DAQO New Energy Corp. reports 338% Net Income growth in 2020 and 10.8 pp EBITDA Margin growth from 27.1% to 38.0%
03/09/2021 • About DAQO New Energy Corp. (
$DQ) • By InTwits
DAQO New Energy Corp. reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- DAQO New Energy Corp. is a fast growth stock: FY2020 revenue growth was 93.0%, 5 year revenue CAGR was 30.0% at FY2020 ROIC 18.5%
- DAQO New Energy Corp. has high CAPEX intensity: 5 year average CAPEX/Revenue was 38.8%. At the same time it's a lot of higher than industry average of 7.6%.
- CAPEX is quite volatile: $118m in FY2020, $279m in FY2019, $143m in FY2018, $64m in FY2017, $67m in FY2016
- The company has highly profitable business model: ROIC is 18.5%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.6x while industry average is -1.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
DAQO New Energy Corp.'s Revenue surged on 93.0%. Revenue growth showed acceleration in FY20Q4 - it increased 108.2% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.3 pp from 7.3% to 10.6% in 2020.
Gross Margin surged on 11.7 pp from 22.9% to 34.6% in FY2020. SG&A as a % of Revenue decreased on 3.4 pp from 9.3% to 5.8% in FY2020.
Net Income margin jumped on 10.7 pp from 8.4% to 19.1% in FY2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 17.5% in FY2020. CAPEX/Revenue decreased on 2.3 pp from 19.8% in FY2017 to 17.5% in FY2020. Average CAPEX/Revenue for the last three years was 48.2%.
Return on investment
The company operates at good ROIC (18.5%) and ROE (19.4%). ROIC surged on 12.9 pp from 5.6% to 18.5% in FY2020. ROE jumped on 14.0 pp from 5.4% to 19.4% in FY2020.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.6x and Debt / EBITDA is 0.9x. Net Debt / EBITDA dropped on 2.8x from 3.5x to 0.6x in FY2020. Debt dropped on 36.3% while cash jumped on 47.8%.
DAQO New Energy Corp. has short term refinancing risk: cash is only 63.9% of short term debt.
Valuation and dividends
DAQO New Energy Corp.'s trades at EV/EBITDA 23.7x and P/E 45.8x.
Management team
Longgen Zhang is a DAQO New Energy Corp.'s CEO. Longgen Zhang has spent 3 years with the company. The company's CFO Ming Yang has spent 5 years with the company.
Financial and operational results
DAQO New Energy Corp. ($DQ) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 229.1 | 323.2 | 301.6 | 350.0 | 675.6 | 93.0% |
| Gross Profit | 80.4 | 144.0 | 98.1 | 80.1 | 234.0 | 192.1% |
| SG&A | 16.1 | 16.0 | 27.1 | 32.5 | 39.5 | 21.6% |
| EBITDA | 99.3 | 158.7 | 109.0 | 94.9 | 256.5 | 170.3% |
| EBIT | | | | 47.6 | | |
| Net Income | 43.5 | 92.8 | 38.1 | 29.5 | 129.2 | 337.6% |
| Stock Based Compensation | | | | 17.9 | | |
Balance Sheet
|
|---|
| Cash | 16.0 | 53.8 | 65.4 | 51.8 | 76.6 | 47.8% |
