Daqo New Energy Corp. (DQ) Earnings Call Transcript & Summary

Good day, everyone, and welcome to the Daqo New Energy Fourth Quarter and Fiscal Year 2022 Results Conference Call. [Operator Instructions]. Please also note today's event is being recorded, and at this time, I would like to turn the conference call over to Kevin He, Investor Relations. Please go ahead.

Hello, everyone. I am Kevin He, the Investor Relations of Daqo New Energy. Thank you for joining our conference call today. The company just issued its financial results for the fourth quarter and the fiscal year of 2022, which can be found on our website at www.dqsolar.com. To facilitate today's conference call, we also have prepared a PPT presentation for your reference. You can also find the PPT presentation at our website. Today, attending the conference call, we have: Mr. Ming Yang, our Chief Financial Officer; and Mr. Longgen, our Chief Executive Officer; and myself. So today I will read -- so before we begin the formal remarks, I would like to remind you that certain statements on today's call, excluding expected future operational and financial performance and industry growth are forward-looking statements that are made under the safe harbor provisions 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 statements. 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 conference call is as of today, and we undertake no duty to update such information, except as required under applicable law. Also, during the call, we will occasionally reference monetary amounts in U.S. dollar terms. Please keep in mind that our functional currency is the Chinese RMB. We offer these translations into U.S. dollars solely for the convenience of the audience. Without further ado, now I will turn the call to our CEO, Mr. Zhang.

Thank you, Kevin. Good evening, everyone. We are very pleased to report second -- to report record results for the year 2022. We would like to thank our entire team for achieving such a strong financial and operational performance. Our annual polysilicon production volume was 133,812 metric tons in 2022, exceeding our guidance of 130,000 to 132,000 metric tons and 54.4% higher than the 86,587 metric tons produced in 2021. Our sales volume was 132,909 metric tons in 2022, 76.4% higher than 75,356 metric tons in 2021. Thanks to the robust demand for solar PV products globally, polysilicon ASPs increased by approximately 50% year-over-year from $21.76 per kg in 2021 to $32.54 per kg in 2022. As one of the most profitable and fastest-growing polysilicon manufacturers in the world, we achieved strong financial results with a revenue of $4.61 billion in 2022, an increase of 175% compared to USD 1.68 billion in 2021. Gross margin improved to 74% in 2022 from 65.4% in 2021. And net income attributable to our shareholders was USD 1.86 billion in 2022, an increase of 148.4% compared to USD 749 million in 2021. We generated approximately $2.47 billion in operating cash flow for the year and ended the year with a very strong balance sheet with USD 4.65 billion in combined cash, cash equivalents, restricted cash and the banking loans with a maturity within 6 months. For the year of 2022, approximately 99% of our production volume was mono-grade polysilicon. We continue to be one of the world's leading supplier of ultra-high purity N-type mono polysilicon, the foundation for the next-generation N-type solar cell technology. Towards the end of 2022, a temporary seasonal slowdown in solar PV market caused the inventory adjustments across the value chain, similar to the year-end of 2021. As a result, the downstream sectors, especially wafer, cell and module