Defu Technology Sprints Growth Enterprise Market： Backed by LG Chem and Contemporary Amperex Technology Co., Limited to Layout High-performance Products.

　　In 2022, the lithium battery track continues to be hot. Under the high industry boom, copper foil enterprises actively expand their production capacity, and the expansion tide of related companies continues.

　　SMM research shows that domestic copper foil enterprises plan to put into production 269,000 tons of lithium-ion copper foil in 2022, up 162% year-on-year. The planned production capacity of H1 is 122,000 tons, and that of H2 is 147,000 tons.

　　Jiujiang Telford Technology Co., Ltd. (hereinafter referred to as Telford Technology) is one of them, and its style is decisive and low-key. In the past three years, its copper foil production capacity has increased from 13,000 tons/year at the beginning of 2019 to 49,000 tons/year at the end of 2021, with a compound annual growth rate of 55.63%. The total planned production capacity of its Lanzhou base in the future will reach 200,000 tons/year.

　　Become the main supplier of lithium battery copper foil business, and whether the layout of high-performance products conforms to the market?

　　According to its prospectus, Telford Technology, formerly known as Jiujiang Electronic Materials Factory, was established in 1985 and is one of the oldest domestic electrolytic copper foil manufacturers in China. In the course of more than 30 years’ development, Telford Technology first seized the development opportunity of PCB industry moving to China and then transforming new energy materials, recruited troops to expand production against the trend, and jumped into the forefront of domestic copper foil enterprises.

　　The second round of reply shows that the capacity utilization rate of comparable companies in the same industry is compared.

　　According to public information, in 2021, Telford Technology ranked third among domestic enterprises in terms of electronic circuit copper foil shipments and fourth among domestic enterprises in terms of lithium battery copper foil shipments, and its production capacity and market share ranked first in the industry. We have established stable and good cooperative relations with leading enterprises in downstream industries such as (), (), (), Zhongchuang Singapore Airlines, (), () and Lianmao Electronics.

　　Among them, the performance of lithium battery copper foil business is particularly eye-catching. In 2021, Telford Technology sold 23,000 tons of lithium battery copper foil, a year-on-year increase of 309%; Among them, the sales volume of 6μm copper foil was 20,000 tons, up 950% year-on-year, and it became one of the main suppliers of 6μm lithium battery copper foil in copper foil industry.

　　The layout of Telford Technology’s lithium battery copper foil business dates back to 2015, and the 8μm lithium battery copper foil products made slow progress at the beginning. In 2018, it ushered in a breakthrough and completed the development of 6μm high tensile lithium battery copper foil. From January to June of 2019-2021, the proportion of 6 μ m revenue increased from 37.28% to 91.42%, and the gross profit margin increased from 17.28% to 24.33%. With the heavy volume of major customers such as Contemporary Amperex Technology Co., Limited,

　　In 2021, we will further master the mass production technology of 6μm high modulus lithium copper foil and 4.5μm high tensile lithium copper foil, of which 4.5μm products have been shipped in batches; In 2021, it was revealed that 4μm high modulus products, 5μm high modulus products and 8μm high elongation products had entered the customer sample stage.

　　The new energy boom remains, and the copper foil industry is in short supply.

　　At present, the revenue proportion of Telford Technology’s lithium battery copper foil business has increased from 9.85% in 2018 to 57.36% in 2021, and this trend is expected to continue further. This is not just what happened to Telford Technology, but the trend of the industry.

　　The downstream market demand of new energy vehicles is still optimistic. According to the forecast of China Association of Automobile Manufacturers, in 2022, China’s total automobile sales volume is expected to reach 27.5 million, and new energy vehicles will reach 5 million, up 42% year-on-year, and the market penetration rate is expected to exceed 18%. According to GGII’s forecast, by 2025, the sales of new energy vehicles in China will reach 10.5 million, and the compound annual growth rate will reach 31.19% from 2021 to 2025, with a strong momentum of sustained growth.

　　Since the rapid warming of the new energy industry in the second half of 2020, the relationship between supply and demand of raw materials in the upstream of lithium batteries has continued to be tense, and the demand for lithium battery copper foil in the downstream market has been increasing. According to incomplete statistics, since 2021, dozens of lithium battery companies including Contemporary Amperex Technology Co., Limited, () and Guoxuan Hi-Tech have announced that their planned new production capacity has reached 1,894GWh. If they all adopt 6μm lithium battery copper foil products, the demand for 6μm copper foil is close to 1.2 million tons according to 622 tons /GWh, and the market demand is huge.

