Recently, Shandong Changxin Chemical Technology Co., Ltd. (abbreviation: Changxin Chemical) Science and Technology Innovation Board IPO was accepted.
Source: Science and Technology Innovation Board official website
According to the data, Changxin Chemical was established in 2009. It is a high-tech enterprise focusing on the research and development, production and sales of fine chemicals. The main products are lithium battery materials such as N-methylpyrrolidone (NMP) and carbon nanotubes (CNT). And γ-butyrolactone (GBL), 2-pyrrolidone (2-p), cyclohexylamine (CHA), dicyclohexylamine (DCHA), furfuryl alcohol (FA) and other fine chemical materials. In addition to selling products, Changxin Chemical also provides customers with NMP recovery liquid purification and processing services.
Among them, NMP is the core product of Changxin Chemical, and it is also its main source of income.
NMP is a high-boiling solvent with excellent performance, low viscosity, high polarity, good chemical and thermal stability, miscible with water and most organic solvents, and can be widely used in chemical industry, resin plastics, coatings, Ink, dye, pesticide, lithium-ion battery, electronics and other industries. Judging from the distribution of NMP application fields, my country’s NMP is currently mainly used in the preparation of lithium batteries. In 2021, China’s NMP consumption in the lithium battery industry will account for more than 80%.
In the preparation of lithium batteries, NMP has two main uses, one is as a positive electrode coating solvent, and the other is as a solvent for lithium battery conductive agent slurry, which is an indispensable solvent material.
It is understood that the first set of industrialized NMP in China was produced by Changxin Chemical. Since 2008, China’s NMP industry has experienced explosive growth. Many large-scale NMP manufacturers have a production capacity of 10,000 tons. However, at that time, lithium battery manufacturers had high requirements for the purity of NMP, and the technical level of the manufacturers could not meet the requirements of customers. Still need to rely on a large number of imports.
In recent years, with the advancement of industry technology, a breakthrough has been achieved in improving the purity of NMP for different purposes. The production and sales of major enterprises in the industry have grown rapidly. At present, the production and sales of domestic NMP rank first in the world.
According to the data in the research report, 1700 tons of NMP are required for the production of every 1GWh of lithium batteries. Through the public data query and calculation of the shipments of various types of lithium batteries in my country, the demand for NMP in 2025 is expected to be 2.1515 million tons, and the future development of the NMP market has broad prospects.
The prospectus shows that Changxin Chemical has an NMP production capacity of 160,000 tons per year, making it one of the largest producers in the industry.
In this IPO, Changxin Chemical plans to raise 925 million yuan, which is planned to be used for the annual production of 80,000 tons of NMP and 10,000 tons of nano-conductive agent recycling projects after deducting the issuance expenses, and the annual production of 60,000 tons of Jiangxi Xinminhui New Material Technology Co., Ltd. 10,000 tons of NMP aqueous solution and 10,000 tons of nano-conductive agent production projects, Inner Mongolia Changxin Nano Technology Co., Ltd.’s annual production of 1,500 tons of nano-carbon tubes and supporting pickling purification projects, supplementary working capital.
Source: Changxin Chemical Prospectus
At the same time, through the study and judgment of the development trend of the downstream lithium battery industry, Changxin Chemical has completed the NMP production capacity layout plan for 2021-2025: it will start new production capacity construction in six provinces in Shandong, Anhui, Inner Mongolia, Jiangxi, and Sichuan.
In terms of customers, after years of accumulation and precipitation, Changxin Chemical’s customers have covered production and trading companies in the fields of lithium batteries, pharmaceuticals, and electronic materials. Including BYD, Sunwoda, Ganfeng Lithium Battery, Honeycomb Energy, Funeng Technology, Narada Power, Zhuhai Guanyu, ATL, Wanxiang 123, Tianjin Lishen, Qingdao Haoxin, Alentas (China), Shang Shun Chemical, Fangda Additives, Guobang Pharmaceutical and other high-quality customers in various industries.
It is worth mentioning that, as mentioned above, Changxin Chemical also provides customers with NMP recovery liquid purification and processing services. It plans to deploy NMP rectification and recovery production lines across the country for nearby lithium battery customers. The first wave of projects will be launched in Guang’an, Sichuan. and Yichun, Jiangxi.
In addition, in order to broaden the customer service area of the lithium battery industry, Changxin Chemical has started the carbon nanotube business since 2021, and has deployed the production of carbon nanotube powder and conductive paste. This time, it is planned to build carbon nanotube conductive paste production lines in Guang’an, Sichuan and Yichun, Jiangxi.
At present, Changxin Chemical’s carbon nanotube conductive paste has been produced and sold in small batches, and some lithium battery customers are undergoing product verification and testing, and will realize large-scale supply in the future.
In terms of performance, from 2019 to 2021 and from January to June of 2022, Changxin Chemical’s operating income will be 835 million yuan, 637 million yuan, 1.573 billion yuan and 1.078 billion yuan respectively; 10,000 yuan, 129 million yuan, and 41.0417 million yuan, with large fluctuations in operating performance.
In addition, during the reporting period, the gross profit margins of Changxin Chemical’s main business were 13.37%, 13.92%, 19.73%, and 10.95%, respectively. Therefore, Changxin Chemical expects that the operating profit for the whole year of 2022 will drop sharply.
Source: Changxin Chemical Prospectus
In terms of market competition, the entry threshold of the NMP industry is not high. Affected by the continuous prosperity of the downstream lithium battery industry, the number of enterprises engaged in NMP production and recycling in the industry is increasing, and the scale of the industry is expanding. But at the same time, this has also caused the problem of unbalanced development structure of my country’s NMP industry. There are a large number of small and medium-sized enterprises and they mainly focus on recycling. The low technical level leads to excess production capacity at the low end and insufficient production capacity at the high end. In the future, with the expansion of the lithium battery and microelectronics markets, the demand for high-purity NMP will become higher and higher. How to quickly and efficiently produce high-purity NMP is the main direction of future industry development. The industry structure will focus on high-end production capacity. Leading enterprises market share will further increase.
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