[Special Stock] T플랙스, Construction of 150 Chinese Nuclear Power Plants... Spotlight on Nuclear Valve Materials

[Asia Economy Reporter Hyungsoo Park] T플랙스 (T플랙스) is showing strong performance. The news that China, the world's largest carbon emitter, plans to build a significant number of nuclear power plants to achieve carbon neutrality has influenced the sharp rise of companies such as KEPCO Engineering & Construction and Hanshin Machinery. Major foreign media reported that the Chinese government plans to invest $440 billion (approximately 518 trillion KRW) over the next 15 years to build at least 150 additional reactors. The 150 reactors exceed the number of nuclear power plants built worldwide, excluding China, over the past 35 years.

As of 12:03 PM on the 4th, T플랙스 is trading at 5,080 KRW, up 5.28% from the previous day.

Sangsangin Securities forecasted that T플랙스 will continue its earnings growth trend next year due to rising nickel prices and supply of battery module materials. Researcher Jongwon Lee of Sangsangin Securities explained, "The price strength of nickel, the main raw material for stainless steel, is expected to continue," and added, "This year's performance is expected to reach its peak."

He added, "Annual depreciation expenses have decreased, and asset revaluation and cost reductions in the 판재 (plate) business division have positively contributed to profit improvement across all sectors."

He emphasized, "Despite the industrial downturn caused by COVID-19, T플랙스 continues to expand its competitiveness as an industry-leading company," and "It has secured a diverse customer portfolio across various front industries such as electronics, automobiles, and shipbuilding, maintaining a stable growth trend."

T플랙스 is a primary metal processing company that was listed on the KOSDAQ market in 2009. It procures raw materials from SeAH Changwon Specialty Steel and supplies products to over 1,500 customers in shipbuilding, semiconductors, and other industries. It holds the number one market share in the stainless steel bar sector. In the first half of this year, it recorded sales of 86.6 billion KRW and operating profit of 6.5 billion KRW, increasing by 25.1% and 174.3% respectively compared to the same period last year. More than 40% of bolts, nuts, and valves produced domestically using stainless steel bars are made with the company's products. It also operates a rare metals business specializing in the distribution of special materials such as nickel, tungsten, and titanium. The rare metals sales ratio is around 7-8%, and the sales profit margin compared to raw materials ranges from 15% to 25%, varying by material such as titanium and nickel.

The researcher emphasized, "In 2014, the company purchased factory land from Korea Water Resources Corporation at 2 million KRW per pyeong," and "During the 2019 asset revaluation, the price was appraised at 4 million KRW per pyeong." He assessed, "With a market price of about 5 million KRW or more, the book value per share (BPS) is around 4,040 KRW," and "The current market capitalization reflects almost none of the asset value of factory land and other assets, which have high potential for future revaluation."

KB Securities also recently predicted improved performance for T플랙스. Researcher Sangguk Lim of KB Securities noted, "We focus on a favorable earnings growth cycle due to increases in stainless steel price (P) and sales volume (Q), and cost reductions (C)," and explained, "The rise in nickel prices is leading to an increase in stainless steel selling prices."

Growth in the nuclear power and electric vehicle sectors is also expected to help increase T플랙스's sales. Researcher Lim explained, "T플랙스 supplies stainless steel materials for electric vehicle battery module case pillars." He added, "The final customer is domestic company S (supplying 50 to 100 tons monthly)," and "As stainless steel materials are incorporated into electric vehicle battery modules, earnings expansion is expected with the growth of the electric vehicle market."

He expressed expectations, saying, "Stainless steel round bars are used as materials for nuclear power plant valves, including small modular reactors (SMRs)," and "In the past, T플랙스's main product was stainless steel round bars for nuclear power plant valves, which can act as a momentum going forward."