Daqo New Energy Corp
NYSE:DQ
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Daqo New Energy Corp
Earnings Call Analysis
Q3-2023 Analysis
Daqo New Energy Corp
In the tale of Daqo New Energy's third-quarter journey, a key chapter highlights operational optimization leading to a vibrant 27% increase in production volume. The dedication to efficiency resulted in a steep drop in production costs by over $1 per kilogram, painting a picture of robust improvement and potential for future cost declines.
Looking ahead, the company's full year production forecast paints an ambitious increase of up to 49% compared to the previous year. Coupled with a digitalized and integrated production system, Daqo positions itself with the confidence to thrive amidst the undulating tides of the polycom industry.
Revenues dipped to $484.8 million from $636.7 million in the previous quarter, illustrating the impact of reduced average selling prices despite rising sales volumes. Meanwhile, polysilicon prices, a significant driver for Daqo, show a recovery, buoyed by industry demand and reduced stock levels, with expectations of continued growth in n-type cell technology.
The quarter also revealed a surge in selling, general, and administrative expenses primarily due to management changes and share-based compensation costs. These expenses are likely to normalize in the coming quarter within the range of $35 million to $38 million, demonstrating the company's capacity for managing fluctuations in operational costs.
From the perspective of profitability, income from operations significantly reduced, and the company registered a net loss of $6.3 million, showing a stark contrast from prior quarters' incomes. However, adjusting for noncash share-based compensation, a profit tale emerges, with adjusted net income attributable to shareholders at $44 million, underscoring the company's potent core operational performance.
Finally, Daqo's financial health resonates with its impressive cash reserves of $3.28 billion and a light receivables balance demonstrating liquidity strength. With significant cash provided by operating activities and balanced cash used in investing, especially in its ambitious polysilicon projects, the company stands on a solid foundation of financial resilience.
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Good morning, and welcome to Daqo Energy. Third Quarter 2023 Results Conference Call. [Operator Instructions] 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.
Hello, everyone. I'm Anita Zhu, the Investor Relations of Taco New Energy. Thank you for joining our conference call today. So Daqo 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, our 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 statements. Further information regarding these and other risks is 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 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 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.
Thank you, everyone, for joining the conference call today. Anita will serve us by 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 out his remarks regarding current market conditions and the market and the company performance. So during the third quarter, continued optimization of operations at our 2 powerful account facilities, resulting 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 Internode facility, which is now in for production, contributed approximately 40% of our total production volume. So meanwhile, our production costs further decreased by 5.8% from quarter -- 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 in meteorological grade [indiscernible]. So compared to our first quarter average production cost of $7.55 per kilo cost of declined by more than $1 per kilogram. So based on the company's most recent production data, we expect our fourth quarter costs to continue to trend downwards from the third quarter levels. So we shipped a total of 62,967 metric tons of polysilicon in the third quarter, an increase of 9,465 metric ton over second quarter shipments and significantly higher than our quarterly production volume. This has resulted in a significant decrease in polysilicon product inventory across our 2 facilities, now at a level of less than 1 week of production volume. So for the third quarter, the company generated $70 million in EBITDA. Net cash provided by operating activities for the first 9 months of the year totaled $1.5 billion, was more than $711 million in the 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 at bank a receivable balance of $3.6 billion. So our total annual polysaconname plate capacity has reached 25,000 metric tons across our 2 facilities. For the fourth quarter, we expect total poly production volume to be approximately 59,000 metric tons to 62,000 metric tons, a continued increase over our third quarter levels. Full year production is expected to be approximately 196,000 metric tons to 199,000 metric tons, representing an increase of 46% to 49% compared to 2022 levels. was 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 polycom 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. Polycom pricing recovered gradually over the third quarter. And in July, our 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 Ratinstem maintenance drove a marginal recovery in polysilicon prices. According to industry statistics, moderate cost silicon prices rebounded from the lowest level of less than RMB 60 per kilo in June to RMB 63 to RMB 68 per kilogram by end July and an average of RMB 87 per kilogram 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 plan. Going to the fourth quarter, production volumes in poly sector are likely -- 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 anti-product demand volume and the anti-product average selling price premium expanded to RMB 10 to RMB 12 per kilo in the third quarter. Going forward, if we expect this transition to further accelerate as anti-product 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 September, the company had already purchased $8.1 million ADS for approximately $3,288 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 ADS for approximately $48.8 million. While basic weighted average ADS outstanding for the third quarter were 74 million shares, totaling 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 energy for Humans Energy 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, our solar PV technology keeps evolving we believe that the increasing needs for very high-purity poly, such as our anti-colic 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. And we are confident that we will navigate the near-term market volatility successfully. We are optimistic that as the solar end market continues to grow and as our customers continue to transition to higher efficiency and 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. So regarding future outlook and guidance, we expect to produce approximately 59,000 metric tons to 62,000 metric tons of poly during the fourth quarter of 2023. And for full year 2023, we expect to produce approximately 16,000 metric tons to 199,000 metric tons Polycom. So now I'll turn the call to our CFO, Mr. Ming Yang to sell deeper on the financial performance. Ma'am, please go ahead.
