Daqo New Energy - Q3 2023
October 30, 2023
Transcript
Operator (participant)
Good morning, and welcome to Daqo New Energy's third quarter 2023 results conference call. All participants will be in listen-only mode. If you need assistance, please signal conference specialist, followed by the star key. After today's presentation, there's an opportunity to ask questions. Please note that this event is being recorded. Now, I'd like to turn the call over to Ms. Anita Zhu, Investor Relations Director. Please go ahead.
Anita Zhu (Investor Relations Director)
Hello, everyone. I'm Anita Zhu, the Investor Relations of Daqo New Energy. Thank you for joining our conference call today. Daqo New Energy just issued its financial results for the third quarter of 2023, which can be found on our website at www.dqsolar.com. Today, attending the conference call, we have our Chairman and CEO, Mr. Xiang Xu, CFO, Mr. Ming Yang, and myself. The call today will begin with an update from Mr. Xu on market conditions and company operations, and then Mr. Yang will discuss the company's financial performance for the quarter and the year. After that, we'll open the floor to Q&A from the audience.
Before we begin the formal remarks, I would like to remind you that certain statements on today's call, including expected future operational and financial performance and industry growth, are forward-looking statements that are made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement. Further information regarding these and other risks included in the reports or documents we have filed with or furnished to the Securities and Exchange Commission. These statements only reflect our current and preliminary view of, as of today, and may be subject to change. Our ability to achieve these projections is subject to risks and uncertainties.
All information provided in today's call is as of today, and we undertake no duty to update such information except as required under applicable law. Also, during the call, we will occasionally reference monetary amounts in the U.S. dollar terms. Please keep in mind that our functional currency is the Chinese RMB. We offer these translations into U.S. dollars solely for the convenience of the audience. So now we would like to welcome our CEO, Mr. Xiang Xu, for the opening remarks.
Xiang Xu (Chairman and CEO)
[Foreign language]
Anita Zhu (Investor Relations Director)
Thank you, everyone, for joining the conference call today. Anita will serve as my translator during the call, and if you have any questions addressed to the company or to me, please, address the questions at the end of the call. So now, on behalf of Mr. Xu, I'll now read off his remarks regarding current market conditions and the market and the company performance.
So during the third quarter, continued optimization of operations at our two polysilicon facilities resulted in a total production volume of 57,664 metric tons, an increase of 12,358 metric tons or 27% compared to the previous quarter. Our Inner Mongolia phase V-A facility, which is now in full production, contributed approximately 40% of our total production volume. So meanwhile, our production costs further decreased by 5.8% from second quarter to $6.52 per kilo, primarily due to improvements in manufacturing efficiency, as well as a reduction in the cost of raw materials, particularly metallurgical-grade silicon. So compared to our first quarter average production cost of $7.55 per kilo, cost has declined by more than a dollar per kilogram.
Based on the company's most recent production data, we expect our fourth quarter cost to continue to trend downwards from the third quarter levels. We shipped a total of 62,967 metric tons of polysilicon in third quarter, an increase of 9,465 metric ton over our second quarter shipments, and significantly higher than our quarterly production volume. This has resulted in a significant decrease in the polysilicon product inventory across our two facilities, now at a level of less than one week of production volume. For the third quarter, the company generated $70 million in EBITDA. Net cash provided by operating activities for the first nine months of the year totaled $1.5 billion, with more than $711 million in third quarter.
The company continues to maintain a very strong balance sheet with no financial debt. At the end of the third quarter, the company had a cash balance of $3.3 billion and a combined cash and bank receivable balance of $3.6 billion. So our total annual polysilicon nameplate capacity has reached 205,000 metric tons across our two facilities. For fourth quarter, we expect total poly production volume to be approximately 59,000-62,000 metric tons. A continued increase over our the third quarter levels. Full year production is expected to be approximately 196,000 metric tons -199,000 metric tons, representing an increase of 46%-49% compared to 2022 levels.
With more than a decade of experience in poly production, as well as a fully digitalized and integrated production system that optimizes operational efficiency, we are confident that we can strengthen our position as one of the dominant polysilicon manufacturers in the industry. At the end of the second quarter, after poly prices reached bottom, customers began reordering and taking delivery of products, significantly reducing industry inventory levels. Polysilicon pricing recovered gradually over the third quarter, and in July, as module makers intensified competition, module prices fell from RMB 1.5 per watt in June to RMB 1.3 per watt in July. Meanwhile, the high demand in the module sector, coupled with lower utilization rate for poly due to power rationing and system maintenance, drove a marginal recovery in polysilicon prices.
