Lushan New Material: Hidden Champion in The Subdivision Field, Hard Verification Strength Promotes "Import Substitution" in the Industry

From the Stone Age, the Bronze Age, the Iron Age, to the Information Age, the development of human civilization is always based on the discovery and application of new materials, and the major countries also regard new materials as the underlying elements of national industrial development, such as the United States, which calls new materials "the flesh and bones of scientific and technological development.".

With the continuous advancement of industrial upgrading under the guidance of double carbon background, China's material manufacturing is ushering in an unprecedented rise opportunity, constantly transitioning from raw materials and basic chemical materials to new materials, functional polymer materials, new energy materials, and green energy-saving materials. In this context, Guangzhou Lushan New Materials Co., Ltd. (stock code: 603051 referred to as Lushan New Materials), which has been working in the field of environmentally friendly high-performance functional polymer materials for more than 20 years, has set sail and is about to land on the main board of A-shares, adding more impetus to future development.

Deep ploughing industry for 23 years, hard-core research and development strength to achieve the leading position

In the modern materials industry, due to the huge difference in performance between different materials such as metals, plastics, and inorganic materials, it is impossible to directly composite molding, and adhesive materials must be used to connect into a whole. As a key material in the manufacture of composite materials, the performance of bonded materials directly determines the function and service life of composite materials.

At present, the bonding materials used in composite materials mainly include liquid adhesive materials and hot melt adhesive materials, although the former has a long history and wide application, but there are hidden dangers of solvent residues, flammable and explosive, VOC emissions and so on. In contrast, hot melt adhesive materials in order to ensure strong adhesion capacity, good weather resistance and other characteristics, but also has higher environmental performance, known as "green adhesive", especially suitable for use in continuous production lines.

Founded in 1998, Lushan New Materials is a focus on green environmental protection type high-performance functional polymer materials enterprises, the company's products mainly include functional polyolefin hot melt adhesive particles and hot melt adhesive film, is widely used in photovoltaic new energy, energy pipelines, rail transit, composite building materials, high barrier packaging, flat panel display and other fields.

The founder of the company, Dr. Wang Jiasheng, is one of the earliest experts engaged in the research of polymer materials in China, and has made achievements in the research and development fields of functional polymer materials, functional masterbatches and elastomers, photoelectric touch screen composite materials, etc., and has published more than 50 papers in academic journals at home and abroad. Under his leadership, Lushan New Materials has also shown excellent technical level, as of June 30, 2021, Lushan New Materials has obtained a total of 100 domestic patent authorizations, including 70 invention patents and 30 utility model patents.

Through independent technological innovation and development practice, Lushan New Material has established a sound core technology system, formed a unique "chemical grafting + physical blending" two-step core technology system, which is used to produce functional polyolefin hot melt adhesive particles and hot melt adhesive film two types of hot melt adhesive material products. Based on this technical route, the company combines the application characteristics and market demand in different fields, through formula design and process optimization, to meet the requirements of different composite processing processes, and produce high-performance functional bonding materials that can be applied to a variety of composite materials and products, to meet the needs of customers for scale, customization, environmental protection and automated production.

Especially in terms of functional polyolefin hot melt adhesive products, Lushan New Material's various products have gradually realized import substitution, of which composite building materials hot melt adhesive products have been applied to a number of large-scale projects at home and abroad, and applied to the manufacture of High-speed Rail train cars in China; oil and gas pipeline anti-corrosion hot melt adhesive covers PetroChina, Sinopec, CNOOC, Baosteel, Valin Group, Jinzhou Pipeline and other downstream well-known customers, the products have been applied to the West-to-East Gas Pipeline, Sino-Russian natural gas pipeline, Central Asian natural gas pipeline, Saudi Arabia water transmission project and other major projects at home and abroad. According to the China Adhesive and Adhesive Tape Industry Association, China Petroleum Engineering Construction Association and other industry associations, Lushan New Material Composite Building Materials Hot Melt Adhesive Products, Oil and Gas Pipeline Anti-corrosion Hot Melt Adhesive Products ranked first in the domestic market share, is a veritable leading enterprise in this field.

