[Featured Stock] TSI's Sales Double and Operating Profit Increases 35-Fold This Year... Rising Orders for Secondary Battery Equipment

[Asia Economy Reporter Hyungsoo Park] TSI is showing strong performance. Securities firms' analysis that TSI will benefit from large-scale investments based on funds raised through LG Energy Solution's initial public offering (IPO) appears to have influenced the stock price.

As of 10:56 AM on the 3rd, TSI is trading at 11,300 KRW, up 8.65% from the previous trading day.

SK Securities expects TSI's performance to improve this year as its major clients, LG Energy Solution (LGES) and ACC, embark on large-scale investments.

Park Chansol, a researcher at SK Securities, said, "LGES recently confirmed a plan to expand production capacity to over 400 GWh by 2025 through its pre-IPO securities registration statement," adding, "Considering that the production capacity was 155 GWh in the third quarter of last year, they plan to expand by at least 245 GWh over the next four years."

He continued, "ACC, which is scheduled to supply to Stellantis, the world's 4th largest automaker, has an expansion plan of 64 GWh," emphasizing, "and in the long term, up to 120 GWh by 2030."

He analyzed, "TSI is expected to secure equipment orders worth between 152.5 billion and 183 billion KRW from ACC and approximately 230 billion KRW conservatively estimated from LGES over the next four years," adding, "The combined expected order amount from these two clients alone exceeds 400 billion KRW over the next four years."

Researcher Park added, "The expected sales for this year are 133 billion KRW and operating profit is 10.5 billion KRW," noting, "which represent increases of 118.0% and 3447%, respectively, compared to last year."

He explained, "The combined amount of sales and order backlog is important," adding, "Equipment manufacturers typically recognize performance according to the equipment installation schedule of secondary battery cell manufacturers."

He said, "The period to complete equipment installation is mostly within two years," and added, "It is meaningful to view TSI's performance on a two-year basis." Furthermore, he analyzed, "However, due to the market characteristics of annual evaluations, the combined amount of sales and order backlog has determined TSI's stock price," noting, "In both 2019 and 2020, the market value was formed at a level 40% higher than the combined amount of sales and order backlog."