Daqo to 'considerably raise' polysilicon capacity with profits of Xinjiang IPO

Sep 14, 2020 01:48 PM ET
  • Polysilicon maker Daqo New Energy has submitted new papers relating to a prospective initial public offering (IPO) to the Shanghai Stock Exchange, detailing exactly how profits will certainly be invested in new centers.
Daqo to 'considerably raise' polysilicon capacity with profits of Xinjiang IPO
Image: Daqo New Energy

Having announced its intent to detail new shares in its Xinjiang Daqo subsidiary in June, Daqo has now exposed that the profits will certainly be spent establishing two brand-new production facilities in China, as well as providing added functioning funding for Xinjiang Daqo moving forward.

It's planned for Xinjiang Daqo to list on the STAR Market of the Shanghai Stock Exchange, a scientific research technology and also innovation-focused exchange. More than 286 million shares will be issued, representing around 15% of the firm's total share capital after the IPO. Daqo New Energy currently owns around 95% of Xinjiang Daqo, a shareholding which will be up to around 81% after the offering.

While there has been no well-known target for gross earnings, Daqo has actually laid out just how it intends to spend around US$ 732 million on new centers as well as functioning funding.

The majority of that number-- some US$ 514 million-- will be spent on a Phase 4B ultra-high-purity polysilicon production center with an annual production ability of 35,000 MT. Daqo stated this will "significantly boost" the business's ability of polysilicon for use in monocrystalline solar wafers and also allow it to much better address sector demand which has actually quickly increased of late.

Last month, throughout Daqo New Energy's quarterly results call, the company claimed it expected polysilicon demand to outstrip supply for at the very least the following 18 months owing to a lack of new ability and also strong need from a boosting number of significant module producers.

Longgen Zhang, president at Daqo, approximated that annual demand for polysilicon by the end of following year would rise to around 800,000 MT, causing a boost in the average market price (ASP) of polysilicon to around US$ 15/kg, substantially higher than the US$ 6/kg videotaped in 2019 as well as in Q1 2020.

Daqo's yearly polysilicon manufacturing is guided at in between 73,000-- 75,000 MT.

Meanwhile some US$ 62 million is to be invested in a semi-grade ultra-high-purity polysilicon facility to generate polysilicon for usage in the semiconductor industry, a market under-served by Chinese polysilicon manufacturers.

Approximately US$ 156 million will be used to boost Xinjiang Daqo's functioning funding, which the firm would permit it to optimise the firm's financial debt framework and fund brand-new organization growth projects, while funds will certainly additionally be diverted to improve its R&D efforts. Daqo has actually historically been extremely conventional in R&D spending. R&D expenditure completed US$ 2.7 million in 2018, boosting to US$ 5.3 million in 2019.

Daqo further claimed the conclusion of the IPO went through the Shanghai Stock Exchange's testimonial processes and enrollment by China's Securities Regulatory Commission, including that the company can not anticipate the timeline, ultimate size or rates of the offering.