Daqo New Energy (DQ) Unit Approves Share Buyback Program
Daqo New Energy Corp. DQ revealed that its subsidiary, Xinjiang Daqo New Energy Co., Ltd., has gained approval from its board of directors to initiate a share repurchase initiative. The company is a prominent manufacturer of high-purity polysilicon for the global solar PV industry.
This program allows Xinjiang Daqo to buy back RMB 200 million to RMB 400 million worth of its currently issued and outstanding shares. This repurchase will be carried out through centralized bidding transactions and remain effective until Aug 22, 2024.
The board-approved purchase price per share is set to not exceed RMB 50. This suggests that under this program, Xinjiang Daqo can repurchase less than 0.4% of the total outstanding shares.
The funding for these repurchases will come from Xinjiang Daqo's resources. The company intends to utilize the repurchased shares for its share incentive schemes, while complying with the applicable regulatory prerequisites.
DAQO New Energy Corp. Price and Consensus
DAQO New Energy Corp. price-consensus-chart | DAQO New Energy Corp. Quote
Daqo New Energy's performance in the second quarter of 2023 fell short of expectations. Earnings per share were $1.34, displaying a decline from the prior-year quarter’s $8.18 and trailing the Zacks Consensus Estimate of $5.79. Revenues were recorded at $637 million, significantly below the consensus estimate of $1.218 billion. This also marked a decrease from the year-ago revenue figure of $1.244 billion. This downfall was mainly owing to lower average selling prices, which were somewhat mitigated by an increase in sales volume.
In the second quarter of 2023, Daqo New Energy’s polysilicon production volume surged 36% from the previous quarter to 45,306 metric tons (MT). This also marked an increase of 30% from the year-ago figure of 35,326 MT. The company's sales volume increased 104% from the previous quarter to 51,550 MT. The figure also reflected an increase from 37,545 MT in the year-ago quarter.
Average total production cost decreased to $6.92/kg from $7.55/kg in the previous quarter and $7.26/kg in the same quarter of the previous year. Average cash cost dropped to $6.05/kg in the second quarter from $6.61/kg in the previous quarter and $6.51/kg in the year-ago quarter. However, the polysilicon average selling price experienced a significant decline, amounting to $12.33/kg in the second quarter from $27.83/kg in the previous quarter and $33.08/kg in the same quarter of the previous year.
Shares of Daqo New Energy have lost 50.7% in the past year against a 21.6% rise of the industry.
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Zacks Rank & Key Picks
Daqo New Energy currently carries a Zacks Rank #5 (Strong Sell).
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The consensus estimate for Hawkins’ current-year earnings is pegged at $3.40, indicating year-over-year growth of 18.9%. HWKN beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 25.6%. The company’s shares have rallied 35% in the past year.
The consensus estimate for Livent’s current-year earnings is pegged at $2.12, indicating year-over-year growth of 51.4%. In the past 60 days, LTHM’s current-year earnings estimate has been revised upward by 3.4%. The company beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 19%.
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