Ladies and gentlemen, thank you for standing by and welcome to the Daqo New Energy’s Second Quarter 2014 Unaudited Financial Results Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (Operator Instructions) I must advise this conference is being recorded today, the 15th of August 2014. I would now like to hand the conference over to your first speaker for today, Mr. Bing Sun, the CFO. Please go ahead, sir.

Thank you, Leslie. Thanks everyone for joining us today for Daqo New Energy’s second quarter 2014 unaudited financial results conference call. Daqo New Energy issued its financial results for the second quarter just after market close today. To facilitate today’s conference call we have also prepared a PPT presentation for your reference. Today, attending the conference call we have Dr. Yao, our CEO, and myself. The call today will feature an update from Dr. Yao on business and operational developments, and then I will discuss the Company’s financial performance for the second quarter. After that I will open the floor to Q&A from the audience. Without further delay, I will now turn the call over to Dr. Yao.

Thank you, Bing. We are proud that the Company continues to deliver excellent performance in the second quarter of 2014 and records the second consecutive quarter of profitability. We shipped about 1,436 metric ton of polysilicon in the second quarter of 2014, increasing from 1,391 metric ton in the first quarter of 2014. Wafer shipment in the second quarter of 2014 was 17.6 million pieces, increasing from 16.8 million pieces in the first quarter of 2014. In the second quarter of 2014, we continued our cost reduction road map and brought down our polysilicon production cost to $14.13 per kilo with a cash cost of $11.48 per kilo. Although in April, we conducted annual maintenance and preparation works for hydrochlorination hook up, which affected production for five days, we produced 1,504 metric ton of polysilicon in the second quarter, compared to 1,517 metric ton in the first quarter of 2014. The annual maintenance time was down from 17 days in 2013 to the current five days in 2014. We expanded the EBITDA margin to 34.9% from 32.5% in the previous quarter, and produced positive operating income of $8.3 million. We achieved about $4.5 million net income attributable to Daqo shareholders, up from $2.6 million in the previous quarter, despite the costs relating to the non-operational Chongqing polysilicon plant of $3.4 million this quarter. Excluding such costs, the non-GAAP gross margin was approximately 30.9%, compared to 30.2% in the first quarter of 2014 and negative 3.9% in the second quarter of 2013, last year. In May, we successfully raised $54.6 million through a follow-on offering in the public market. We will use the net proceeds mainly for the expansion and technology improvement at our Xinjiang polysilicon facility. The construction work started in the first quarter of 2014 and is on track…

Thank you, Dr. Yao. Now let’s take a look at the financial performance of the second quarter. Revenue was $43.7 million, increased from $42.1 million in the first quarter of 2014 and $27.8 million in the second quarter of 2013. The Company generated revenues of $31 million from polysilicon sales, increased from $30.1 million in the first quarter of 2014 and $16.4 million in the second quarter of 2013. The increase from the first quarter of 2014 was primarily due to the higher sales volume and higher average selling prices for polysilicon. The Company generated $12.7 million from sales of wafers, compared to $12 million in the first quarter of 2014 and $11.4 million in the second quarter of 2013. The increase from the first quarter of 2014 was primarily due to higher sales volume offset by slightly lower average selling price for wafer. Gross profit was $10.1 million, compared to $9 million in the first quarter of 2014 and a gross loss of $10.2 million in the second quarter of 2013. Gross margin was 23.1%, compared to 21.4% in the first quarter of 2014 and substantially improved from negative 36.7% in the second quarter of 2013. The continuous improvement in gross margin was mainly attributable to higher average selling prices and lower production cost for polysilicon. On standalone basis, the gross margin for Xinjiang polysilicon in Q2 was 39.6%, increased from 32.7% in Q1 of 2014. The improvement is due to higher ASP and lower production cost. ASP increased from $21.63 per kilo from the first quarter to $22.04 per kilo in the second quarter. Total production cost decreased from $14.48 per kilo in the first quarter to $14.13 per kilo in the second quarter. We expect the total production cost to further go down to below $14 level…

Thank you, sir. (Operator Instructions) We have the first question from the line of Pranab Sarmah from AM Capital. Please ask your question. Pranab Kumar Sarmah – AM Capital Ltd.: Hi, good afternoon. Thank you for taking my question. Good set of results on second quarter despite you have five days of maintenance issues you managed to reduce the production cost. That’s a good number. I have a couple of questions. First one to come up with your commentary. You said that some of your customer has high inventory at the end of second quarter. Can you elaborate a little bit on that part and how you think that inventory status will – in line of August?