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, mainly gated 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 mature 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. We I will give a little bit more details about the increase in SG&A expenses for the quarter as compared to the previous quarter, and this is primarily related to the resignation of expenses and the recognition of the remaining share-based compensation expenses related to the company's recent management change. The recognition of the remaining noncash share-based compensation expenses consists of approximately 330,000 shares, which will be invested based on investing schedule over the next 2 years. And based on the current share price, this is approximately $8 million in terms of expense. However, U.S. GAAP growth requires that the company recognized the diluted 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 noncash share-based compensation costs, which includes the above expense related to recent manner change, as I had mentioned. And so -- and 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 to $38 million per quarter, inclusive of noncash 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 to reflect R&D activities that take place during the quarter. And most of our R&D activities currently is focused on increasing the percentage of anti polysilicon for the company's product mix. For foreign exchange gain was $3.1 million for the quarter compared to a loss of $19.7 million in the second quarter of 2023. As is attributed to the volatility and poly fluctuation in the US 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 same quarter of 2023 to $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 $13.7 million in the second quarter of 2020 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 for $4.28 in the third quarter of 2022. And adjusted net income non-GAAP attributable to Daqo New Energy shareholders, excluding noncash share-based compensation costs was $44 million compared to $134.5 million in the second quarter of 2023, around $90.4 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 $120 million in the third quarter of 2022. EBITDA margin was 14.5% compared to 36.1% in the second quarter of 2023 at 59% in the third quarter of 2022. Now I would like to provide some additional color related to our operations. So from a pure operations perspective, this would exclude the impact of the onetime resignation costs and the noncash share-based compensation costs of the U.S. Letco, for our operating subsidiary, Xinjiang Daqo, recorded a pretax earnings of RMB 888 million or approximately USD 121 million, and net income was 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 $2.4 million, excluding the above GAAP accounting related expenses. And now on the company's financial condition. As of September 30, 2023, the company had $3.28 billion in cash and cash equivalents and resulted cash compared to $3.17 billion as of June 30, 2023, to $3.05 billion as of September 30, 2022. And as of September 30, 2023, low receivable balance, the company was $276 million compared to $799 million from June 30, 2023, from $1.57 billion since September 30, 2022. Notable bank notes with maturity within 6 months. And now on the company's cash flow. For the 9 months ended September 30, 2023. Net cash provided by operating activities was $1.49 billion compared to $1.7 million in the same period of 2022. And for the 9 months ended September 30, 2023, net cash used in investment activities was $964 million compared to net cash net 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 in the Mongolia inclusive of both Phase 1 and Phase 2. And for the 9 months ended September 30, 2023, net cash use in financing activities was $602 million compared to net cash provided of net activities of $1.47 billion in the same period of 2022. Net cash resting finance activities for the first 3 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. And with that concludes our prepared remarks.
Operator, we will now open the line to questions from the audience. Thank you. I begin the question-and-answer session. [Operator Instructions] First question will be from Philip Shen Roth MKM.
Hi, everyone. Wanted to explore your view on polysilicon pricing for Q4. You came in with about $7.70 for Q3 per kilogram. And I wanted to see what your expectations are for Q4? And then also for the beginning of next year and then by year-end '24, do you see a recovery? Or do you expect polysilicon pricing to remain at current levels.
