan and clarify the requirements of on-site inspection to ensure that

Check the work quality on site. Listed companies have the following problems

Under any of the circumstances, the sponsor shall know or shall

Within 15 days from the date of knowing or Shanghai Securities Exchange

Within the time limit required by Yi, the listed company shall be registered

Special on-site verification; (I) controlling shareholders and actual shareholders

15. The controller or other related parties occupied non operating funds of Xinjiang Daqo New Energy Co.Ltd(688303) no municipal company in 2021; (II) providing special on-site inspection for others in violation of regulations

protect; (III) illegal use of raised funds; (Ⅳ)

Illegal securities investment, hedging business, etc;

(V) the related party transaction is obviously unfair or fails to perform the audit

Approval procedures and information disclosure obligations; (VI) performance

Current loss or operating profit decreased compared with the same period of last year

More than 50%; (VII) requirements of Shanghai Stock Exchange

Other circumstances

2、 Problems found by the recommendation institution and the recommendation representative and their rectification

None. 3、 Major risk matters

The main risks faced by the company during the continuous supervision period are as follows:

(I) risk of sharp decline in performance or loss

From January to December 2021, the company’s operating revenue and net profit attributable to shareholders of the parent company were 10831866700 yuan and 5723842400 yuan respectively, with a significant increase in operating performance compared with the previous year. From 2022, new capacity will be released in the industry, and the industry capacity is expected to be greatly improved. If the production capacity of the polysilicon industry increases significantly in the short term in the future, resulting in intensified industry competition or shrinking downstream demand, it may lead to the imbalance between polysilicon supply and demand, the risk of further decline in polysilicon price and the risk of decline in the company’s performance.

(II) core competitiveness risk

The photovoltaic industry in which the company is located has the characteristics of rapid technology renewal and rapid cost reduction, which objectively requires the company to pay attention to the industry and technology development trend in advance. Polycrystalline silicon is the main raw material of crystalline silicon photovoltaic cells. The downstream technological progress of crystalline silicon photovoltaic cells may lead to higher and higher requirements for the quality of polycrystalline silicon products. In order to maintain the advanced technology, the company must invest a lot of R & D funds in technology research, process development and improvement, and new product development. If the company fails to make forward-looking technology layout and maintain continuous scientific research investment and technological innovation ability, there may be a risk of backward technology, which will weaken the company’s market competitiveness and even face the risk of elimination.

(III) business risk

1. Risk of high concentration of customers and suppliers

The concentration of the company’s downstream silicon wafer industry is high. From January to December 2021, the sales of the company’s largest customers accounted for 31.70%, and the sales of the top five customers accounted for 80.63%.

If the cooperative relationship between the company and its main customers changes adversely, or the operation and financial status of the main customers changes adversely, or the industry competition intensifies in the future, and the company fails to cultivate new customers in time, it will have an adverse impact on the company’s future production, operation and financial status.

The company is located in Xinjiang and purchases raw materials such as industrial silica fume and energy such as electricity and steam nearby, resulting in a high concentration of suppliers. For industrial silica fume as the main raw material, the company mainly purchases from Xinjiang Sokos new materials Co., Ltd., a local supplier in Xinjiang; Power, steam and other energy required for production shall be purchased from Xinjiang Tianfu Energy Co.Ltd(600509) by the company. From January to December 2021, the company’s purchase amount from the top five raw material suppliers accounted for 94.65% of the total purchase amount of raw materials. From January to December 2021, the company’s procurement from Xinjiang Tianfu Energy Co.Ltd(600509) accounted for 98.44% of the total energy procurement. If the company’s main suppliers cannot meet the company’s procurement needs, or the company changes its cooperation with them, it may have an adverse impact on the company’s operation in the short term. The company may be forced to purchase raw materials from foreign suppliers, resulting in an increase in procurement prices or transportation costs and affecting the company’s profitability.

2. Risk of gross margin decline

From January to December 2021, the company’s direct materials accounted for 51.16% of its main business costs, mainly industrial silica fume. Since September 2021, affected by the dual control of energy consumption and the change of supply-demand relationship, the market price of industrial silicon powder has increased sharply. In the middle of January 2022, the market price of industrial silicon powder has decreased. The price of industrial silicon powder directly affects the unit cost of the company’s products. The upward fluctuation of industrial silicon powder price will lead to the rise of the company’s cost, which will have a great negative impact on the gross profit margin of the company’s products; The sharp fluctuation of industrial silicon powder price will also bring difficulties to the company’s raw material procurement management and inventory management, and have a negative impact on the company’s normal operation. January December 2021, public

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