CAPCHEM

Global electronic chemical products supplier

Media

May 27

Live : walk in Capchem “ A Testa concept stock”

The lithium battery market competition is intense. Capchem optimizes the customer structure to control risk.


“Ideal plump, reality is very skinny”. In the face of market heating with lithium batteries, the CEO,Mr. Qin JiuSan makes a comment with the calm attitude to evaluate the current status of lithium battery industry of fierce market competition.


In the past year, Tesla effects in the a-share market continue to attack, driving A heat of lithium battery, but the reality is that the lithium battery industry chain upstream and downstream. Manufacturers are facing fierce competition status: although sales have risen sharply, but the price has fallen sharply as well as the gross margin.


As a leading supplier of lithium battery electrolyte, Capchem still keep advantage under the industry trend, the market share accounted for nearly one-to-five of the electrolyte. In the activity of “practicing Chinese dream, walking into the listed companies. ", Mr.Qin JiuSan revealed the secrets of them:" Capchem optimizes customer and product structure to control the market risk.”


The fierce competition in the industry


Although in the transatlantic Tesla lead the electric car industry, but the electric car upstream of the electric car , the lithium battery industry is not like Tesla ‘scenery. Capchem’ general manager Mr. Zhou Dawen states that the domestic lithium battery industry growth in 2013 to a certain extent, but prices go down very serious, price drops more than 20%


"Judging from the electrolyte, the situation is stable on the whole, however, under the background of the increase on the demand and falls of the price, the situation of almost all the enterprises are about the same" Mr. Zhou dawen said: "two years ago, upstream material of lithium battery electrolyte, lithium salt, price was higher, price was between 200000 yuan per ton to 300000 yuan , now below 100000 yuan." 


The prices of upstream Product also conductive to the downstream products, electrolyte cost is also changing. “ the cost ratio of lithium salt in the electrolyte used to be between 60% to 60%, now has reached 30% to 40%."Mr. Zhou Dawen explained. 


Upstream material ,lithium salt will also be faced with the plight of excess capacity. According to Zhou Dawen said, According to media, the lithium salt production capacity of domestic, listed companies have four in the business, in addition, Japan and Korea lithium salt manufacturers have also invested in the domestic market, plus some private company has been put into production, there are nearly 10 domestic lithium salt producers now. The production capacity for big factories are about 2000 tons/year, little ones are about 500 tons/year.


At the same time, a growing number of entrants has also increased the electrolyte market competition. "As early as two years ago, the domestic lithium battery electrolyte manufacturer probably around 10, now reached 30 registered at home, also some are not registered ,the number is likely to be close to 50. Facing the disorderly market competition, the industry rules are changing." Qin JiuSan said


Under the fierce competition, some battery enterprise losses, even on the brink of collapse. "Battery enterprise benefit is less optimistic than in previous years, a few of our customers also have a bad situation." Qin JiuSan said. But Capchem maintains a more moderate, cautious attitude in the fierce market competition, so we can still maintain profit margins at a stable level.


"Now our net margin is between 15% to 20%, belong to the higher level in the industry. Looking to the total market and development scale, the future industry net profit margin level around 10% is more appropriate." Qin JiuSan is quite satisfied with the company maintained this higher profit margins under such market competition.


Qin JiuSan believes that the fall of the prices must be the industry trends, especially the demand of the power battery electrolyte increases will increase the price drop. "The lower price of power battery electrolyte will be plunged to a large-scale application, price requirements for upstream raw material suppliers also will decline."


“When we first started getting into the business of lithium battery electrolyte, the highest price at that time is more than two hundred yuan per kilogram, now it is just around seventy yuan a kilo, only a third of the original price”. Zhou Dawen believed that the rapid development of lithium battery due to the reasons:  material costs continue to drop, more technology innovation brings into the business, Moore's law also applies to lithium battery industry


"If the development of the industry getting mature, it may also become a traditional industry in ten years." Qin JiuSan said.


Optimize the structure of the customer.


In the face of fierce industry competition, Capchem’s strategy is to optimize the customer structure, positioning in the high-end market, so as to keep relatively high market share and profit margins. 


