A Battery Activation Equipment Manufacturer
The author is an analyst of NH Investment & Securities. He can be reached at minwoo.ju@nhqv.com. -- Ed.
A-Pro is a battery activation equipment manufacturer with LG Energy Solution as its main customer. With sales recognition for Ultium Cells Plant 1 to begin in earnest, the company is expected to enjoy rapid earnings growth in line with the expansion of its primary client’s US investment.
Starting to reap fruits of LG Energy Solution’s US investment
A-Pro is a battery equipment manufacturer that produces chargers/dischargers and high-temperature pressurized chargers and dischargers, all of which are used in back-end processes for battery production. A-Pro’s main customer is LG Energy Solution, which accounts for more than 90% of its sales. Plant activation equipment sales to Ultium Cells (a battery JV between LG Energy Solution and GM) should start to be recognized from 4Q21, likely continuing thereafter until full capacity is reached. With sales to domestic and Polish production facilities also expected to be booked in 4Q21 figures, overall sales for 2021 are to reach around W76.8bn (+56.7% y-y).
According to LG Energy Solution’s securities filing, battery production capacity plans in the US for 2025 are projected to divide as 80GWh for Ultium Cells, 55GWh for a JV between Stellantis and a new OEM, and 25GWh at its own plant, totaling 160GWh. Since it is difficult for Chinese companies to enter the US mainland, we believe these players will have an edge in the competition to win orders. Both the fruits of LG Energy Solution’s increased investment in the US and a favorable business environment are set to continue ripening, leading to an increase in A-Pro’s equipment supply.
Picture bright for both core business and new ventures
A-Pro has developed a next-generation GaN power semiconductor device for the advancement of activation equipment; quality testing is currently underway. The device is to be used to upgrade activation equipment at the initiation of the mass production stage. Of note, power semiconductors are characterized by high efficiency, miniaturization, and high-speed switching. Costs can be reduced through design simplification and the overall size of the equipment can be reduced. In addition, high-speed switching reduces the loss that occurs during power conversion, thereby reducing energy consumption costs.
Using power conversion and circuit technology, A-Pro intends to broaden its business spectrum to not only the rechargeable battery activation process, but also power conversion technology-related businesses such as battery recycling, two-wheeled vehicle charging stations, and EV charging services.