[Asia Economy Reporter Hyungsoo Park] The stock price of Yeonghwa Tech is steadily trending upward. This is interpreted as a result of growing expectations for the new business Yeonghwa Tech is pursuing.
As of 2:16 PM on the 10th, Yeonghwa Tech is trading at 21,650 KRW, up 9.34% from the previous day. The stock price has been steadily rising since last month, with a market capitalization around 230 billion KRW.
Yeonghwa Tech develops automotive junction boxes, electric vehicle power electronics components and modules in-house, supplying them to domestic and international automotive OEMs and global parts companies. It operates headquarters and production plants in Korea, local production subsidiaries in China, and local subsidiaries in the United States.
The junction box is an essential system safety component that supplies and distributes power and signals to electronic components, which account for about 40-50% of all automotive parts, and provides circuit protection. It is necessary not only for internal combustion engine vehicles but also for electric vehicles and hydrogen fuel cell vehicles. Market expansion is expected due to rising junction box unit prices and an increase in the number of units installed per vehicle.
Yeonghwa Tech mass-produces and supplies junction boxes ranging from PCB-type junction boxes to smart junction boxes with CAN communication functions across all vehicle classes?from compact cars to mid-sized vehicles, luxury cars, buses, and trucks?to the five major domestic automakers as well as leading overseas OEMs.
In the first half of this year, Yeonghwa Tech recorded sales of 19.3 billion KRW and operating profit of 600 million KRW. Sales increased by 26.5%, and operating profit turned positive.
The growth potential of the new business Yeonghwa Tech is pursuing is also significant. In line with the era of eco-friendly vehicles and autonomous driving, the company is developing new junction box products. Through lightweighting, direct integration, and electrification, it is developing intelligent standard modules and pursuing new market expansion by developing and mass-producing products applicable to various vehicle types through intelligent integration with external control devices and optimal design.
For emerging countries such as China, Yeonghwa Tech is promoting the integration of various electric vehicle and electronic components related to power, power supply, and communication used in various mobility devices including automobiles. It has also planned to expand its product lineup through the development of parts for mid- and large-sized vehicles.
It is also advancing the development of power conversion components and devices for hydrogen fuel cell vehicles. Since last year’s second quarter, it began mass production and supply of converters and related parts for commercial hydrogen fuel cell vehicles and expanded R&D into hydrogen power generation control components. The company is focusing on the development of power conversion components and devices for hydrogen fuel cell vehicles.
Yeonghwa Tech is also engaged in a business utilizing used batteries. It explained that it is promoting a business to reuse high-voltage used batteries from electric vehicles as industrial ESS (Energy Saving Storage). It was selected as the lead operator for the 10kW-class ESS reuse technology development project using used batteries and is proactively advancing related businesses.
Last year, Yeonghwa Tech, together with Chungnam Province, developed technology to manufacture solar power generation facility energy storage systems (ESS) reusing used batteries from electric vehicles for the first time in Korea. It has entered the demonstration and commercialization stage. The ESS manufacturing technology is the result of an in-house R&D project conducted over three years from 2018, and last year it completed performance verification preparations and entered the demonstration phase.
As technology to recycle electric vehicle batteries advances, there is great expectation that used batteries will transform from environmental hazards into a "gold mine." Batteries account for about 30-40% of the price of electric vehicles and there have been concerns about environmental damage when their lifespan ends. However, recycling used batteries can reduce battery costs and environmental pollution, achieving a twofold benefit.
Tesla, Volkswagen Group, Hyundai Motor Group, and others are promoting battery recycling. According to the Korea Resources Corporation, as of the 8th, lithium prices have surged 243% compared to last year’s average price. Nickel rose 43%, and cobalt nearly 60%. For lithium-ion series, the main products of domestic battery companies, the prices of key raw materials such as lithium, nickel, and cobalt account for about 60% of the battery price.
It is analyzed that recycling a 24kWh battery pack can generate about 900 dollars (approximately 1.05 million KRW) in revenue per unit. One used battery from the Ioniq 5 Long Range model (72.6kWh) can earn 3.15 million KRW. Market research firm SNE Research forecasted that the global electric vehicle battery recycling market, which was about 400 billion KRW last year, will reach 12 trillion KRW by 2030 and 87 trillion KRW by 2040.
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