According to industry statistics, mono-grade polysilicon prices rebounded from the lowest level of less than RMB 60 per kg in June to RMB 63-RMB 68 per kg by end July, and an average of RMB 87 per kg by the end of September. Furthermore, as the current price range is unlikely to be profitable for new entrants, given their cost structure, we have seen delays in the production plans. Going into the fourth quarter, production volumes in the poly sector are likely to increase marginally as some new capacities come online. During the third quarter, we saw an acceleration in the transition from P-type to N-type cell technology, with strong growth in N-type product demand volume and the N-type product average selling price premium expanded to RMB 10-RMB 12 per kg in the third quarter.
Going forward, if we expect this transition to further accelerate as N-type products expand market share, leading to continued demand growth. To give an update on the company's $700 million share buyback program announced in November 2022. By the end of this September, the company had already purchased 8.1 million ADSs for approximately $328.8 million, with an average cost of approximately $40.58 per ADS. Combined with the program completed in 2022, in aggregate, the company has already purchased approximately 10 million ADSs for approximately $448.8 million.
While basic weighted average ADSs outstanding for the third quarter was 74 million shares, total outstanding shares at the end of the third quarter were approximately 71.8 million shares, after fully reflecting our recently completed share repurchases. With the urgent need to address climate change, we're still at the very early stage of the energy transition from fossil fuels to renewable, renewable energy for humans' energy needs on Earth. As one of the most competitive forms of power generation, the continuous cost reduction in solar PV products and the associated reduction in solar energy generation costs are expected to create substantial additional green energy demand, which we believe is likely to exceed most analysts' expectations. Solar PV is generally expected to eventually become one of the most important energies to power the world.
In addition, as solar PV technology keeps evolving, we believe that the increasing needs for very high purity poly, such as our N-type polysilicon, will help differentiate us from most of our competitors. While many of our competitors will likely struggle in the current market environment, Daqo New Energy has one of the best balance sheets in the industry with no financial debt. We, as a whole, are confident that we will navigate the near-term market volatility successfully. We're optimistic that as the solar end market continues to grow and as our customers continue to transition to higher efficiency N-type technology, we will benefit from this trend. Daqo will continue to strive to maintain solid growth and capture the long-term benefit of the growing global solar PV market.
Regarding future outlook and guidance, we expect to produce approximately 59,000 metric tons-62,000 metric tons of poly during the fourth quarter of 2023. For full year 2023, we expect to produce approximately 196,000 metric tons-199,000 metric tons of polysilicon. Now I turn the call to our CFO, Mr. Ming Yang, to delve deeper on the financial performance. Ming, please go ahead.
Ming Yang (CFO)
Thank you, Anita, and hello, everyone. Thank you for joining our third quarter earnings conference call today. Now I will discuss the company's third quarter financial performance. Revenues were $484.8 million, compared to $636.7 million in the second quarter of 2023, and $1.2 billion in the third quarter of 2022. The decrease in revenue compared to the second quarter of 2023 was primarily due to the decrease in average selling prices, mitigated by an increase in sales volume. Gross profit was $67.8 million, compared to $258.9 million in the second quarter of 2023, and $978.6 million in the third quarter of 2022.
Gross margin was 14% for the quarter, compared to 40% in the second quarter of 2023, and 80% in the third quarter of 2022. The decrease in gross margin compared to the second quarter of 2023 was primarily due to lower average selling prices, which was partially mitigated by our lower production costs. Selling, general and administrative expenses were $89.7 million, compared to $43.3 million in the second quarter of 2023, and $280 million in the third quarter of 2022. I will give a little bit more details about the increase in SG&A expenses for the quarter and as compared to the previous quarter, and this is primarily related to the resignation expenses and the recognition of the remaining share-based compensation expenses related to the company's recent management change.
The recognition of the remaining non-cash share-based compensation expenses consists of approximately 330,000 shares, which will be vested based on the vesting schedule over the next two years. Based on the current share price, this is approximately $8 million in terms of expense. However, US GAAP rules requires that the company recognize the delivery expenses based on the share price at the time of grant, and this would be approximately $23 million. In addition, our SG&A expenses during the third quarter includes a total of $46.3 million in non-cash share-based compensation costs, which it includes the above expense related to recent management change, as I had mentioned. This compares to a total of $27.5 million of share-based incentive expenses in the second quarter of 2023.
For the fourth quarter, we would expect our SG&A expenses to normalize and will be in the range of approximately $35 million-$38 million per quarter, inclusive of non-cash share-based compensation costs. Research and development costs were $2.8 million, compared to $2.2 million in the second quarter of 2023, and $2.5 million in the third quarter of 2022. R&D expenses vary from period to period as we reflect R&D activities that take place within the quarter. Most of our R&D activities currently is focused on increasing the percentage of N-type polysilicon for the company's product mix.