Okay. Mr. Xu will provide commentary first, and then Anita will provide a translation.
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 708 per kilo and for antipers0 premium, which is around RMB 80 per phigram. 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 65 to RMB 70 per kilogram around that range. But going to second quarter and beyond, it should go right above 70 and plus.
Okay. Great. So the price to 55 to 70 kilograms lower in Q1. What is driving that? And is that price -- are you talking about p-type? And so should we expect NTI to be KRW 10 higher? And what will cause the price to go higher in Q2? And what do you think the year-end '24 price might be?
So price in the first quarter around 65 to 70 million, the price range is primarily driven by seasonality. So Christmas and Chinese Lura New Year, and that causes lower demand. So that's primarily price in January and February, but price should recover starting in March. And that's a price for p-type. For n-type, we see a price premium of around RMB 5 to RMB 10 per kilogram.
Okay. Got it. One more question for me and then I'll pass it on. As it relates to the industry structure and given these low prices, there are a lot of companies that might be having trouble with driving profit. So just curious if you can talk about what ACs ahead? And can you talk through and do you expect certain companies to stop production or even accelerate the stoppage of production shutdown, what does he see for the evolution for the industry in the coming 6 months.
In terms of the industry structure, first of all, you want to highlight that we have a very competitive cost advantage in producing poly silicon. And we see that the price goes down to 5.2, there's roughly 50,000 to 60,000 of production volume that's at -- that are not going to be profitable. And for the new entrance costs are obviously a lot higher than us, which is around 75,000 to 80,000. So given that they don't have enough cash -- not enough cash and the financing rate is relatively limited now. They will be struggling in the coming quarters.
So we certainly see industry supply adjustments going forward in the coming months as well as the industry rebalancing and normalize.
Next question will be from Alan au of Jefferies.
Thanks Mr. Xiang Xu for the prepared remarks. So I would like to have more clarity on the share-based expense. 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, $46.3 million of noncash share-based compensation, but in your conciliation is $50 million. So I would like to know like how much is the original share-based compensation? And how much is related to the resonation of [indiscernible]
This is Ming. I will over discuss the increase in SG&A expenses. So for the quarter, we had a total of $46 million in noncash share-based compensation expenses. And of that, approximately half or approximately $23 million is late to [indiscernible] of our previous CEO, Mr. Longgen Zhang. And this actually is approximately against 330,000 shares of his previous equity grant, which would be invested over the next 2 years. But because of GAAP accounting rules, and we are required to recognize this expense during the third quarter based on resignation as we saw. And this also will be recognized in terms of at the time of the graph. Which was around $7 million per share or so. So that's how we recorded an additional $23 million in additional share-based compensation costs. So and the remaining is also primarily related to the other resignation expenses as well. But we do expect this to normalize for the next quarter. And we expect next quarter's SG&A expense to be in the range of $35 million to $38 million per quarter.
Understood. Because it seems that other than lease 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.
Yes. Yes. So I mean some of it is expenses related to, for example, shipping costs as we ship more volume for the quarter. Yes. But the remaining is primarily to recognition costs.
Understood. So -- and the next question, switching gears to our buyback plan. So we have already buy back 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.
Regarding the $700 million share back, we have a remaining in $380 million left. And because our CEO has just been in the possession 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 airbases. But overall, we will continue to repurchase. Yes, we will buy back as much as we can in the last quarter.
So effectively means $380 million the remaining 2 months.
Effective as much as we could repurchase. Yes.
Yes, we see the price of being very low at that point. So we are very committed to repurchase at this point.
Understood. So as communicated before, the company may also consider to cancel those shares? So is this still a plan or when will the company cancel those shares?
Yes, it's Alan. So it is a competing intention that I think by year-end, we would cancel of the shares that we have repurchased. So the company's intention is to cancel those shares repurchase shares.
Yes. That will definitely help a lot increase in the ETFs as well. So yes. So I think my last question here is, so what is your view on the -- or next year? Like what do you think will be your production plan? Is it full capacity based on the current capacity? And lastly, what is the progress on your semiconductor grade polysilicon?
For the production volume for next year, we forecast around 280,000 metric tons to 300 metric tons but that will also be contingent upon the price programs of our construction. Yes. And for semiconductor, we'll start pilot production at the end of this year. So for next year, the capacity will just be 10,000 per ton.
