although this is the first fixed increase since listing, and the amount seems to be only 10 billion, as early as the end of last year, Xinjiang Daqo New Energy Co.Ltd(688303) announced projects with a fund-raising amount of 33.25 billion yuan.
After hours on January 24, Xinjiang Daqo New Energy Co.Ltd(688303) announced that it planned to raise no more than 11 billion yuan for the project of 100000 tons of high-purity silicon-based materials per year and supplement working capital.
At the close today, Xinjiang Daqo New Energy Co.Ltd(688303) was reported at 49.9 yuan / share, down 6.43%, with a total market value of 96.058 billion yuan.
expand polysilicon production
According to the fixed increase plan, the issuance target of this issuance is no more than 35 specific investors, the number of shares issued is no more than 578 million, and the total fund-raising is no more than 11 billion yuan. Among them, 8.003 billion yuan is used for the project of high-purity silicon-based materials with an annual output of 100000 tons, and 2.997 billion yuan is used to supplement working capital.
It is reported that the construction content of the above-mentioned raised investment project is a high-purity polysilicon production line with an annual output of 100000 tons, including cold hydrogenation workshop, rectification workshop, reduction workshop, tail gas recovery workshop, product finishing workshop, utility workshop and other supporting facilities.
Xinjiang Daqo New Energy Co.Ltd(688303) said that the raised investment project will be constructed and implemented by the wholly-owned subsidiary Daquan of Inner Mongolia in Baotou, Inner Mongolia. The company will build a new production capacity of 100000 tons in Baotou, Inner Mongolia, so as to better serve downstream customers with Longi Green Energy Technology Co.Ltd(601012) , Ja Solar Technology Co.Ltd(002459) , Wuxi Shangji Automation Co.Ltd(603185) , Meike and Shuangliang shares equal to a large number of distribution capacity in Inner Mongolia and its surrounding areas. After the completion of the project, the company will operate 105000 tons and 100000 tons of polysilicon capacity in Shihezi, Xinjiang and Baotou, Inner Mongolia respectively. The operation and capacity dispersion of the two places are conducive to reducing business risks and serving major customers in close proximity, but also put forward higher requirements for the management level of the company.
According to public data, Xinjiang Daqo New Energy Co.Ltd(688303) was established in 2011 and landed in the capital market in July 2021. It is located in Shihezi, Xinjiang, and is mainly engaged in the R & D, manufacturing and sales of high-purity polysilicon.
Although this is the first fixed increase since Xinjiang Daqo New Energy Co.Ltd(688303) was listed, the raised investment project came out at the end of last year.
On December 20, 2021, Xinjiang Daqo New Energy Co.Ltd(688303) disclosed that it signed the strategic cooperation framework agreement with Baotou Municipal People’s government, which agreed that Xinjiang Daqo New Energy Co.Ltd(688303) planned to invest 33.25 billion yuan to invest in the construction of 300000 t / a high-purity industrial silicon project, 200000 t / a silicone project, 200000 t / a high-purity polycrystalline silicon project and 21000 T / a semiconductor polycrystalline silicon project in Baotou city.
In addition, according to the announcement on January 3 this year, Xinjiang Daqo New Energy Co.Ltd(688303) plans to increase the capital of Inner Mongolia Daquan with its own or self raised funds of 9.999 billion yuan for the investment, construction and operation of Inner Mongolia Daquan’s phase I project “100000 t / a high-purity polysilicon + 1000 t / a semiconductor polysilicon” in Baotou city.
insufficient funds
Only half a year after listing, Xinjiang Daqo New Energy Co.Ltd(688303) repeatedly threw out large investments, which surprised the market.
Surprised, Xinjiang Daqo New Energy Co.Ltd(688303) was questioned. The first is the problem of capital. By the end of the third quarter of 2021, the company had only 4.248 billion yuan in cash on its book. Even with the fixed increase of 11 billion yuan, there is still a big gap compared with the investment amount of more than 30 billion yuan. Xinjiang Daqo New Energy Co.Ltd(688303) also admitted that if the company needs to solve capital problems through bank financing, equity financing and other means, the financing cost is high, which may lead to a significant increase in financial expenses, which may have an adverse impact on the net profit.