So, we do see especially for wafer business in China because probably that’s impacted by U.S. policy against the products from China and Taiwan. So we see some wafer industry slowdown and the inventory increase. As a fact of that when enter especially into today, August, we the polysilicon price is softening from the second quarter. But we see that trend as from the especially of the middle of July and going into August, clearly we see that trend. Although, we don’t know that trend is how large, we said, in the first quarter strongly the business will pick up. Especially in China the distributed generation installation would pick up and if Chinese goal is 10 gigawatts or even – 13 gigawatts certainly was bigger installation target from now to end of the year. So we strongly believe second half of 2014 will be strong, but at this moment we see currently it is softening in the market. Pranab Kumar Sarmah – AM Capital Ltd.: In your polysilicon plant, some generation cycle is totally completed or still there is something to do on there?

We are doing the construction. I don’t know. We are doing the – we call the Xinjiang as primarily in second phase of Company, but right now is second phase D, which we started this year. We said we’ll be finishing by November and we will upgrade our capacity from 6,000 metric tons to double that to close to 12,000 metric tons, a new capacity and at the same time we will upgrade our technology from hydrogenation to hydrochlorination process, which will save the energy and further reduce the cost. Pranab Kumar Sarmah – AM Capital Ltd.: Got it. And my last question is on your production cost where you are targeting $12 by need of mixture and $8.7 cash cost. I was wondering like (indiscernible) cost in the $12 how many percentage raw material or labor cost, something about that is very helpful.

Roughly we give idea if cost situation is typically at 20%, 25%. And raw material typically is about 16% and then of course the energy cost is very high, it’s 30%. And labor is typical 8% to 9%, roughly there. Remaining you have consumable materials and you have small amount maintenance cost, which is average out to the whole year. Pranab Kumar Sarmah – AM Capital Ltd.: Maintenance would be about 1% and…

Yes. And then the consumable is typically a few percentage. Pranab Kumar Sarmah – AM Capital Ltd.: And then, what is your average ASP for polysilicon and production cost roughly? Any guidance on that. Probably margins will be down in Q3, right if production goes down?

Yes. Talking about the remaining quarters… Pranab Kumar Sarmah – AM Capital Ltd.: Q3.

Q3, of course the price is average out. Getting into Q3 we roughly add about $22. Right now it probably is above $21. Pranab Kumar Sarmah – AM Capital Ltd.: Around the $21.

$21. Yes, that range. But when we go to the Q3, we believe our production cost is fueled down from second quarter. And our goal is, for the whole year average cost for our company should be below $14, which means – so in the second half our target is around $13.5 cost for the polysilicon.

And I just want to add on to Dr. Yao’s comment. Because of yesterday’s announcement of China’s decision to suspend the acceptance of solar grade polysilicon processing trade in (indiscernible) application, so there might be some upside like from that news. And Dr. Yao, maybe you can expand a little bit on the topic.

So, because of this event we see lot of – we receive with our sales, basically receive lot of causative question from our customer in actually the last 24 hours. So we don’t know what is going on, but in the future by (indiscernible) time we still think balance is not that broken. But I think there were more requests for domestic made polysilicon, will be used in China. Pranab Kumar Sarmah – AM Capital Ltd.: Thank you. Have a good quarter ahead.

Thank you.

Thank you.

We have the next question from the line of Philips Shen from Roth Capital. Please ask your question. Philip Shen – ROTH Capital Partners, LLC: Gongda, Bing, congrats on the nice quarter and strong execution.

Thank you.

Thank you, Philip. Philip Shen – ROTH Capital Partners, LLC: Hey. So just as a follow-up on the last topic. You brought up the ban of imports of poly from overseas. It sounds like sales – the interest in activity is picking up. How do you expect this to change price going forward? How much upside do you think there is, the poly pricing?

