[Exclusive] Apro to Supply Equipment Worth 100 Billion KRW for LG Energy Solution-GM Battery Plant

Joint Venture Battery Plant 1 Orders Around 15GWh... KRW 10 Billion per 1.5GWh
Total Contract Estimated at KRW 100 Billion, APro's Sales More Than Doubled Last Year
Equipment Orders Scheduled for Mid-Next Month, Contract Imminent... Performance Improvement Expected

[Asia Economy Reporter Lee Seon-ae] Apro is pushing to supply secondary battery activation (charging and discharging) process equipment to Battery Plant 1, jointly constructed by LG Energy Solution and GM in Ohio, USA. The contract scale is 100 billion KRW, which is more than twice Apro's sales revenue of 48.6 billion KRW last year.

According to industry sources on the 19th, it has been confirmed that Apro and LG Energy Solution are discussing a supply contract for activation process equipment at Battery Plant 1, a joint venture with GM. The scale of Battery Plant 1 is 35GWh, with Apro currently securing about 15GWh, and the remaining portion being pursued by China's Hangke. Since the estimated value is about 10 billion KRW per 1.5GWh, Apro's order volume is estimated to be around 100 billion KRW.

The contract is said to be imminent. Since the plant aims to start operations around the end of the year, considering the average process setup time of five months, the order for activation process equipment must be placed by mid-next month at the latest. An industry insider hinted, "LG Energy Solution is currently conducting internal reporting related to Apro's supply of activation process equipment." Regarding this, Apro stated, "Since matters related to the contract are subject to disclosure, we cannot confirm the facts."

Apro is also establishing a local corporation in Ohio, USA, to closely respond to orders from its major client LG Chem. While its past growth engine was charging and discharging devices, it is now building a full lineup of activation process equipment through degassing, aging, and testing equipment, receiving evaluations that its customer response level has reached a high standard, making the contract likely to proceed smoothly.

Factory 1 exterior view.

The secondary battery process proceeds in the order of electrode process, assembly process, and activation process. The activation process, which is a post-process stage, follows the assembly process and imparts electrical characteristics through charging and discharging. The process sequence includes primary charging and discharging, degassing, aging, and secondary charging and discharging. Apro, which manufactures charging and discharging equipment, a type of activation process equipment, was established in June 2000 and listed on the KOSDAQ market in July 2020.

The securities industry expects Apro's performance to improve rapidly. LG Energy Solution recently announced plans to establish Battery Plant 2 with GM in Tennessee, USA. With a total investment of 2.7 trillion KRW, it plans to secure production capacity of over 35GWh by the first half of 2024. Battery Plant 2 represents potential contract volume for Apro. Moreover, if trade conflicts between the USA and China intensify, Apro may additionally secure some of Hangke's volume for Plant 1. Apro recorded sales of 67.3 billion KRW and operating profit of 10.3 billion KRW in 2019, and last year sales reached 48.6 billion KRW with operating profit of 1.5 billion KRW.

Geonjae Lee, an analyst at IBK Investment & Securities, explained, "Apro is a specialized company in secondary battery activation process equipment and has LG Chem, the world's number one secondary battery manufacturer, as its largest client. To produce fast and effective charging and discharging equipment, the use of compound semiconductors is essential. Apro has established Apro Semiconductor as a consolidated subsidiary last year to secure the necessary power semiconductors independently and to enter the rapidly growing power semiconductor market, and is currently developing GaN power semiconductors."