[Click eStock] "Sangsin EDP to Benefit from ESS Expansion... The First to Turn Around"

On March 10, Hanyang Securities analyzed that Sangsin EDP is a component manufacturer poised to benefit from both the expansion of the North American energy storage system (ESS) market and the global shift in battery form factors.

Sangsin EDP specializes in manufacturing CANs for secondary batteries and was listed on the KOSDAQ market in May 2007. As of the third quarter of last year, its sales breakdown by product was: medium/large CANs at 56.1%, cylindrical CANs at 31.7%, and other products at 12.1%. Its main customer is Samsung SDI. The company has established global production bases in Cheonan and Yangsan, Korea, as well as in Hungary and the United States, allowing it to respond to demand near its key clients' manufacturing sites.

The global secondary battery industry saw an adjustment phase in recent years due to slowing demand for electric vehicles (EVs), but since late last year, demand for ESS—centered around North America—has been rapidly expanding, reigniting market interest in the battery sector.

Junseok Lee, a researcher at Hanyang Securities, stated, “While many companies in the secondary battery sector remain unprofitable, Sangsin EDP turned a profit last year and is expected to achieve over 30% earnings growth this year.” He added, “It is a component manufacturer expected to benefit preemptively amid the expansion of the ESS market and the global transition in battery form factors.”

Key investment points for Sangsin EDP include the expansion of the North American ESS market and the growing size of prismatic LFP batteries. Given the importance of long cycle life and stability for ESS, prismatic LFP batteries have become the de facto standard, and the trend toward larger battery cells could lead to higher average selling prices (ASP) for larger CANs. In the United States, 24.3GW out of 86GW of new power generation capacity planned for 2026 is expected to come from ESS, indicating direct benefits from the expanding North American ESS market.

Additionally, the growing adoption of prismatic batteries in the global EV market is another positive factor. As major automakers choose prismatic batteries, demand for medium/large prismatic CANs is projected to increase.

Researcher Lee explained, “As leading automakers adopt prismatic batteries, demand for medium/large prismatic CANs is expected to grow, and Sangsin EDP is well-positioned to respond with its Deep Drawing manufacturing technology and global production bases.”

Changes in cylindrical battery trends are also cited as a mid- to long-term growth driver. While cylindrical batteries have traditionally focused on the 18650 and 21700 models, the industry is now evolving toward the 46mm series, and Sangsin EDP is preparing for mass production of these new types.

Lee added, “Cylindrical batteries are evolving from the 18650 and 21700 series to the 46mm series, and Sangsin EDP is also expected to benefit from supplying cylindrical batteries for customers’ humanoid robots.”

Diversification of the customer base is also a positive. While Samsung SDI remains its primary customer, Sangsin EDP has secured global clients such as Panasonic and CATL, and has proactively expanded overseas production more than other component manufacturers.

He emphasized, “The production bases in Hungary and the United States are likely to serve as strategic hubs for acquiring additional customers as the global battery supply chain expands.”

Performance is also expected to improve sharply. Hanyang Securities forecasts that Sangsin EDP’s sales will reach 325 billion won in 2026, up 30% from the previous year, with operating profit rising 237.5% to 31.3 billion won.

Lee analyzed, “The key to performance improvement lies in the expansion of the North American ESS market and improved profitability at the U.S. production base. Notably, the Indiana subsidiary posted profits even at low utilization rates, suggesting high operating leverage as ESS volumes increase.”

He also positively assessed that the StarPlus Energy plant—a joint venture between Samsung SDI and Stellantis—will convert some lines to ESS production, securing approximately 30GWh of ESS capacity by the end of 2026.

Lee added, “CATL is expanding its capacity in Hungary by 100GWh, and with a production base in Hungary, Sangsin EDP is poised to broaden supply to global clients. Considering the EV market’s transition to prismatic form factors and the mid- to long-term spread of 46mm batteries, new supply opportunities are expected to expand gradually.”

He concluded, “Ultimately, Sangsin EDP is exposed to all three structural growth trends: North American ESS expansion, global battery form factor changes, and customer diversification.”

This content was produced with the assistance of AI translation services.