I think let me try to maybe blink. So first of all we think maybe they were affected from wafering business, maybe the demand for polysilicon as a whole business. I think overall you’re looking at most the imported polysilicon as a high, we call the high quality portion, especially for the mono wafer application. If you look at that, we know that certain American companies using China as a process in wafers. They ship their polysilicon to China and process those. Secondly, as the status data from custom, U.S. imported polysilicon for first half of 2014, about 10,000 metric ton, which overall in one year it maybe like typically 20,000 metric ton. But you also need to remember that certain amount is – there’s no breakdown in Korea, because Korea is OCI. The tariff is very low, is 2% to 3%. But overall for other people for (indiscernible) group or other maker and the Korea maker’s tariff is still significantly high. So those things haul to impact the Chinese market. It’s too early to predict what’s going on, but we think we are recording tight supply in the polysilicon side. But we don’t know that what were happening to what’s the ASP and to what’s the balance. We need more time to watch the result. Secondly, as the status data from custom, U.S. imported polysilicon for first half of 2014, about 10,000 metric ton, which overall in one year it maybe like typically 20,000 metric ton. But you also need to remember that certain amount is – there’s no breakdown in Korea, because Korea is OCI. The tariff is very low, is 2% to 3%. But overall for other people for (indiscernible) group or other maker and the Korea maker’s tariff is still significantly high. So those things haul to impact the Chinese market. It’s too early to predict what’s going on, but we think we are recording tight supply in the polysilicon side. But we don’t know that what were happening to what’s the ASP and to what’s the balance. We need more time to watch the result. Philip Shen – ROTH Capital Partners, LLC: Okay. And how does this change potentially your outlook for capacity expansion? Does it give you some more confidence to potentially go beyond 12,000 metric tons? And if so, what kind of timing could we look at?

Well, actually we think our own business has not changed because of these events, because overall I think whole industry needs low cost manufacturer of polysilicon. I think using the current performance of Xinjiang we are around the cost structure and the go away in our industry. So we have the confidence after expansion we will be even lower compared with current performance. We still have like a 10% to 20% reduction for cost. So then in future I think our expansion will be continuous going on. I think we run a very focused company, finished those 6,000 capacity by end of this year. And we are also actually need to study after that what’s our technology road map and we also explore the new technology and the new ways to increase our – potentially in visiting the current facility and also looking for future, how to develop our facility in Xinjiang as well. Overall, I think our position cost structure and quality is we have confidence we can grow significantly next three to five years. Philip Shen – ROTH Capital Partners, LLC: Great. Thanks, Gongda. Congrats again, I’ll jump back in queue.

Thank you, Phil.

We have the next question from the line Wei Feng from Luminus Management. Please ask your question. Wei Feng – Luminus Management LLC: Hi, Mr. Yao, congrats on the result.

Hi, Wei. Thank you. Wei Feng – Luminus Management LLC: First question is on the operating expense run rate. It looks like you had been running your operating expense around $3 million quarter. I’m just wondering once you ramp up your capacity in second half 2015, will your operating expense go up or it can be kept around $3 million per quarter?

Wei, that’s the question for me. This is Bing. As we talked this like in the previous quarter, from the current capacity level to 12,000 metric ton level our operating expense will stay at the current level, because we will not expect to expand the sales force or the other supporting functions. So we can assume it will remain at the current level. And when I say current level, you are right. When you talk about on average, it’s around $3 million on normalized quarterly basis. And in this Q2 and the same as Q1, operating expense is only around $1.5 million because as we talked about this, this has – in both quarters we have a reversal of previously recorded bad debt provision of approximately $1.5 million. So on average when you look at the normalized term, you are right. We’re looking at around $3 million on quarterly basis on operating expense. Wei Feng – Luminus Management LLC: Got it. Thanks. Also, on the mono wafer side, do you have any mono wafer capacity or you just sell your poly directly to the mono wafer producers?

We sell to the mono wafer makers. We do not have mono wafer facility. Wei Feng – Luminus Management LLC: Got you. And so – go ahead.

All our wafer capacity is for multi-wafers. So we have about 300 megawatts annual capacity. Wei Feng – Luminus Management LLC: Okay. Next question, you mentioned the wafer inventory is a little high that give you a price pressure on your wafer side and also on poly side. So what is your estimate on the channel inventory for wafer and sale and model, do you have any estimate.