| Accounts Receivable | | | | 0.0 | | |
| Inventory | | | | 36.4 | | |
| Accounts Payable | | | | 12.7 | | |
| Short Term Debt | 131.7 | 88.6 | 67.4 | 229.9 | 119.9 | -47.9% |
| Long Term Debt | 111.9 | 111.4 | 133.3 | 151.6 | 123.2 | -18.7% |
Cash flow
|
|---|
| Capex | 67.5 | 64.1 | 143.1 | 279.0 | 118.3 | -57.6% |
Ratios
|
|---|
| Revenue growth | 25.9% | 41.1% | -6.7% | 16.0% | 93.0% | |
| EBITDA growth | 72.4% | 59.8% | -31.3% | -12.9% | 170.3% | |
|
|---|
| Gross Margin | 35.1% | 44.6% | 32.5% | 22.9% | 34.6% | 11.7% |
| EBITDA Margin | 43.3% | 49.1% | 36.1% | 27.1% | 38.0% | 10.8% |
| EBIT Margin | | | | 13.6% | |
| SG&A, % of revenue | 7.0% | 5.0% | 9.0% | 9.3% | 5.8% | -3.4% |
| SBC, % of revenue | | | | 5.1% | |
| Net Income Margin | 19.0% | 28.7% | 12.6% | 8.4% | 19.1% | 10.7% |
| CAPEX, % of revenue | 29.5% | 19.8% | 47.4% | 79.7% | 17.5% | -62.2% |
|
|---|
| ROIC | 12.7% | 23.2% | 12.2% | 5.6% | 18.5% | 12.9% |
| ROE | 17.0% | 28.1% | 8.3% | 5.4% | 19.4% | 14.0% |
| Net Debt/EBITDA | 2.3x | 0.9x | 1.2x | 3.5x | 0.6x | -2.8x |
People
|
|---|
| Insider ownership | | | | 7.4% | | |
| Employees | | | | 1,892 | | |
| Revenue/Employee, th. $ | | | | 185 | | |
DAQO New Energy Corp. ($DQ) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 169 | 134 | 126 | 248 | | 108.4% | 102.3% | 49.4% | 108.2% |
| EBITDA | 63 | 27 | 52 | 115 | | 250.3% | 123.1% | 158.1% | 155.8% |
| Net Income | 33 | 2 | 21 | 73 | | 374.7% | - | 315.1% | 264.1% |
Balance Sheet
|
|---|
| Cash | 63 | 88 | 70 | 77 | | -2.8% | 184.6% | 159.8% | 47.3% |
| Short Term Debt | 206 | 197 | 193 | 120 | | 87.5% | 19.4% | 30.6% | -47.9% |
| Long Term Debt | 149 | 117 | 140 | 123 | | -0.6% | -23.1% | -14.7% | -18.9% |
Ratios
|
|---|
| Gross Margin | 33.5% | 17.0% | 36.0% | 44.2% | | 10.5% | 4.0% | 14.0% | 14.2% |
| EBITDA Margin | 37.3% | 20.1% | 41.1% | 46.5% | | 15.1% | 1.9% | 17.3% | 8.6% |
| Net Income Margin | 19.7% | 1.8% | 16.5% | 29.4% | | 11.0% | 4.8% | 10.6% | 12.6% |
Peers in Semiconductor Equipment
Below you can find DAQO New Energy Corp. benchmarking vs. other companies in Semiconductor Equipment industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Xperi Corporation ($XPER) | - | 44.0% | 8.7% | -31.0% | 218.5% |
| Advanced Energy Industries, Inc. ($AEIS) | - | 38.7% | 7.1% | 9.7% | 79.5% |
| Ichor Holdings ($ICHR) | - | 61.7% | 25.6% | -24.6% | 47.3% |
| ACM Research, Inc. ($ACMR) | - | 33.4% | 104.5% | 44.1% | 45.7% |
| Axcelis Technologies, Inc. ($ACLS) | - | 53.8% | 7.8% | -22.5% | 38.4% |
| |
|---|
| Median (27 companies) | 5.0% | 24.2% | 15.5% | -2.8% | 16.3% |
|---|
| DAQO New Energy Corp. ($DQ) | - | 41.1% | -6.7% | 16.0% | 93.0% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Xperi Corporation ($XPER) | 99.8% | 98.3% | 96.7% | 97.0% | 91.2% |
