Announcement No.2022-054
Yunnan Energy New Material Co., Ltd.
2021Annual Report
April 2022
Section 1 Important Notes, Contents and Definitions
The Board of Directors and its members, the Supervisory Committee and its members, and the senior management warrant that the contents of
the Annual Report are truthful, accurate and complete, without any false statement, misrepresentation or major omission, and that they are jointly and
severally liable for them.
Paul Xiaoming Lee, the Company’s legal representative, Li Jian, financial controller, and Deng Jinhuan, financial manager (“Accounting
Principal”) hereby declare and warrant that the contents of the Financial Statements in thisAnnual Report are truthful, accurate and complete.
All Directors were present at the Board meeting to review thisAnnual Report.
The forward-looking statements in this Annual Report, such as estimates of operating results, are among the planned matters of the Company,
subjected to uncertainties and do not constitute material commitments of the Company to investors. Investors are advised to pay attention to
investment risks. The future plans, development strategies and other forward-looking descriptions in this Report do not constitute material
commitments of the Company to investors. Investors and related persons should be fully aware of the risks in connection therewith and should
understand the difference between plan, forecast and commitment. Investors are advised to pay attention to investment risks.
For details, please refer to the “3. Risks The Company May Face” under the “XI. Outlook for the Company’s Future Prospects” in the Section 3
“Management Discussion andAnalysis” of this Report.
1. Risk relating to lithium-ion battery separator film business being regulated by national policies
In recent years, various countries have intensively introduced industry policies to support the development of new energy vehicle industry.
Benefiting from policy support, the production value of new energy vehicle industry rapidly increased, driving the rapid development of the upstream
lithium battery industry. If there are significant adverse changes in domestic and overseas subsidy policy, carbon emissions, renewable energy
application and other relevant industry policies in the future, the relevant policies may have a negative impact on the development of the whole
industry chain of new energy vehicle, thus having an adverse impact on the upstream lithium-ion battery separator film industry and the Company’s
operation result.
2. Fierce market competition risk
The rapid growth of the new energy vehicle industry has driven the fast development of lithium-ion battery separator film in the upstream part.
With the high gross profit margin of lithium-ion battery separator film, many domestic enterprises are attracted to invest in this segment. Massive
investment funds are driving the rapid increase in production capacity, and this segment is currently becoming increasingly competitive. The
increasingly fierce competition will have an adverse impact on the results of the Company if it can’t deeply understand the law of industrial
development and make constant efforts for technological innovation and operational management improvement to improve product quality and reduce
production costs.
3. Risk of price fluctuation of major raw materials
The major raw materials used by the Company are subjected to price fluctuation to some extent, especially polypropylene and polyethylene,
whose prices are affected by the strong fluctuations of the international crude oil price. The results of the Company may be adversely affected by the
gross profit margin which may be affected to some extent if the prices of major raw materials fluctuate sharply due to the macroeconomic
developments, the demand and supply relation for enterprises in the upstream and downstream parts and other factors.
4. Risk relating to construction in progress
The Company needs a great amount of investment funds for the under-construction projects in the production bases, such as Jiangsu Energy,
Jiangsu Ruijie, Chongqing Energy, Jiangxi Ruijie, Hungary Project and Jiangxi Enpo. If the Company fails to raise sufficient funds in time, or
complete the projects and put into operation on schedule, the production, operation and profitability will be adversely affected.
5. Risk of technology leakage and talent outflow
An enterprise engaging in lithium-ion battery separator film requires advanced technology and process, rich management experience and deep
understanding of the industry. To ensure the ability of constant innovation and the steady growth of business, the Company should have teams
consisting of steady high-quality employees in scientific research, management and sales. The Company constantly improves the mechanisms for
talent cultivation, incentive, promotion and res
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