Daqo New Energy (DQ) AI Stock Analysis

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Daqo New Energy

(NYSE:DQ)

43Neutral

Daqo New Energy is currently navigating a tough financial period, characterized by declining revenues and profitability. The company's strong balance sheet is a positive, but the negative cash flow and valuation metrics are concerning. Technical analysis indicates a bearish trend, further compounded by negative sentiment from the recent earnings call. While the company is making efforts to optimize costs, the significant industry challenges and financial losses weigh heavily on the overall score.

Daqo New Energy (DQ) vs. S&P 500 (SPY)

Market Cap

$862.68M

Dividend YieldN/A

Average Volume (3M)997.65K

Price to Earnings (P/E)―

Beta (1Y)0.81

Revenue Growth-55.42%

EPS Growth-195.06%

CountryUS

Employees5,765

SectorTechnology

Sector Strength44

IndustrySemiconductors

Share Statistics

EPS (TTM)-5.20

Shares Outstanding66,007,454

10 Day Avg. Volume1,274,045

30 Day Avg. Volume997,652

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)2.67

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$21.17

Price Target Upside53.29% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

Daqo New Energy Business Overview & Revenue Model

Company DescriptionDaqo New Energy Corp., together with its subsidiaries, manufactures and sells polysilicon to photovoltaic product manufactures in the People's Republic of China. Its products are used in ingots, wafers, cells, and modules for solar power solutions. The company was formerly known as Mega Stand International Limited and changed its name to Daqo New Energy Corp. in August 2009. Daqo New Energy Corp. was founded in 2006 and is based in Shanghai, the People's Republic of China.

How the Company Makes MoneyDaqo New Energy makes money primarily through the production and sale of high-purity polysilicon to solar manufacturers. The company sells its product to major solar wafer manufacturers, who then use it to produce solar cells and modules. Daqo's revenue streams are significantly influenced by polysilicon prices, production volumes, and long-term supply agreements with key clients. The company benefits from economies of scale and technological advancements that enhance production efficiency and cost-effectiveness. Additionally, strategic partnerships with industry players and a strong focus on maintaining high-quality standards contribute to Daqo's earnings and market position.

Daqo New Energy Financial Statement Overview

Summary

Daqo New Energy is facing significant financial challenges. The income statement indicates a sharp decline in revenue and negative profitability, while the balance sheet, despite being debt-free, shows decreasing equity. The cash flow is strained with negative operating cash flow, suggesting potential difficulties in sustaining operations.

Income Statement

Neutral

Daqo New Energy's income statement reveals a challenging financial period. The company experienced a significant drop in total revenue from $4.6 billion in 2022 to $1.03 billion in 2024, reflecting a sharp revenue decline. The gross profit margin turned negative in 2024, indicating the cost of goods sold exceeded revenue. Additionally, both EBIT and net income margins are negative, demonstrating declining operational and overall profitability. While the past showed strong growth, recent performance highlights instability and potential market challenges.

Balance Sheet

Neutral

Daqo's balance sheet indicates a mixed financial position. Positive aspects include zero total debt in 2024, suggesting no leverage risk and a healthy cash position with $2.1 billion in cash and equivalents. However, stockholders' equity has decreased from 2023 to 2024, and the equity ratio remains stable but not improving. The company’s ability to maintain a debt-free status is commendable, yet declining equity may pose future challenges.

Cash Flow

Negative

Daqo's cash flow statement reveals pressure on cash generation. Operating cash flow turned negative in 2024, indicating potential difficulties in generating cash from core operations. Free cash flow has also significantly decreased, suggesting reduced financial flexibility. While the company previously enjoyed strong free cash flow growth, recent trends indicate a challenging cash flow environment that could impact future operations and investments.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.03B	2.31B	4.61B	1.68B	675.60M
	Gross Profit
-212.93M	920.65M	3.41B	1.10B	233.99M
	EBIT
-564.09M	783.43M	3.04B	1.05B	120.08M
	EBITDA
-179.88M	932.32M	3.15B	1.13B	188.76M
	Net Income Common Stockholders
-345.21M	429.55M	1.82B	748.92M	129.19M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.14B	3.04B	3.53B	1.00B	76.60M
	Total Assets
6.42B	7.43B	7.59B	3.34B	1.24B
	Total Debt
0.00	0.00	20.69M	0.00	243.09M
	Net Debt
-1.04B	-3.04B	-3.50B	-723.97M	166.49M
	Total Liabilities
560.38M	978.58M	948.24M	672.53M	440.23M
	Stockholders Equity
4.36B	4.76B	4.85B	2.17B	767.12M
Cash Flow		Free Cash Flow
-794.50M	429.20M	1.22B	130.16M	91.41M
	Operating Cash Flow
-437.72M	1.62B	2.47B	639.10M	209.70M
	Investing Cash Flow
-1.48B	-1.20B	-1.00B	-782.00M	-118.49M
	Financing Cash Flow
-47.36M	-795.40M	1.47B	736.23M	-95.47M

Daqo New Energy Technical Analysis

Technical Analysis Sentiment

Negative

Last Price13.81

Price Trends

50DMA

18.45

Negative

100DMA

18.73

Negative

200DMA

18.47

Negative

Market Momentum

MACD

-1.42

Positive

RSI

35.26

Neutral

STOCH

26.20

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DQ, the sentiment is Negative. The current price of 13.81 is below the 20-day moving average (MA) of 15.78, below the 50-day MA of 18.45, and below the 200-day MA of 18.47, indicating a bearish trend. The MACD of -1.42 indicates Positive momentum. The RSI at 35.26 is Neutral, neither overbought nor oversold. The STOCH value of 26.20 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DQ.