Foreign exchange gain was $2.1 million for the quarter, compared to a loss of $19.7 million in the second quarter of 2023, and this is attributed to the volatility and price fluctuation in the U.S. dollar and RMB exchange rate during the quarter. And as a result of the above-mentioned, income from operations was $22.5 million, compared to $213 million in the second quarter of 2023, and $693 million in the third quarter of 2022. Operating margin was 4.6%, compared to 33.6% in the second quarter of 2023, and 56.8% in the third quarter of 2022.
Net loss attributable to Daqo New Energy shareholders was $6.3 million, compared to net income of $103.7 million in the second quarter of 2022, and $323 million in the third quarter of 2022. Loss per basic ADS for the quarter was $0.09 per share, compared to earnings per basic ADS of $1.35 in the second quarter of 2023, and $4.28 in the third quarter of 2022. Adjusted net income, non-GAAP, attributable to Daqo New Energy shareholders, including non-cash share-based compensation costs, was $44 million, compared to $134.5 million in the second quarter of 2023, and $590.4 million in the third quarter of 2022.
Adjusted earnings per basic ADS was $0.59, compared to $1.75 in the second quarter of 2023, and $7.81 in the third quarter of 2022. EBITDA was $70.2 million, compared to $230 million in the second quarter of 2023, and $720 million in the third quarter of 2022. EBITDA margin was 14.5%, compared to 36.1% in the second quarter of 2023, and 39% in the third quarter of 2022. Now, I would like to provide some additional color related to our operations. From a pure operation perspective, and this would exclude the impact of the one-time resignation costs and the non-cash share-based compensation costs of the U.S. Listco.
But for our operating subsidiary, Xinjiang Daqo, it recorded pre-tax earnings of RMB 888 million, or approximately $121 million, and net income of RMB 689 million, or approximately $94 million. Daqo New Energy currently owns approximately 72.4% of Xinjiang Daqo, and Daqo New Energy shareholders allocation of the operating net income should be approximately $52.4 million, excluding the above mentioned GAAP accounting-related expenses. And now on the company's financial condition. As of September 30th, 2023, the company had $3.28 billion in cash and cash equivalents, which is the cash, compared to $3.17 billion as of June 30th, 2023, and $2.05 billion as of September 30th, 2022.
As of September 30th, 2023, notes receivable balance the company was $276 million, compared to $799 million as of June 30th, 2023, and $1.57 billion as of September 30th, 2022. Notes receivable balance represent, bank notes with maturity within six months. Now the company's cash flow. For the nine months ended September 30th, 2023, net cash provided by operating activities was $1.49 billion, compared to $1.7 billion in the same period of 2022. For the nine months ended September 30th, 2023, net cash used in investing activities was $954 million, compared to net cash used in that, in spend activities of $605 million in the same period of 2022.
Net cash used in investing activities in the third quarter of 2023 were primarily related to capital expenditures on the company's polysilicon project in Baotou City, Inner Mongolia, inclusive of both phase I and phase II. For the nine months ended September 30, 2023, net cash used in financing activities was $602 million, compared to net cash provided by financing activities of $1.4 billion in the same period of 2022. Net cash used in financing activities for the first three quarters of 2023 was primarily related to $322 million in share repurchases and $303 million in dividend payments made by the company, Xinjiang Daqo subsidiary, to its minority shareholders.
The company continued to maintain a very strong balance sheet, with significant cash balances and no financial debt, as well as healthy operating cash flow. With that, concludes our prepared remarks. Operator, we will now open the line to questions from the audience.
Operator (participant)
Thank you. We'll now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. This time, we'll pause momentarily to assemble the roster. First question will be from Philip Shen, Roth MKM. Please go ahead, sir.
Philip Shen (Managing Director and Senior Research Analyst)
Hi, everyone. Mr. Xu, Ming, thanks for taking my questions. Wanted to explore your view on polysilicon pricing for Q4. You came in with about $7.70 for Q3 per kilogram, and wanted to see what your expectations are for Q4, and then also for the beginning of next year. And then by year-end 2024, do you see a recovery, or do you expect polysilicon pricing to remain at current levels? Thanks.
Ming Yang (CFO)
Okay. Mr. Xu will provide commentary first, and then Anita will provide a translation.
