Good day, and welcome to the Daqo New Energy Fourth Quarter and Fiscal Year 2013 Financial Results Conference Call. All participants will be in a listen-only mode. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Mr. Bing Sun, CFO. Please go ahead.

Thank you, Emily. Thank you, everyone for joining us today for Daqo New Energy’s fourth quarter and fiscal year 2013 unaudited financial results conference call. Daqo New Energy issued its financial results for the fourth quarter and the fiscal year 2013 earlier today, which can be found on the company’s website. To facilitate today’s conference call we put together a PPT presentation. Today, attending the conference call we have Dr. Yao, our CEO, and myself. The call today will feature a remark from Dr. Yao covering business and operational developments, and then I will discuss the company’s financial performance for fourth quarter and for fiscal year 2013. After that we will open floor to Q&A from the audience. With no further delay, I will turn the call over to Dr. Yao.

Thank you, Bing. In 2013, according to industry analyst reports, global solar PV installations were around 37 gigawatts of which the China market alone contributed approximately 11 gigawatts. Most industry research analysts estimate global installations in 2014 to be around 45 gigawatts, which represent a year-on-year growth of 22%. This growth is expected to accelerate in the years to come. Solar PV is rapidly approaching great parity in increasing number of regions. We believe that as the key raw material for the most widely used crystal silicon solar PV cells, polysilicon demand will continue its rapid growth going forward. With one of the lowest cost structure and excellent reputation for the first-class quality in the industry, we are confident that we will be able to enjoy the benefit -- and the benefit from the robust growth in the next growing cycle. Since the fourth quarter of 2013, demand in the polysilicon and the wafer market has remained strong. In the fourth quarter of 2013, we shipped 1,271 metric ton of polysilicon to our customers, and 216 metric tons to our internal wafer facilities. In the fourth quarter, we produced 1,445 metric ton of polysilicon in our Xinjiang facility, compared to 1,311 metric ton in the third quarter. 99.5% meet solar grade 1, the highest level solar grade according to China’s industry standard, in which 95.7% meets the electronic grade and 53.6% meets electronic grade 1, the highest level for the electronic grade according to China’s industry standard. As the solar industry remains in its upward trend, our ASP for polysilicon increased around 24% in the past six months. In the fourth quarter of 2013, EBITDA margin was 21.9% compared to 22.9% in the third quarter of 2013 and a negative 754% in the fourth quarter of 2012. We also achieved…

Thank you, Dr. Yao. Let’s now work through the Q4 performance first and then we can discuss fiscal year 2013 results. Revenue in Q4 was $37 million compared to $29.6 million in the third quarter of 2013, and $6.2 million in the fourth quarter of 2012. The company generated revenue of $24.2 million from polysilicon compared to $22.9 million in the third quarter. The increase from the third quarter was primarily due to higher polysilicon ASP, which increased from $17.99 per kilo in Q3 to $18.67 per kilo in Q4. The company generated $11 million from sales of wafer in Q4 compared to $6 million in the third quarter. The increase from the third quarter was primarily due to higher sales volume. Total wafer sold increased from 7 million pieces in Q3 to 16 million pieces in Q4. Note that in November 2013, we fully ramped up our wafer capacity to 6 million pieces per month. The company also generated the $1.8 million from wafer OEM business. EBITDA was $8.1 million compared to $6.8 million in the third quarter. EBITDA margin was 21.9% compared to 22.9% in the third quarter of 2013, and negative 754.9% in the fourth quarter of 2012. Gross margin in Q4 was approximately $1 million compared to a gross loss of $3.9 million in the third quarter and a gross loss of $11.1 million in the fourth quarter of 2012. Gross margin was 2.6% compared to negative 13.3% in the third quarter of 2013, and a negative 178.5% in the fourth quarter of 2012. It is the first time that we have been able to achieve positive gross margin since the third quarter of 2011. Improvement in gross margin was primarily due to increased sales volume, higher average selling prices, and the reduced production cost for…

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from Paul Strigler of Esplanade. Please go ahead.

Hey, guys. So looking at your poly price in Q4, is $18.67 your actually recognized price? That seems awfully low. And I guess for Q1, it seems like your prices should be meaningfully higher than that?

This is Bing. I’ll try to answer your question first, and then Dr. Yao can add on to my comment. First of all, for Q1 our average ASP was $18.67. And in Q4, the price -- actual price increased actually significantly. If you look back in October, the price was still relatively low and people got to the impression that the average price should be higher, it was actually because in November and December the price increased significantly compared to October. And to answer the second part of your question, you are right. If we compare Q1 of this year's ASP, it’s approximately 15% higher than the average sales price of Q4.

Yes Paul, so I’d like to end on -- this is Gongda. I think the price we are reflecting in our ASP normally is one-month delay for our shipment, so normally because of the contract we signed with customer is the price is determined by previous -- end of previous month.

Yes.

So, what you see, the December price actually reflects our January sales, and January decided prices will reflects in February. So there is one month delay. So your feeling is correct, and as Bing has already told you is we actually see from Q4 to Q1 the price ASP is steadily increasing.

And then I’ve been hearing from some folks over in China that at least in the past, call it a week or so, prices of poly have not so much decreased, but sort of demand has softened just a little bit. Have you guys seen any noticeable change in poly demand in the past, call it a week or two or any impact on pricing?

