On the first day of the New Year in 2022, Shanshan Shares (600884.sh) announced the completion of a 3.053 billion yuan private placement plan. The funds raised were mainly used to replace the early acquisition funds of Shanshan Shares, that is, to Suzhou Shanjin increased capital to acquire 70% of Suzhou Shanjin’s equity, and indirectly purchased 70% of LG Chem’s LCD polarizer business and related assets in mainland China, Taiwan and South Korea through Suzhou Shanjin.
The implementation of this private placement will significantly enhance Shanshan Co., Ltd.’s technology and scale competitiveness in the global LCD polarizer market, and further strengthen its leading position in the global polarizer industry.
The performance of the polarizing film industry has taken off strongly
Since the completion of the delivery of the relevant assets in mainland China for this acquisition on February 1, 2021, the polarizing film business has been included in the consolidated statements of listed companies . In the first three quarters of 2021, the polarizer business achieved revenue of 7.53 billion and net profit attributable to the parent company of 890 million, accounting for 48 and 32 of the company respectively. It has made outstanding performance contributions and is likely to hold up half the sky.
Polarizer is a key component in the production of LCD panels. LCD panels are widely used in consumer electronics such as TVs, monitors, laptops, tablets, etc. The market demand is steadily increasing, especially the demand for large-size TVs. It is expected that the year-on-year growth rate will be 23% in 2021, and the compound annual growth rate will still be maintained at approximately 16% in the next few years.
Since 2016, the global panel industry chain has gradually shifted to China. The LCD panel production capacity and share of the Chinese mainland market have been rapidly increased, and the scale has ranked first in the world.
Compared with the rapid increase in LCD panel production capacity, there is still a large gap in the local supply of polarizers as the main raw material. According to IHS data, the polarizer production capacity gap in mainland China will reach 117 million square meters in 2022. rice.
Faced with such a blue ocean market, the time is just right for the company to acquire the polarizer business. The LG Chem polarizer business acquired by the company has become the industry leader since 2013, accounting for approximately 25% of the global market share in 2020, ranking first in the world.
From the perspective of different display application fields, in 2020, LG Chem’s market shares in large-size TFT-LCD polarizers, LCD TV polarizers, and Monitor polarizers were 24.1, 25, and 25 respectively. 24, both ranking first in the world, and the proportion of 65-inch (inclusive) and above is as high as more than 40%. It is a truly global leader.
The polarizer business currently has 8 front-end production lines with a production capacity of approximately 130 million square meters, of which 5 are ultra-wide production lines of more than 2 meters. It is the global market leader in the ultra-wide field and the industry leader. The first company to use ultra-wide production lines, the 2600 mm ultra-wide production line is the largest in the world. In the first half of the year, the company successively launched new projects in Zhangjiagang, Mianyang and other places. After full production, the annual production capacity will be increased by 90 million square meters, further increasing the overall production capacity.
In addition, in 2003, LG Chem took the lead in investing in post-processing production lines in Nanjing. It currently has 12 post-processing bases distributed across the country and has strong post-processing production capabilities.
The back-end production line includes the industry-leading RTS (roll to sheet) production line and RTP (roll to panel) production line, which can provide downstream LCD panel manufacturers with a complete set of RTP that can be used for their back-end production. Production lines, and most factories are located near customer factories, which can quickly meet customer needs such as model change while controlling transportation and packaging costs.
Currently, polarizer business customers include the world’s leading LCD manufacturers BOE, LG Display, CSOT, Sharp and Innolux, among which the cooperation time with LG Display, BOE and Sharp has been as long as 20 years respectively. years, 15 years and 13 years.
It can be seen that the polarizer business acquired by the company is a high-quality asset, and despite the continued growth of market demand and obvious production capacity gap, the company still ranks first in the world and has obvious advantages.
Lithium battery materials are busy expanding production
The company began to industrialize negative electrode materials in 1999. It got involved in cathode materials in 2003 and electrolytes in 2005. It has been deeply involved in lithium batteries for more than 20 years and has a stable leading position in the industry. , leading the industry in comprehensive production capacity, and the winner of the Grand Slam of lithium battery materials.
As of the 2021 semi-annual report, the company has a production capacity of 60,000 tons of cathode materials, 120,000 tons of anode materials, and 40,000 tons of electrolyte. Customers include ATL, LGES, CATL, BYD, Lishen, Honeycomb Energy, Funeng Technology, Guoxuan Hi-Tech, Yiwei Lithium Energy, SDI and other global mainstream battery companies.
Benefiting from the continued prosperity of the downstream new energy vehicle industry and the continued production of the company's lithium battery materials project, the company's lithium battery materials business has also achieved a performance explosion. In the first three quarters of 2021, revenue and net profit attributable to the parent company respectively reached 7.23 billion and 840 million, a year-on-year increase of 58 and 465 respectively.