manufacturers reduced inventories and significantly lowered the production utilization rate. These led to widespread price decline across the value chain. In February 2023, lower module prices effectively stimulated market demand and downstream production utilization rates quickly ramped up back to normal levels, reducing channel inventory significantly and leading to a meaningful recovery of polysilicon ASPs. Currently -- current polysilicon prices of approximately RMB 230 to 250 per kg are very healthy and reflect the strong demand for solar modules in the range of RMB 1.7 to 1.8 per watt. Global solar PV installations were approximately 268GW in 2022, a 53% annual increase from approximately 175GW in 2021, growing faster than most had forecasted at the beginning of the year. The increase in polysilicon supply in conjunction with supportive global climate change policies as well as favorable economic conditions driven by grid-parity, made 2022 one of the industry's fastest-growing years. Meanwhile, solar module price increased from approximately RMB 1.80 per watt in Q1 2022 to RMB 2 per watt in Q4 2022. Despite higher solid module market pricings that many expected would lead to a slowdown in China's PV installation, the Chinese PV end-market also saw robust growth for the year with installations of 87GW, an increase of 59% compared to 2021. These market conditions suggest that the global PV market demand was actually limited by supply, significantly of -- specifically of polysilicon. Key global trends, including the urgent need to address climate change, the driver for greater energy independence as well as positive economic conditions driven by a grid-parity, have led to strong demand momentum for renewable energies, including solar PV. We believe energy transformation is still in its early stage and has opened a huge potential market for solar PV, which is likely to be far beyond expectations. The high-purity polysilicon sector will continue to benefit strongly from these positive developments. Daqo New Energy is well-positioned to benefit from the evolving trends and deliver continued growth. The construction of our Phase 5A 100,000 metric tons polysilicon capacity expansion project in Inner Mongolia is progressed smoothly. We expect to complete the construction and start the pilot production in April 2023 and the ramp up of full capacity by the end of June 2023. Therefore, we expect to produce approximately 190,000 to 195,000 metric tons of polysilicon in 2023, [ 38% ] to 46% more than in 2022. Furthermore, our Phase 5B project for an additional 100,000 metric polysilicon in Inner Mongolia will start the construction in March and is expected to be completed by the end of this year. Solar PV will continue to play a critical role in transforming the global energy infrastructure by powering the world with sustainable cost-effective and renewable energy at a pace much faster than thought possible. As a leading player in polysilicon industry, we outperformed most of our peers in terms of unit profitability, cost structure and the product quality in 2022. We believe our focus on our core competitiveness, solid growth road-map and our strong balance sheet will allow us to benefit from the long-term growth of global solar PV market. For the future outlook and the guidance, we expect to produce approximately 31,000 metric tons to 32,000 metric tons of polysilicon in the first quarter of 2023 and approximately 190,000 metric tons to 195,000 metric tons of polysilicon in the full year of 2023, inclusive of the impact of the company's annual facility maintenance. Now I will turn the call to our CFO. Mr. Yang, please.