　　According to GGII statistics, in 2021, the shipment of lithium battery copper foil was about 280,500 tons, up 124.0% year-on-year, and the relationship between supply and demand in the industry continued to be tense. Under the tight balance, lithium battery copper foil products are in short supply, with full production and full sales, and copper foil enterprises are profitable.

　　Telford Technology is an example. In 2019, 2020 and 2021, the company achieved operating income of 755 million yuan, 1.374 billion yuan and 3.940 billion yuan respectively, and the net profit after deducting non-return to the mother was-3,606,100 yuan, 15,239,300 yuan and 464 million yuan respectively. The gross profit margin of the main business was 10.63%, 10.75% and 264 million yuan respectively. In 2021, compared with listed companies in the same industry, Telford Technology’s revenue and net profit attributable to the parent company ranked second in the same industry, and its profitability was significantly enhanced.

　　When expanding production, the shipment is expected to exceed 60,000 tons by the end of the year.

　　Under the high prosperity of the industry, the copper foil industry has set off a new wave of expansion, among which Telford Technology is one of the most powerful. At the end of 2021, the company’s production capacity was 49,000 tons, with a year-on-year increase of 63.33%, which was higher than the industry average. GGII shows that Telford Technology shipped more than 11,000 tons of lithium copper foil in the first quarter of 2022, and the annual shipment is expected to exceed 60,000 tons.

　　In the context of capacity expansion, yield and supply chain security need to be paid attention to. Telford Technology vigorously promotes the quality improvement plan to ensure the quality stability of 100,000-ton delivery. In addition, Telford Technology has reached a strategic cooperation with () to ensure its cathode copper supply security, improve procurement efficiency, and provide guarantee for its lithium battery copper foil production capacity construction and release. The metaphor of the image: "Holding thighs to do oriental selection!"

　　Technical strength was recognized by two battery giants, and Telford Technology sprinted the GEM.

　　In the fierce market competition, the core technology is the key to break the competition barrier. According to the prospectus of Telford Technology, its core technology additives are independently researched and developed, and it is also one of the few domestic copper foil enterprises to conduct product research and development with a doctoral research and development team as the backbone. With strong R&D strength, Telford Technology continues to upgrade its products in the direction of "high tensile strength, high modulus and high elongation".

　　In the field of electronic circuit copper foil, at present, the production capacity of main electronic circuit copper foil in China is still concentrated in low-end products, and only a few leading enterprises have achieved mass production of high-end products, such as RTF copper foil and VLP copper foil. At present, Telford’s scientific and technological products are mainly high-performance HTE copper foil and HDI copper foil, and RTF copper foil has entered the stage of scale trial production. At the same time, the research and development of VLP and HVLP products are progressing in an orderly manner, and the additive compounding technology, one of the core processes, has been overcome.

　　The technical level and quality of Telford’s technology products are generally recognized in the industry. In the first half of 2021, Telford won strategic investment from two battery giants, Contemporary Amperex Technology Co., Limited and LG Chem, setting a precedent for domestic copper foil industry. Among them, Contemporary Amperex Technology Co., Limited indirectly participated in this round of financing through Chendao Capital, and Chendao Capital strategically holds nearly 4% of the shares; LG Chem invested 40 billion won (about 230 million yuan), holding nearly 5% of the shares.

　　Driven by the strong demand in the downstream market, Telford Technology applied for the Growth Enterprise Market at the end of 2021, and planned to raise 1.2 billion yuan for 28,000 tons/year high-grade electrolytic copper foil construction projects, high-performance electrolytic copper foil research and development projects and supplementary working capital.

　　Telford Technology disclosed in the prospectus that it will continue to deepen the electrolytic copper foil industry in the future, and rely on its own market position and core technology accumulation to promote the sustainable development of its main business. The company will continue to rely on technology and product innovation ability to carry out production and business activities, grasp the industry demand and the development direction of advanced technology, continue to invest R&D resources in two areas of lithium battery current collector copper foil and electronic circuit copper foil, consolidate its leading edge in the field of lithium battery current collector copper foil, actively lay out the application of the next generation of lithium battery current collector copper foil products, strengthen the research and development and promotion of high-end electronic circuit copper foil products, and enhance the company’s core competitiveness.

　　We will wait and see whether the horn blows and whether it can succeed.