Xiang Xu (Chairman and CEO)
[Foreign language] 目前是，第四季度十月份，十一月、十二月，十月份现在还是维持现在的价格。N型的，P型的这个是RMB 80,000，RMB 70,000，RMB 70,000多嘛，RMB 70,000左右。N型的大概在RMB 80,000左右的这个，这价格，十月份。因为我们现在订单，我们看到十月份现在也是这个价格，也没有太大的变化。估计十二月份有一些因为供求的问题，可能价格有一些，有一些变化，但是不会有太大的变化。二年呢，当然了，这个日子当中是什么？2024年的第一季度，必定是需求的这个，这个关系。我们可能我们在2020年第一季度，估计的价钱应该在RMB 70,000，RMB 65,000-RMB 70,000之间，是吧？但是呢，我想在二季度应该价格还会上来，就到RMB 70,000以上。我们是这样子判断。
Anita Zhu (Investor Relations Director)
Oh, hi, Philip. So Mr. Xu have commented that for the fourth quarter, the price should stay somewhat similar to now, and for P type, should remain around RMB 70 per kg, and for N type, there's a RMB 10 premium, which is around RMB 80 per kg. And in December, the price should stay somewhat consistent as of now. And going into the first quarter, because of demand, the price should lower to around RMB 55-RMB 70 per kg, around that range. But going to second quarter and beyond, it should go rise above RMB 70+.
Philip Shen (Managing Director and Senior Research Analyst)
Okay, great. So, the price to 55 kg-70 kg lower, you know, in Q1, what is driving that? And is that price, are you talking about P type? And so should we expect N type to be RMB 10 higher? And what will cause the price to go higher in Q2? And what does he think the year-end 2024 price might be? Thanks.
Xiang Xu (Chairman and CEO)
[Foreign Language] 原因，其实主要的原因是现在是一季度的价格，主要是圣诞节和中国季节性。圣诞节和中国的主要是圣诞节的原因和春节，所以一季度的价格是在$65的，但是呢，可能相差$5左右，对吧？这个一季度，主要是季节性的原因。但二季度我认为，一季度也就是一月份，二月份，到三月份就开始，价格我认为会上来。
Ming Yang (CFO)
N-type price spread should be 5 to -
Xiang Xu (Chairman and CEO)
[Foreign language] 5块，5块到5块到10块钱嘛。
Anita Zhu (Investor Relations Director)
... The price in the first quarter, around RMB 65-RMB 70. The price range is primarily driven by seasonality. So Christmas and Chinese Lunar New Year, and that causes lower demand. So that's primarily the price in January and February, but price should recover starting in March. And that's the price for P-type. For N-type, we see a price premium of around RMB 5-RMB 10 per kg.
Philip Shen (Managing Director and Senior Research Analyst)
Okay, got it. Thank you. One more question for me, and then I'll pass it on. As it relates to the industry structure and, you know, given these low prices, you know, there are a lot of companies that might be having trouble with driving profit. So, just curious, if you can talk about what he sees ahead. And can he talk through, you know, does he expect certain companies to stop production or even accelerate, you know, the stoppage of production shutdown? What does he see for the evolution for the industry in the coming six months? Thanks.
Xiang Xu (Chairman and CEO)
[Foreign language]
Anita Zhu (Investor Relations Director)
In terms of the industry structure, first of all, we wanna highlight that we have a very competitive cost advantage in producing polysilicon, and we see that the price goes down to about RMB 65-RMB 70. There's roughly a 50,000-60,000 of production volume that's, that's at the, that are, that are not gonna be profitable. And for the new entrants, their costs are obviously a lot higher than us, which is around RMB 75,000- RMB 80,000. So, given that they don't have enough cash, not enough cash, and the financing route is relatively limited now, they will be struggling in the coming quarters.
Ming Yang (CFO)
So, we certainly see industry supply adjustments going forward in the coming months, as well as the industry rebalancing normalize.
Philip Shen (Managing Director and Senior Research Analyst)
Okay, got it. Thank you for the color. I'll pass it on.
Anita Zhu (Investor Relations Director)
Great. Thank you, Phil.
Ming Yang (CFO)
Thank you.
Operator (participant)
Thank you. Next question will be from Alan Lau of Jefferies. Please, go ahead.
Alan Lau (Managing Director and Senior Equity Research Analyst)
Thanks a lot. Thanks a lot for taking my question. And thanks, Mr. Xu and also Ming for the prepared remarks. So I'd like to have more clarity on the share-based expense. This, this seems to be the item which has a major change quarter over quarter. So I would like to know what is the breakdown on the $89.7 million of SG&A? Because in the prepared remarks, there were $46.3 million of non-cash share-based compensation, but in the reconciliation is $50 million. So we'd like to know, like, how much is the original share-based compensation, and how much is related to the resignation of Mr. Longgen?