Thank you, Longgen, and hello, everyone. Thank you for joining our earnings conference call today. Now I will discuss the company's financial performance for the quarter and for the year. Revenues were $864 million compared to $1.22 billion in the third quarter of 2022 and $295.5 million in the fourth quarter of 2021. The decrease in revenue compared to the third quarter of 2022, as Longgen mentioned, was primarily due to a decrease in sales volumes mitigated by an increase in average selling price. Gross profit for the quarter was $668.9 million compared to $978.6 million in the third quarter of 2022 and $239.8 million in the fourth quarter of 2021. Gross margin was 77.4% compared to 80.2% in the third quarter of 2022 and 60.6% in the fourth quarter of 2021. The slight decrease in gross profit compared to the third quarter was primarily due to the lower sales volume as well as higher production costs. Selling, general and administrative expense was $44 million compared to $280 million in the third quarter of 2022 and $10.2 million in the fourth quarter of 2021. SG&A expenses during the fourth quarter included $28.4 million in non-cash share-based compensation costs related to the company's share incentive plan, and this compares to the third quarter cost of $263.4 million in the third quarter of 2022 of non-cash share-based compensation costs. Research and development expense for the quarter was $2.7 million compared to $2.5 million in the third quarter of 2022 and $1.3 million in the fourth quarter of 2021. R&D expenses vary from period to period and reflect R&D activities that take place during the quarter. And currently, most of our R&D expense primarily are N-type technology research as well as [ research ] to reduce production costs. Income from operations was $623 million compared to $693 million in the third quarter of 2022 and $228 million in the fourth quarter of 2021. Operating margin was 72% compared to 56.8% in the third quarter of 2022 and 57.7% in the fourth quarter of 2021. As a result of the above, net income attributable to Daqo New Energy Corp. shareholders was $372.9 million compared to $223.4 million in the third quarter of 2022 and $141.3 million in the fourth quarter of 2021. Earnings per basic ADS was $4.78 compared to $4.28 in the third quarter of 2022 or $1.90 in the fourth quarter of 2021. Adjusted net income attributable to Daqo New Energy shareholders, excluding non-cash share-based compensation costs was $403.3 million compared to $590.4 million in the third quarter of 2022 and $143.6 million in the fourth quarter of 2021. Adjusted earnings per basic ADS was $5.17 compared to $7.81 in the third quarter of 2022 and $1.93 in the fourth quarter of 2021. EBITDA for the quarter was $648.5 million compared to $720 million in the third quarter of 2022 and $251.1 million in the fourth quarter of 2021. EBITDA margin was 75% compared to 59% in the third quarter of 2022 and 63.5% in the fourth quarter of 2021. Now for review of our full year 2022 results. Revenue for the year 2022 were $4.6 billion compared to $1.68 billion in 2021. The increase was due to higher costs within average selling prices as well as significantly higher sales volume. Gross profit was $3.4 billion compared to $1.1 billion in 2021. Gross margin for the year was 74% compared to 65.4% in 2021. The increase in gross profit was due to higher sales volume and higher selling prices. SG&A expenses for the year was $354.1 million compared to $39.9 million in 2021. The increase of SG&A expenses for 2022 compared to 2021 was primarily due to our non-cash share-based compensation costs related to our share incentive plan, which was $299 million for 2022 compared to $8.4 million in 2021. R&D expenses were $10 million compared to $6.5 million in 2021. And income from operations for the year was $3.04 billion compared to $1.05 billion in 2021. Operating margin was 66% compared to 62.6% in 2021. Interest income for the year was $14.5 million compared to $20.5 million in net interest expense in 2021. The interest -- increase in interest income was primarily due to our higher cash balance. Income tax expense for the year was $537 million compared to $170 million in 2021. The net income attributable to Daqo New Energy shareholders for the year was $1.86 billion compared to $748.9 million in 2021. Earnings per basic ADS for the year was $24.61 compared to $10.14 in 2021. Adjusted net income attributable to Daqo New Energy shareholders was $2.16 billion compared to $759 million in 2021. Adjusted earnings per basic ADS were $28.50 per share compared to $10.28 in 2021. EBITDA for the year was $3.15 billion compared to $1.13 billion in 2021. EBITDA margin for the year was 68.4% compared to 67.5% in 2021. And now on the company's financial conditions. As of December 31, 2022, the company had $3.52 billion in cash, cash equivalents and restricted cash compared to $3.05 billion as of September 30, 2022, and $724 million as of December 31, 2021. And as of December 31, 2022, a bank note receivable balance, which can be [ immediately ] redeemed for cash was $1.1 billion compared to $1.57 billion as of September 30, 2022, and $366 million at December 31, 2021. The bank notes typically would mature in about 6 months' time frame. And now on to the company's cash flow. For the 12 months ended December 31, 2022, net cash provided by operating activities was $2.46 billion compared to $639 million in the same period of 2022. The increase was primarily due to higher revenue and higher gross margin. And for the 12 months ended December 31, 2022, net cash used in investing activities was $1 billion compared to $782 million in the same period of 2021. Net cash used in investing activities in 2022 was primarily related to total capital expenditures on the company's 100,000 metric tons polysilicon project in Baotou City, Inner Mongolia. And for the 12 months ended December 31, 2022, net cash provided by financing activities was $1.47 billion compared to $736 million in the same period of 2021. The net cash provided by finance activities in 2022 was primarily related to net proceeds of $1.6 billion from our Xinjiang Daqo's private offerings in China's [ A share ] market. And that concludes our prepared remarks. And now we will open the call for questions from the audience.