Green energy material supplier, brand strength to win the favor of photovoltaic giants

In addition to its outstanding performance in the field of composite building materials and oil and gas transportation, Lushan New Materials is also an excellent supplier of green energy materials. The company's hot melt adhesive film products are mainly used in the field of solar cells and flat panel displays, the main products are solar cell encapsulation film (photovoltaic film) and thermoplastic optical transparent film.

As an indispensable material for the encapsulation of photovoltaic modules, the photovoltaic film acts as a binder in it, connecting the upper and lower surface materials with the cells, thereby protecting the cells from water vapor and mechanical damage. The packaging process of photovoltaic cells is irreversible, once the adhesive film and backplane of the battery module begin to turn yellow and crack, it will lead to battery failure and scrapping. Therefore, this puts forward strict requirements for the performance indicators of photovoltaic materials such as light transmittance, shrinkage, elongation, peeling strength, crosslinking degree, and aging resistance.

In short, photovoltaic film is a key factor in determining the quality and life of photovoltaic module products.

On top of the core technology system of chemical grafting + physical blending, Lushan New Material has formed a relatively complete product series, including transparent EVA film, white EVA film and POE film and other mainstream products in the market. The company's independently developed polyolefin encapsulant film crosslinking curing technology has optimized the comprehensive performance of photovoltaic film, and improved the moisture and heat stability of the film, UV aging resistance and other weather resistance. For photovoltaic film, the adhesive bonding force of EVA film prepared by this technology can reach more than 100N/cm, excellent aging resistance, 1,000 hours of thermal aging and xenon lamp aging after bonding strength retention rate can reach more than 90%, to meet iec61730 and national standard GB/T 29848 requirements, by Panasonic, Jinko Energy, Trina Solar, BYD, Taiwan AUO and other leading photovoltaic enterprises at home and abroad fully recognized, has a strong competitive advantage in the industry.

With the strong promotion of the main business and the strong and stable downstream customer resources, Lushan New Materials has also shown a good strength in operating income. According to the prospectus, from 2018 to June 2021, Lushan New Materials achieved operating income of 766.3161 million yuan, 794.974 million yuan, 1,011.5119 million yuan and 718.3645 million yuan, respectively, and achieved net profit attributable to the mother of 47.9102 million yuan, 71.9428 million yuan, 115.7397 million yuan and 50.4176 million yuan. For enterprises with technology and innovation like Lushan New Materials, this data performance is in line with the laws of the market, but if the future encounters an outbreak of product demand, then the spring that belongs to the company is really coming, coincidentally, it is the time when the opportunity comes.

Industrial upgrading continues to advance, and downstream demand in many fields has exploded

The pace of the global energy transition is accelerating to achieve the zero-carbon goal, with more than 130 countries and regions around the world announcing carbon neutrality targets. The establishment of an energy system dominated by renewable energy and the realization of green and sustainable development have become a global consensus, and under the background of increasing the proportion of renewable energy consumption in the world, the global new wind and photovoltaic installed capacity will continue to grow rapidly. According to the data released by Wang Bohua, chairman of the photovoltaic annual conference, it is expected that the global new installed capacity of photovoltaics will be 150-170GW in 2021, and will continue to maintain an average annual growth rate of 30-40GW in the next few years, and it is expected that the new global installed capacity will reach 270-330GW in 2025, with a compound growth rate of about 17%.

As a key component of photovoltaic modules, the demand for photovoltaic film is also rising, according to the forecast data of CICC's research department, the global demand for photovoltaic film in 2021 is close to 2 billion square meters, and by 2025, the global demand for photovoltaic film can reach 4.8 billion square meters, an increase of about 210% over 2020, and the future market space is vast.

At the same time, under the guidance of carbon neutrality goals, the development of the mainland hydrogen energy industry has also entered the fast lane, but there are still certain constraints and bottlenecks, among which the small scale and high cost of hydrogen transportation are the "card neck" links that currently restrict the development of hydrogen energy. At present, the mainland hydrogen transportation mode mainly includes long-tube trailer transportation, pipeline transportation and liquid hydrogen tank truck transportation, and according to foreign experience, the main hydrogen energy transportation mode in the Developed Hydrogen Energy Regions such as the European Union, the United States, and Russia is pipeline network transportation, which mainly realizes hydrogen energy long-distance pipeline network transportation by incorporating hydrogen into the natural gas pipeline network and basing on the existing natural gas pipeline network infrastructure system. With the development of the hydrogen energy industry in the future, long-distance pipeline network hydrogen transmission has huge development space, and Lushan New Material's oil and gas pipeline anti-corrosion hot melt adhesive will also usher in a new round of development opportunities.

