Liquidmetal Technologies Inc (LQMT)

[joshuaeyu]

Eon latest investor brochure

https://pdf.dfcfw.com/pdf/H3_AP202003111376117879_1.pdf

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Please see the end of the report for each statement.

Application scenario of foldable screen mobile phone zirconium-based liquid metal hinge opens, opening up the company's growth space

¦ Huawei's second-generation upgraded folding screen phone, Mate Xs, chooses zirconium-based liquid metal + MIM process to create explosive application scenarios for liquid metal commercialization, opening up growth space.

First, Huawei ’s second-generation upgraded folding screen phone, MateXs, uses zirconium-based liquid metal as the main hinge system material to increase strength. On the evening of February 24th, Huawei released the second-generation upgraded folding screen phone Mate Xs. The official revealed that MateXs' hinge system has more than 100 devices.
The use of zirconium-based liquid metal and other materials greatly enhances the strength of the hinge, which is 30% higher than that of titanium alloy.

Secondly, the hinge is the most critical functional part to realize a foldable mobile phone, and it is also the highest-tech part of the folding screen. The hinge design can effectively prevent excessive mechanical damage to the screen. Compared with notebook computer hinges, the specifications are high, which determines the success of folding screen mobile phones. Because of the high requirements for materials, Huawei's second-generation folding screen finally selected a zirconium-based liquid metal material with superior performance, which is combined with metal injection molding (MIM) in the process, with the advantages of high precision and thinner, which is expected to replace the traditional Press + CNC mode.

Third, the liquid metal has characteristics such as high strength, high hardness, lightness, complexity, and brightness, which makes it extremely adaptable. Liquid metal is a new generation of disruptive materials that surpasses traditional light alloy varieties such as aluminum, magnesium, and titanium. At present, although the material has great potential in 3C, automotive, medical and other fields, the market space has just begun to open. Huawei ’s second-generation upgraded folding screen phone Mate Xs chooses zirconium-based liquid metal + MIM process to create a liquid metal commercial Explosive application scenarios to expand growth space.

Eontec is a global industrial leader in the field of liquid metal. It has a large-scale production line for zirconium-based amorphous alloys, and has the ability to develop and produce liquid metal mobile phone hinges. According to the announcement, the company is a pioneer in liquid metal research and development in the industry, with integrated manufacturing capabilities from materials to equipment and design, and the only company in the world that applies liquid metal to the automotive industry. The company started research and development in 2012, and began mass production of bulk amorphous materials in 2018. With the gradual expansion of application scenarios, the market space is large. First, the company's liquid metal products have cooperated with relevant customers in the fields of 5G communications, new energy vehicles, and consumer electronics. The liquid metal Face ID brackets have been supplied in batches to well-known domestic mobile phone manufacturers such as Xiaomi, OPPO, Huawei, etc .; the company's 5G base station products include filters and heat dissipation casings. Currently, it cooperates with customers such as China Communications and cooperates with Tex Customers such as Latin America, Samsung, Lansi Technology, and ABB have established cooperative relationships. According to Eon's regular report, the company has always had good cooperation with Huawei, and the company also has R&D and production.

Production of liquid metal hinges. The second is to sign cooperation agreements with a number of companies and governments to expand the industrialization of liquid alloys.

According to the announcement, on July 22, 2019, the company's wholly-owned subsidiary Eon Liquid Metal signed a project investment framework agreement with the Qingxi Town People's Government of Dongguan City, with a total investment of 380 million yuan to jointly build a liquid metal project; March 6, 2020 On the day, the company and Sanxiang New Material's industry fund Sanxiang Zirconium Magnesium signed a project cooperation investment agreement to jointly invest in amorphous alloy (liquid metal) projects at a ratio of 40%: 60%, with a registered capital of 100 million yuan. With the expansion of industrialization, it is expected to accelerate the application field of liquid metal is expanded to increase the market scale.

¦ Diecasting magnesium alloy business seized the tide of new energy, and the industrialization of medical magnesium alloy entered a new stage. The company has long been committed to research and development of lightweight new materials for new energy vehicles. As a supplier, it has entered the supply chain of well-known customers at home and abroad such as Tesla, BYD, Geely, LG, etc., and cooperated with Yunhai Metal, Ningde Times and other companies to expand market share. . In addition, the company is a pioneer in the development of standards and clinical and industrialization of the domestic medical magnesium alloy industry. The company received the medical device clinical trial approval issued by the State Drug Administration on July 12, becoming the first biodegradable metal screw approved in the country. After clinical success, it is expected that it will reach the market by the end of 2020.

¦ Give “Buy-A” investment rating. Considering the gradual release of the company's production capacity and the acceleration of the demand for folding mobile phones, the company's performance has steadily improved. We estimate that the company's net profit attributable to the mother in 2019-2021 will be 102 million, 132 million and 163 million yuan, corresponding to PE of 76x, 58x and 47x. Considering that the company has strong technical barriers in the fields of liquid metals and bio-magnesium alloys, and has a large market potential in the future, it is expected to enjoy a higher valuation premium and give it a “Buy-A” investment rating.

¦ Risk warnings:
1) Market demand and commercialization of liquid metal are lower than expected;
2) Industrialization of bio-magnesium alloy is lower than expected;
3) Business orders of traditional aluminum-magnesium alloy are lower than expected.


1. Fold the hinge of the mobile phone to create the explosive application scenario of the commercialization of liquid metal and open up the growth space
Huawei's second-generation upgraded folding screen phone, Mate Xs, uses zirconium-based liquid metal + MIM technology to create explosive application scenarios for liquid metal commercialization, opening up room for growth. On the evening of February 24th, Huawei released the second-generation upgraded folding screen mobile phone MateXs. The most obvious appearance improvement of Huawei MateXs comes from the hinge, which is officially called "eagle-wing folding design". What users can see is actually only exposed. That small piece has also become the most obvious difference between the appearance of this generation of Huawei MateXs and the previous generation. The official revealed that MateXs' hinge system has more than 100 devices. The use of zirconium-based liquid metal and other materials has greatly improved the strength of the hinge, which is 30% stronger than titanium alloy.

Figure 1: Huawei Eagle-wing hinge design uses zirconium-based liquid metal to enhance strength
Source: Huawei website, Anson Securities Research Center

hinge is the most critical functional component to achieve a foldable mobile phone, and it is also the highest-tech part of the folding screen. Hinge set It can effectively prevent excessive mechanical damage to the screen. Compared with the hinge of a laptop, the requirements of precision, durability, strength and thinness of a hinge hinge of a mobile phone are very high, which almost determines the success of a folding screen mobile phone.

According to Huawei Consumer Business CEO Yu Chengdong,

"We have been researching on this folding screen hinge for three years and contain more than 100 parts. This is very expensive, but there are many new technologies in it." Because of the high requirements for materials, Huawei's second-generation folding screen finally selected a zirconium-based liquid metal material with superior performance, which is combined with metal injection molding (MIM) in the process, with the advantages of high precision and thinner, which is expected to replace the traditional Press + CNC mode. Liquid metal has characteristics such as high strength, high hardness, lightness, complexity, and brightness, which makes it extremely adaptable. The official name of liquid metal is amorphous alloy, which has significant advantages in performance, process and cost. It is a new generation of disruptive materials that surpasses traditional light alloy varieties such as aluminum, magnesium, and titanium. Currently, the material is used in 3C, automotive, medical and other fields. Although the market potential is huge, the market space has just begun to open. Huawei ’s second-generation upgraded folding screen phone Mate Xs uses zirconium-based liquid metal + MIM