This LED company invests 6 billion yuan to transform production... | BYD and BOE establish new lighting-related companies

On July 22, Shaoxing BYD Semiconductor Co., Ltd. was established with a registered capital of RMB 50 million. Its business scope includes: manufacturing of semiconductor discrete devices; sales of semiconductor discrete devices; manufacturing of semiconductor lighting devices; sales of semiconductor lighting devices, etc.. Equity penetration shows that the company is 100% held by BYD Semiconductor.

The Qichacha app shows that Yibin Shuyun Technology Co., Ltd. was recently established, with Xia Ji as the legal representative and a registered capital of 7 million RMB. Its business scope includes: IoT technology R&D; digital cultural and creative software development; battery sales; sales of semiconductor lighting devices, etc. Equity penetration analysis reveals that the company is indirectly jointly held by BOE A (000725) and others.

On July 27, Shenzhen Baoming Technology Co., Ltd. (hereinafter referred to as "Baoming Technology") announced that the company signed an "Investment Project Contract" with the Management Committee of Ganzhou Economic and Technological Development Zone. The contract stipulates investment in a lithium battery composite copper foil project in the Ganzhou Economic and Technological Development Zone, with a total project investment of RMB 6 billion, mainly producing lithium battery composite copper foil.

Among them, fixed asset investment is 5 billion yuan, and working capital is 1 billion yuan. Phase I of the project has an investment of 1.15 billion yuan, with fixed asset investment of 1 billion yuan, leasing factory buildings for production. Phase II of the project has an investment of 4.85 billion yuan, with fixed asset investment of 4 billion yuan, purchasing land for production.

It is understood that Baoming Technology's original main business was the research and development, design, production, and sales of LED backlights, as well as deep processing of major processes for capacitive touch screens. Previously, it had no intersection with the copper foil industry. According to the company's website, the company is mainly engaged in LED backlight R&D, design, production, and sales, as well as deep processing of major processes for capacitive touch screens . Its main products fall into two categories: LED backlights and capacitive touch screens.

Baoming Technology's major transformation into new energy materials stems from sluggish growth in its existing business. The company listed on the capital market in 2020. In 2021, affected by fierce competition in the mobile phone backlight market and declining sales prices, Baoming Technology saw both revenue and net profit decline. Specifically, revenue for the year was RMB 1.12 billion, a Year-on-year (YoY) decrease of 19.08%; net profit was -RMB 350 million, turning from profit to loss. In the first quarter of 2022, the company's Revenue was RMB 255 million, a Year-on-year (YoY) increase of 9.73%, while Net profit recorded a loss of RMB 25.0221 million.

It is understood that the traditional anode current collector material for lithium batteries is electrolytic copper foil, which accounts for approximately 9%–15% of the cost of lithium batteries. In recent years, the battery copper foil industry has developed rapidly in tandem with the new energy vehicle market. According to estimates by BOC International (China) Electric & New Energy, global demand for lithium battery copper foil will reach 768,200 tons in 2025, with a compound annual growth rate (CAGR) of 29.3% from 2020 to 2025. By 2025, the global market size for lithium battery copper foil is expected to reach RMB 58 billion, of which the market for 6μm copper foil is expected to reach RMB 30.4 billion.

Baoming Technology recently stated during investor surveys that, compared to traditional copper foil, composite copper foil offers advantages such as lighter weight, higher energy density, longer service life, higher safety, and wider application. Taking traditional 6-micron copper foil as an example, composite copper foil consists of a 4-micron polymer material in the middle and 1 micron of copper on each side, therefore the manufacturing cost is lower than that of traditional copper foil, offering greater gross margin potential. Although composite copper foil represents entry into a completely new field for Baoming Technology, the company has long-term accumulation in metal coating technology, which is the core technology of composite copper foil. According to reports, the company's production yield for lithium-ion battery composite copper foil is approximately 80%. After the Ganzhou Phase I project reaches full production capacity, it will produce approximately 150-180 million square meters of lithium-ion battery composite copper foil annually (equivalent to about 10,000 tons of traditional copper foil).

Baoming Technology stated that the company's current investment in building a lithium battery composite copper foil production base is based on its overall future development strategy. By effectively integrating advantageous resources, expanding the company's business development space, and accelerating its strategic layout, this move holds positive significance for the company's long-term development.

This investment in the construction of a lithium battery composite copper foil production base will provide new momentum for the company's future performance growth, enhance its profitability and overall competitiveness, promote sustainable and healthy development, and align with the company's development strategy and the interests of all shareholders.

How to raise the investment of RMB 6 billion? Baoming Technology stated that it will invest using its own or self-raised funds. For the upcoming Phase I project, the company will comprehensively consider raising funds through自有 funds, bank project loans, and industry funds.