Betray New Materials Group Co., Ltd. (hereinafter referred to as the “Company”) held an investor briefing session on Tuesday, September 19, 2023, from 4:00 p.m. to 5:00 p.m. in the conference room of the Betray New Energy Technology Building, No. 8 Guangyuan 4th Road, Dongkeng Community, Fenghuang Subdistrict, Guangming District, Shenzhen.

Main activities of investor relations

1. Industry conditions of the company

Reply: The company primarily engages in the R&D, production, and sales of negative electrode materials, positive electrode materials, and advanced new materials for lithium-ion batteries. These materials are core components used in the manufacture of power batteries for new-energy vehicles, consumer electronics batteries, and energy storage batteries.

Looking at the domestic automotive market, with the continued economic recovery, the state and local governments have intensively introduced a series of automobile policies to ensure steady growth in the car market and to continuously improve the infrastructure for charging stations. As a result, domestic sales of new-energy vehicles continue to grow rapidly. According to statistical analysis by the China Association of Automobile Manufacturers, from January to July 2023, production and sales of new-energy vehicles reached 4.591 million units and 4.526 million units, respectively, representing year-on-year increases of 40% and 41.7%. In July, the penetration rate of new-energy vehicles in China exceeded 32%.

In 2022, the European and U.S. markets together sold 2.592 million and 897,000 electric vehicles, respectively, with penetration rates of only 23% and 6.5%. Compared to the domestic market, there is still tremendous room for growth in overseas penetration rates, indicating a vast market potential. Given the low penetration rates and significant growth opportunities in overseas markets, China’s new-energy vehicle industry chain is accelerating its expansion into foreign markets. According to the latest data from the General Administration of Customs, in the first seven months of this year, China’s total lithium-battery exports increased by 58.9% year-on-year.

The company will actively seize globalization opportunities, vigorously advance its globalization strategy, accelerate the construction of overseas production bases, optimize its overseas presence, and gradually achieve global operations.

2. Core Competitive Advantages of the Company

Reply: (1) The company boasts a high-quality customer base. Global top-ranking power battery manufacturers such as SK On, Panasonic, LG Energy Solution, Samsung SDI, and BYD are all key customers of Betray, ensuring the company is not overly reliant on any single client. (2) Strong R&D capabilities and comprehensive product portfolio. The company’s products encompass artificial graphite, natural graphite, silicon-based anode materials, and other novel anode materials, offering a full range of options. Moreover, the company has proactively positioned itself in emerging battery material systems such as sodium-ion batteries, solid-state batteries, and hydrogen fuel cells, demonstrating robust R&D prowess. (3) An outstanding and stable core team. The company’s core team members generally hold advanced degrees and possess strong professional backgrounds. Several senior managers have accumulated between 10 and 20 years of industry experience, giving them deep insights into business management, industrial dynamics, industry trends, and future developments—thus laying a solid talent foundation for the company’s steady growth. (4) A fully integrated industrial chain layout coupled with technological innovation to reduce costs and enhance efficiency. In the area of natural graphite, the company has consistently adopted a full-chain approach—from mining to finished products. In the field of artificial graphite, it places great emphasis on establishing stable supply mechanisms for core critical materials such as needle coke, as well as ensuring sufficient production capacity and driving technological innovation in key processes like graphitization. This integrated industrial chain layout will provide the company with a cost advantage in the production of anode materials.

3. Technical Roadmap for Sodium-Ion Cathode Materials

Reply: The company has already established a presence in both the positive and negative electrode materials for sodium-ion batteries. Specifically, the positive electrode material for sodium-ion batteries primarily focuses on layered oxide technology. Currently, the company’s Bayna-O3B positive electrode material boasts a specific capacity of up to 145 mAh/g and a tap density exceeding 3.4 g/cc.

In the future, the company will work hand in hand with its customers to jointly unlock the vast market for oxide-layered cathode materials and accelerate the large-scale application of sodium-ion batteries.