Daqo New Energy Risk Analysis

Daqo New Energy disclosed 70 risk factors in its most recent earnings report. Daqo New Energy reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Daqo New Energy Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UMC	76 Outperform	$17.11B	11.52	12.65%	5.21%	1.28%	-25.42%
ASX	74 Outperform	$17.18B	17.10	10.32%	2.84%	-0.62%	-1.08%
ON	68 Neutral	$14.66B	9.56	18.97%	―	-14.19%	-27.42%
MCHP	66 Neutral	$21.21B	69.53	4.71%	4.61%	-44.31%	-86.74%
STM	61 Neutral	$18.50B	12.07	9.12%	1.51%	-23.24%	-62.93%
Sector *	58 Neutral	$9.82B	10.00	-6.63%	3.09%	7.49%	-11.58%
DQ	43 Neutral	$862.68M	―	-7.57%	―	-55.42%	-195.06%

* Technology Sector Average

Performance Comparison

Daqo New Energy

13.81

-9.20

-39.98%

ASX

ASE Technology Holding Co

8.16

-1.95

-19.29%

MCHP

Microchip

40.29

-43.81

-52.09%

ON Semiconductor

35.45

-26.23

-42.53%

STM

STMicroelectronics

20.86

-18.69

-47.26%

UMC

United Micro

6.80

-0.49

-6.72%

Daqo New Energy Earnings Call Summary

Earnings Call Date: Feb 27, 2025 | % Change Since: -36.91% | Next Earnings Date: Apr 29, 2025

Earnings Call Sentiment Negative

The earnings call highlights a challenging year for Daqo New Energy with significant declines in revenue and prices, leading to negative margins and asset impairments. Despite these challenges, the company maintained a strong balance sheet and worked on optimizing costs. However, the lowlights, including reduced utilization rates and significant financial losses, outweigh the highlights, indicating a difficult market environment.

Highlights

Increase in Polysilicon Production Volume

Daqo New Energy achieved an annual polysilicon production volume of 205,068 metric tons in 2024, meeting the guidance of 200,000 to 210,000 metric tons, marking a 3.7% increase from 2023.

Strong Balance Sheet and Liquidity

The company maintained a strong balance sheet with a cash balance of $1 billion, short-term investments of $10 million, bank notes receivable of $55 million, and a fixed term bank deposit balance of $1.1 billion, totaling $2.2 billion in quick assets.

Cost Optimization Efforts

Relentless efforts to improve operational efficiency resulted in a cash cost decline by 6% quarter-over-quarter to $5.04 per kilogram.

Lowlights

Significant Revenue and Price Decline

Revenue fell from $2.3 billion in 2023 to $1 billion in 2024 due to a sharp decline in polysilicon ASP from $11.48/kg in 2023 to $5.66/kg in 2024.

Negative Gross Margin and Asset Impairment

The company recorded a negative gross margin of 20.7% for 2024 and a non-cash long-lived asset impairment charge of $175.6 million.

Reduced Production and Utilization Rates

Due to weak market prices, the company operated at a lower utilization rate of 40% to 50% of capacity, with expected production volume for 2025 significantly reduced to 110,000 to 140,000 metric tons.

Net Loss and EBITDA Margin Decline

Net loss attributable to shareholders was $345 million for the year, with an EBITDA margin of negative 32.9%, compared to a positive margin of 39.8% in 2023.

Company Guidance

During the Daqo New Energy Fourth Quarter 2024 Results Conference Call, the company reported a challenging market environment due to excess capacity in the solar PV industry, which led to significant price declines. The company's annual polysilicon production volume reached 205,068 metric tons, meeting their guidance of 200,000 to 210,000 metric tons, with a year-over-year increase of 3.7%. However, the average selling price (ASP) of polysilicon fell drastically from $11.48 per kilogram in 2023 to $5.66 per kilogram in 2024, causing revenues to drop from $2.3 billion to $1 billion. The company recorded a negative gross margin of 20.7% for 2024 and a non-cash long-lived asset impairment charge of $175.6 million due to falling ASPs. Despite these financial challenges, Daqo New Energy maintained a strong balance sheet with $1 billion in cash, $10 million in short-term investments, and $1.1 billion in fixed-term bank deposits. Looking ahead, the company anticipates a total polysilicon production volume of 110,000 to 140,000 metric tons for 2025, maintaining low utilization rates amid ongoing industry challenges. The company remains optimistic about the solar PV industry's long-term demand prospects, emphasizing their focus on enhancing higher efficiency N-type technology and optimizing cost structure to navigate through the downturn and capture future growth opportunities.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.