Xingyuan material plans to raise no more than 6 billion yuan plus lithium battery diaphragm

On the evening of September 27th, Xingyuan material (300568) disclosed the stock issuance plan to specific objects, and proposed to raise no more than 6 billion yuan for the wet diaphragm and coating diaphragm (phase I and II) project of high-performance lithium-ion batteries to supplement liquidity.

The announcement shows that the project of wet diaphragm and coating diaphragm of high-performance lithium-ion battery (Phase I and Phase II) intends to raise 5 billion yuan, which will be implemented by Xingyuan material (Nantong) New material Technology Co., Ltd., a wholly-owned subsidiary of the company, with a total investment of 7.5 billion yuan. the construction period of the project is five years. This project mainly produces high-performance lithium-ion battery wet diaphragm and coated diaphragm, which can form an annual production capacity of 2 billion square meters of high-performance lithium-ion battery wet diaphragm and coated diaphragm. After the completion of this project, the company will further improve the product structure, improve the market share of wet diaphragm and coated diaphragm products, and enhance the comprehensive competitiveness.

This time, Xingyuan material intends to use the raised capital of 1 billion yuan to supplement the working capital to meet the capital needs of the company's future business development, improve the company's sustainable profitability and enhance the company's capital strength.

Under the expectation of the rapid and long-term development of new energy vehicles and energy storage industry, power battery manufacturers have expanded their capacity layout. With the expansion of downstream customer capacity, the demand for lithium-ion battery separators increases accordingly, and enterprises with high-quality supply capacity and capacity guarantee will get a large number of business opportunities.

Xingyuan material said that in order to seize the opportunities for the development of the industry and avoid restricting the development of the company's business due to insufficient production capacity in the future, the company will expand the production capacity of wet diaphragm and coated diaphragm through this fundraising project. in order to better meet the demand for the company's products in the middle and high-end market of lithium-ion battery diaphragm, so as to further enhance the strength of the company. With the implementation of this investment project, the production capacity of wet diaphragm and coated diaphragm will be greatly improved. on the one hand, it will help to improve the product layout and enhance the company's ability to serve customers in an all-round way. On the other hand, the company increases the capital investment in wet diaphragm coating and expands production capacity to form economies of scale to effectively reduce costs. In addition, the increase in the proportion of diaphragm coating will effectively improve the profitability of the company's unit diaphragm products, thereby enhancing the company's profitability and improving the company's profitability.

It is understood that Xingyuan material has formed a stable cooperative relationship with domestic and foreign first-line lithium battery manufacturers, such as Ningde era, BYD, Guoxuan Tech, AVIC Lithium, LG Chemical, Samsung SDI, Murata, Japan, etc., and the company's current production capacity has been difficult to meet the growing procurement needs of existing and potential customers.

In terms of performance, Xingyuan material achieved operating income of 831 million yuan in the first half of the year, an increase of 143.65% over the same period last year; the net profit belonging to shareholders of listed companies was 112 million yuan, up 56.39% from the same period last year. In the first half of the year, the company's revenue mainly comes from the sales of lithium-ion battery diaphragm products, the company sells lithium-ion battery diaphragm products of more than 500 million square meters.

In terms of overseas customer development, following the signing of a strategic cooperation agreement with Northvolt in March this year, Xingyuan material plans to sign a "supply guarantee Agreement" with LG New Energy on August 31, agreeing that the company will supply LG New Energy with wet coating of lithium-ion battery separator material, with an agreement amount of about 4.311 billion yuan. It shall be valid for 4.5 years from the date of entry into force of the agreement and may be extended with the consent of both parties.

A few days ago, Xingyuan material replied to a letter from the Shenzhen Stock Exchange that the company's production capacity in the field of wet coating diaphragm increased from 30.5 million square meters at the end of 2018 to 490 million square meters at the end of July 2021. According to the company's capacity planning, the company will have sufficient production capacity to meet the new procurement needs of LG new energy.

Zheshang Securities analysis said that because overseas battery factories generally have extremely high requirements for diaphragms and are willing to pay high prices in exchange for high-quality products, the unit price of diaphragm products for overseas head customers is generally 2-3 times or even higher than the domestic average price. Xingyuan material has successively entered into the supply chain of LG and Northvolt. At present, it has signed a long-term supply agreement with LG with a total value of 4.31 billion yuan for a period of 4.5 years, corresponding to about 13-1.5 billion sales volume of flat-wet diaphragm coating, accounting for more than 20% of the company's production capacity. Northvolt is expected to enter the mass production phase from 2022 to 2023, when the company's overseas shipments will enter a period of rapid growth as the company's supporting European capacity is put into production, laying the foundation for the company's profit margin boost.