A new long-term supply deal failed to buoy the shares of Yunnan Energy New Material after the major Chinese producer of lithium-ion battery separators said it expects to report its first annual loss since going public in 2016 due to squeezed product prices.
YENM [SHE: 002812] closed 5.1 percent lower at CNY29.30 (USD4) a share in Shenzhen today. The shares have tumbled by almost 40 percent over the past 12 months.
The Yuxi-based company expects a net loss of CNY515 million to CNY665 million (USD70.8 million to USD91.5 million) for 2024, versus a net profit of CNY2.5 billion (USD343.8 million) the year before, according to unaudited figures it released late yesterday.
The loss resulted mainly from provisions for impairment losses on inventory and other assets, YENM said, adding that competition in the battery separator market is ratcheting up, while cost-cutting pressure from downstream clients resulted in lower sales prices and gross margins.
YENM had a net profit of CNY443 million for the first three quarters of last year, despite a 79 percent year-on-year decline, implying that the fourth quarter was particularly weak.
The company also revealed a new supply deal yesterday. A unit has signed an agreement with LG Energy Solution to supply around 3.6 billion square meters of battery separators to the South Korean battery giant through 2027. It did not disclose any financial details.
This is YENM’s second such order from LG affiliates in less than a month. In late December, the Chinese firm said it would sell battery separators to Ultium Cells, a joint venture of LG Energy Solution and General Motors. Ultium is tasked with making batteries for GM’s electric vehicle plants in North America.
YENM produced almost 7.1 billion sqm of battery separators in 2023 and sold 6.2 billion sqm, which contributed CNY10.1 billion (USD1.4 billion), or more than four-fifths, to its annual revenue. At the end of 2023, YENM's annual output capacity had reached 9.4 billion sqm, according to its annual trading report.
（Picture: Veer）
