"Advertising Expenses of 10 Billion Won but R&D Costs Only 200 Million Won"…This Company's Growth Engine Is 'In the Fog'

[Post-IPO]④ Analysis on the 1-Year Anniversary of TS Trillion's Listing

[Asia Economy Reporter Jang Hyowon] TS Trillion, a KOSDAQ-listed company that produces the hair loss shampoo ‘TS Shampoo,’ has spent 200 million KRW on research and development (R&D) through the end of the third quarter this year. This accounts for less than 0.6% of its total sales. In contrast, the company has spent about one-third of its total sales on advertising expenses, raising concerns about the uncertainty of its future growth potential.

According to the Financial Supervisory Service’s electronic disclosure on the 8th, TS Trillion spent approximately 210 million KRW on R&D on a separate cumulative basis through the end of the third quarter this year. During the same period, the company recorded cumulative sales of 35.8 billion KRW, investing 0.59% of that amount in R&D.

This is significantly lower compared to major domestic companies. As of the end of last year, the average R&D expenditure as a percentage of sales among the top 30 domestic companies was 4.9%. Especially in industries where technology is critical, such as bio and IT, the proportion of R&D expenses was higher.

TS Trillion manufactures and sells ‘TS Shampoo,’ a product that alleviates hair loss symptoms, as well as other hair care products. Essentially, despite generating sales based on the functional efficacy of alleviating hair loss symptoms, the company spends very little on R&D.

On the other hand, during the same period, the company spent 10.3 billion KRW on advertising and promotional expenses, which is 28.7% of total sales. TS Trillion uses celebrities such as singer G-Dragon and soccer player Son Heung-min as advertising models. Last year as well, TS Trillion made large-scale advertising expenditures while investing only a small amount in R&D.

Even this R&D spending began only in 2019. TS Trillion spent 160 million KRW on R&D in 2019, but there was no R&D expenditure until 2018, the previous year. It appears that the company hurriedly invested in R&D ahead of its planned KOSDAQ listing at the end of last year.

In fact, TS Trillion’s first registered patent was in 2019. Moreover, the first patent was jointly developed with companies such as J2K Bio and Cosmecca Korea. Patents related to hair loss alleviation were registered for the first time last year.

Despite repeated inquiries to the company about what patented technology was used to produce hair loss shampoo before 2018, no response was given.

According to industry sources, CEO Jang Ki-young of TS Trillion launched a hair loss shampoo at a company called Moracle in 2006. The patent from Seongpil Hair Research Institute used at that time expired in 2010, and although Moracle still holds patents it directly registered, the company is currently closed.

Meanwhile, in a market where competition in the hair loss shampoo industry is intensifying, attention is focused on how TS Trillion will overcome challenges with its technological capabilities. As of the end of the third quarter this year, TS Trillion recorded an operating loss of 3.6 billion KRW and is experiencing poor performance.