Daqo (DQ) Inks Investment Agreement to Integrate Upstream Supply
Daqo New Energy Corp. DQ has signed an investment agreement with its subsidiary Xinjiang Daqo to establish a silicon-based new materials industrial park. Located in China's Shihezi, the project is divided into two stages.
With an estimated expenditure of RMB7.5 billion, the project's first phase comprises the manufacture of 150,000MT of silicon metal, 50,000MT of polysilicon and 1.2 million pieces of silicon seed rod. The second phase of the project consists of the manufacture of 150,000MT of silicon metal, 50,000MT of polysilicon and 1.0 million pieces of silicon seed rod, with an estimated expenditure of RMB7.5 billion.
The development and completion timeline of this project, together with its implementation, is subject to market conditions, shareholder approval from Xinjiang Daqo and other regulatory filings and approvals, including those pertaining to energy usage. The project is anticipated to acquire certificates for renewable energy and green power as well as green electricity.
The company's latest development plan will let it take advantage of Shihezi's abundance of natural resources and its competitive electricity costs, which set it apart from other locations. The silicon metal project, in particular, is strategically significant to the company's capacity to generate long-term growth.
Its cost and quality competitive advantages will be strengthened by integrating the upstream supply, which will also reduce variations in the price of raw materials. Further, the company will be able to meet its supply chain traceability and due diligence obligations, which are essential to its future competitiveness, with the ability to supervise and regulate the upstream process.
Shares of Daqo have lost 47.2% over the past year against a 17.1% rise of its industry.
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The company projects that it will generate between 59,000 and 62,000 metric tons of polysilicon in the fourth quarter of 2023. In 2023, the company anticipates producing between 196,000 and 199,000 metric tons of silicon, taking into account the effects of yearly facility maintenance.
DAQO New Energy Corp. Price and Consensus
DAQO New Energy Corp. price-consensus-chart | DAQO New Energy Corp. Quote
Zacks Rank & Key Picks
Daqo currently carries a Zacks Rank #5 (Strong Sell).
Better-ranked stocks in the basic materials space include Denison Mines Corp. DNN, Axalta Coating Systems Ltd. AXTA and Hawkins, Inc. HWKN.
Denison Mines has a projected earnings growth rate of 100% for the current year. It currently carries a Zacks Rank #1 (Strong Buy). DNN delivered a trailing four-quarter earnings surprise of roughly 225%, on average. The stock is up around 60% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axalta has a projected earnings growth rate of 5.4% for the current year. It currently carries a Zacks Rank #1. AXTA delivered a trailing four-quarter earnings surprise of roughly 6.7%, on average. The stock is up around 35.3% in a year.
Hawkins has a projected earnings growth rate of 21% for the current year. It currently carries a Zacks Rank #2 (Buy). Hawkins delivered a trailing four-quarter earnings surprise of roughly 27.5%, on average. HWKN shares are up around 84.7% in a year.
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