Ming Yang (CFO)
Hi, Alan, this is Ming, and I will discuss the increase in SG&A expenses. So, for the quarter, we had a total of $46 million in non-cash share-based compensation expenses. And of that, approximately half or approximately $23 million is related to the resignation of our previous CEO, Mr. Longgen Zhang. And this actually is approximately, again, 330,000 shares of his previous equity grant, which would be vested over the next two years. You know, but because of GAAP accounting rules, and we are required to recognize this expense during the third quarter, based on his resignation, as we saw. And this also would be recognized in terms of at the time of the grant, right, which was around $70 per share or so.
So that's why we quoted the additional $23 million compensation costs. So, and the remaining is also primarily related to other resignation expenses as well. But we do expect this to normalize for the next quarter. Yeah, and we expect next quarter's G&A expense to be in the range of $35 million-$38 million per quarter.
Alan Lau (Managing Director and Senior Equity Research Analyst)
Understood. Thanks a lot. So, because it seems that other than these expenses, because the increase in expenses quarter-over-quarter is like $46 million. So probably this $23 million is one-off, so it seems there are also other increase in expenses. So are those cash expenses?
Ming Yang (CFO)
Yeah, yeah. So I mean some of it is expenses related to, for example, shipping costs, as we ship more volume for the quarter. Yeah, but the remaining is primarily to the resignation cost.
Alan Lau (Managing Director and Senior Equity Research Analyst)
Understood. So, the next question, switching gear to our buyback plan. So, we have already buyback a major portion of our $700 million buyback plan, but still, we have quite a lot of bullets. So are we planning to declare dividends, or what is our plan to execute the remaining of the make use of the remaining funds for the buyback or dividends?
Anita Zhu (Investor Relations Director)
Regarding the $700 million share buyback, we have a remaining $730 million left. And because our CEO has just been in the position for a quarter, and we've been in talks with our board and our management team, and we have decided that we will continue to pursue the share repurchase program, and we're committed to repurchase during the last quarter to whatever the upper limit will be, based on what we can do to repurchase on a daily basis. But, overall, we will continue to repurchase. Yeah, we will buy back as much as we can in the last quarter.
Alan Lau (Managing Director and Senior Equity Research Analyst)
Oh, thank you. So effectively means $380 million in the remaining two months?
Ming Yang (CFO)
Effective, yeah. So as much as we could repurchase. Yeah.
Alan Lau (Managing Director and Senior Equity Research Analyst)
Okay. Okay. Thank you. So, yeah. Yeah.
Xiang Xu (Chairman and CEO)
[Foreign language]
Anita Zhu (Investor Relations Director)
Yeah, we see the price as being very low at this point, so we are very committed to repurchase at this point.
Alan Lau (Managing Director and Senior Equity Research Analyst)
Understood. So, as communicated before, the company may also consider to cancel those shares. So, is this still the plan, or when will the company cancel those shares?
Ming Yang (CFO)
Yeah, yeah, so it is the company's intention that, I think by year-end, we would cancel the shares that we have repurchased. Yes. So the company intention is to cancel those shares. The repurchase shares.
Alan Lau (Managing Director and Senior Equity Research Analyst)
Thank you. Yes, that would definitely help a lot in increasing the ETS as well. So yeah, yep. Yeah, thanks, thanks a lot. So, I think my last question here is, what is your view on next year? Like, what do you think will be your production plan? Or is it full capacity based on the current capacity? And lastly, what is the progress on your semiconductor grade polysilicon?
Anita Zhu (Investor Relations Director)
For the production volume for next year, we forecast around 280,000 metric tons to 300,000 metric tons, but that will also be contingent upon the progress of our construction. Yeah, and for semiconductor, we'll start pilot production at the end of this year. So for next year, the capacity will just be 1,000 metric ton.
Ming Yang (CFO)
So I want to ask on a high level, right? So we will have full production on our Xinjiang facility, which is around 130,000 metric tons, and then also full production on our Inner Mongolia phase I, which is also additional 100,000 metric tons. And finally, we expect our Inner Mongolia phase II to start production around mid-year next year. So approximately, you know, based on 100,000 metric tons capacity, around 50,000 metric tons production. So that's why we think next year range 280-300. Obviously, this is a very preliminary estimate, it's not an official guidance, and we will have a more formal numbers based on when our Inner Mongolia phase II is more closer to completion and start of production. Okay, thank you.