[Operator Instructions] our first question today comes from Philip Shen from ROTH MKM.

I wanted to start off with your latest [indiscernible] on pricing. So specifically, I think you talked about this module prices, stabilizing polysilicon prices. How do you expect polysilicon price trend by quarter for the rest of the year?

I think the -- since the last year, December, that's every year, I think since the year 2020 and -- because all of these Thanksgiving holiday, the New Year, plus Chinese New Year, so the downstream of [indiscernible], I think [ producer ], every year reduce their utility capacity, utilization rates, we call. So last year, the same thing happened. [ since ] -- because Chinese New Year very close to, I think the New Year. So basically, in last year December, we didn't sell any silicon -- [indiscernible] silicon. The reason is because I think the [indiscernible] -- almost the utilization expenses down to -- I think, it's coming to 0, even 10%, and clean all inventory. So basically then, Chinese New Year is coming, I think, early February. So January, we also did not sell anything. So February, we are starting I think. By now we – at the end of last year, we have inventory 5,000 tons -- 5,200 tons. So we believe -- I think we'd given guidance. I think right now, the price come I think back from last year December almost as low as like RMB 120 per kg. Right now it comes back to normal, is around back at RMB 210 to RMB 250 per kg. So we sold, I think, more than 10,000 tons in February as the price is higher. So we will continue selling. So we believe, I think in Q1, the selling price should be about RMB 220. The reason is because I think in the second quarter of this year is not too much new players come in, so it is not too much new output come out. So we think we will continue to digest our inventory come to normal. So my forecast, I think before mid of this year, before end of June, the selling price should be about RMB 210, even higher to RMB 250. For the Q3, I think the only new capacity has come from our Mongolia Phase 1 come out, as the market demand has continued to go up. So we believe, I think we can keep silicon price between RMB 150 to RMB 200. Q4, definitely, I think the picture is not clear, it's like crystal ball. So the silicon price may be will go down to RMB 100 to RMB 120. So overall, this year, we're still thinking it's very profitable for Daqo. Second is, we do not think that the module price will continue to go down because we see that high-performance module -- like TOPCon module, even today in China, we can sell it around RMB 2 per watt. And overseas, of course, depending on different regions, I think the original contract -- like Kinco signed almost 80% overseas their fixed price. So it's very profitable. And yes, may be the module price will go down in Q4 this year. But that matter is -- let's say, if the module price is $1.70 per watt, they can support polysilicon price above $200. So the only thing is the gross margin allocation between silicon, wafer, cell and the module. But we believe silicon segment still is a very, I think, capital-intensive investment. A long-term constructing period still is challenge, yes. And I think may be till next year then -- I think now only silicon may be oversupplied than demand, but also wafer, cell, module, the same. So it may be come back -- you see the lower module price will stimulate the whole market to come back. So I think it is still [ achieved by us ]. So what I can say is, this year, we still think polysilicon is very profitable, and we will continue to make money.

You mentioned you didn't sell any poly in December or January and you said you sold 10,000 tons in February. So you are producing 10,000 at least a month. Are you saying that incrementally you sold another 10,000? And also, do you still have any of that excess inventory left over? Or have you already sold at all in the month of February?

Basically, I think for the Q1, we have given guidance. I think -- we were I think, sell the production -- new production for the Q1. So end of the Q1, we may be still have inventory around 10,000 tons, around about, okay. But, yes, we saw -- what we do, I think, produce still at a stable price, very high price about -- let me be like around $220 per kg. I would say in February we sold more than 10,000. I'm not to saying 10,000, more than 10,000. So for March, we were selling more than 20,000 tons.

Shifting gears to your bookings. I think on the last call you were 90% booked for 2023. You can't really move much more than that. I was wondering if you can talk through what you were contracted for 2023 and perhaps even for 2024. And then I will have one more final follow-up.

You mean the long-term contracts? I think for this year, our planning is -- given guidance, is 190,000 tons to 195,000 tons, right? I think for long-term contracts, we almost cover more than 90%. So I think -- we continue, I think, working with the clients to sign long-term contracts. So majority, I think, for 2023, more than 90%. For '24 we're right now is more than -- if we didn't have any -- not considered any capacity expansion, I think -- we cover at least, I think, the next year, 70%. I think the year 2025 will cover more than 65%. But the long-term contract is a roll-over.

