On the evening of February 27, Daqo Energy (SH:688303), a leading polysilicon company, released its 2024 annual performance report.

According to the report, the company's annual operating income was 7.411 billion yuan, a year-on-year decrease of 54.62%; the net profit loss attributable to the parent company was 2.718 billion yuan, a year-on-year decrease of 147.17%; The net loss after deducting non-profits was 2.638 billion yuan, setting a record for the largest annual loss since its listing in 2021.

Daqo Energy pointed out that in 2024, the imbalance between supply and demand in the domestic polysilicon industry will lead to the continuous decline in the price of the industrial chain, and the price of polysilicon products has fallen below the cash cost line of enterprises, resulting in the whole industry falling into a loss situation. Although the company operated steadily and had sufficient cash reserves, its performance declined year-on-year due to the impact of lower prices. At the same time, due to market factors, product prices continued to decline, and the company made provisions for inventory decline and long-term asset impairment, which had a greater impact on the performance of the reporting period.

According to public information, Daqo Energy, founded in 2007 and headquartered in Shihezi, Xinjiang, is a core enterprise in China's high-purity polysilicon manufacturing field, and will be listed on the Science and Technology Innovation Board in 2021. The company is mainly engaged in the R&D, production and sales of photovoltaic-grade polysilicon, which are widely used in the middle and downstream links such as solar cells and modules. By the end of 2024, Daqo Energy has formed two production bases in Shihezi, Xinjiang and Baotou, Inner Mongolia, with an annual production capacity of 305,000 tons, ranking among the top three in the world.

Relying on cost control and technological advantages, Daqo Energy achieved a net profit of 19.121 billion yuan in the 2022 polysilicon price surge cycle, ranking among the "windfall profits" camp in the industry. However, from 2023 onwards, the industry's supply and demand will reverse, polysilicon prices will fall "avalanche", and the company's performance will take a sharp turn, and it will fall into a comprehensive loss in 2024.

In terms of shipments, in 2024, Daqo Energy's polysilicon production will reach 205,100 tons, sales volume will reach 181,400 tons, inventory will remain reasonable, and the proportion of N-type polysilicon production will increase significantly to 70%. During the reporting period, in order to respond to market challenges and prevent vicious competition, the company established an efficient and flexible production adjustment mechanism, and implemented orderly production reduction and production control for some production lines. Despite the slight fluctuation in the impact of unit cost under controlled production, the company's unit cash cost has steadily decreased thanks to the digital "intelligent" manufacturing strategy and cost reduction and efficiency improvement measures.

In fact, Daqo Energy's core competitiveness lies in polysilicon production, and its business development is deeply bound to the cycle of the photovoltaic industry chain.

In 2023, the first phase of its Baotou project will be put into operation, with annual sales of 200,000 tons, a significant increase of 50.5% year-on-year. By 2024, the company's N-type polysilicon will accelerate its layout, accounting for 70% of the company's N-type polysilicon from 40% in 2023, but the price will plummet to about 40.6 yuan/kg, almost halving compared to 2023. Although the unit cash cost fell to about 36.2 yuan/kg, it was still affected by the market price falling below the cost line, and the selling price in the second and third quarters directly broke down the cash cost, resulting in a sharp drop in gross profit margin to -20.7%.

Although Daqo Energy is facing losses, it still sits firmly in the position of first-line manufacturers by virtue of its scale and technological advantages. In 2024, the market share of the N-type polysilicon market will be the highest, but the industry as a whole is facing the dilemma of overcapacity, with domestic production capacity reaching 1.5 million tons while demand is only 1.1 million tons, and the overall overcapacity of the industry is exacerbating the price war. Against this backdrop, second-tier manufacturers have withdrawn from the market, and even the first-tier polysilicon giants have recorded billions of yuan in losses.

In short, Daqo Energy's performance decline is only a microcosm of the cyclical adjustment of the photovoltaic industry chain. In the "L-shaped" bottoming stage of the industry, its technological transformation and financial resilience may become the key to crossing the cycle. However, if the price recovery is less than expected, whether the polysilicon giant can stand out from the industry reshuffle will be a severe test of its survival wisdom.

(Redirected from: Photovoltaic News).