Good day and welcome to the Daqo New Energy Company Third Quarter 2015 Earnings Conference Call. All participants will be in listen-only mode [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions [Operator Instructions] Please note, today’s event is being recorded. I would now like to turn the conference over to Kevin He, Investor Relations Officer. Please go ahead.

Hello, everyone, I’m Kevin He, 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 2015, which can be found on our website at www.dqsolar.com. To facilitate today’s conference call we have also prepared a PPT presentation for your reference. Today, attending the conference call we have Dr. Gongda Yao, our Chief Executive Officer, and Ming Yang, our Chief Financial Officer. The call today will feature an update from Dr. Yao on market and operations, and then Mr. Yang will discuss the company’s financial performance for the third quarter of 2015. After that we will open the floor to Q&A from the audience. Before we being 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 provision 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 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 the 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 laws. Also during the call, we will occasionally reference monetary amounts in U.S. dollars terms. Please keep in mind that our functional currency is the Chinese RMB. We offer these translations into US dollars solely for the convenience of the audience. Without further ado, I now turn the call to Dr. Yao. Please.

Thank you everyone for joining our call today. First, let me provide some updates on recent industry developments. According to data released by China National Energy Administration, China added a 9.9 gigawatts of solar PV installations in the first three quarters of 2015 which has brought China’s cumulative solar PV installation to 38 gigawatts. We believe China is on track to achieve its annual installation target of 17.8 gigawatts, which would signify additional 8 gigawatts of installations in the fourth quarter, representing approximately 45% of annual target. China would soon overtake Germany to become the world’s largest solar power generating countries. Based from feedback from our customers, demand for solar products across the value chain in the fourth quarter is expected to be strong. Most downstream players are running at full capacity and ASPs of downstream solar products, particularly for solar wafers and solar cells are on the rise. Many of our customers have sold out their capacity for the remainder of the year and some have been sold out to their capacities through the first quarter of next year. As a result, we are expecting to see stable demand for polysilicon. Polysilicon import volumes into China in Q3 was around 29,000 metric tonnes, a 12% decrease from 33,000 metric tonnes in the Q2 of 2015 due to antidumping and contravening curves. The import from U.S. decreased 78% in Q3 as compared to Q2 2015. However, import from Korea is increasing which makes the overall supply still sufficient. While overall value demand for polysilicon remains strong, near-term pricing had been impacted by inventory adjustments both in the channel and at some of our competitors. We have seen encouraging signs that industry poly inventory situation is improving and is expected to come down further in Q4. We anticipate polysilicon ASP to…

Thank you Dr. Yao and good day everyone. The solid execution of our capacity expansion project and technology upgrades enabled us to post strong financial results for the quarter Although polysilicon ASPs declined by approximately 6% in the third quarter as compared to the second quarter of 2015, we were able to return to profitability and expanded our gross margin, operating income and EBITDA in the third quarter, as a result of reduction in manufacturing costs and increase in production volume. We achieved non-GAAP gross margin of 23.4% in the third quarter, as compared to 19.6% in the second quarter of 2015. Operating income was $6.7 million as compared to$1.2 million in the second quarter. EBITDA was $15 million, up 79% from $8.4 million in the second quarter of 2015. We are proud of what we have achieved in the third quarter. We have successfully increased our capacity, further reduced our cost structure that is already highly competitive and achieved substantial improvements in margins and profitability. We believe we are on track to achieve our goal of becoming a highly-profitable and fast-growing top-tier solar raw material provider in the world. Now I will provide financial updates for the third quarter of 2015. Revenues were $46.6 million, an increase of 36% from revenue of $34.3 million in Q2 2015. Revenues from polysilicon sales to external customer were $34.1 million an increase of 57% from $21.7 million in the second quarter. External polysilicon sales volume were 2277 metric tonnes, an increase of 67% from 1363 metric tonnes of polysilicon sold in the second quarter. The increase in polysilicon revenue as compared to the second quarter was primarily due to the increase in polysilicon sales volume partially offset by lower ASP. With the ramp up of the companies Phase 2B polysilicon expansion, the…

Thank you. And we’ll now begin the question-and-answer session [Operator Instructions] Our first question comes from Philip Shen of ROTH Capital Partners. Please go ahead.

Hey guys, congratulations on the success of ramping your facility.

Hello, hi Phil.

Good to hear from you.

Great. For ASPs I know Dr. Yao you talked about stable outlook for ASPs, but can you provide some more color on the ASPs you see ahead and specifically what’s your view on the Korean imports. Do you expect this to continue and when if at all does it end?

Okay. So we said - look at the numbers from Korea especially for OCI our typical larger poly maker as the significant imports increasing we said that. And other from U.S., it’s offsetting what U.S. import to China. While [indiscernible] actually from this month we see we heard some manufacture poly maker in China they stopped their manufacturing. But we don’t have verified names so, so I cannot disclose this, but some competitor see the difficult time, so they probably reduced their capacity of production. So we believe the demand for Q4 in China will be [indiscernible] Q3. So we don’t see any slowdown for the downstream. And I think the balance between demand and the supply is really depends on all the poly makers in China and also in Korea how to solve the inventory issues there right now some of them they have. So we believe the Q4 will be stable at the price and next month it will be stable or maybe slight changes because some players maybe out of the game.

Do you expect the Korean imports from OCI and other is to continue at these levels for the foreseeable future?