And then the final question I have was on your cost structure. Q4 was a little bit higher. Just curious if you could share how you expect your cost structure to trend by quarter this year?

So the increase in cost structure for Q4 compared to Q3 was primarily due to increase in raw material costs, particularly the market cost for silicon metal as well as increase in electricity rates. So I think, as you know and probably most investors are aware that China actually probably did see increase in electricity rates across all of China, including areas like [indiscernible] as well as Inner Mongolia and Xinjiang as well. And so, all the cost increase has been fully reflected in our updated cost structure for Q4. So in terms of our cost trend, we do expect, overall our cost structure for the first half of 2023 should be similar to our Q4 costs. While after we ramp up our Inner Mongolia facility, we expect our costs to trend down. I think based on our latest internal estimate, we do think, for example, our cost in Q4 for 2023 should be about 5% plus lower than, for example, our first half cost, assuming the same electricity [ as well as ] metal cost.

Next question comes from [ Leo Ho ] from [ Tyler ] Capital Markets.

My first question is on cost. We noticed that there has been some power shortage in Hunan recently. How do you expect it to affect silicon metal price? And also, do you expect there will be cost-driven polysilicon price hike? This is my first question.

So actually, interestingly, silicon metal cost in Q4 of last year was substantially higher than Q3 of last year, I think, primarily due to higher energy costs within China. And silicon metal price briefly declined in January of this year, and now it's a little bit on the trend -- rising trend, but we haven't really seen any significant increase of silicon metal cost due to the issue with Hunan. That's what we are seeing currently. So as a result, we do think our Q1 cost should be relatively stable compared to our Q4 cost.

My second question is on -- can you share just a little bit color on the industry inventory level for silicon?

Industry inventory level for polysilicon?

Yes.

I think, China -- as you know that, every month our production output is around 1,000 tons, and for the inventory, we cannot calculate everyone. But I think the end of last year, the inventory is around less than 50,000 tons. The reason is because Tongwei, they continue to vertically integrated. And also I think just the -- same the material outside to do the [ selling ], and then take -- with the back continue to produce sales. So up till right now, because I think the market come back to normal, I think -- Tongwei, [ TBEA ] and us, I think the inventory gradually [ digest ]. So if you ask me, by the end of Q1 how much inventory is there, I think it should be less than 50,000 tons.

My third question is on technological demand. We noticed that one of our peers is announcing some [ breakthrough ] of the continuous digital [ growth ] technology the first quarter of this year. How do you expect the competitiveness of advanced Siemens method that we use in comparison with the FBR granular silicon that they propose?

So I believe your question is, for example, granular silicon right? The FBR process versus our same traditional Siemens process. Right?

Yes.

Okay. So I will take it from 2 perspectives, okay? So I think one is really from a quality perspective, okay, the FBR process because it has much higher contamination of both hydrogen and also because of the use of graphite stack for heating, so a lot higher carbon contamination as well as -- because of the high surface area compared to the intrinsic area of much higher surplus metal contamination. So if you compare the quality of the Siemens -- advanced Siemens process, especially in the high-purity suppliers like us compared to a typical FBR type of process, our purity is about 100 times higher, okay. So a lot of our purities are now on the parts per billion, in fact, parts per trillion level, right. So from a purity perspective, I think if you look at what's happening in the market is that companies -- our customers will use our product as their primary use of silicon and FBR only generally used to -- the mix. So I think FBR -- as the market grows, I think it does have a relatively more limited addressable market. And then in terms of cost structure, I think, even ideally, you are talking about may be saving 20 to 30 kilowatt hour of electricity, you're talking about RMB 6 to RMB 8 per kilogram of cost reduction. But what we are seeing in the market is the FBR generally offers between RMB 15 to RB, 20 or more in cost discount or price discount. So I think that is fully reflected in that kind of environment.

My last question, and I will jump back to the queue. Can you share with us the price premium of N-type polysilicon over P-type polysilicon right now, either in like absolute terms or in percentage terms? And where do you expect to [indiscernible]?

