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Senior Material Expects Surging Profit Growth for First Half of 2022 as New Production Capacity for Separator Films Is Being Rapidly Released

published: 2022-07-18 9:30

Many Chinese companies involved in the lithium battery industry are projecting impressive financial results for the first half of this year because of the continuing boom in the global market for new energy solutions. Shenzhen Senior Technology Material Co. Ltd., a Chinese supplier for battery separator materials, reported on July 5 that its net profit for the first half of this year is estimated to have reached around CNY 365-385 million, thereby showing a year-on-year growth rate of 227.05-244.97%.

Senior said two factors were behind the massive profit growth during the first half of this year. First, the company was able to maintain steady growth because the market for Li-ion battery separator materials was fairly strong during the period. Senior also activated the initial production capacity of its latest expansion projects, and this helped reinforce the partnerships with the existing clients and opened up more opportunities in the overseas markets. Second, the impact of non-recurring gains and losses on the company’s net profit (that is attributed to the shareholders of the listed company) is estimated to reach just around CNY 15 million. Going forward, Senior will continue to optimize its client base in order to significantly raise its profitability.

Established in September 2003, Senior focuses on the development, manufacturing, and sales of Li-ion battery separator materials. Initially, the company is a distributor of separator films. Now, it can provide specific technological solutions, and its main offerings include a range of advanced materials that are purposed for separator films. In 2006, Senior acquired a wet separator technology and set up a related trial production line. Then, in 2008, it made a significant investment to enhance its own R&D capability. This resulted in a breakthrough in the development of a one-way stretch (uniaxial extrusion) process for the manufacturing of dry separator materials. The technological achievement was followed by the setup of the first production line for dry separator films in China.

Senior began its overseas expansion in 2013. Its first success was securing the position of being the exclusive supplier to LG Chem for dry separator films. In 2014, Senior completed the development of its production line for wet separator films and began shipping related products to LG Chem, BYD, and Gotion Hi-Tech. Later, in 2015, Senior acquired the license for Safety Reinforced Separator (SRS) that had been developed by LG Chem. The technology is a ceramic coating that improves the separator film in terms of mechanical strength and thermal deformation resistance. Senior therefore became the first Chinese supplier with the capabilities to manufacture dry, wet, and coated separators.

Moving into 2016, Senior launched its IPO on the Shenzhen Stock Exchange. During the 2017-2019 period, the company used the additional capacity raised from selling shares to establish local subsidiaries in China and scale up its production capacity for coated separators. In 2019, Senior became a supplier to CATL.

Starting in 2020, Senior has been picking up the pace in overseas expansion. The company signed supply agreements first with Northvolt and then with LG Energy Solution, thereby strengthening its relations with the major foreign clients. In 2021, Senior formed its European subsidiary and invested no more than CNY 2 billion to build a plant in Switzerland for the production of coated and wet separators. The company also ramped up capacity expansions in the home country in the same year. For instance, it announced a plan to invest around CNY 10 billion to build a base in the Nantong ETDZ. The base is expected to have a production capacity of 3 billion square meters per year for coated and wet separators. Additionally, Senior captured another huge order from LG Energy Solution for coated wet separator film. The deal is estimated to worth CNY 4.3 billion.

As of now, Senior has a global presence with its headquarters in Shenzhen as the center of its operation. The company is running production facilities in several Chinese provinces (e.g., Guangdong, Anhui, and Jiangsu) and Europe. Furthermore, it has established R&D centers in Japan and Germany. In terms of offerings, Senior currently sells dry, wet, and coated separators for Li-ion batteries. The main application segments that its products are targeting are new energy vehicles, consumer electronics, and energy storage equipment. It is also worth noting that the company has achieved some success in the development of products for aerospace applications.

In the aspect of production scale, Senior’s production capacity for separator films now totals around 1.6 billion square meters per year. Of that, wet and dry separators account for around 1 billion and 600 million square meters respectively. The company aims to reach 6 billion square meters per year for separator films and 4 billion square meters per year for film coating by 2025.

Looking at Senior’s client base, the major domestic clients include CATL, BYD, Gotion Hi-Tech, CALB, EVE, Lishen, Sunwoda, and SVOLT. They are mostly Li-ion battery suppliers. In the international market, Senior’s tier-1 foreign clients include LG Energy Solution, Samsung SDI, Murata, and SAFT. On the whole, Senior has formed partnerships with many major Li-ion battery suppliers. In addition to getting its products qualified and adopted by clients, Senior continues to improve the performances of its existing products and pursue innovations in order to create new products. These activities, in turn, are raising the company’s competitiveness on a global level.

Regarding Senior’s financial result for 2021, the company’s actual operating revenue rose by 92.48% year on year to CNY 1.861 billion. The net profit of the parent company rose by 133.49% year on year to CNY 283 million, whereas the net profit attributable to equity holders rose by 235% year on year to CNY 296 million.

This article is a translation of a Chinese article written by Wendy at TrendForce. It contains information that is either sourced from other news outlets or accessible in the public domain.

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