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Daqo New Energy Corp. (DQ)
NYSE - NYSE Delayed Price. Currency in USD
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China will continue to allow Chinese companies to go public in the U.S. as long as they meet listing requirements, China’s securities regulator told brokerages late Wednesday, according to a source familiar with the matter.
A series of regulatory actions in the last few weeks has heightened investor concerns that Beijing is trying to block foreign capital flows into Chinese assets.
The cross-border stock listings can also occur using the variable interest entity structure, the source said, citing the regulator. It refers to a legal structure which allows international investors to access shares of Chinese companies in the U.S.
The regulator recognized the structure is a vital way for companies to attract foreign capital, but said it would have to be adjusted if there were national security concerns, said the source, who requested anonymity due to the sensitivity of the matter.
China Securities Regulatory Commission Vice Chairman Fang Xinghai made the comment during a virtual meeting with major investment banks on Wednesday, the source said. It followed days of sharp selling in Chinese stocks on fears of increased regulatory crackdown by Beijing.
The securities regulator has stopped short of making an official public statement.
So if DQ is on the "Entity List" how does that affect investors?
Are American pension funds and institutions still allowed to invest?
There is confusion by some people here on the board as to what the price parity is comparing the Chinese a-shares to the US ADRs.
I understand the 73 million outstanding adrs represent the equivalent of 1 billion 650 million Chinese A shares. An additional $300 million Chinese A shares were listed as part of the IPO representing approximately 18% dilution.
This represents the equivalent of 22 Chinese a shares to 1 ADR.
So as per my calculation the current price of DQ in China is 71 Yuan PER CHINESE A SHARE which as per the current exchange rate is approximately 11 US dollars and times 22 represents approximately $230 us equivalent. We are now at $56 in the US.
Guys - Don't get suckered into this false panic that is meant solely to make you part cheaply from your shares. The China shares 688303.SS are up 16% (from RMB 61 to RMB71) in last 2 trading days while the US ADRs were taken down 25% (from $79 to $59). This is HIGHWAY robbery! Please don't fall for it.
Fundamentally this company is at the strongest it ever was and will generate more than $2.7 billion in operating cash flow in the next 3 years which is enough to buy it's entire US ADR float at current price, even without resorting to additional capital raise in China or a consortium led buyout. Think about how many options it has on the table to 'rectify' this pricing insanity! And there is no risk of regulatory crackdown on Solar industry similar to one being felt in the Chinese internets - the baby is getting thrown away with the bath water here. Seller beware!
There is misinformation being spread that DQ is under a do not invest ban issued by the US Government. This has been spread by short sellers. This not true look for a snap back rebound. The shares are grossly undervalued. Even a slight miss would generate a huge increase in EPS. This is going to get active again and the Bulls will take charge as this rumour/ Lie is understood. Game over for short sellers. Do not sell your shares. Put in a 100 sell to prevent GTC for now.
Pattern of price action that I have observed since the US announced their decision on xinjiang solar is highly consistent with what I commented on a few weeks ago .That is mandated divestiture by the US and some European MMS because DQ is on the US blacklist. The way this works is quite simple. There is an algorithmic predetermined sale of DQ everyday based on the difference between price on open and each MMS specified price Target. Yesterday's trading is consistent with this in that DQ opened marginally positive but towards the end gained 20%. I believe it would have gained 30% had it not been for the algorithmic selling that was going on on be known to the average retailer. Today's action totally exemplifies the above in that DQ was 17% up pre-market therefore the crazy MM selling occurred at the open because of the huge price disparity that I outlined above. AGAIN I WISH TO EMPHASIZE THAT THIS IS NOT SOME SHORT MANIPULATION BUT RATHER A MANDATED DIVESTITURE UNTIL ALL THE MMS DQ SHARES ARE ZERO
All us retailers have to appreciate that MMS who are investing in solar are highly ESG mandated and a big part of this is the SG .given that DQ is on the entity list they cannot hold DQ shares .Unfortunately Black Rock owned 11% and until all of its shares are gone this pattern will continue.