4. Views on the future market for natural graphite and synthetic graphite

Reply: Natural graphite boasts advantages such as low energy consumption and low cost, and has already been widely adopted by overseas customers. On the other hand, artificial graphite exhibits excellent cycling performance, giving it a distinct edge in applications. Some battery manufacturers also blend natural graphite with artificial graphite in certain proportions to enhance product performance. As technology continues to innovate, both artificial graphite and natural graphite will continue to maintain substantial market potential.

5. Are downstream customers paying more attention to carbon emissions, and what measures has the company taken in response?

Reply: Betray places great importance on green development. When identifying investment projects, we tend to prioritize regions with green electricity quotas. At the same time, we are continuously stepping up our use of clean energy sources—such as hydropower and solar energy—to reduce carbon emissions.

Betray has installed solar panels at its plants in Jiangsu and Huizhou, and uses hydropower at its facilities in Sichuan and Yunnan. Moreover, by optimizing equipment operating procedures and upgrading equipment, the company has significantly reduced carbon emissions throughout its production processes.

6. Industry and Company Future Trend Outlook for the Third and Fourth Quarters

Reply: Regarding negative electrode materials, the overall market currently remains in a state of structural overcapacity. However, in the third quarter of this year, the overall production schedule for negative electrode materials showed a rebound compared to the previous quarter. Our company has been deeply engaged in the negative electrode materials sector for over 20 years and is one of the earliest domestic enterprises to achieve mass production of silicon-based negative electrode materials. We lead the industry in shipment volumes and possess distinct technological and first-mover advantages. Focusing on the strategic needs of our key customers, we are enhancing product competitiveness and improving the return on investment. Looking ahead, we expect to sustainably increase our shipment volume of negative electrode materials. In the first half of 2023, our company comprehensively implemented the philosophy of cost reduction and efficiency improvement, thereby enhancing our overall operational quality. As a result, we achieved negative electrode material sales exceeding 170,000 tons, generating revenue of 6.327 billion yuan.

In terms of cathode materials, according to data from BaiChuan YingFu, demand for ternary materials has been steadily improving since the third quarter. Domestic power battery companies remain optimistic about their production outlook for the second half of the year, and some battery manufacturers are experiencing a need to ramp up capacity. As a result, leading material suppliers have seen a significant increase in orders, and the tightening of supply-demand dynamics in the domestic market in the short term is likely to drive up prices for ternary materials. Against the backdrop of growing market demand for long-range electric vehicles, material systems with higher nickel content will better meet the future downstream market’s requirements for energy density in power batteries. Our company continues to focus on high-nickel ternary cathode materials. In the first half of 2023, through measures such as lean cost reduction, we promoted high-quality development and achieved cathode material sales exceeding 19,000 tons, generating revenue of 6.9 billion yuan.

7. Company Gross Profit Margin Status

Reply: The company continues to strengthen its supply chain management capabilities, pursue lean cost reductions, and enhance operational quality. In the first half of 2023, the company’s gross profit margin was 14.97%. Notably, profitability improved significantly in the second quarter. In the second half of the year, the company will continue to comprehensively implement the principles of cost reduction and efficiency improvement across various areas—including raw material procurement, core production processes, and technological innovation—gradually raising the gross profit margin of its products.

8. What is the current silicon content of the company’s silicon-based anode material?

Reply: The silicon doping content in silicon-carbon composites typically ranges from 5% to 10%. As future technological advancements continue, the silicon doping level is expected to increase further.

9. How should we view the selection of the technical route for ternary materials?

Reply: Ternary materials offer the advantage of high energy density. As new-energy vehicles and power battery technologies continue to evolve, longer driving ranges, faster charging rates, and enhanced safety will become the mainstream demands and development directions. Ternary materials are conducive to breakthroughs in extending the driving range of electric vehicles and will continue to be highly favored by the market.

10. How to respond to incremental growth in overseas markets

Reply: Currently, the company is fully committed to advancing the construction of an integrated project in Indonesia for the production of 80,000 tons per year of negative-electrode materials for new-energy lithium batteries. In the future, the company will gradually evaluate and plan capacity deployment in other overseas markets, taking into account factors such as industry development trends, overseas customer needs, and the company’s strategic development plans, in order to meet the growing demand from overseas markets.

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