| PDF Solutions, Inc. ($PDFS) | 58.6% | 53.4% | 50.1% | 60.9% | 58.2% |
| Teradyne, Inc. ($TER) | 54.7% | 57.2% | 58.1% | 58.4% | 57.2% |
| Nova Measuring Instruments Ltd. ($NVMI) | 45.9% | 59.1% | 57.8% | 54.2% | 56.8% |
| Kulicke and Soffa Industries, Inc. ($KLIC) | 45.7% | 47.2% | 46.1% | 47.1% | 47.8% |
| |
|---|
| Median (27 companies) | 40.0% | 43.2% | 41.2% | 40.5% | 42.7% |
|---|
| DAQO New Energy Corp. ($DQ) | 35.1% | 44.6% | 32.5% | 22.9% | 34.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Xperi Corporation ($XPER) | 47.6% | 23.4% | 34.3% | 16.4% | 40.8% |
| Teradyne, Inc. ($TER) | 3.4% | 29.6% | 27.9% | 30.3% | 33.8% |
| Cabot Microelectronics Corporation ($CCMP) | 23.4% | 27.2% | 31.5% | 20.1% | 31.6% |
| Entegris, Inc. ($ENTG) | 21.7% | 25.6% | 27.1% | 24.7% | 29.3% |
| Nova Measuring Instruments Ltd. ($NVMI) | 10.2% | 28.8% | 27.1% | 22.1% | 25.9% |
| |
|---|
| Median (25 companies) | 11.4% | 16.0% | 16.2% | 11.9% | 15.4% |
|---|
| DAQO New Energy Corp. ($DQ) | 43.3% | 49.1% | 36.1% | 27.1% | 38.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Photronics, Inc. ($PLAB) | 10.4% | 20.4% | 17.3% | 32.4% | 11.6% |
| Cabot Microelectronics Corporation ($CCMP) | 4.1% | 4.2% | 3.6% | 5.4% | 11.3% |
| Amkor Technology, Inc. ($AMKR) | 16.5% | 13.1% | 12.7% | 11.7% | 10.9% |
| ACM Research, Inc. ($ACMR) | 2.9% | 1.8% | 2.5% | 0.9% | 9.5% |
| SolarEdge Technologies, Inc. ($SEDG) | 4.3% | 3.5% | 4.1% | 5.1% | 8.7% |
| |
|---|
| Median (24 companies) | 2.2% | 2.8% | 2.9% | 3.2% | 3.3% |
|---|
| DAQO New Energy Corp. ($DQ) | 29.5% | 19.8% | 47.4% | 79.7% | 17.5% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Teradyne, Inc. ($TER) | -2.9% | 23.8% | 22.6% | 29.2% | 40.3% |
| Entegris, Inc. ($ENTG) | 10.3% | 14.7% | 15.4% | 11.3% | 16.4% |
| Advanced Energy Industries, Inc. ($AEIS) | 41.2% | 45.7% | 31.3% | 6.9% | 15.5% |
| Ultra Clean Holdings, Inc. ($UCTT) | 7.8% | 27.5% | 10.5% | 4.1% | 14.8% |
| MKS Instruments, Inc. ($MKSI) | 10.1% | 20.3% | 22.7% | 8.3% | 14.1% |
| |
|---|
| Median (27 companies) | 6.9% | 12.2% | 11.2% | 5.5% | 10.2% |
|---|
| DAQO New Energy Corp. ($DQ) | 12.7% | 23.2% | 12.2% | 5.6% | 18.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Veeco Instruments Inc. ($VECO) | - | - | - | 577.2x | 3.4x |
| Cohu, Inc. ($COHU) | -6.0x | -2.7x | - | 10.1x | 2.9x |
| Xperi Corporation ($XPER) | 4.2x | 5.0x | 2.6x | 6.1x | 2.1x |
| Cabot Microelectronics Corporation ($CCMP) | -1.3x | -1.8x | -1.9x | 3.6x | 2.0x |
| Entegris, Inc. ($ENTG) | 0.7x | 0.1x | 1.1x | 1.6x | 1.0x |
| |
|---|
| Median (23 companies) | -1.3x | -0.7x | -1.0x | -0.4x | -0.4x |
|---|
| DAQO New Energy Corp. ($DQ) | 2.3x | 0.9x | 1.2x | 3.5x | 0.6x |