In addition, under the expectation of excess silicon, Xinjiang Daqo New Energy Co.Ltd(688303) such a radical expansion of production may face certain risks. The silicon branch of China Nonferrous Metals Industry Association predicts that the fourth quarter of 2022 will enter the intensive production period of polysilicon, adding new entrants. China’s output will be 1.75 million tons in 2023, a year-on-year increase of 150%; The total supply is 1.95 million tons, 3.36 times that of 2021. In 2023, the problem of excess silicon may begin to appear.
Xinjiang Daqo New Energy Co.Ltd(688303) said that from 2018 to 2020, the overall profitability of polysilicon was poor, which led to the decline of enterprise production expansion enthusiasm. The company’s polysilicon sales unit price decreased from 86.27 yuan / kg in 2018 to 61.93 yuan / kg in 2020. In 2021, the demand continued to grow, and the price of silicon materials continued to rise to a new high in recent ten years due to tight supply and demand. If the polysilicon industry has more production capacity in the short term in the future, or the downstream demand of photovoltaic shrinks, it may lead to the imbalance between polysilicon supply and demand, and there is a risk of further decline in price, which will have an adverse impact on the profitability of the company.
Peer “inner volume” is also one of the challenges Xinjiang Daqo New Energy Co.Ltd(688303) faces. According to the data of China Photovoltaic Industry Association, from 2018 to 2020, the output of China’s top ten polysilicon enterprises accounted for 78.1%, 91.3% and 99.5% of China’s total polysilicon output respectively. It can be seen that the concentration of polysilicon industry is strengthening day by day.
Xinjiang Daqo New Energy Co.Ltd(688303) also said that most of the existing Chinese competitors in the same industry have production expansion plans to varying degrees; With the rising price of polysilicon since the second half of 2020, new competitors began to enter the industry and announced plans to invest in polysilicon production capacity, which may further aggravate the market competition in the industry. In addition, the subsidy amount of the photovoltaic industry is declining year by year, and the “affordable Internet access” puts forward higher requirements for the quality and efficiency improvement of the photovoltaic power generation industry, which makes the photovoltaic industry face the pressure of product price decline, so as to continuously compress the profit space of upstream suppliers and intensify the competition in the polysilicon industry.
The reporter also noted that behind the massive expansion, Xinjiang Daqo New Energy Co.Ltd(688303) R & D investment is not enough. The prospectus disclosed that from 2017 to January to March 2020, the company’s R & D expenses were 15.1609 million yuan, 21.6987 million yuan, 33.8659 million yuan and 12.7661 million yuan respectively, accounting for 0.69%, 1.09%, 1.40% and 1.08% of the operating revenue of each period respectively.
decline in net profit
On the same day when the fixed growth plan was announced, Xinjiang Daqo New Energy Co.Ltd(688303) also issued a performance pre increase announcement. It is estimated that the net profit attributable to the parent company will reach 5.6 billion yuan to 5.8 billion yuan in 2021, with a year-on-year increase of 436.69% to 455.86%; It is expected to realize the deduction of non net profit of 5.58 billion yuan to 5.78 billion yuan, a year-on-year increase of 435.63% to 454.83%.
For the pre increase of performance, Xinjiang Daqo New Energy Co.Ltd(688303) said that the overall photovoltaic market continued to grow in 2021, the production expansion and speed-up of downstream monocrystalline silicon enterprises and the demand for high-quality polycrystalline silicon increased significantly, while the overall supply of high-purity polycrystalline silicon materials was in short supply, so the polycrystalline silicon market price continued to rise. During the reporting period, the company maintained full production and increased production and sales compared with the same period last year, so the performance increased significantly.
However, Xinjiang Daqo New Energy Co.Ltd(688303) showed a decline in profitability in the fourth quarter of last year. According to the above data, the net profit of the company in the fourth quarter of 2021 is expected to be 1.127 billion yuan to 1.327 billion yuan, down 43% to 51% month on month.
In the secondary market, investors do not seem to buy the expansion blueprint of Xinjiang Daqo New Energy Co.Ltd(688303) . On July 22, 2021, the share price of Xinjiang Daqo New Energy Co.Ltd(688303) soared by 273% on the first day of listing, and the market value exceeded 100 billion. At the end of August, the company hit a new high of 96 yuan / share. Since then, Xinjiang Daqo New Energy Co.Ltd(688303) has fluctuated all the way down, with the latest closing price of 49.9 yuan / share, almost halving from the previous high.