I think that right now, the N-type and the P-type price, I think, is not too much different and the reason is because the selling price is high. When I was [ running ] -- every selling my last year $32. Right now RMB is around RMB 220, RMB 230. So the N-type may be RMB 3 per kg higher. But I think the silicon price back to normal, and then as the demand continue for high quality of -- high purity of N-type, I think the difference will become larger. So when silicon price go down, let us say, to RMB 100, I think N and P-type will be more than RMB 10 per kg difference. That means may be $1 to $2 difference is there.

Next question comes from Alan Lau from Jefferies.

So my first question is about the progress of your Inner Mongolia expansion. It is supposed to be completed in April, right, and take 3 months to ramp up. Is it correct? And I would like to know -- you have also mentioned in Q2, there is not much supply addition. So I would like to know if you may share with us more color on those? Because there are a lot of peers or new players scheduled to have their plants to be completed in 2Q.

I think -- Mongolia, I think Phase 1, we call 5A, we are planning, I think to put into trial production I think April this year. We believe we can full capacity running, I think, in May of this year. So these were adding for this year more capacity to our total guidance. So the given guidance of 190,000 to 195,000. So this will run, I think we are already calculating, around 60,000 tons this year, may be adding to our total guidance. For the Phase 2, I think we starting -- I think we already announced that we are starting design. And for this month, we are also starting field work. So we are planning to early -- may be end of this year or early next year, starting to trial production. So that will help us, I think, next year’s capacity. In total together, I think in Mongolia, it is 200,000 tons project, that's for N-type, okay? And for the P-type, we will may be produce a little more, may be 5% to 10% more. So the Mongolia capacity, I think, besides that 200,000 metric tons of polysilicon, we also -- I think in Puyang we do the silicon metal. Silicon metal because I think we are waiting for the [indiscernible] [ approval ], supply approved. We believe may be by the end of this year or next year, I think 150,000 or 200,000 metric tons were put into production. Then meanwhile, the semiconductor, I think -- at 1,500 tons I think in the Phase 5A, we are starting may be production of semiconductor in this year -- September of this year. So this is our total planning for Mongolia.

Would you share update on your peers – like -- some of the peers like LiHao or other players? Because they are supposed to have their plants completed in 1Q and 2Q. So do you think that will add to poly supplier and may cause poly prices to drop or…?

We will not comment all peers, especially those of newcomer, right? So we'll not do any comments. But as you will see, as the timing continue going up, we believe, I think, for newcomers, some challenge is there, both in product quality and on-time scheduled delivery, et cetera. So we're not going to comment on all peers.

So would like to check on the dividend ratio, because the company has posted an excellent result in [ recurring $ 5 million ], and also -- the company has also announced the $700 million of buyback 2023 in the U.S. level. So I wonder if it implies -- what level of dividend ratio in order for the U.S. ADR to have the required amount of cash to carry out the buyback?

Basically, I think, next month, the Asia company, we have a shareholders meeting. And at that time, we will announce the dividends declared. But we also -- I cannot give you a detailed figure. But as we already announced, we will buyback basically, we own -- I think a U.S. company owns the Asia 73%. And we buy back $700 million. So you can easily do calculations. We believe which should be between 35% to 40% our net profit was distributed as a dividend.

And my last question on the PCAOB investigation. How do you see that like? And will this be a positive catalyst to the company?

I think the 4 bigger firms, I think, PCAOB already passed, basically -- of course the report still is not on the website -- PCAOB website. But I think they are already starting, I think, at Deloitte and PwC right now. I think the Chinese government is very corporative. And we're also very open as a public company. I do not think any challenge so far. I think, hopefully, the PCAOB can go forward. They are regularly inspecting for their numbers. So we believe the bigger 4 firms in China and the branches will be okay.

Our next question comes from Gary Zhou from Credit Suisse.