Yes. So I think the current Q3 data indicate that maybe there are some inventories in the channels. So we believe with that will be maybe reduced next year Q1, but we do not have very clear accurate information about that but it seems like Q3 and the current imported recent demand to accelerate some import to China maybe they are just clearing the inventories they have. As you also know but recent the data for IEC indicated they have few inventories maybe more than one quarter’s production inventories and because of [tariff] issue with China. So we do expect Korea also had some inventories in last few quarters maybe they are trying to sell those inventories right now. Probably we will see some maybe lower inventory in the Q1 next year.

Okay, great. Shifting to demand, it sounds like your customers are all doing well in terms of being sold out through even Q1. With your expansion, can you talk about your customer base, have you added some new customers, if you can give us some names that will be great or have you mostly expanded with the existing customers that you have? Thanks.

Yes we do two areas, so very simple, existing customers increased their shipping quantities. And secondly also we are expanding to a new customers and we have several key customers on the qualification phase. So I cannot disclose name yet, but we will firm after qualification finish, we are expecting it will be finished in this quarter. So we are starting to shipping significant amount for them. [indiscernible] we see the demand is so strong because that we see the [indiscernible] price and sale price is rising also. So that’s the indication of the market and its very strong.

Great. In terms of the cost you guys did a great job, reducing your cost structure and you have shared that you expect to get 2016 on cost below $10, can you give the breakdown what that $10 is. You know how much is electricity, how much is depreciation, it should be about $2.50, I guess, but [indiscernible] Thanks.

Yes so from Q3 data we have now reached a 100% for full for capacity yet. So after we reached the full capacity, we expect the depreciation will reduce and the same time also the electricity consumption will reduced too, because of our optimized process. So roughly speaking normally depressing is around - I don’t have aggregate breakdown yet, so I don’t want to breakdown, give you information, but typically its same as before, but I want to give you - the idea is about among all the savings, so we saved about 30% of consumption to electricity compared with the Q2 data. So that’s probably the best of roughly about the electricity point of view. And also we have some labor and materials and depreciation savings. So it's almost proportional, but electricity will be I would say give a much larger [indiscernible] for saving from now to next year.

Okay great. Thank you congrats again and I will jump into queue. Thanks.

Thank you Phil.

Thank you phil.

And our next question comes from Mae Huang of SWS Research. Please go ahead.

Hello this is Mae from SWS Research; I just have one additional question regarding the finance cost, because I see that our finance cost in the third quarter has reduced at some point year-over-year and with that many cost by a lot of interest rate cut this year and do we still have room for further cost reduction in this respect in the next quarter or in 2016?

So we think our financing cost interest expense will roughly stable for next quarter and our overall financing cost is somewhere between 5.5% to 6% of interest rate and then you can look at our overall total debt is roughly $260 million in that range.

Alright. Thank you.

Great. Thank you.

[Operator instruction] Our next question comes from Paul Strigler of Esplanade. Please go ahead.

Hey guys nice quarter. Any update on the U.S. China trade case, as I understand it the module guys sort of had their agreement in place, but on the poly side there is a little bit friction between China and the U.S., can you share anything on that?

Hi Paul this is Gongda, so we do not have similar information because apparently the module guys are talking polysilicon group is doing separately. So my understanding is U.S. poly companies and China module company is are very eager to look out a kind of solution, but I don’t think we have no significant U.S. module guys and China poly guys at this period of time talk. So officially they are trying to get some agreement in October when Chinese President visits the U.S. but apparently there is no such agreement happening. So there are some news regarding this in China and this year also the Chairman announced that there was no such solution recently reached out in China and U.S. So that’s all the public knowledge. So we didn’t hear anything where we will soon be reached in U.S. and China. So we don’t believe there will be some results, yes Paul.

And then on the Korean front, so obviously OCI is a large player there, but are you also seeing supply from HanKook or the SunEdison plant or Hanwha and during the market in China as well or is it largely just OCI?

We see HanKook, but we don’t see SunEdison. I don’t believe their manufacturing started. And that’s according to some channels checking, the Hanwha’s material is not significant, because Hanwha only provides polysilicon for their subsidies in China which used to be solar from Hanwha solar company in China, not significant sales to other customers as we have.

Great. Congratulations on the cost structure guys, really impressive and good luck.

Thank you Paul.

Great, thank you Paul.

And our next question comes from Sheng Zhong of Morgan Stanley. Please go ahead.

Thanks for taking my questions and very impressive cost reduction, congratulations. Beside the polysilicon business, I also want to ask on your wafer business as the industry actually saw some tight capacity on the wafer and the sale. So just want to know as your balance sheet is now very healthy also I just want to know if you have any plan to maybe expand some wafer capacity in the future?

Okay, so we said that we probably would do some of debottlenecking with fully utilized existing to increase their wafer production efficiency. But we are not significantly expanding our wafer site for example increasing capacity for other purpose, because we are really on to upgrade our furnace from G5 to G6 and at the same time it results some bottleneck, as a result of that increasing. And our wafer business is very, very healthy and we reduced our cost of manufacture, pre-manufacture cost, same time also because on the cash cost side as well as in the utilization, because deprecation side also. So as wafer ASP is slightly increasing from month-to-month. So our margin increased almost from 12% to 18%. We believe Q4 would be around 20% level yes.

I got it. Thank you very much. That’s helpful.

Thank you.

Thank you, Sheng.

And this concludes our question-and-answer session. I would like to turn the call back over to the management team for any final remarks.

Thank you everyone for joining the conference call today. Should you have any further questions, please feel free to contact the investor relations of the company. Thank you.

Bye, bye.

Bye.

Thank you, this conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines.