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[Asia Economy Reporter Hyungsoo Park] Even as the year changes, there are no signs of the initial public offering (IPO) market recovering. While institutional investors participating in demand forecasting are acting conservatively, NanoTeam, a thermal management material company for electric vehicles, is pushing for a listing on the KOSDAQ market. Since 2019, its sales have rapidly increased, leading to aggressive capacity expansion.

NanoTeam is offering 2.05 million new shares for its KOSDAQ listing. The expected price range is 11,500 to 13,000 KRW per share, with a post-IPO estimated market capitalization of 220 billion to 249 billion KRW. Demand forecasting for institutional investors will be conducted over two days, from the 14th to the 15th of next month. Korea Investment & Securities is the lead underwriter. At least 23 billion KRW will be raised through the IPO.

Founded in 2016, NanoTeam supplies thermal management materials for secondary batteries used in electric vehicles. Thermal management materials utilize thermal conductivity properties to effectively dissipate heat externally. When electric vehicles are rapidly charged, significant heat is generated. Thermal management materials are necessary to safely enable fast charging. Charging time has become as important a factor as driving range in choosing electric vehicles.

The thermal management materials produced by NanoTeam are used in Hyundai and Kia’s battery electric vehicles (BEVs). As the share of electric vehicles in the domestic automobile market grows substantially, NanoTeam’s sales are expected to continue increasing. Hyundai and Kia have announced plans to increase domestic BEV production to 1.28 million units by 2025. As thermal management materials emerge as key components in electric vehicles, NanoTeam’s scale has rapidly expanded. Sales grew from 7.4 billion KRW in 2019 to 27 billion KRW in 2021, recording a compound annual growth rate of 91.5%. Operating profit surged from 400 million KRW to 4.5 billion KRW during the same period. The cumulative sales for the first three quarters of last year were 26.6 billion KRW, with operating profit of 2.5 billion KRW.

Along with the increase in sales, NanoTeam has been pursuing factory expansion since 2020. It acquired land in the second phase of the Daedeok R&D Special Zone’s New Dong District and built a new factory. Although production capacity was expanded with the factory’s completion in July last year, considering expected orders from existing clients and new customers, further expansion is necessary. NanoTeam plans to construct a factory near the existing one to manufacture new products. Among the funds raised through the IPO, 10.6 billion KRW will be allocated for facility investment. Of the funds borrowed last year for expansion, those with higher interest rates will be repaid first. 8.6 billion KRW is allocated for debt repayment, which is expected to reduce interest burdens.

Korea Investment & Securities selected four comparable companies?Chunbo, Husung, L&F, and SKC?to determine NanoTeam’s appropriate corporate value. Considering the average price-to-earnings ratio (PER) of 22.13 times for these four companies and NanoTeam’s estimated net profit, a per-share valuation of 16,712 KRW was calculated. Applying a discount rate of 22.21% to 31.19%, the expected IPO price range was proposed.

NanoTeam expects sales and operating profit to surge this year as the effects of capacity expansion fully materialize. Sales are projected at 83 billion KRW and operating profit at 16.2 billion KRW this year. These figures represent increases of 115% in sales and 280% in operating profit compared to last year’s estimates.

Yoonseong Choi, CEO of NanoTeam, said, "The market for thermal management materials, which determine the performance of secondary batteries, will continue to grow," and added, "Starting with electric vehicles, we aim to become the leading company in thermal and flame-retardant materials across various industrial sectors."

CEO Yoonseong Choi worked at Henkel Korea and Hanwha Aerospace for 20 years, handling product development and overseas sales. Noticing that although the domestic thermal management materials market was growing, most heat management materials were supplied by overseas companies, he founded NanoTeam in December 2016. In October 2017, he acquired the thermal management materials business division of TTM, securing production facilities and research personnel. CEO Choi’s shareholding ratio is 53.3% after listing.