No, actually unfortunately we don’t. We know the poly amount – we only know is that polysilicon overall, I think inventory is very low compared with wafer and downstream. The people always think the inventory is high, because China is – expected a low shipment for first half of 2014. By contrast actually our wafer shipment is okay. It’s very good. Actually if you look at the overall performance like the days for the payments and also the shipment, it’s still an uptrend and we do not see much power running into the third quarter as well. So it’s still – some demanding, it’s still there. So we strongly believe we’ll be showing a pick up, because Q4 – typically China is the installation quarter. It’s crazy quarter normally, we will see. And I think our plan is that Q3 and Q4 is fully running, all our capacity for wafer and polysilicon and we’re expecting a very strong fourth quarter. Wei Feng – Luminus Management LLC: Got it. And another question about the maintenance CapEx. So, once you finish the expansion by the second half 2015, your growth CapEx should go to zero. And do you have any maintenance CapEx or you already include the maintenance cost expense in your cash cost?

Yes, it’s already included in the production cost. Wei Feng – Luminus Management LLC: Okay. When I model after 2015 second half it will be zero CapEx basically?

Yes, correct. Yes.

Yes. Wei Feng – Luminus Management LLC: Okay, all right. That’s all my questions. Thank you. Great comments.

Wei, thank you.

We have the next question from the line of Paul Strigler from Esplanade Capital. Please ask your question. Paul Strigler – Esplanade Capital LLC: Hey, guys. Great quarter. Just a couple of housekeeping questions. How much CapEx is remaining on the Xinjiang plant?

Paul, this is Bing. And that’s a question for me. And as we communicated with you like in previous quarters, the total CapEx for the Xinjiang expansion is around $100 million. And I have a table of the details here. Let me find it, just a second. As I just mentioned, as of the end of July 2014, the company has spend approximately $38 million in our Xinjiang expansion projects. And among which $12.2 million was from the proceeds of the follow-on offering. So basically, Paul, we got majority of the fundings on this CapEx we needed from this follow-on offering. And for a small balance that we still need, we believe, we can – we are self sufficient for our own sources from funding. First of all, we expect future cash inflows from Xinjiang operation. Like for Q1 and Q2, each quarter we generate approximately $15 million cash inflow and we believe that trend will be continued to do so. And secondly, all the Chinese bankers tend to have more positive views on the whole Chinese solar industry compared to last year. So we expect it to get some additional fundings from the banks in China also. And we believe together with the two lead I mentioned and the public offering we should be fine with the CapEx needed for this expansion project on the way, Paul. Paul Strigler – Esplanade Capital LLC: Awesome. And then on the inventory situation, I’m not sure if you can comment on this. But is there any irrational behavior occurring from a larger polysilicon flash wafer producers? Is that what’s sort of causing the inventory buildup where one of the larger wafer producers is trying to unload inventory or is sort of more wide spread than just one large supplier sort of trying to manage their inventories?

Paul, we see the slight shift for that focus, because in the first and the second quarter they focused on ship more wafers, almost less, much less polysilicon. In the third quarter, we see they shift it trying to sell polysilicon. People are saying it’s not confirmed. The information is that inventory for wafer is pretty high. But a strange thing is we do not see that phenomenon. Actually our wafer shipment is quite good in the way we introduce third quarter and of course the wafer pricing from the second quarter is down already. So right now it’s relatively stable and still have a little bit down fall in second quarter maybe, but not much compared with go to the second quarter from first quarter. So it’s more stabilized and shipment is very strong and because we are lowering the cost during – when we adapted a slow recovering system. So that we mentioned before. So our cash cost is reduced. So our wafer is stable there. But we see maybe because wafer issue maybe, people are more fixed on polysilicon shipment. Yes, we saw that. Paul Strigler – Esplanade Capital LLC: And then also related to the inventories in the channel. First of all, so if I order polysilicon from you today, how long until that’s made into a module to be shipped? Just because China is going to take off in the fourth quarter, I’m going to order my polysilicon weeks if not a month before that. It’s not like I order polysilicon on a Tuesday and I made a module on a Wednesday, correct?

It will take how many days? I will say when we arrived – poly arriving at manufacturer, I will say about probably two weeks. I will say relatively if assuming don’t need one month. But that’s assuming you fully integrated a customer. It’s not like during shipment from many, many different company, different locations, yes. Paul Strigler – Esplanade Capital LLC: And then related to that – one last housekeeping question. I’ll get to my last question. When your Xinjiang plant is fully operational and you stop capitalizing expenses, what you think your total corporate D&A will be, depreciation?

So it will be about the 12,000 metric ton you mean.

12,000, yes.

It’s a double line, the number. Paul Strigler – Esplanade Capital LLC: So about $40 million a quarter?

