(Yicai) May 25 -- Shares of Yunnan Energy New Material fell after the Chinese lithium battery separator giant, better known as Semcorp, pulled a CNY2 billion (USD295 million) plan to build a new plant in Malaysia in a broader investment rethink driven by policy, market, and business changes.

Semcorp [SHE: 002812] closed 5.3 percent down at CNY69.40 (USD10.23) per share today, after earlier plunging by as much as 8.5 percent. The benchmark Shenzhen Component Index rose 1.7 percent. Semcorp’s stock has gained more than 22 percent in value since the end of last year,

Changes in the external market environment and the industry’s competitive landscape have altered the business case for the planned Malaysia plant, Yuxi-based Semcorp said in a statement on May 22. It would have had annual production capacity for one billion square meters of lithium battery separators.

The company said the move was an adjustment in its overall investment strategy in response to changes in policies at home and abroad, market conditions, and its own business development needs.

Semcorp first announced plans to build a factory in Malaysia in September 2024. Construction had not yet begun, so abandoning the project should not have a negative material impact on the firm’s financial position or operating results, it noted.

The announcement came less than two weeks after Semcorp unveiled a major capacity expansion plan for China. On May 13, the company said it would invest CNY4 billion in a joint venture factory in Sichuan province with annual production capacity of five billion sqm of lithium battery separators.

At the time, Semcorp said the investment was intended to meet growing downstream demand, capture growing opportunities in the high-end product segment, improve its production footprint, and strengthen ties with key customers.

Semcorp has steadily expanded its overseas battery separator production capacity in recent years. Its Hungary plant, designed for annual output of 1.2 billion sqm, began first phase production in the fourth quarter of last year. Meanwhile, its coated separator facility in the US state of Ohio, with annual capacity of 700 million sqm, is expected to begin operations in the second quarter of this year.

Strong downstream demand has prompted China’s major suppliers of lithium battery separators to roll out a series of expansion plans this month.

In addition to Semcorp’s Sichuan project, Cangzhou Mingzhu plans to build eight lithium battery base-film production lines in Guangzhou with combined annual capacity of 2.4 billion sqm, while PTL plans a lithium-ion battery base film plant in Sichuan province, capable of producing 7.2 billion sqm annually.

Editor: Futura Costaglione