Daqo Shines Light on Subsidiary IPO on STAR Market

Shares in the Chinese solar company jumped 6% on the listing update and Q2 estimates.
CapitalWatch StaffJun 01,2021,21:45

Daqo New Energy Corp. (NYSE: DQ) ended 6% higher Tuesday in New York on news that its subsidiary is pursuing an initial public offering at home, on the STAR Market.

The Chinese maker of polysilicon for the global solar PV industry said in a statement today that its main operational subsidiary, Xinjiang Daqo New Energy, has applied to become publicly traded on the Shanghai Stock Exchange's Sci-Tech innovation board.

In addition, Daqo shared the estimated preliminary results for the quarter ending June 30, 2021, for the subsidiary. The estimated revenue, Daqo said, would be in the range of 2.46 billion to 2.51 billion yuan. Net profit in the second quarter is estimated by the company at 1.30 billion to 1.33 billion yuan. Xinjiang Daqo contributes the majority of Daqo’s revenue and net income.

Plans for the listing were first made public last summer, and the application was submitted to the stock exchange in September. Now, the documents are filed with China’s Securities Regulatory Commission (CSRC) for registration.

DQ shares closed at $78.95 apiece Tuesday after exceeding the $83 mark in early trading.

Year-to-date, shares in the Chinese solar energy company are up 27%, though still lower than the February peak of $130.33.

Zacks Equity Research rated Daqo at a “strong buy” in early May, when DQ shares traded at near $74. TipRanks had Daqo at a “moderate buy.” However, some analysts are concerned over Daqo’s valuation.

In mid-May, GuruFocus Value published a report stating it sees Daqo as “significantly overvalued.” It cites historical multiples of the stock, the past business growth, and analyst estimates of future performance. Nomura analyst Jamie Wang also held Daqo at “sell,” according to a mid-May report by Investing.com, giving it an expected target of $57 per share.

Topics:Daqo, China, IPO