[Foreign Language]

Yes. Paul, I need to double check the numbers. Basically it should be double the current depreciation a month. Paul Strigler – Esplanade Capital LLC: And then last question. So at this time last year the Chinese market was still very slow and picked up very quickly. Do you think your inventory situation is leaner today than it was at this time last year, so that the reaction to increased demand will be faster in 2014 than it was in 2013, or do you think there’s more inventory in the channel today than there was in 2013 when we saw prices go up pretty quickly and demand turned on almost overnight?

No, not overnight that quick, but I think, Paul, I think this year we see people much, much careful compared what they used to be. We still have signed a lot of contract for polysilicon. We see the situation. Honestly speaking compared with last year, I think this year is much better, because two things that we noticed that is still – price is still relatively much high than last year this time obviously from polysilicon. And secondly, we have both channels. We have wafer selling and we have poly selling. We still do not see the issue compared with last year. I’m very optimistic for this year’s performance. The problem is, I think in the Q2, Q3, very high expectation for Chinese market. So this is kind of disappointment after second quarter finishing, realize the China installation on the 3 gigawatts, compared with target for 14 gigawatts for full year. So China did some adjustment. Now the recent government signal is very, very strong signal that China will be really pushing for the detailed installation. And there’s new policy we’re expecting. We heard they have a draft, gave to our customers and the industry to review. I gave a comment, but they released this policy very soon, probably in this month. That we heard. We have that. I think the installation will quickly pick up. Paul Strigler – Esplanade Capital LLC: Awesome. Great job, guys. Keep up the good work. Thanks.

Hey, Paul, let me try to answer your previous question on depreciation amount. We wrap up to 12,000 metric tons. I don’t have the dollar amount with me, but I can talk about it on per kilo basis. After we wrap up to 12,000 metric ton basically depreciation per kilo basis, it will remain at the current level. It will not go up on per kilo basis. And when you think about that please keep in mind we already take into consideration the current idle capacity related to fixed asset, the depreciation related to that will be gone and that the depreciation will be absorbed to the depreciation cost on per kilo basis. And I hope that helps to answer that question, Paul. Paul Strigler – Esplanade Capital LLC: Yes, great. Thank you so much, guys. Continue your success.

Thank you, Paul.

We have the next question from the line of Patrick Jobin from Credit Suisse. Please ask your question. Patrick Jobin – Credit Suisse: Hi, and congratulations again on the quarter. I wanted to just ask a follow-up question on the pricing trends you’re seeing. You mentioned some softness in the market with an expected pick up kind of later in the year as volume ramps. I just want to understand kind of what you’re seeing on a more near-term basis as pricing deteriorated in the last few weeks, or is it stabilized. I think you mentioned average of kind of $22 kind of going down to $21 now, but is it still declining or is there stability? And then the follow-up to that would be, how do you think the policy changes with the Ministry of Commerce in the import duties could change the market? It seems like if you’re getting a lot of inbound calls from customers over the last 24 hours that that bodes well for your position and helping satisfy that demand. Thanks.

Hi, Patrick, let me try to answer. Well, pricing softening, as we see, is very slow compared in the history, the price going down. This time it’s relatively slow. But this news, just we realized last night change of [locker] (ph) for the demanding and the supply balance. I think because the new decision will be people – China Government already announced (indiscernible) September 1, we’re providing to do this new decision, which is two weeks ahead of time. So, as you know, when you import poly from outside of China probably this is already too late, probably down the way and shipped to China. So this is very urgent issue for people to prepare their production into for September. So I think this is where definitely I think will stabilized price as we see for a short period of time. Although long-term it’s really hard to say, but I think if you consider – even without policy we knew that Q3, Q4 will be very strong. Q3 is particular time. We know Q4 is strong to pick over Japan and China. And U.S. market is already – is not accessible for our customer in China domestic. But China market and Japan will be strong first quarter for historical reasons. Then I think originally will pick up and I think I strongly believe product price will be stabilized. Patrick Jobin – Credit Suisse: Great. Thank you so much and congratulations.

Thank you, Patrick.

Thank you.

As there are no further questions at this time, I’d like to hand the call back to you speakers for their closing remarks.

Okay. Thank you again for you participation in this conference call. And as always if you guys have any further questions after this call you are more than welcome to call to me directly or contact our IR Manager, Kevin He. Thank you everybody and have a good weekend. Bye-bye.

Thank you, sir. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.