Alan Lau (Managing Director and Senior Equity Research Analyst)
Understood. It's very clear. Thanks a lot. I'll pass on. Thank you.
Operator (participant)
Thank you. Our next question comes from Andre Korporati from the Andre Korporati Corporation. Please go ahead.
Speaker 9
Hello, sir. Just so I understand, repurchasing in the last... I like that the total shares outstanding decreased finally. I want to ask one question, more questions. The first question is, how much more will shares be issued for management compensation plans in the next one year or two years? Will we see $40 million or something like that, as share-based compensation? That's the first question. And the second question, you have $3,350 million or something like that, repurchasing left. Last quarter, you were stating that you will finish it by the end of the quarter - by the end of the year. So we'll be expecting Q4 for you to deploy all of this capital or as much as possible and at an accelerated pace compared to the anterior quarters.
So till now, you bought in three quarters, like $300 million. Are you telling us that you will buy $200 million or even $300 million of the what is left in the last quarter, in one quarter?
Anita Zhu (Investor Relations Director)
Regarding the share repurchase, yes, I think we can repurchase based on the rule, we can repurchase around $220 million-$250 million in the last quarter, and we'll definitely accelerate. We'll keep that pace. So we will-
Speaker 9
Okay, how many in quarter four? I don't know the exact number, but if you have it on the top of your head or something around that, how many shares will be issued for share-based compensation? If I'm not wrong, this quarter it was like 45 million, but last quarter, so Q2, you had like a hundred and twenty million or something like that. You had a larger, a one-time. So my question is for Q4, how many shares will be issued for share-based compensation for management?
Ming Yang (CFO)
Around, in aggregate, around 350,000 shares.
Speaker 9
300,000 shares, something like that. So that's-
Ming Yang (CFO)
Something like that, yes.
Speaker 9
300,000 times, times $24 today's price. It's... Okay, not even $1 million in share-based compensation. Okay. Okay, last question is... Actually, I have two questions left. You stated in last quarter, and I really like that, in the transcripts and the earnings call. You stated in August that, you will consider issuing shares in 2024, in, the, the, in the Shanghai-listed shares, the 75% ownership that our New Energy has, and you would consider selling shares there to buy shares on the New York Stock Exchange. So my question is, when will that be available? Is it two years after the IPO, or in what month of, next, next quarter-- next year, sorry?
Xiang Xu (Chairman and CEO)
[Foreign language]
Anita Zhu (Investor Relations Director)
Yeah, we will definitely consider. Yeah, thank you for the suggestion, and we will consider that proposal. In fact, I think by July next year, we are able to sell the shares in A shares, and then use that amount to continue, maybe employ, deploy, another share repurchase plan for 2024.
Speaker 9
... Do you have any idea, some, not an estimate, of what this share purchase—after you finish this share repurchase of this year, the $750 million, so you have, like, $300 million left or $350 million left. So my question is: What will the scale of the 2024 repurchase program be or other dividend yields for investors in the New York Stock Exchange shares? I'm talking in DQ on your stock exchange. If you have any idea or if you could comment on that. And thank you very much for all your answers. Very, very nice for you.
Ming Yang (CFO)
Hello. Thanks for your question. So, it is still early to say or to estimate what the program size might be like. But you know, starting in July of 2024, you know, after the three-year lockup period for our A-share listing, so Daqo New Energy is able to start to sell down some of its shares of the A-share listing. So I'll just throw out some numbers, right? So let's assume that we say sell down even a minor 10% stake, you know, based on the current valuation of the A-share listing, which is roughly RMB 70 billion, right? So we could potentially raise, you know, somewhere in the range of RMB 7 billion or so in capital.
I would expect that majority of this could be used for share purchase in the US, NYSE listing. That's the current-
Speaker 9
Very nice way how you stated it. So Daqo New Energy, just for all shareholders and for me also to understand, we own 75% of the Shanghai listings, right? It's such a rudimentary question, but I just want to make it clear. It's the stupidest question ever, but yeah.
Ming Yang (CFO)
That's right. I 72.4% to be exact. Yeah, but that's right. Yes.
Speaker 9
Yeah, the discount is insane. Okay, and the last question and final one: what will the cash flow be for 2024? Or, how much CapEx last quarter? I really liked how management talked in the earnings call, and I just want to make a revamp of what happened last quarter. So, CapEx, you talked last quarter, actually, Ming Yang talked, I think the last CEO, if I'm... or whatever. He talked that, how much CapEx is left in 2024. What will the outflow, what will the CapEx be for 2024, around? How much is left to invest?
