Jeil Machine & Solution IPO Valuation Analysis

• Our base case valuation of Jeil M&S is target price of 24,354 won per share, which is 35% higher than the high end of the IPO price range.

• We estimate the Jeil M&S to generate sales of 279 billion won (up 94.9% YoY) and operating profit of 18.1 billion won (up 928% YoY).

• Jeil M&S's main products include mixing equipment for the rechargeable battery sector. Its major customers include Samsung SDI, LG Energy Solution, and Northvolt.

• Jeil Machine & Solution is getting ready for an IPO in April in the Korean stock market. The IPO price range is 15,000 won to 18,000 won.

• The total offering amount ranges from 36 billion won to 43.2 billion won. The book building for the institutional investors will last from 5 to 12 April.

• According to the bankers' assessment, the implied market cap of the company ranges from 309 billion won to 371 billion won.

Jeil Machine & Solution (Jeil M&S) is getting ready for an IPO in April in the Korean stock market. The IPO price range is 15,000 won to 18,000 won. The company plans to offer 2.4 million shares (100% new shares) in this IPO. The total offering amount ranges from 36 billion won to 43.2 billion won.

According to the bankers' assessment, the implied market cap of the company ranges from 309 billion won to 371 billion won. The book building for the institutional investors will last from 5 to 12 April. KB Securities is the lead underwriter of this IPO.

Major Shareholders - CEO of the company Lee Young-Jin owns a 29.2% stake in Jeil M&S. His family members own additional 28.95% stake in the company.

Company Background

Jeil Machine & Solution (JMS KS) was founded by CEO Lee Hyo-won as Jeil Machinery in Seongsu-dong, Seoul in 1981. Jeil M&S started out by supplying specialized equipment for food and pharmaceuticals and is currently expanding its business to rechargeable batteries, defense industry, and chemicals.

The company had order backlog of 303.3 billion won at the end of 2023, up 155% YoY. The company generated sales of 143.2 billion won, up 131.4% YoY.

Based on differentiated research and development data, such as the blade (rotating blade) shape and motion suited to each material, the company has developed a blade capable of ultra-high viscosity mixing which is evaluated as the industry's best in terms of performance. Based on its excellent mixing technology capabilities, Jeil M&S succeeded in localizing and commercializing Korea's first secondary battery mixing equipment.

In the early days of the industry of rechargeable battery materials mixing equipment, the domestic secondary battery manufacturers in Korea were highly dependent on imports of mixing equipment from Japan and Germany. In 2007, Jeil M&S succeeded in developing the local production of Samsung SDI's cathode ray tube internal coating mixing equipment. Based on this, the company continued to collaborate with Samsung SDI and succeeded in localizing it for the first time among secondary battery mixing equipment companies.

Strong customers in the rechargeable battery segment - Rechargeable battery manufacturers are the most important customer segment of the company. Its major customers include Samsung SDI (006400 KS), LG Energy Solution (373220 KS), and Northvolt. The company had 10 customers in 2023, 10 in 2022, and 5 in 2021. The company has completed the construction of the Gimhae plant and has expanded production capacity of its main products. As the company has sufficiently secured additional production capacity, it does not expecte additional major investment expenditure in the near future and this is a key reason for the company's expectation of higher profits in 2024.

Rechargeable battery companies accounted for 99.2% of total sales in 2023, 81.4% in 2022, and 91.9% in 2021. The company's main business, mixing equipment and mixing systems, are equipment and systems required for the mixing process (a process of mixing active materials, conductive materials, binders, and solvents) among secondary battery manufacturing equipment.

Major Competitors - The four major local players in the rechargeable battery materials mixing equipment include Jeil M&S, Yunsung F&C, TSI, and Dongjae. Yunsung F&C (372170 KS), one of the major competitors of Jeil M&S in the rechargeable batteries materials mixing equipment sector, has SK On as one of its major customers. TSI (another competitor in this segment) has LG Energy Solution and Samsung SDI as its major customers. Other global competitors include ROSS and LEAD China; PRIMIX and ASADA in Japan; and BUHLER and NETZSCHE in Germany.

Source: Company data

Source: Company data

Source: Company data

Source: Company data

Source: Company data