So just a 2 quick follow-up on the -- our share buyback program. So firstly, I want to ask in terms of your timing. So when do we expect to receive the dividends from A share subsidiary? And secondly, for buyback. So is it possible that we would consider to do some small buyback before receiving the A share dividends? Or is it probably going to be after we receive A share dividends from A share? And lastly, because I did a simple calculation, so USD 700 million, that's almost 20% of our current market cap and were probably even bigger in terms of our computational. So just wondering, does this imply that how do we get the funding and that could get little bit relatively aggressive?

Gary, let me answer the first question, and then Ming answer the second question, okay? Basically, we cannot complain anything in the market, right. Market is always correct. So right now, our stock price -- we also cannot do anything, but we know this is far below our I think equity value. So we just finished I think USD 140 million. Basically is used our [ Chongqing ]. I think, Daqo New Energy U.S. [ list co ] 100% subsidiaries in Chongqing. The money deposited to China Merchant Bank, then we got the loan, I think, is around USD 140 million. So yes, if this window opens, we will buyback, the amount is around USD 140 million. Then we already declared the dividend next month, that will be the $700 million, then you take $ 140 million away, you have like $560 million left. That's for the next window. That means May and June, the window open, we'll buyback. So basically, I only can tell you that with 2 windows, we are going to execute our stock buyback program. We will really do that.

Mean, you owe a second time?

Yes. So like Longgen has mentioned, right? So I think both our board and our management team believe our current share price in the U.S. is extremely undervalued. It's trading at a huge discount, whether it is to the company's cash level or our equity value or our future potential earnings. I think we announced our results for 2022 to see our cash generation. Our current cash balance on hand, while -- I think you forecast in your expectations of poly pricing for this year, right, given that it's still around USD 30 per kilogram, today in the market, where we will continue to generate significant cash flow for this year and likely for future periods because we are the lowest cost producer in the world effectively. We have some of the highest quality, especially when N-type products are likely becoming the mainstream module for the next year or so and where we are going to be one of the primary supplier of N-type poly as well. So we do believe now is really a good opportunity for the company to be a very active in terms of our share buyback program. So I think in terms -- your comment in terms of the market cap, while it does look like it is a fairly high percentage, and I think it's because our market cap is externally low compared to our cash flow generation and also the capital that we have.

And simply just a very quick question on the -- our future capacity expansions. So we consider our study, the kind of a possibility to expand in other countries outside China. So if we go -- in the future if we see kind of more kind of trade restrictions?

Yes. We always research all the situation, including the overseas capacity, especially I think the market -- the global market, the module price, also the regional critical I think competition et cetera. So yes, we will compare -- the reason that we go to overseas, we have to consider the local business practice, all the resources and the people, the talent and so on. So definitely, if any opportunities, we'll do the study, and where we'd not.

Our next question comes from Alan Hon from JPMorgan.

I have just one question on your CapEx. Can you share with us like what is the CapEx commitment for Phase 5A and Phase 5B? How much is already spent and how many expected to spend this year?

So I have the numbers in R&D first, and I will kind of translate to U.S. dollars. So the CapEx for 5A total CapEx is around RMB 9.5 billion or so. And then for 5B total CapEx is expected to be around RMB 9 billion. So I guess, 5A is around USD 1.4 billion and then 5B is around USD 1.3 billion or so. And then actually for the full year of 2022, we spent approximately $1.3 billion in CapEx. Most of it is related to our Inner Mongolia project 5A, but some of it -- was also the [indiscernible]. And in terms of CapEx for 2023, I think, for the full year, we were expecting roughly $1.2 billion of CapEx. For the [ full year ], it was roughly -- $900 million to a $1 billion is for Phase 5B Inner Mongolia and around $300 million is for our -- the remaining payments for our Phase 5A Inner Mongolia.

Ladies and gentlemen, at this time, we will end today's question and answer session. I would like to turn the floor back over to Kevin for any closing remarks.

Thank you everyone again for participating in today's conference call. Should you have any further questions, please do not hesitate to contact us. Thank you, and bye-bye.