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Demand hike prompts Chinese firm to triple battery separator film capacity

By: Nina Ying Sun

June 17, 2014

In response to soaring demand, Cangzhou Mingzhu Plastic Co. Ltd. plans to invest about 245.9 million yuan ($39.4 million) to build additional capacity for separator film for lithium-ion batteries.

Chairman Yu Lixin told investors last week that the company sees significant growth for its battery separator film business this year. He said its customer, battery maker BYD Co. Ltd., has been increasing output in recent few months and it will have a positive impact on Cangzhou Mingzhu.

Cangzhou Mingzhu's sales of battery separator film jumped by 90 percent in 2013, reaching 50.2 million yuan. It currently has an annual capacity of 20 million square meters of battery separator film and produced about 13 million square meters in 2013.

The planned expansion includes a dry process project of 20 million square meters of annual capacity and a wet process project of 25 million square meters.

The dry process project will take 12 months to build and an investment of 87.4 million yuan ($13.9 million). It is estimated to generate 86 million yuan ($13.8 million) of annual sales and 23.35 million yuan ($3.7 million) of net profit.

The wet process project will take 18 months to build with an investment of 158.5 million yuan ($25.5 million). The company expects it to generate 130 million yuan of annual sales and 32.6 million yuan of net profit.

The company last week announced plans to raise the fund for the expansion through non-public offering of shares.

It also plans to raise 80 million yuan ($12.8 million) to inject cash into two ongoing expansion projects: a 15,000-metric-ton-per-year polyethylene pipe project and a 5,500 metric ton biaxially oriented nylon film project.

The company currently has 90,000 tons of PE pipe capacity and 23,000 tons of nylon film capacity.

The company posted 1.98 billion yuan ($317.9 million) of sales in 2013 with 150 million yuan ($24 million) of net profit. In the first quarter of 2014, sales came in at 370 million yuan ($59.4 million) and net profit 21.8 million yuan ($3.5 million).

Cangzhou Mingzhu, a joint venture between Hebei Cangzhou Dongsu Group Co. Ltd. and Hong Kong Juhong Co. Ltd., is publicly listed on the Shenzhen Stock Exchange.