We do not see weak demand, but we notice that in the other sector of the -- our future channel of the PV, actually we see the wafer pricing little bit softer compared with a month ago. The poly price is the same. We do not see any changes. Actually, we do not have much inventory as of today compared with a few weeks ago. But we really don’t see much change yet. We see April -- at least at this moment, we see -- we can see very clearly April demand is very strong, yes.

Great. And then just one clarification on the balance sheet, Bing, I think you may have answered this, but I got a little lost. So the decrease in the amount owed to your parent company, DQ Group, can you just talk about sort of that change? I think you may have answered that in the script, but I missed it, why did it go down $20 million?

Yes, it’s like accounting concept of VIE, Variable Interest Entity, and I think I should refresh the memory of our investors. There is a company called Daqo New Material, which has been historically consolidated into the balance sheet and the P&L of the listing company, but the owner of that Daqo New Material is actually DQ Group. But for accounting perspective, because most of their cash flow was generated from the lease, we leased their facilities, and the land therefore for accounting perspective, their balance sheet was consolidated into ours. But because of as of December 31, 2013, we are moving most of our equipment to Xinjiang facility, so we terminated the lease. So such lease no longer exists and the VIE structure no longer exists. Therefore, they will no longer be consolidated into the listing company's balance sheet starting from 2014. Therefore, their liability as well as their assets and their negative equity will all be removed from the consolidated balance sheet, and there is no P&L impact of this accounting treatment. So, it’s pure accounting treatment of VIE structure, and this is being de-consolidated. Hope that answers your question, Paul.

Just on a cash flow basis, the change in amount due to related party, there is no cash flow impact there, it’s strictly a balance sheet item?

Yes. That’s correct. There is no cash flow impact at all and there is no P&L impact.

And in terms of financing the expansion, is your parent company still going to -- are they still going to provide a loan to you, a shareholder loan to finance the expansion, is that still the plan?

I will try to answer your question first and Dr. Yao can add. Right now, we are evaluating our options. We have a lot of different options, and the management believe this expansion plan is good use of capital. First of all, we are still considering debt financing because we still have -- we communicated a lot, (inaudible) China in Xinjiang. Right now, we are still in the discussion and we are looking at -- we are trying to get around RMB250 million to RMB300 million like a project loan, but it’s still in discussion. Secondly, we are looking at our positive operating cash flow starting from third quarter of 2013 and we believe the operating cash flow will also help us on this expansion in funding. And third of course just like you mentioned and we talked about it in previous quarters and if we still need additional cash DQ Group is still committed to provide us with additional funding.

Okay. Great. And just one aside, clear the point, but when I think about your amount due to related parties on your balance sheet, is it fair to think of that as debt, or is that -- should we think of that as something else?

You can think of that as debt, yes.

Right.

Other than very small piece, we do purchase very few equipment from subsidiaries of DQ Group, but the majority of that is debt yes.

Great. Thanks a lot guys. Great quarter.

Thank you, Paul.

Our next question is from Vincent Yu of SWS Research. Please go ahead.

Hi. This is a Vincent of SWS Research and I have two questions. First what’s your latest view on the policies for price change and for the year and for next quarter?

Okay. So we still -- our view is still the same. As you know the ASP price for the polysilicon have been changed a lot in last six months. Our view is still the same. We believe polysilicon price in 2014 will be in the range of from $20 to $25 range. Of course there may be small amount of -- it varies from period to period. And we see the demand is still very strong. Especially we think second half of 2014, the market is very strong for PV industry, and because the forecast of 45 gigawatts installation and forecast by many industry analysts. So we’re very confident. But meanwhile saying that our company is still focused in 2014 is still reduced our cost, manufacture cost. We believe our cost would be further improved in the second quarter and we've realized benefit for the remaining time of 2014.

Okay. Thank you. And do you think that China will ban the raw material process contract to fill in the loophole of polysilicon antidumping against the U.S.?

Well as you know because of this loophole of the antidumping for ploy for United States has been talking a lot by all the people in the industry and also Chinese Government definitely notice that. I think regarding the dispute in the trade, right now two government's relative parties have been working on that issue for long period of time. We believe eventually, the solution will be provided. But the meanwhile during the dispute is still there. I think if -- before we reach the agreement between two countries, I think the government will try to find a solution how to stop the loopholes in this antidumping practice. Of course this is very, very sensitive issue. It’s regarding political party involved there. We just believe that this loophole is really impacted the effectiveness of the antidumping measures proposed by government. Yeah, we believe this will have high attention from the government and from also China industry-wide and this is the issue of the -- in the major which is right now carried on by the government. Yes.

Okay. Okay. Thank you. And one more question is that when we will be through the 12,000 MT capacity get ready?

The readiness of the expansion, right. So the product would be finished by 2014 and we will starting to try production by end of this year, and we expecting ramping up the finish will be in some time in the second quarter of 2015.

Second quarter of 2015, right?

Yeah.

Okay. Okay. Thank you again. That's all for my questions.

Thank you.

I’m showing no further questions. This concludes our question-and-answer session. I’d like to turn the conference back over to Mr. Bing Sun for any closing remarks.

Okay. Thanks again for everybody for joining this conference call. And like always, if you guys have any further questions, just feel free to contact me or contact our IR Manager, Kevin He. Have a good weekend guys. Bye-bye.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.