Under the background of tight supply and demand of aluminum foil processing enterprises in the aluminum foil industry.
Today (May 18), Jiangsu Lidao New Material Co.Ltd(603937) ( Jiangsu Lidao New Material Co.Ltd(603937) , SH) announced that it plans to invest 1 billion yuan to build a “new energy battery collector material project” in Wuhe County, Anhui Province, and build high-end battery grade aluminum foil production line, high-end carbon coated aluminum foil and high-performance continuous composite aluminum material production line.
It is worth noting that this is the first time that the company has been involved in the production of new energy battery collector materials. Due to the high prosperity of the new energy industry, the current supply of battery aluminum foil is in short supply. However, China Merchants Securities Co.Ltd(600999) also mentioned in a research report that it takes at least one to two years for new entrants in the battery foil industry to explore from the beginning to sending samples to customers. Considering the uncertainty of subsequent customer expansion and certification, the risk of new entrants’ intervention is high.
plans to allocate 1 billion new energy equipment, with the investment amount exceeding 50% of the total assets
Jiangsu Lidao New Material Co.Ltd(603937) is mainly engaged in the deep processing of aluminum materials, mainly including color coated aluminum materials for construction industry, color coated aluminum materials for food packaging and finishing and cutting aluminum materials. The products are used in the market fields of building materials, food packaging, transportation, electronics and appliances, etc.
Since 2017, Jiangsu Lidao New Material Co.Ltd(603937) has repeatedly mentioned in the annual reports over the years that the application market of the company’s products includes functional composite materials, which can be applied to new energy equipment and other fields.
“As a new type of lightweight and high-strength composite, functional composites are widely used in the fields of automobiles, trains, yachts, mobile buildings, chemical equipment, environmental protection materials, new energy equipment and so on because of their high-quality properties such as lightweight and high-strength, green environmental protection, energy conservation and renewable utilization.” Jiangsu Lidao New Material Co.Ltd(603937) in several annual reports.
However, Jiangsu Lidao New Material Co.Ltd(603937) has not made any substantive action to lay out new energy. The company plans to build a new energy battery collector material project in Wuhe County, which is the first time it has set foot in the field of new energy battery collector material production.
“The company will further optimize its aluminum processing business and make layout in new energy related market segments with high development potential. On the basis of continuing to do a good job in the production, R & D and sales of functional aluminum materials, the company will deepen the integration of upstream and downstream of relevant industrial chains and actively expand new businesses in new energy fields such as energy storage and new energy vehicles.” Jiangsu Lidao New Material Co.Ltd(603937) indicates.
The proposed investment amount of this project is 1 billion yuan. For Jiangsu Lidao New Material Co.Ltd(603937) , this is not a small investment. By the end of the first quarter of this year, Jiangsu Lidao New Material Co.Ltd(603937) had only 1.845 billion yuan of total assets and 350 million yuan of monetary capital balance. As of today’s closing (May 18), the market value of Jiangsu Lidao New Material Co.Ltd(603937) is only 1.955 billion yuan.
“At present, the company’s financial situation is stable and good. The capital of this foreign investment comes from self raised funds and is invested by stages according to the specific needs of the project, which will not have a significant impact on the current financial and operating conditions of the company.” Jiangsu Lidao New Material Co.Ltd(603937) scale. However, the listed company also pointed out the risk: “the capital source of this investment project is self raised funds, and the future investment expenditure may lead to the reduction of the company’s cash flow or the increase of liabilities, thus increasing the relevant financial risks of the company. If the progress or scale of fund-raising does not meet the expectations, it may affect the smooth implementation of the above projects and other risks.”
industry is in short supply, but the risk of new entrants is high
Specifically, Jiangsu Lidao New Material Co.Ltd(603937) this project is divided into two phases. Phase I project will build a new production workshop of about 84000 square meters and build a high-end battery grade aluminum foil production line; Phase II project will build 36000 square meters of production workshop, dormitory, office building and other ancillary facilities, and build high-end carbon coated aluminum foil and high-performance continuous composite aluminum production line. The construction period of the project is expected to be 18 months.
Battery grade aluminum foil materials are mainly used as fluid collectors in the positive and negative electrodes of lithium batteries and sodium batteries, and are widely used in power batteries, energy storage and other industries and fields. Carbon coated aluminum foil is an “upgraded version” of lithium battery aluminum foil, which is mainly used for lithium iron phosphate power battery. It has the advantages of increasing battery cycle life and improving battery material processing performance. At present, the market scale is small, but the development potential is large.
At present, the battery grade aluminum foil industry is in a state of tight supply and demand. Many aluminum processing enterprises are laying out or expanding production, including Jiangsu Alcha Aluminium Group Co.Ltd(002160) ( Jiangsu Alcha Aluminium Group Co.Ltd(002160) , SZ), Shantou Wanshun New Material Group Co.Ltd(300057) ( Shantou Wanshun New Material Group Co.Ltd(300057) , SZ), Guangdonghectechnologyholdingco.Ltd(600673) ( Guangdonghectechnologyholdingco.Ltd(600673) , SH), etc. At the end of last year, Jiangsu Alcha Aluminium Group Co.Ltd(002160) disclosed that it planned to invest 350 million yuan to build a 30000 ton special aluminum foil project for power batteries Jiangsu Alcha Aluminium Group Co.Ltd(002160) it is expected that the tight supply of power battery foil will continue in the next three years, especially the supply of high-quality power battery foil.
The shortage of battery grade aluminum foil stems from the rapid development of new energy vehicles and energy storage industry on the one hand. The demand for battery grade aluminum foil materials in new energy vehicles and energy storage industries is increasing day by day Zhongtai Securities Co.Ltd(600918) it has been predicted that the global battery output from 2021 to 2025 will be 426gwh, 603gwh, 790gwh, 997gwh and 1270gwh respectively. According to the calculation of 400 tons of aluminum foil per GWH, the demand for battery aluminum foil will reach 508000 tons in 2025, with a compound growth rate of more than 30%.
On the other hand, it is due to the slow speed of industrial production line construction and reaching production, and the strict technical requirements of new entrants China Merchants Securities Co.Ltd(600999) said in a research report that the requirements for sector type and accuracy of battery foil are significantly higher than those of traditional aluminum foil, so it is difficult to certify. New entrants need at least one to two years to explore from trying to sending samples to customers. Considering the uncertainty of subsequent customer expansion and certification, the risk of new entrants’ intervention is high.
Jiangsu Lidao New Material Co.Ltd(603937) also indicated relevant risks in the announcement. “The technical reserve in this field is limited, and there is still uncertain risk whether it can support the smooth implementation of the project… The company has conducted a certain talent reserve in the new energy battery collector material industry, but the talent reserve is limited, and there is still uncertain risk whether it can support the smooth implementation of the project.”
