[Click eStock] TSI Achieves 300 Billion KRW Orders This Year

[Asia Economy Reporter Lee Seon-ae] Korea Investment & Securities analyzed on the 14th that since TSI's order amount is rapidly increasing, its stock price is also likely to rise. However, no investment opinion or target price was presented.

TSI secured orders exceeding 100 billion KRW in the fourth quarter of this year from LG Energy Solution and European secondary battery cell manufacturer ACC (Automotive Cells Company), achieving annual orders of 300 billion KRW (last year's order amount was 136.9 billion KRW). Most of the orders were for LG Energy Solution's Ultium Cells Plant 2 and the expansion of the cylindrical battery factory. The unexpectedly positive factor was the order of mass production line equipment for overseas customers. It is estimated that TSI's equipment was applied to the mixing system for the first block (13.4 GWh) of ACC's first gigafactory (40 GWh) being constructed in France. The order amount for ACC equipment exceeds 40 billion KRW, including the pilot line equipment capable of mass production ordered in April. Since ACC's ultimate goal is to secure a production capacity of 120 GWh per year (a total of three gigafactories), the pool of mass production line equipment orders has increased.

In the third quarter, operating profit margin recorded -10% due to decreased recognized sales, but in the fourth quarter, it is expected to turn profitable as the first half orders (1H 2022 orders of 136.6 billion KRW vs. full-year 2021 orders of 136.9 billion KRW) are delivered and recognized as sales. Additionally, the company stated that excluding foreign exchange losses and CB valuation losses in the third quarter, the net profit margin is around 7%, indicating improved profitability compared to 2021, which was affected by rising costs. However, the reason operating profit margin remains low is presumed to be due to increased expenses from a growing number of customers. Researcher Kim Jeong-hwan of Korea Investment & Securities forecasted, "As the proportion of mass production line orders from new customers increases, profit margins are expected to gradually rise."

Along with LG Energy Solution's upward revision of investment plans, TSI has also successfully built references for mass production equipment orders from new European customers. He emphasized, "We expect to receive mass production equipment orders from customers such as Verkor and Morrow, to whom pilot equipment was delivered," and added, "Since the order backlog (1,967 billion KRW at the end of Q3 2022 vs. 1,003 billion KRW at the end of 2021) has significantly increased, the stock price can also rise."