(Yicai Global) March 30 -- Shares of Senior Technology Material jumped after the leading supplier of lithium battery separators in China said it plans to invest CNY7.5 billion (USD1.18 billion) to boost capacity amid surging demand for lithium power packs.

Senior Technology [SHE: 300568] ended 7.1 percent higher at CNY38.43 (USD6.05), falling back from an 8 percent gain earlier today.

The expansion plan will raise the Shenzhen-based firm’s annual capacity by 2 billion square meters. It aims to raise CNY6 billion from investors, of which CNY5 billion will go on the project, and the rest will supplement working capital.

The new facility will be built over five years in the city of Nantong, at the mouth of the Yangtze River, and will produce high-end diaphragm products for large overseas new energy battery producers. It will become operational in the third year. 

After full capacity is reached, Senior Technology expects to post annual revenue of CNY4.68 billion from its new factory, with the project’s gross profit margin set to reach just over 41 percent. The company hopes to get its investment back in less than nine years.

Senior Technology’s total sales of lithium battery separators hit 1.22 billion sqm last year, an increase of 74 percent on the year before. It has three production bases in China and it is investing in the construction of a new factory in Sweden to supply Northvolt.

The company’s overseas clients also include LG Chem, Samsung SDI, and Murata Manufacturing.

Editor: Tom Litting