The negative electrode coating material produced by the company is an asphalt material with special properties.
On the one hand, it can be used as a coating agent and binder for the production and processing of lithium battery anode materials to improve the product performance of anode materials;
On the one hand, carbon fiber can be made into spun asphalt through proprietary process, and after spinning, carbonization and other production processes, asphalt-based carbon fiber products are obtained.
The company is an industry leader in lithium battery anode coating materials, with a market share of 27%-39% in 2020, according to the calculation data in the company's prospectus. As of June 30, 2023, the company has an anode coating material production capacity of 40,000 tons/year, and another 15,000 tons/year production capacity is under construction. In addition, Chengdu Yutai, a holding subsidiary, completed technical transformation in the third quarter and now has a production capacity of 30,000 tons/year of anode coating materials.
The addition of anode coating material can improve the reversible capacity of the first charge of the anode material, the cycle stability and the battery rate performance, and its mass accounts for about 5%-15% of the anode material of the lithium battery. In addition to being used for lithium battery anode coating, a small amount of proprietary process products in the company's anode coating materials can also be spun to produce asphalt-based carbon fiber.
In addition, the company's production process will produce by-product rubber plasticizers, which are widely used in the rubber industry as plasticizing materials, and can also be used to blend heavy oil. The company extends the process route upward, using ethylene tar as a raw material, and in the process of preparing the direct raw material coumaron resin, the by-product cracking naphthalene fraction will be obtained, which can be used to extract industrial naphthalene and be used as a carbon black raw material.
The company's main products and their uses
Over the years, revenue and net profit have shown an upward trend. Since 2021, driven by the vigorous development of the new energy industry, the downstream lithium battery anode material market has maintained a rapid growth trend, and the company's revenue and net profit have increased significantly. In 2022, the company achieved operating income of 904 million yuan, a year-on-year increase of 83.7%, and net profit attributable to the parent company of 149 million yuan, a year-on-year increase of 8.2%. In the first half of 2023, the company's performance declined due to factors such as the phased weakening of downstream demand and the digestion of high-cost inventory, and the market demand gradually recovered in the third quarter. In the first three quarters of 2023, the company achieved operating income of 702 million yuan, an increase of 0.9% year-on-year, and net profit attributable to the parent company of 52 million yuan, a year-on-year decrease of 57.0%.
Anode coating materials are the company's main business, and by-products include rubber plasticizers and pyrolysis naphthalene fractions.
Since June 2021, the company and its supplier Panjin Futian have changed from a direct procurement model to a commissioned processing model, and the by-product pyrolysis naphthalene fraction obtained from the processing process is sold by the company, thus generating this part of the revenue. In the first half of 2023, anode coating materials, rubber plasticizers, and pyrolysis naphthalene fractions accounted for 45.5%, 29.3%, and 24.7% of the company's revenue, respectively. Anode coating materials and rubber plasticizers contribute the majority of gross profit.
Affected by the fluctuation of raw material prices, the gross profit margin has decreased since 2022.
The gross profit margin of the company's anode coating materials and rubber plasticizer products is relatively high. In 2021, the company's gross profit margin fell to 40.58% due to the delay of cracked naphthalene fraction products with low gross profit margin. The decrease in gross margin in 2022 was related to the increase in raw material prices. From 2019 to 2021, direct materials accounted for more than 70% of the company's anode coating material business costs. With the sharp rise in overall oil prices since 2022, the prices of the company's core raw materials ethylene tar and coumaron resin have shown an upward trend, of which the average purchase unit price of ethylene tar has increased from 3,206 yuan/ton in 2021 to 4,642 yuan/ton in 2022, an increase of 38%, resulting in a decrease in the gross profit margin of the main business.
The production of anode materials is relatively concentrated, and the head enterprises have obvious advantages.
According to EVTank, global anode material shipments will reach 1.556 million tons in 2022, of which China's anode material shipments will reach 1.433 million tons, accounting for 92%. According to Huajing Industry Research Institute, China's anode material industry is highly concentrated, with CR3 exceeding 50%. In the context of low-end overcapacity, leading manufacturers are expected to seize the opportunity by virtue of product quality advantages and scale advantages, and the industry concentration is expected to be further improved. Based on a rough estimate of the unit price of 14,000 yuan/ton with a 10% addition amount, we estimate that the market size of anode coating materials in 2022 will be about 2 billion yuan.
The company is firmly in the leading position of anode coating materials, with an existing production capacity of 70,000 tons.
Anode coating material is a subdivision of the upstream of anode material, and there are few participants in the industry market, mainly including Xinde New Material, Xinjiang China Carbon Technology, German Lütge, Dalian Mingqiang, Liaoning Aoyida, Liaoning Runxing and other companies, among which Xinde New Material has the superior production capacity. According to the prospectus, the company's market share in the anode coating material industry in 2020 will be between 27-39%. After the completion of the technical transformation in the third quarter of 2023, the company's Dalian base will have a production capacity of 40,000 tons, and the Chengdu base will have a production capacity of 30,000 tons, with a total production capacity of 70,000 tons.
The company has stable customer resources. The concentration of anode materials is high, and the company's customers cover the main leading enterprises of anode materials, including Jiangxi Zichen (a wholly-owned subsidiary of Putailai), Shanshan Co., Ltd., beiteri, and Kaijin Energy, and the supply of two of them exceeds 50%. Due to the strict technical standards of anode materials, the product certification cycle is long, and the company will form a high certification barrier in a short period of time by entering the downstream supply chain with high-quality products, so as to ensure that the company maintains a high market share in a certain cycle.
The company is a leading enterprise of anode coating materials in China, and the development of the downstream lithium battery industry promotes the continuous expansion of the market scale of anode coating materials, and the company has strong competitiveness. In the first half of 2023, operating income declined due to the adjustment of selling prices to seize the market share of low- and medium-temperature products. In the future, with the gradual launch of Dalian fundraising project and Chengdu Yutai's technological transformation and production capacity, as well as the improvement of the expected profit center under the trend of integrated process route.
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