As the lithium battery industry may be about to embark on a new upward cycle, leading companies in the industry chain have been increasing their resources.
Enjie Group (Image from Visual China)
According to the latest announcement from Enjie Group (002812.SZ), the company plans to acquire 100% equity of Qingdao Zhongke Hualian New Materials Co., Ltd. (hereinafter referred to as "Zhongke Hualian"), a membrane equipment manufacturer, through the issuance of shares and other means, and at the same time raise supporting funds. The company's stock has been suspended from trading since December 1, and the transaction plan is expected to be disclosed within no more than 10 trading days.
This move signifies that this leading lithium battery separator manufacturer is officially extending its reach to the upstream equipment segment of the industry chain. With the industry's supply and demand dynamics reaching a critical turning point, simply relying on scale expansion may not be sufficient to cope with the new market trend. Leading companies need to improve their comprehensive capabilities in technology, efficiency, and cost control to possess core competitiveness.
Despite current pressure on its performance, Enjie has maintained its leading market share in the lithium-ion battery separator industry for seven consecutive years as of the end of 2024.
As of the market close on November 28, Enjie's stock price was 55.35 yuan, with a market capitalization of 54.366 billion yuan. Year-to-date, the company's stock price has risen by over 73%.
Mergers and acquisitions of upstream companies in the industry chain
According to the announcement, Enjie Group plans to acquire 100% equity of Zhongke Hualian through share issuance and other means, and raise supporting funds. The announcement stated that the transaction is still in the planning stage, and the company is currently in contact with the shareholders of the target company. The preliminary counterparty is all shareholders of Zhongke Hualian.
What makes Zhongke Hualian, the target company, attractive to Enjie Shares? Public information shows that Zhongke Hualian was founded in 2011 and is headquartered in Qingdao, Shandong. It was delisted from the National Equities Exchange and Quotations (NEEQ) in April 2018 and is currently a non-listed company.
This company is a leading player in China's new materials industry. Its main business is the research, development, production, and sales of complete production equipment for wet-process lithium-ion battery separators. It has mastered the core technologies of key equipment involved in wet-process lithium battery separator production, such as material mixing and extrusion, casting, stretching, extraction, drying, and winding, and can provide customers with complete automated production line solutions for wet-process lithium battery separators.
As early as April 2013, Zhongke Hualian's first lithium-ion battery separator production demonstration line was successfully commissioned. In 2014, the "Lithium-ion Battery Separator Production Line and Supporting Processes" was recognized as the first (set) of major technical equipment in China. That year, the company's lithium-ion battery separator production line equipment officially entered the market, and the first wet-process separator production line was sold. To date, its customers include major domestic lithium-ion battery separator manufacturers such as Shanghai Enjie and Xingyuan Material.
It is worth mentioning that Zhongke Hualian is not only a "shovel seller", but also has a certain membrane production capacity.
Zhongke Hualian established the Lankotu brand in 2016, directly entering the R&D, production, and sales of separator products. As of 2025, Lankotu has established three mass-production bases in Qingdao (Shandong), Yuncheng (Shanxi), and Bengbu (Anhui), with a total capacity of approximately 2 billion square meters. Two more bases are under construction in Suining and Yibin (Sichuan), expected to reach full production in the second half of 2026. By the end of 2026, the total capacity may reach 3 billion square meters. Once all five bases are fully operational, the total capacity is projected to reach 5 billion square meters. The Bengbu (Anhui) base has already developed second-generation ultra-high-strength separators.
If Enjie's acquisition is successful, it will not only extend its reach to the equipment sector but also "add" some production capacity. This means that Enjie can not only further reduce costs and shorten production line R&D cycles through an integrated layout, but also is expected to directly gain a larger market share.
Performance under pressure; is an industry turning point imminent?
Enjie Group was formerly known as Yunnan Innovation New Materials Co., Ltd. In September 2016, the company was listed on the Shenzhen Stock Exchange. Its products include three major categories: film products (including lithium battery separators and BOPP films), packaging and printing products (cigarette labels and aseptic packaging), and packaging products (specialty paper, holographic anti-counterfeiting electroplated aluminum and other products).
In its early days as a listed company, the company’s main business was cigarette packaging production. After completing a major asset restructuring in 2018, the company added lithium battery separator products to its business, thus entering the new energy industry.
However, Enjie has not been doing well in recent years. Since 2023, competition in the separator industry has intensified, and product prices have continued to decline. Last year, Enjie even reported its first loss since its listing in 2016, with a net profit attributable to shareholders of the listed company of -556 million yuan, a year-on-year decrease of 122.02%. In the first three quarters of this year, the net profit attributable to shareholders of the listed company was -86.323 million yuan, a year-on-year decrease of 119.46%; the gross profit margin was 15.90%, a year-on-year decrease of 5.07%.
With the profit margins of diaphragm manufacturers being significantly squeezed, even leading company Enjie Group has no choice but to seek ways to alleviate operational pressure through strategic adjustments.
However, it is worth mentioning that market observers believe the lithium battery separator industry is currently undergoing a profound transformation from overcapacity to a rebalancing of supply and demand.
According to EVTank data, in 2024, China's lithium-ion battery separator shipments reached 22.75 billion square meters, a year-on-year increase of 28.6%, with wet-process separators accounting for 76.9%, becoming the absolute mainstream. However, the disorderly expansion in the early stages led to low overall capacity utilization in the industry.
Since 2025, the situation has been changing. Enjie Group stated in a recent investor relations activity that the company currently has a large order backlog and high capacity utilization. The company's analysis indicates that from the supply side, new capacity additions this year are lower than last year, and the effective capacity that can be formed this year is also reduced, leading to an improvement in supply. Regarding expansion intentions, the membrane industry has a long expansion cycle and heavy asset investment; at current profit levels, the payback period is too long, making expansion difficult and lacking in driving forces. From the demand side, demand for energy storage batteries is strong, demand for power batteries continues to grow, and overall downstream demand continues to grow, suggesting that supply and demand are expected to gradually reach equilibrium.
Enjie Group expects that the price of its separator products will gradually recover in the future. On the one hand, the industry is cautious about expanding production capacity, and on the other hand, with the continuous improvement of downstream demand, the industry's capacity utilization rate is also steadily increasing. Against the backdrop of an improved supply and demand situation, product prices and profitability will also steadily recover to a more reasonable level for the manufacturing industry.
It also emphasized that small and medium-sized enterprises lack the confidence and ability to expand production, and that the incremental supply in the future will mainly come from leading companies, and the industry concentration is expected to increase further.
Furthermore, it is worth noting that Enjie Group, as the world's leading company in lithium battery separator market share, has now established a global production base integrating "China + Europe + North America".
Its first-phase project in Hungary (400 million square meters/year) has achieved stable shipments, marking a significant milestone in the company's internationalization. Furthermore, construction of its US factory (700 million square meters/year coating film capacity) is progressing as planned. In September 2025, Enjie announced an investment of approximately RMB 2 billion in Malaysia to build a lithium battery separator project, with a planned annual production capacity of approximately 1 billion square meters.