(1) Anode: Global leader
Shanshan Anode Company is the first domestic enterprise engaged in the research, development and production of artificial graphite anode materials for lithium-ion batteries. Its consumer battery anode materials Leading the industry's technical standards, power products sell well in domestic and overseas markets with extremely cost-effective advantages, and their share among core customers such as ATL and CATL continues to expand.
The company's independently developed high-energy-density low-expansion technology, fast-charge coating technology, and silicon anode precursor synthesis technology are all at the forefront of the industry. Since 2019, Shanshan's anode technology has joined the national team and been selected as a national enterprise. Technology center, national manufacturing individual champion demonstration enterprise, and national high-tech enterprise.
With the rapid development of the new energy industry, lithium battery anode materials will also maintain explosive growth in the next ten years, and the company is also planning to build production capacity ahead of schedule. Currently, the company has an anode material production capacity of 120,000 tons. With the second phase of the Baotou integrated project put into operation at the end of 2021, the company's anode production capacity will reach 180,000 tons.
On January 4, 2022, the company's Meishan anode material project with an annual output of 200,000 tons officially started construction. The project has reached the industry-leading level in terms of investment intensity, production capacity scale and process technology. The company has become a global leader in anode materials.
The key to the production of negative electrode materials lies in the supply security of raw materials and the cost of graphitization processing in the main process.
The company signed a strategic cooperation agreement with PetroChina Jinzhou Petrochemical Company to carry out all-round cooperation in the fields of needle coke, petroleum coke, calcined coke and other raw materials. Jinzhou Petrochemical is an industry leader in the field of needle coke. The outstanding technological and resource advantages will provide raw material guarantee for Shanshan Co., Ltd.’s strategic planning in the next 3 to 5 years.
In terms of graphitization processing, the company has adopted internal expansion, equity participation, etc. to expand graphitization production capacity. Currently, the proportion of graphitization supporting equipment is relatively high. The cost of raw material supply and graphitization processing has been guaranteed, and with the optimization of product structure and the emergence of scale effects, the company's gross profit margin of anode materials has continued to increase, from 24.4 in 2018 to 27.7 in 2020.
(2) Cathode: strong alliance
In terms of cathode materials, the company has always maintained a leading position in the industry in the technology of lithium cobalt oxide cathode materials for high-voltage and high-capacity consumer electronic products. It has also built its own product and technology system in terms of ternary materials, especially high-nickel power ternary cathode materials, which can meet the needs of customers at different levels. The company currently has a cathode material production capacity of 60,000 tons. It is expected that after the second phase of the Changsha base is put into operation in 2022, the production capacity will reach 90,000 tons.
On August 31, 2021, the company’s cathode business company Shanshan Energy completed the integration with Germany’s BASF. BASF is a world-famous chemical leader and the first in the world to have ternary cathode material factories on three continents. The company has a ternary patent authorization from Argonne National Laboratory (ANL) in the United States.
This joint venture will help Shanshan Energy leverage BASF’s cooperation resources with the world’s leading car companies, global industrial layout, core patent technology licensing, and international With its brand influence and other advantages, it can quickly integrate into and seize the global market, increasing its profitability and market share. After the transaction is completed, the company's shareholding ratio in Shanshan Energy will be reduced from the original 68.6438 to 49, and will no longer be incorporated into the consolidated statements. However, the company will appoint some directors and senior executives to participate in its daily operations and management, and adopt equity method accounting. Long-term equity investment, profit distribution and other methods contribute to the company's profits.
(3) Electrolyte: cost reduction, profit improvement
The core of the electrolyte is lithium hexafluorophosphate. In the first half of 2021, the company’s 2,000-ton lithium hexafluorophosphate production line has reached capacity. The price of lithium hexafluorophosphate has increased significantly. In addition to the company's own part of the lithium hexafluorophosphate production capacity, the performance has increased significantly year-on-year. In the first three quarters of 2021, the electrolyte business achieved a net profit of 224 million attributable to the parent company.
The company also plans to build a new lithium hexafluorophosphate production capacity of 2,000 tons. Once completed and put into operation, the company's lithium hexafluorophosphate production capacity will reach 4,000 tons, which will ensure the supply security of the company's electrolyte raw materials while reducing the company's electrolyte raw material costs and improving profitability. ability.
As the global new energy industry continues to prosper, Shanshan Co., Ltd., which has also laid out lithium battery cathode materials, anode materials and electrolytes, has finally ushered in a bright moment, with continuous improvement in profitability and great performance. break out.
By acquiring LG's high-quality polarizer assets, the company has completed the layout of the two major sectors of "lithium battery materials and polarizers", and a new journey has begun.
Editor-in-chief: Luo Zaifang
Proofreader: Wan Li
General duty: Ding Xiangle