(Bloomberg) — W-Scope Chungju Plant Co., the South Korean battery-parts maker seeking to raise as much as 1 trillion won ($765 million) in an initial public offering, sees operating margins north of 30% by 2025 on robust demand for electric cars, Chief Executive Officer Won-Kun Choi said.
The company also expects revenue will increase around 40% to about $200 million this year, Choi said in an interview from the company’s headquarters in Chungju earlier this week.
Chungju, a city known for its annual martial arts festival, is where W-Scope also has one of its manufacturing facilities.
“We’re all set for production plans for the next five years and we’re in talks with potential partners for new orders,” Choi said.
W-Scope Chungju Plant, which makes the separators used in electric-car batteries, is seeking a stockmarket valuation of least 3 trillion won, Choi said.
Proceeds from the IPO will be used to build a new plant in Hungary.
Separators, or thin insulating membranes, physically isolate the anode and the cathode in an electric battery, preventing a short circuit, while allowing ions to circulate between them.
A strong membrane that can endure high temperatures is key for battery makers to prevent fires in electric vehicles.
W-Scope Chungju Plant, a unit of Tokyo-listed W-Scope Corp., set an IPO price range between 80,000 won and 100,000 won a share, according to a prospectus submitted to the Korea exchange on Thursday.
Trading is expected to begin in mid-August, Choi said.
Two Lessons
Shares of W-Scope in Japan have soared 131% this year, partly on news of its Korean unit’s share sale listing plans, which first emerged in February.
Stock in rival separator maker SK IE Technology Co., however, has slumped 51% since January, a broader indication of worsening investor sentiment toward EV-related companies as the cost of raw materials spikes and the chip shortage drags on, according to Jeon Chang-hyun, analyst at Daishin Securities Co.
W-Scope Chungju Plant’s main customer is Samsung SDI Co., a battery unit of South Korea’s biggest conglomerate Samsung Group.
It also supplies to LG Energy Solution Ltd. and Sony Group Corp., Choi said.
The Korean unit reported 185 billion won in sales and 40.4 billion won in operating profit for 2021 for a margin of almost 22%, company filings show.
Before founding W-Scope with other engineers in 2005 in Japan, Choi spent about a decade at Samsung Electronics Co.’s semiconductor and display division.
It was there that he realized the technology for producing membranes could be used for separators for lithium-ion batteries.
“No investor believed me in South Korea when I told them I wanted to make a battery separator with a membrane,” he said.
“That’s why I couldn’t list shares in Korea at the time.”
Two lessons he learned from Samsung — secure stable supplies for raw materials and meet customer demands.
“Partnering with Korean suppliers is crucial to keep input costs stable,” Choi said.
“Samsung was also good at after service for customers.”
(Updates IPO range in sixth paragraph.)
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