In addition to the new energy market, the demand for polymer functional materials for building materials greening, automobile lightweighting, and energy renewables is also huge, especially with the industrial upgrading of the downstream industry of the adhesive industry, consumer products and other industries, the downstream customers' requirements for product quality and environmental protection continue to increase, the differentiated demand for products continues to increase, and clean, non-toxic functional polyolefin polymer materials will also usher in a broader market space.

The century-old great change is imminent, and the expansion of production and research promotes the "import substitution" of the industry

Today's world is experiencing unprecedented changes in a century, a new round of scientific and technological revolution and industrial transformation in depth development, the global industrial chain supply chain is facing deep restructuring, as the origin of all industries, the innovation and application of basic materials have become an important breakthrough point in the current competition.

Hot melt adhesive materials belong to the polymer modified materials industry in Europe, the United States, Japan and South Korea and other developed countries have many years of development history, and derived from BASF, Dow Chemical, LG Group, Hanwha Group, Mitsui Chemical, Mitsubishi Chemical and other large multinational companies, in contrast, most of the mainland polymer modified materials enterprises are from the 1980s and 1990s, although the development speed in recent years is relatively fast, but the product structure is relatively single, in the high-end products competitiveness and international large companies still have a certain gap, As a result, the current domestic high-end application market for polymer modified materials is still mainly imported.

With the continuous complexity of the international trade situation, the "14th Five-Year Plan" development plan and the 2035 long-term goal outline, the "13th Five-Year" special plan for scientific and technological innovation in the field of materials, "New Materials Industry Development Guide" and other policies continue to be introduced, the import substitution needs of high-end products in the field of polymer modified materials in the mainland have become more and more urgent, and also provide good development opportunities for domestic industry-leading enterprises with strong technical strength.

As a leading enterprise in the industry for more than 20 years, Lushan New Material has formed a deep brand and qualification accumulation, "Lushan" brand has won the famous trademark of Guangdong Province, and the company's products have passed the certification of many downstream high-quality customers at home and abroad such as Panasonic, BYD, JinkoSolar, PetroChina, Sinopec, CNOOC, Baosteel and many other downstream high-quality customers at home and abroad, and is a qualified supplier of petroChina's "Energy No. 1 Network" first-class material supplier, Sinopec's "E-Paike" procurement platform, CNOOC procurement business management and trading system and other procurement platforms.

From 2018 to June 2021, the company's functional polyolefin hot melt adhesive particle capacity utilization rate was 85.57%, 84.03%, 92.90% and 91.73%, respectively, and the capacity utilization rate of the company's main products of hot melt adhesive film products was 66.85%, 61.16%, 84.45% and 70.59%, showing an increasingly saturated trend, in order to better meet the huge demand of the future industry, expanding production capacity has become a top priority.

Lushan New Materials intends to raise 593,074,400 yuan in the capital market this time, mainly for the expansion of functional polyolefin hot melt adhesive, the technical transformation of functional polyolefin hot melt adhesive, the expansion of TOCF optical film, the construction of R&D center and the supplement of working capital related to the main business. It can be seen that the company has made full preparations for future development in solving the problem of production capacity.

In addition, Lushan New Materials since its inception to technological innovation as the development benchmark, in the current green development and industrial upgrading of the background, the company is also actively carrying out the application of related functional polymer material products comprehensive performance research, and constantly expand such as high barrier packaging hot melt adhesive, composite plate hot melt adhesive, lithium battery soft pack hot melt adhesive and other high-end products with high technical level, broad market prospects, further expand and improve product quality, performance, thereby promoting the upgrading of functional polymer modified materials in the mainland, Break through the monopoly of overseas enterprises to fully realize import substitution.