" Talking about market conditions of Lithium battery electrolyte in 2013, different people mixed up in the industry like a warlord infighting,it is rather risky." Zhou dawen says, the company had to readjust the structure of product and the customers in the past few years, basically adjusted to high-end market, rather than to impulse to bargain, doing meaningless competition in the low-end customers, we try very hard in risk control.  

 

Zhou dawen said: "the quality of our customers is better among all counterparts, this is also the major work we have done in recent years." 

According to the introducing, Capchem’ major clients ranking on the top ten in the lithium battery industry in the world, including SONY, Panasonic, Samsung, etc., another leading product, electrolytic capacitor in the company, the world's largest enterprises are also in capchem’ customers list.


Capchem can hold high quality clients, Zhou dawen says, the secret is the company's research and development advantage.

 

"On the platform for the research and development in electronic chemical enterprises, many enterprises have personnels to do research for material synthesis and analysis, but the lack of good technical communication and interaction can't provide one-stop solution to customers." Zhou Dawen thought, the key of winning of Capchem is to provide one stop solution for the customers.


According to Zhou Dawen , the ability of designing tests in Capchem’s R&D center for the product material, formula, technology and the components is very outstanding, very few companies at home and abroad can do the same work. In the company's research and development personnel structure, in addition to chemical talents, there are a lot of electronic components and other related professional and technical personnel, so we can provide customers a better solution.


"You must understand the needs of customers. If you can’t understand deeply into the needs of the customers or his product features or performance requirements of the products, you can’t find where to potential customers, where's your research direction." Zhou Dawen concluded.


According to introducing, in the years Capchem has maintained a relatively high spending on research and development every year, more than 3% of sales revenue putting on research and development work, keeping a high proportion company technical personnel, more than 100 people. The company's core research team is formed by graduates from domestic famous universities and people with doctor degree returning from abroad.


Technology Reserve


Tesla effect cause agitation in the a-share market,  Capchem also become one of the popular target. Qin JiuSan said, the company main products are mainly for consumer electronics products.


now we are leading supplier of Samsung, SONY, Panasonic, our products mainly used in consumer electronics products, the proportion for power battery electrolyte products is not very high. When  investors asked if the company will supply to Tesla. Qin Jiusan said, if samsung entered the tesla supply chain system, what surprise can bring us, we need to see the subsequent development of" tesla electric car business


"Capital markets tend to imagine things better than the reality. the most attention of everyone is the tesla, but if the investors counted how many tesla cars sold in China, and all the lithium-ion batteries used in Tesla , its total amount must be less capital market interest." Zhou Dawen think we should take tesla effect calmly.


We focus on what we do now ,but we also working on the plan and layout in the field of the new energy vehicles, energy storage battery and mobile charging station; as well as the industrial chain including material, intellectual property, technical reserves. We have worked on it for many years." Zhou Dawen argue that although lithium battery electrolyte in the company's business accounts for only half, and mainly supply for consumer electronics, but Capchem are still bullish on the future of the power battery development. 


In addition to the power battery, Capchem have technical reserves in the field of conductive polymer materials. According to introducing, the company is currently developing a conductive polymer materials, the material is mainly applied to the capacitor, display, etc.


Currently what we mostly use is solid capacitors, now a lot of phone, flat-panel display,  including tablets, inside there are a lot of small capacitors, called solid-state capacitors, it is applied to the conductive polymer materials. At present our products are used mostly in this field. "Zhou Dawen introduced.


Zhou Dawen was very positive on the development prospects of the material, he said: "in the future , the OLED display equipment will be developed, namely the organic electroluminescent display. Now lots of Samsung’ mobile phone display used the OLED technology, our conductive polymer materials might be applied to it in the future."


"There will be a very promising field - organic solar cells, and the conductive layer can be used with our conductive polymer materials, because the battery is organic material, so device can be made softly and flexible." Zhou Dawen said: "in a more intuitive way, in the future by coating the organic solar cells on the suface of the building's exterior wall, the power can be supplied to the building."


"However, the organic solar cells is still on the stage of laboratory. At present, organic solar energy conversion rate is about 6% - 10%, it is better used crystalline silicon and thin film technology." Zhou Dawen said.


President of the company ,Mr. Zhou Dawen interpreted the business situation of the company


The investors visited the production workshop of Capchem.



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