Lastly yes I am highly encouraged by the 30 PE given on the A shares but unfortunately the US sees that as tulip mania in China
Once this selling is over I believe other funds that are not mandated and the retailers will push this up above into the mid 100 range
There’s rumors that China is going to apply export tax to a wide range of industrial raw materials in response to US trade war polices. Yes, you read it right, China will increase price on its raw exports. Such offensive measures hopefully will wake US politicians from their dreams. This will likely increase US inflation and domestic production cost by another 10% or so but at the same time enhance China’s industrial leadership.
At what price should we set the sell you think?
I expect 30% increase at least
Just to clarify to fellow investors so we are all on same page:
US investors own Daqo New Energy (DQ) valued at $7.6 billion (assuming $90 ADR price fully diluted)
Chinese investors now own Xinjiang Daqo (688303.SS) valued at $18 billion (assuming RMB 61.11 closing price)
DQ owns 80.7% of Xinjiang Daqo (688303.SS) which mean DQ stake is now valued at $14.5 billion
Assuming a safe ~30% holding co discount, DQ valuation would still be $10 billion which gives us an ADR price of $120.
So there is still a lot catchup for this stock to do. I am not even thinking of selling my shares until it hits $125.
There were a lot of calls sold for Aug $95 yesterday. Let's SQUEEZE the shorts and make them pay for all the FUD they unleashed upon us retail investors - this is our time in the sun!
My hearty congrats to all those who stuck around & believed.
i'm not selling my shares for a couple of years, but I wonder why DQ in the US keeps going down while DQ in the China keeps going up.
How is the stock price at STAR Market is doing now? Increasing or Decreasing?
Hold onto your shares, no need to sell here. Shorts shorted 6.5 M shares out of a stock with only 12 M truly floating shares (the funds and insider have the rest), therefore falsified the larger downward pressure for a very long time. Now it is time for them to pay. There is hardly 6.5 M shares available unless price doubles from here.
Five days ago this was $80.
Notice how many new IDs, never appeared in this forum before, posted today? Some of the IDs are newly registered with their first post here diminishing DQ. Hmm, fascinating to see how “calm” and “insightful” and “I know it all” they are today. I am holding my 5000 shares and will add more if price is good. Market has its good day and bad day, don’t panic and life is just as normal as it is everyday. Do your assessment carefully and invest responsibly.
Some of the shorts never get the basics of solar has fundamentally changed since last and this year, with a LCOE of 0.01 to 0.04 USD for solar PV, it is now the CHEAPEST energy form of all, forget coal, natural gas, oil, wind, all of them, they will be gone In time. Human beings for the first time mastered the art of directly harvesting solar energy cheaply and effectively. If you ever worked in energy or chemical industry, you will know the demand will be explosive at least and limitless if you are optimist once we are here. Who can compete a competitor if his electricity is just 1/3 of yours, or 1/10 of yours in the extreme case in Middle East (PV LCOE 0.01 USD /kWh). No one. Solar will be the end of the energy source transition we human ever tried. And yet solar stocks, the best kind of solar stocks like DQ are still trashed like they are worthless.
Crazy world we live in. Numbers satisfying one of an infinite possible set of algorithms (that's what "cryptomoney" actually is) stored on disks are worth trillions while all the solar companies in the world together, potentially increasing the time we humans can enjoy this lovely planet, probably aren't worth more than one tenth as much.
Don’t know if this price movement will stay course or fall down again. This is way undervalued. Earnings should easily be more than 8 dollars for the future and 15 x earnings should get price of 120. Way too undervalued.
What a day! The shorts/algos and sell-the-news crowd successfully thwarted another advance. And while investors may feel disappointed of the failed opportunity, the fact remains that there is now a yawning valuation gap between China ($14.5B) and US ($5.7B) listings that people just can't ignore. So something has gotta give. If this price disparity continues for long then I think a consortium led buyout becomes an attractive option for DQ management. Let's see how China investors react tonite though I suspect they don't really care. Tomorrow the analysts come into play where I'm sure some of them will highlight the extremely favorable risk/reward ratio.
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