Soaring share prices for Chinese graphene companies prompts ‘bubble’ warning

Industry experts caution of need for better regulation and industry standards in China’s nascent graphene industry

PUBLISHED : Monday, 09 October, 2017, 6:15am
UPDATED : Monday, 09 October, 2017, 12:10pm

Signs of excessive investor exuberance have emerged in China’s nascent graphene industry, as punters chase up the share prices of companies linked to a new material seen as having a promising future.

The share prices of mainland listed companies touted as graphene-related have risen sharply in recent months, with at least 14 listed companies valued at more than 100 times trailing price/earnings.

In one example Letong Chemical Co, a Guangdong-based ink paint provider listed in Shenzhen, was valued at more than 1,200 times trailing price/earnings.

“There are definitely bubbles in the graphene industry. Most companies only hyped the concept without real research,” said Li Yichun, secretary general of China Innovation Alliance of the Graphene Industry (CIAGI).

The cutting edge industry has attracted about 500 mainland Chinese companies. Of these, however, less than five have spent more than 100 million yuan (US$15.2 million) on related research, according to statistics by CIAGI.

South Korean scientists add value to new kind of graphene

Chen Jianhao, an associate professor of physics who studies graphene at Peking University, said the core technology lies in the thickness of the graphene and how much by-product waste is created along the preparation.

By laboratory standards, a single graphene layer is 0.3-nanometre thick, equivalent to a hundred thousandth of the thickness of a human hair.

The hype around graphene comes as China lacks a clear standard for the material and related applications, according to experts.

“Companies can claim what they want because of the [regulatory] vacuum. That’s why the association is studying industrial guidelines, ranging from examination standards for its preparation to what kind of products can be marketed as ‘graphene-enhanced’,” said Li.

He added that it was natural to expect delays in the preparation of a national standard.

Chen added his voice to the chorus calling for a unified standard.

“Graphene has to show its extraordinary qualities when added to improve existing material,” he said.

“The thin graphite sold in the market cannot be called graphene. They are essentially different in physicochemical properties,” he said.

Chen said he agrees with an academic consensus to limit the definition of graphene to material no thicker than 10 layers of carbon atoms.

However, Stephen Voller, chief executive of ZapGo, an Oxford-based technology start-up specialised in ultra-fast charging batteries, disagrees.

“Graphene with 10 to 20 layers is much cheaper and can already get excellent results in conductivity,” he said.

The breakthrough on carbon-ion batteries that can be recharged within five minutes or less is a result of over five years of research, said Voller.

In June, ZapGo unveiled a manufacturing agreement with Hunan-based Li-Fun Technology. The two companies plan to manufacture battery cells next year for global export.

“It’s very exciting to see so much graphene research going on in China,” said Voller.

When asked whether investment is excessive, he said there was little reason to be concerned. “If China is going to ban all petrol and diesel cars like London, imagine the demand for electric car batteries in a few years’ time.”

Why Beijing’s plan to stop producing petrol and diesel cars could be a game-changer for the industry

The CGIA expects China will account for up to 80 per cent of the global graphene industry, which is expected to be worth at least 100 billion yuan.

Chinese companies have been aggressive in securing patents for graphene, though they lack blockbuster products compared to international giants such as IBM and Samsung, said Chen.

“Graphene research bears great uncertainty. It’s obvious to see over investment focused on the lower end, while lack of spending on the higher end,” he said.

The professor expects graphene-enabled filtration and purification devices in five to 10 years. However, it could be 10 years before graphene finds its way into commercial uses in fields like semiconductors and bio-pharmaceuticals.

“China used to be known as a copycat, but now as the country marches ahead, there’s no precedence to draw from. Domestic firms have to learn to spearhead [innovation],” said Chen.

Chen said he is concerned the hype around graphene might eventually hurt investors and ultimately dampen serious research.