Daqq New Energy (NYSE:DQ) Should Benefit from Chinese Government Restrictions

Daqq New Energy (NYSE:DQ) should benefit from new restricions of the Chinese government on polysilicon production, which should, at minimum, support polysilicon prices in the short term.

Auriga says, "We reiterate our price target on Buy-rated Daqq following recent press reports of Chinese government mandated restrictions on polysilicon production. The stated goal to reduce pollution and decrease electricity usage should push out marginal suppliers and, at least in the near term, prevent a decline in polysilicon prices when increasing supply should push spot prices lower. We believe DQ meets all of the requirements put forth in the new regulation while continuing production in a more firm price environment. Our research suggests that DQ management was involved with the formation of the new government restriction during the past year, and that the recently announced polysilicon facility destined for production in mid-2012, will also adhere to the new restrictions."

Auriga maintains a "Buy" rating on Daqq New Energy (DQ), which closed Thursday at $13.28, up $0.11, or 0.84 percent. Auriga has a price target on Daqq of $20.