The soaring prices of industrial gases represented by neon and helium have made the industry highly motivated to expand production. Along with the rise of emerging industries such as semiconductor and electronic information, specialty gases have become a hot spot for market layout.

According to the incomplete statistics of Securities Times-e, among the 12 listed companies in Wind industrial gas sector since March this year, 4 companies have disclosed their plans to raise capital for production expansion, involving a total amount of over 3.7 billion yuan. In addition, the news of investing in construction projects with own funds has been common in recent months, and there is no shortage of listed companies outside the industrial gas sector raising capital to invest in related capacity initiatives.

Industrial gases set off a wave of fund-raising for expansion

On June 14, Qiaoyuan, the largest professional supplier of all-liquid air separation gases in southwest China, successfully landed on the GEM.

As a comprehensive gas supplier, Qiaoyuan plans to raise RMB 1 billion in capital, except for RMB 300 million to supplement working capital, most of the remaining capital will be used for capacity expansion projects such as industrial gas and 1100TPD nitrogen recovery and energy-saving technology reform in Ganmei Industrial Park.

It is not uncommon for IPOs to raise capital for production expansion. However, in the context of the recent soaring industrial gas prices and expected positive downstream demand, a number of listed companies have intensively launched capacity expansion layouts.

In April 2022, Huatech Gas announced the issuance of convertible bond proposal to raise RMB 646 million, including RMB 383 million for the construction project of annual production capacity of 1,764 tons of semiconductor materials.

In March this year, Kemet Gas disclosed a proposed capital raising of no more than RMB 1 billion for the layout of Yizhang Kemet Special Gas Project and 300,000 tons/year (27.5%) of high clean food and electronic grade hydrogen peroxide project of Fujian Kemet Gas Co. Among them, Yizhang Kemet Special Gas Project will initially build 15 sets of electronic special gas and blended gas production and processing and auxiliary devices, and the products include electronic-grade hydrogen chloride and electronic-grade hydrogen bromide.

In May this year, Hangxiang also disclosed that it intended to issue convertible bonds to raise 1.137 billion yuan, to be used for more than 100,000 Nm3/h air separation projects in Luliang, Quzhou, Guangdong and Jiyuan in total.

In addition to raising capital for production expansion, in March 2022, Heyuan Gas disclosed that it had signed a contract with Yichang High-Tech Industrial Development Zone Management Committee for the "Heyuan Gas Electronic Special Gas and Functional Materials Industrial Park Project", proposing to spend RMB 5 billion to build a fluorosilicon electronic special gas, functional silica polymer, aerogel, functional silica polymer, aerogel and functional material industrial park with Yichang's fluorine, silicon, chlorine, carbon, hydrogen, ammonia and sulfur resources as basic raw materials. The project is to build a whole industrial chain cycle system of fluorine and silicon electronic special gas, functional silicon polymer, aerogel, rare gas, precursor and isotope with Yichang's fluorine, silicon, chlorine, hydrogen, ammonia and sulfur as the basic raw materials.

Semiconductor gas has become a hot spot for layout

In recent years, the application scope of industrial gases has expanded from traditional metallurgical, chemical, military and medical industries to new energy, semiconductor, electronic information and other emerging industries. Among them, electronic gases for semiconductors are the hot spot of the industry's current layout.

In March 2022, Jinhong announced that it intended to change one of its initial public offering projects in 2020 to "high-end electronic special materials project of Meishan Jinhong Electronic Materials Co. The new project is for the development and production of electronic special materials, and will have a production scale of 312,000 bottles of electronic gases, 867,000 bottles of bulk gases and 21,000 bottles of cryogenic liquefied gases (in Dewar bottles) per year after completion.

According to Jinhong Gas, with the development of semiconductor integrated circuit technology, the purity and quality of electronic gases have also put forward higher and higher requirements. According to the plan, the average annual growth rate of domestic integrated circuit sales will remain at about 20%, and is expected to reach 870 billion yuan in 2020. If electronic gases for semiconductors maintain the same stable growth rate, the domestic market for electronic gases for semiconductors will double in 2020.

Among the projects that have been put into operation with recent intensive fund raising, Huatech gas, Hangxiang shares and Kemet gas have all set their eyes on the semiconductor market.

With the rapid expansion of China's semiconductor and display panel markets, it is significant to achieve import substitution of upstream raw materials, including electronic special gases, according to Kemet Gas, which is the "blood" of the semiconductor industry. With the rapid expansion of China's semiconductor and display panel markets, the import substitution of upstream raw materials, including electronic special gases, is of great significance.

Huatech also admits that the investment project is to deepen the company's business layout in the field of high-end semiconductor materials. The re-expansion of Jiangxi base signifies the company's determination to grasp the development opportunities of the industry and make sufficient preparation for the upcoming wave of wafer expansion; and the heavy investment in Yichang by Huayuan Gas extends the high-end industry chain to fluorosilicon electronic special gases, functional silicon polymers, aerogels, rare gases, precursors, isotopes, etc., and gradually lays out the layout in the field of electronic special gases and electronic chemicals.

In addition to the main gas production of listed companies, specializing in the production of advanced electronic materials, Nanda Optoelectronics also announced in March this year, the proposed issue of convertible bonds to raise not more than 900 million yuan, of which 500 million yuan will be used for the annual output of 7200T electronic grade nitrogen trifluoride project in Ulanqab Nanda Microelectronics Materials Co. According to the introduction, the fluorine electronic special gas market is still in short supply. With the global wafer manufacturing enterprises to increase investment, overseas markets continue to expand, the global market will maintain the growth trend. In the first quarter of this year, the sales revenue and gross profit level of fluorine electronic special gas increased significantly, making an important contribution to the company's performance.