Hydrogen tank supplier to Hyundai prepares for 2021 IPO

Iljin Composites Corp., the only South Korean manufacturer of composite fuel tanks, is set to mandate Mirae Asset Daewoo Co. and Samsung Securities Co. for its initial public offering set for next year, according to acompany source.

“Although not confirmed, we picked the two brokerage companies as the strongest candidates (as IPO managers),” the company source told The Korea Economic Daily on Oct. 21. “We are near signing a formal agreement with them.”

Iljin, 87% owned by Iljin Diamond Co., is the exclusive supplier of hydrogen fuel storage tanks for Hyundai Motor’s fuel cell SUV Nexo, introduced in 2018.

In addition to Nexo, Iljin has been selected to supply fuel tanks and modules for Hyundai’s other commercial vehicles, including wide-area buses, transit buses and electric police buses.

With Hyundai Motor making quick inroads into the electric vehicle market, Iljin is planning to raise new capital from the IPO to fund facility expansion.

Earlier this month, Hyundai Motor announced a plan to boost the production capacity of its electric heavy-duty truck, the XCIENT Fuel Cell, to 2,000 units annually by next year.

Hyundai is setting up a joint venture with the government and other domestic companies to establish and run hydrogen filling stations, in line with the South Korean government's drive to push the hydrogen economy as one of the country’s new growth engines.

Hydrogen fuel boasts energy and cost efficiency compared to gasoline and diesel. They are used to power commercial vehicles such as trucks, buses, drones, as well as ships and trains.

With annual sales of 100 billion won ($88 million), the high-tech material arm of Iljin Group is also one of the world’s two producers of the most advanced hydrogen tank, Type IV, alongside Toyota Motor Corp. Type IV tanks are made of fiber composite material and wrapped in carbon fiber, making them much lighter and more durable than traditional fuel tanks.

Driven by a sharp increase in fuel tank supply to Hyundai, Iljin’s operating profit soared by twentyfold on year to 12 billion won ($ million) in 2019. Sales more than trebled to 88.5 billion won from 2018.

Its first-half operating profit came to 5.3 billion won on sales of 48.6 billion won.

The company also produces storage tanks for compressed natural gas (CNG), known as an eco-friendly alternative to gasoline.

Write to Geun-Ho Im at eigen@hankyung.com
Yeonhee Kim edited this article.