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SHANGHAI - Daqo New Energy Corp. (NYSE: NYSE:DQ), a prominent polysilicon manufacturer for the solar PV industry currently valued at $1.25 billion, has revealed that its subsidiary, Xinjiang Daqo New Energy, is anticipating a substantial net loss for the fiscal year that ended on December 31, 2024. The company's financial challenges are reflected in its negative gross profit margin of -4.62% and a significant revenue decline of 51.4% over the last twelve months. According to a recent estimate provided to the Shanghai Stock Exchange, Xinjiang Daqo expects a net loss ranging from 2.6 to 3.1 billion RMB for FY2024, a stark contrast to the 5.8 billion RMB net profit reported in FY2023.
The projected loss includes significant provisions for inventory impairment and fixed asset impairment. Daqo New Energy, which owns approximately 72.4% of Xinjiang Daqo's equity interest, relies heavily on its subsidiary for the majority of its revenue and net income. InvestingPro analysis reveals the company is quickly burning through cash, though it maintains a strong current ratio of 4.61, indicating solid short-term liquidity. The estimated financial figures are based on PRC GAAP and expressed in RMB, while Daqo New Energy's consolidated financial results are reported in U.S. dollars and follow U.S. GAAP.
The company has cautioned that these preliminary figures are subject to change upon completion of Xinjiang Daqo's internal financial closing and reporting process. Investors are advised to exercise caution and not to rely solely on these estimates for making decisions, as actual results may differ materially. The provided estimate should not be considered a substitute for comprehensive financial statements prepared in accordance with PRC GAAP, nor is it necessarily indicative of future performance.
Daqo New Energy, founded in 2007, is recognized as one of the world's lowest-cost producers of high-purity polysilicon, with a nameplate capacity of 305,000 metric tons. The company supplies high-purity polysilicon to photovoltaic product manufacturers for use in solar power solutions.
This announcement includes forward-looking statements subject to risks and uncertainties, including fluctuating demand for photovoltaic products, global polysilicon supply and demand dynamics, technological advancements in cell manufacturing, and regulatory changes. While trading at a notably low Price/Book ratio of 0.26, InvestingPro analysis suggests the stock may be undervalued, with 13 additional exclusive ProTips available to subscribers, including detailed insights on the company's financial health and growth prospects.
The information in this article is based on a press release statement from Daqo New Energy Corp.
In other recent news, Daqo New Energy, a prominent player in the global solar PV industry, has reported its financial results for the third quarter of 2024. The earnings report revealed a significant net loss of $61 million, an improvement from the second quarter's net loss of $120 million. This was accompanied by a decrease in revenue to $198.5 million, a significant drop from the previous year's $484.8 million, primarily driven by lower average selling prices and sales volumes.
In response to market conditions, Daqo has revised its full-year 2024 production volume guidance downward, from the initial range of 210-220 kilotons to 200-210 kilotons. This move is seen as a measure to preserve cash, with the company also setting its fourth-quarter volume guidance at 31 to 34 kilotons.
Analyst firm Jefferies has updated its price target on Daqo New Energy to $35.54, up from the previous $34.05, maintaining a "Buy" rating. Despite facing challenging market conditions, the company's management predicts a potential rebound in polysilicon prices by year-end due to regulatory changes. These recent developments indicate a cautiously optimistic outlook for Daqo New Energy's future operations.
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