So 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 -- in the Mongolia Phase 1, which is also additional 100,000 metric tons. And finally, we expect our -- in the Mongolia phase 2 to start production around midyear next year. So approximately based 100,000 metric ton capacity around 50,000 metric ton production. So that's why we think next year range 280 to 300. Obviously, this is a very preliminary estimate, it's not an official guidance, and we will have a more formal numbers based on -- in our Mongolia Phase 2 is more closer to completion and start of production.
Our next question comes from Andrey [indiscernible] from the Andre [indiscernible] Corporation.
Just to understand, repurchasing in the last -- I like that the total share of standing decreased finally. I want to ask more questions. The first question is how much more will shares be issued for management compensation plans in the next 1 year or 2 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 $350 million or something like that, repurchasing last. Last quarter, you were stating that you will finish it by the end of the quarter -- by the end of the year. So will we expect in Q4 for you to deploy all of this capital or as much as possible and at an accelerated pace compared to the until quarters. So till now you bought in 3 quarters like $300 million. Are you telling us that you will buy $200 million or even $300million of the -- what is left in the last quarter, in one quarter?
Regarding the share repurchase, yes, I think we can repurchase based on the role we can repurchase around $220 million to $250 million in the last quarter and will definitely accelerate. We'll keep that pace.
Okay. Okay. And how many -- in quarter 4, I don't know the exact number, but if you have it on the top of your head or something around that, what -- 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 $120 million or something like that, you had a larger onetime. So my question is for Q4, how many shares will be issued for share-based compensation for management.
In aggregate around 350,000 shares.
300,000 shares, something like that. So that's 300,000 $24 today's price, it's okay, not even $1 million in share-based compensation Okay. Okay. Last question is -- actually, I have 2 questions left. You stated in last quarter, and I really like that in the transcript in the earnings call, you stated in August that you will consider issuing shares in 2024 in -- in the Shanghai listed shares, the 75% ownership Daqo New Energy has, and you would consider selling shares there to buy shares on the inter Stock Exchange. So my question is, when will that be available? Is it 2 years after the IPO or in what month of next year, sorry.
Yes, we will do because there's -- we -- yes, thank you for the stone we will consider that proposal. And in fact, I think, by July next year, we are able to sell the shares in shares and then you saw amount to continue maybe employ -- deploy another share repurchase plan for 2024.
You have any idea, not an estimate of what this -- after you finish the share repurchase of this year, the $750 million. So you have like $300 million left or $150 million left. So my question is, what will the scale of the 2024 repurchase program be or other dividend yields for investors in the newer Stock Exchange shares. I'm talking in DQ on your stock exchange. If you have any idea or if you could comment on that? Thank you very much for all your answers. It's very nice for you.
Thanks for your question. So is it still early to say or to estimate what the program side might be like. But starting in July of 2024, after the 3-year lockup period for our Asia listing, so the U.S. Daqo New Energy is able to start to sell down some of its shares of the Asia listing. So I'll just start some numbers, right? So let's assume that when we say sell down even a minor 10% stake based on the current valuation of the Asia listing, which is roughly $70 billion, right? So we could potentially raise somewhere in the range of $7 million on -- in capital, and I would expect the majority of this could be used for share repurchase in the U.S listing. That's the current...
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 retimer question, but I just want to make it clear, it's stupid question ever, but...
Yes. That's right. 72.4% could be exact, yes. But that's right, yes.
Yes, the discount is the same. Okay. And the last question and final one, what will the free 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 stock last quarter actually Ming Yang talked, I think, the last for if or whatever, she talked that how much CapEx is left into 2024? What will the outflow? What will the CapEx be for 2024 around -- how much is left?
Okay. So as of the end of the third quarter, so total package remaining for the company's major projects, including in the Mongolia Phase I in the Mongolia Phase II semi project is approximately RMB 6.5 billion or approximately $900 million or so. And of that, we expect for the third quarter, total CapEx -- planned CapEx is around RMB 2.7 billion or roughly $300 million. And the remaining would be set for the next year. Yes. So that's the total CapEx plan right now.
So what is left in 2024 is the $900 million, right? Or that is minus the $300 million...