Ming Yang (CFO)
Okay. As of the end of the third quarter, total CapEx remaining for the company's major projects, including Inner Mongolia phase I, Inner Mongolia phase II, and our semi project, is approximately RMB 6.5 billion, or approximately $900 million or so. Of that, we expect for the third quarter, total planned CapEx is around RMB 2.7 billion, or roughly $350 million.
Speaker 9
Yeah. No worries.
Ming Yang (CFO)
And the-
Speaker 9
Okay
Ming Yang (CFO)
... remaining will be set for the next year. Yeah. So that's the total CapEx plan right now.
Speaker 9
So, what is left in 2024 is $900 million, right? Or that is minus the three-
Ming Yang (CFO)
Uh, left?
Speaker 9
... the 300, that-
Ming Yang (CFO)
$60 million-$100 million, yeah, approximately.
Speaker 9
Okay. In 2025, do you have any major plans yet, or is there any CapEx in 2025, which is exceeding, like above $500 million?
Ming Yang (CFO)
No, no plan right now currently. Yes.
Speaker 9
Okay. So Mongolia phase II or phase I, whatever is the last thing. Okay, thank you very much. You are very kind, very nice to hear you.
Ming Yang (CFO)
Thank you. Thank you.
Operator (participant)
Thank you. Next question will be from Jacky of LHC Capital. Please go ahead.
Jacky Yan (Analyst)
Hello. I want to query about the cancellation of the shares. Just now, you said that at the end of the year, there might be cancellation of the shares. We would like to know, will you cancel all of it by the end of the year, or is at the end of the year, you will start to cancel it? So what is the schedule of the cancellation of the shares in details? Do you have plans?
Ming Yang (CFO)
Okay. Most likely it will be one time at around the end of the year, and we would likely cancel much almost all, if not all. A majority, if not all of the shares that we've repurchased. I think most likely all of the shares that we've repurchased at that time will be canceled.
Jacky Yan (Analyst)
Oh, okay.
Ming Yang (CFO)
Yeah.
Jacky Yan (Analyst)
I see. Thank you. We also want, like, to know, do you consider any dividend option, dividend, for the company?
Anita Zhu (Investor Relations Director)
For this year, our priority this year will still be the share repurchase plan. We, as we just stated, we'll continue to repurchase our shares as much as we can. And for next year, we will contemplate between share another share repurchase program or issuing dividends. But that will be contingent upon board approval, and we'll need to delve deeper into that and consider the plan. But as of now, our-
... primary goal is to complete as much as we can in terms of the share repurchase plan.
Ming Yang (CFO)
Okay. Okay, thank you. That's all my questions.
Operator (participant)
Thank you. Our next question will be from Gordon Johnson, GLJ Research. Please go ahead.
Gordon Johnson (Founder and CEO)
Hey, guys, can you hear me? Hello?
Anita Zhu (Investor Relations Director)
Yeah. Hi, we're here.
Gordon Johnson (Founder and CEO)
Hey, thanks. Hey, thanks for taking the questions. So, a lot of my questions have been answered, but there seems to be some concern amongst some of our on-the-ground contacts in China, that there could be grid issues with respect to the massive amount of solar that's been installed this year. I mean, I think over the first nine months, we're close to 130 GW in China, suggesting we could get 172 GW for the full year, 2023. That's amazing. That's great for you guys. But what we're hearing is that could potentially cause issues with respect to grid connects next year, and thus you could get flat to down installs in China. Two questions: number one, have you heard this? Number two, if you have, what are your thoughts? And then a follow-up. Thank you.
Xiang Xu (Chairman and CEO)
[Foreign language]
Ming Yang (CFO)
Okay, let me translate for Mr. Xu. So, so even though this year, or, you know, approximately 130 GW has already been installed, but Mr. Xu is still very optimistic about the overall installation here within, in China. So it's the expectation that, you know. And again, and he's actually an expert on the grid, so he's been a supplier of equipment to the power equipment to the grid for many, many years. So, he expects that, overall, next year could be approximately 200 GW. And what's happening here in China is, it is the Chairman Xi Jinping's goal and his mandate that China to deploy a significant amount of renewable energy.
Also, the National Energy Administration is very proactive in terms of allowing and requiring actually local grids to accept as much renewable energy as possible. And at the same time, China is building significant amount of capacities and energy storage. Expecting that storage, it could reach as high as 15% of the overall power generation for China over time. And even in the near term, you know, China exploring technology, including not just battery storage, but also in terms of hydrogen storage, as well as hydro or a water-based type of energy storage. So these are all happening within China.
So I think, and combining all these factors, including the mandate from Chairman Xi Jinping, we do believe that China will renewable energy, in particular the solar market, will continue to grow for next year.
