Daqo New Energy Corporation

Daqo New Energy Corp. (NYSE: DQ) is a polysilicon manufacturer. The Company utilizes the chemical vapor deposition process, or the modified Siemens process, to produce polysilicon. The Company's segments include Polysilicon and Wafer. The Company manufactures and sells polysilicon to photovoltaic product manufacturers, whereby the polysilicon is processed into ingots, wafers, cells and modules for solar power solutions.

Recent Financial and Business Updates:

• Daqo New Energy Corp. has executed approximately 43.1% of its authorized USD 700 million share repurchase program, totaling 7.28 million ADSs at an average cost of USD 41.42 per ADS, as of today. This update follows the program's announcement in November 2022.
• Polysilicon production volume increased to 45,306 MT in Q2 2023 from 33,848 MT in Q1 2023.
• Polysilicon sales volume rose to 51,550 MT in Q2 2023 from 25,284 MT in Q1 2023.
• The average total production cost for polysilicon decreased to USD 6.92/kg in Q2 2023, down from USD 7.55/kg in Q1 2023.
• The average cash cost for polysilicon was USD 6.05/kg in Q2 2023, compared to USD 6.61/kg in Q1 2023.
• The average selling price (ASP) for polysilicon was USD 12.33/kg in Q2 2023, down from USD 27.83/kg in Q1 2023.
• Revenue for the quarter amounted to USD 636.7 million, a decline from USD 709.8 million in Q1 2023.
• Gross profit totaled USD 258.9 million in Q2 2023, with a gross margin of 40.7%, compared to USD 506.7 million and a gross margin of 71.4% in Q1 2023.
• Net income attributable to Daqo New Energy Corp. shareholders was USD 103.7 million in Q2 2023, a decrease from USD 278.8 million in Q1 2023.
• Earnings per basic American Depositary Share (ADS) stood at USD 1.35 in Q2 2023, down from USD 3.56 in Q1 2023.
• Adjusted net income (non-GAAP) attributable to Daqo New Energy Corp. shareholders amounted to USD 134.5 million in Q2 2023, a decline from USD 310.2 million in Q1 2023.
• Adjusted earnings per basic ADS (non-GAAP) reached USD 1.75 in Q2 2023, down from USD 3.96 in Q1 2023.
• EBITDA (non-GAAP) was USD 230.0 million in Q2 2023, with an EBITDA margin (non-GAAP) of 36.1%, compared to USD 490.2 million and a margin of 69.1% in Q1 2023.

Technical Observation (on the daily chart)

The Relative Strength Index (RSI) over a 14-day period stands at 27.69, going into the oversold zone with the expectations of an upside momentum or some consolidation. The current price is expected to hold the support levels of USD 28- USD 30, with expectations of a momentum in the upward directions. Additionally, the stock's current positioning is below both 21-period SMA and 50-period SMA, which may serve as a dynamic short-term resistance level.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘BUY’ rating has been given to Daqo New Energy Corp. (NYSE: DQ) at its current price of USD 30.03 as of September 21, 2023, 8:25 am PDT. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is September 21, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

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