$600 million to $700 million. Yes, approximately.
Okay. And in 2025, do you have any major plans yet? Or is there any CapEx in 2025, which is eccentric, like above $500 million?
No plan right now currently.
Okay. So Mongola Phase 2 or Phase 1, whatever is the lasting Okay. You were very kind -- very nice to hear you. Thank you.
Next question will be from Jackie LC Capital.
I want to carry 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 this by the end of the year? Or is the end will start to cancel it. So what is the schedule of the cancellation of the shares in detail? Do you have a plan?
Okay. Most likely, it will be a one time around the end of the year, and we would likely test so much -- almost all, if not -- the majority is not all of the share that we've repurchased. I think most all of the shares that we've repurchased at that time will be canceled.
Okay. And we also want like to know, do you consider any dividend option dividend for the company?
For this year, we -- our priority this year will still be the share repurchase plan. We -- as we just stated, we will 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 on board approval and will 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.
Thank you. Our next question will be from Gordon Johnson GLJ Research.
So a lot of my questions have been answered, but there seems to be some concern among 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 9 months, we're close to 130 gigawatts in China, suggesting we could get 172 gigawatts 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.
Let me translate for Mr. Xu. So even though this year approximately 130 gigawatts has already been installed, it is she's still very optimistic about the overall isolation here within China. So the expectation that -- and again, he's actually an expert on the grid. So he's been a supplier of equipment to the parent of the grid for many, many years. So I expect that overall, next year could be approximately 200 gigawatts. And what's happening here in China is one is it is the Chairman Xinjiang goal and its mandate that China to deploy a significant amount of renewable energy. And also the National Energy Administration is very proactive in terms of allowing -- requiring actually local grids to except for smart renewable energy as possible. At the same time, China is building a significant amount of capacity in energy storage, expected that storage, it could reach high as 15% of the overall generation for China over time. Even in the near term, China exploring technology, including not just battery storage, but also in terms of hydrogen storage as well as hydro or water-based type of energy store. So these are happening within China. So I think I'm combining all these factors, including the mandate for German shipping plan, we do believe that China will renewable energy market will continue to grow for next year.
Okay. That's helpful. And then one last one for me. And again, congratulations on your prior execution guys, really good in the poly market. So we heard that there was -- in September, there was roughly 60 gigawatts of output, yet the market only absorbed 40 gigawatts. And again, we're hearing that there could be tapped on the market of 200 gigawatts 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 '24. Thanks again.
Yes. So for this quarter, we've seen that wafer has some inventory due to seasonality reasons. So for instance, our downstream players, our customers are showing on TCO going we from what we know that their utilization rate has dropped to 50%. But overall, for wafer, the utilization rate is still around 78%. And because module price has kept falling down, we have seen that there should be around 20 gigawatt of inventory by year-end and also at the beginning of the year. But there should be some new changes going forward into next year, and we forecast that China should be able to reach and even exceed 200 gigawatts next year because there are some new policies launched in Xinjiang Daqo, intermargin, et cetera. And regarding the question on our competitors, those who don't have any competitive advantage would have no edge in this market given the low price. And yes, they would have some struggles.
So I think Shanghai and of some capacity is actually a likely situation for noncompetitive players within the industry.
Yes, for players and our industry cost and quality are the 2 primary key factors in gaining an edge in this competitive landscape. And as a company, we have the lowest cost and they are high quality. So we believe that we can sustain our position in the market.
And we'll take our last question if there's one more.
The next and final question will be from Frank Fan of Nomura.
I just -- I 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 is equal to those working right hold minority comment shareholders. Thank you.
Frank, can you repeat the second question?
My second question is about voting rights of shares held by management or the board members. I wonder if the working rights is similar at 1:1 ratio to those shares held by minority from shareholders.
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 prioritization this year and in the coming years.
Okay. And regarding your second question regarding voting right. So the majority shareholder does not have super voting rights. So they do have the same one-to-one voting rights, the minority shareholders or the public shareholders. So the voting rights are the same amongst shareholders. Operator, I think that concludes the session.
Yes. That concludes the question-and-answer session. Now I'll turn back to the management side for closing remarks.
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.
Thank you. This concludes the conference call today. Thank you for attending today's presentation. You may now disconnect.