[Post-IPO] TSI, Will the Performance That Declines Every Year Be Different This Year?

[Asia Economy Reporter Hyunseok Yoo] TS&I, a company specializing in secondary battery mixing systems, has been experiencing negative growth every year. This is due to a decrease in orders caused by delays in investments in the upstream industry. However, with several battery companies announcing investment plans this year, there is hope for performance improvement.

TS&I recorded sales of 45.7 billion KRW and an operating loss of 88.42 million KRW last year. Sales decreased by 25.03% compared to the previous year, and operating profit turned into a loss. By sales proportion, mixing systems accounted for the largest share at 65%, followed by mixing products (19%), construction (10%), and others (6%).

Founded in 1996 as Taeseong Gikong, TS&I is a company specializing in secondary battery mixing systems. The mixing process refers to the supply process that mixes and disperses conductive agents, binders, solvents, etc., necessary for producing cathode and anode plates used in secondary batteries, into a slurry form and then coats it. The company entered the KOSDAQ market in July last year.

TS&I attributed last year’s poor performance to delays in customer investments. The delays were from major clients such as Samsung SDI, LG Chem, and the French company Automotive Cells Company (ACC). The order backlog, which was 34.2 billion KRW at the end of 2019, decreased to 30.7 billion KRW by the end of last year.

Sales have also declined from 2018 through last year. On a consolidated basis, sales were 66 billion KRW in 2018 and 61 billion KRW in 2019. Meanwhile, operating profit increased from 5.1 billion KRW to 5.8 billion KRW. A company official said, "It is true that the order volume was not large last year. Since it is an order-based industry, when upstream investments increase, that translates into sales."

However, performance improvement is expected starting this year as customer investments are anticipated to resume. According to SK Securities, LG Energy Solution’s production capacity (CAPA) is expected to expand from 120 GWh at the end of last year to 260 GWh by 2023. Samsung SDI continues investment in its new plant in Hungary, and SK Innovation has planned investments in its second plants in Georgia, USA, and Yancheng, China. Additionally, ACC is expected to make investments totaling 24 GWh by 2023.

TS&I also stated in its fourth-quarter investor relations (IR) materials last year that it expects to recover to levels above those of 2019 due to expanded customer investments. A company representative said, "There are still many uncertain factors, so it is cautious to speak definitively, but since several battery companies have announced investments, there is hope for volume this year."

One concern is that most of TS&I’s sales come from domestic customers. Recently, Volkswagen announced a strategy to gradually reduce pouch-type batteries, which LG Energy Solution and SK Innovation have mainly produced, and increase the proportion of prismatic batteries produced by China’s CATL and Sweden’s Northvolt, increasing uncertainty for domestic battery companies.

In response to these concerns, TS&I expressed confidence that there is no problem. The mixing systems they produce are not affected by battery form factors such as prismatic or pouch types, and they are currently diversifying their customer base. A company official explained, "We are not related to battery form factors, so it does not matter. The fact that other companies are producing batteries is actually an opportunity for us." He added, "Although not directly, we have a track record of supplying Northvolt for research purposes in the past, and we are also in discussions with other European battery companies. We are continuously preparing to broaden our portfolio."