Gordon Johnson (Founder and CEO)
Okay, that's helpful. And then one last one from me. And again, congratulations on your, your, your prior execution, guys. Really good in the poly market. So we've heard that in September there was roughly 60 GW of output, yet the market only absorbed 40 GW. And again, we're hearing that there could be caps on the market of, you know, 200 GW in 2024. So just wanted to hear your thoughts on, if indeed those numbers are accurate, is there the potential for some of your competitors to potentially shut down capacity/idle capacity that's making the market better, as we enter the first half of 2024? Thanks again.
Xiang Xu (Chairman and CEO)
[Foreign language] 我现在开始硅片，因为这个季节性的问题，所以硅片现在就有库存，包括我们的下游几，几家企业是吧，比如说双良，我们的客户中环、高景，有的产能都降到了50%。整个平均硅片的产能，我们的下游，我们的客户是78%左右，是78%左右，所以这也是一个整体的数据。这个季度的这种需求，当然也是欧美的这个需求，不过当然还有中国的需求。应该讲，这个由于这个组件的价格在下降，所以大家还处在一种观望，大概有20个计划，我们这个，这个，这个就是这个组件的，真的有些20计划的库存。很快当中呢，应该讲年底年初的时候呢，我认为中国，这个当然这个中国这个市场会有应该有一些新的变化。明年，虽然现在统计的出来是20个计划，但是我认为200个计划，但是我认为明年中国的市场一定会超过200个计划。包括现在我们现在所谓的这个沙漠光伏发电，中国也出来新的很多新的政策，沙漠发电就是一个大的增长。包括新疆，包括甘肃，包括这个内，内蒙古都有大的发展。因为总的来讲，中国还有缺点，同行就不是不具备竞争性的同行。不具备竞争性同行，那当然当然就没有什么太多的优势了。对，因为这是一个通常来讲亏损的时候就不能做。现在减产，因为他刚才问的问题，他是个专家，所以他说得很对，确实有些企业正在减产，数据是这样。
Anita Zhu (Investor Relations Director)
...
Xiang Xu (Chairman and CEO)
[Foreign language] 当然中国的市场上还是什么？未来当中，一个是你的成本优势，还有一个就是你的质量优势。尤其像我们这样有成本优势的企业，我们竞争也会更强，我们的毛利率也更高。一般的企业，很多企业停产的beaucoup，那个是真的下去。
Jacky Yan (Analyst)
Thanks again, guys.
Ming Yang (CFO)
Great. Thank you. Thank you. And we, we will take our last question, if there's one more.
Operator (participant)
Thank you. The next and final question will be from Frank Fan of Nomura. Please go ahead.
Frank Fan (Senior Analyst Asia-Pacific region)
Thanks, Mr. Xu and Mr. Yang, for taking my question. I just think this question has been addressed in second quarter earnings. I just want to reconfirm that we do not consider any privatization plan in this year and also in the next year, right? And the second question is, are the voting rights of shares held by management equal to those voting rights held by minority common shareholders? Thank you.
Anita Zhu (Investor Relations Director)
Sorry, Frank, can you repeat the second question?
Frank Fan (Senior Analyst Asia-Pacific region)
Yeah, my second question is about voting rights of shares held by management, the board members. I wonder if the voting rights is similar at 1:1 ratio to those shares held by minority common shareholders. Thank you.
Xiang Xu (Chairman and CEO)
[Foreign language] 就是关于，没有这个，目前还没有这个，这个私有化的这个计划，是吧。但是我们也看，看到这个市场的变化，目前还没有。
Anita Zhu (Investor Relations Director)
Yeah, we don't have any plans in terms of privatization at this point, but we will see how the market evolves. But as of now, we don't have any plans in terms of privatization this year and in the coming years.
Ming Yang (CFO)
Okay, and regarding your second question regarding voting rights. So, the majority shareholder does not have super voting rights, so they do have the same one to one voting right as the minority shareholders or the public shareholders. So, the voting rights are the same amongst shareholders.
Frank Fan (Senior Analyst Asia-Pacific region)
Understood. Thank you, Mr. Xu, and thanks, Mr. Yang.
Ming Yang (CFO)
Good day. Thank you, Frank.
Okay, operator, I think that concludes the session.
Operator (participant)
Yes, that concludes the question and answer session. Now I'll turn back to management side for closing remarks.
Anita Zhu (Investor Relations Director)
Thank you everyone again for participating in today's conference call. So should you have any further questions, please do not hesitate to contact us. Thank you and have an awesome day! Goodbye.