KOSDAQMachinery125020

TC Materials

₩6,230▲ 3.32%2026-10-02 close

Market Cap

₩217.6B

Turnover

₩3.6B

Volume

590,000 shares

Shares out.

35M

PER

19.5×

PBR

2.3×

EPS

₩309

Dividend Yield

0.00%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩0 per share · Prices as of the 2026-10-02 close

Report overview

Power-Grid Copper Materials: Capacity Expansion Meets a Margin Test

TC Materials posted its highest quarterly revenue on record in the second quarter of 2026 on stronger demand for power-infrastructure and automotive copper materials, but its operating margin slipped from the first quarter amid a lag between raw-material costs and customer pricing.

1
Q2 2026 revenue reached a record 123.8 billion won, but the operating margin fell from 6.3% in Q1 to 3.1%.
2
Owners' net profit over the trailing four quarters (Q3 2025–Q2 2026) totaled roughly 10.6 billion won, well above the full-year 2025 figure of 1.7 billion won, showing a profit recovery trend.
3
Capacity expansion adding CTC lines from 5 to 13 units is scheduled to be completed sequentially by October 2026, with monthly output expected to more than triple.
4
The top three customers account for roughly 50% of revenue, leaving customer concentration as a structural source of earnings volatility.
5
DS Investment & Securities forecast operating profit of 21.3 billion won for 2026 and 36.7 billion won for 2027, but did not issue an investment rating or price target.

Business structure

TC Materials was founded in 1995 and listed on KOSDAQ in May 2025 as a specialized copper materials manufacturer.

Its flagship products are enamel wire, square wire, and CTC (continuously transposed conductor) along with ultra-high-voltage cable materials, and the company has developed enamel wire manufacturing methods for submarine cable applications and ultra-high-voltage power cables, supplying core materials for large domestic and overseas underground power grid projects.

The business is organized around power infrastructure, automotive (electrification), and home appliance end markets, with customers including HD Hyundai Electric, Hyosung Heavy Industries, Iljin Electric, and LS Cable & System among major domestic transformer and cable manufacturers.

The company is also expanding into large motor stator manufacturing and repair/maintenance services as it seeks to grow into a higher-value-added copper products specialist.

That said, customer concentration is notable, with the top three customers accounting for roughly 50% of revenue and two customers alone reaching 33% last year.

The company had already disclosed in its listing prospectus that it has relatively low bargaining power versus customers and that revenue concentration could persist.

TC Materials reacquired its Ulsan and Busan plants from KAMCO for a combined 26.3 billion won late last year; while this does not add production capacity, it is expected to improve the cost structure by eliminating lease payments.

Earnings trend

Quarterly revenue · Operating profit

₩76.9B₩1.4B25Q2₩78.1B₩1.9B25Q3₩76.2B₩1.1B25Q4₩101.4B₩6.4B26Q1₩123.8B₩3.8B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩303.9B₩10.9B2024₩299.1B₩6.8B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩76.9B	₩1.4B	1.9%
2025Q3	₩78.1B	₩1.9B	2.5%
2025Q4	₩76.2B	₩1.1B	1.4%
2026Q1	₩101.4B	₩6.4B	6.3%
2026Q2	₩123.8B	₩3.8B	3.1%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2024	₩303.9B	₩10.9B	₩6.3B	3.6%	11.0%	33.9%
2025	₩299.1B	₩6.8B	₩1.7B	2.3%	2.2%	55.5%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

Consolidated revenue in 2025 was 299.1 billion won, slightly down from 303.9 billion won in 2024, while operating profit fell to 6.8 billion won from 10.9 billion won, pushing the operating margin down from 3.6% to 2.3%.

Owners' net profit dropped sharply from 6.3 billion won in 2024 to 1.7 billion won in 2025, and operating cash flow also declined from 13.5 billion won to 4.0 billion won, indicating weaker cash generation alongside lower earnings.

The debt ratio rose from 33.9% in 2024 to 55.5% in 2025, reflecting increased financial burden from capacity expansion and asset reacquisition. On a quarterly basis, owners' net profit swung to a loss of 3.2 billion won in Q2 2025 before turning profitable again at 1.6 billion won in Q3 and 1.4 billion won in Q4.

Q1 2026 showed a clear rebound with revenue of 101.4 billion won and operating profit of 6.4 billion won (6.3% margin), and Q2 revenue rose further to a record 123.8 billion won.

However, Q2 operating profit was 3.8 billion won (3.1% margin); while this still reflected the benefit of stronger front-end demand, profitability disappointed relative to Q1 and the stock reacted negatively after the earnings release.

DS Investment & Securities attributed the margin pressure to differing timing of raw-material cost pass-through across customers during a period of rising input costs, noting the company is reportedly negotiating a pricing structure based on the copper price in the month of shipment to address this.

Trailing four-quarter (Q3 2025–Q2 2026) owners' net profit totaled approximately 10.6 billion won, well above the full 2025 annual figure, confirming an overall profit-recovery trend despite quarterly volatility.

Industry analysis

Analysts note that the power grid industry is undergoing an architectural shift driven by aging grid replacement needs and rising power density from data center expansion, which is broadening front-end demand.

This trend is expected to lift demand for enamel wire as well as square wire and CTC (continuously transposed conductor), the core materials used in transformers.

TC Materials counts HD Hyundai Electric, Hyosung Heavy Industries, Iljin Electric, and LS Cable & System among its customers, placing it directly in the path of expanding grid investment.

That said, demand trends differ meaningfully across segments: in the first half of 2026, power-infrastructure segment revenue rose 80.45% year over year and the automotive segment rose 65.2%, while the home appliance and other segment fell 16.43% due to weakness in the underlying appliance market.

In the automotive segment, revenue from electric-vehicle-related supply continues to expand on the back of customer diversification, gradually broadening the customer base.

Wound-wire materials for power infrastructure are generally viewed as a technically demanding niche, and the company has been directing proceeds raised since listing toward automation, capacity expansion, and new material R&D.

Outlook

The company has stated that in the second half it plans to respond actively to demand in its key growth markets based on the full operation of expanded facilities.

Preemptive capacity expansion under way since 2025 to raise the share of higher-margin CTC output is entering its final stage, with CTC lines set to increase from 5 to 13 units through sequential additions of 8 units by October this year. As a result, monthly CTC output is expected to more than triple to 1,600 tons.

DS Investment & Securities analyst Cho Dae-hyung said that once the expansion is fully operational in 2027, both the top line and profitability should improve as the CTC mix rises and productivity gains materialize, with further profitability upside possible as the share of high-value, large-capacity and ultra-high-voltage transformers increases.

The same report projected high visibility for operating profit of 21.3 billion won in 2026 (+213.0% year over year) and 36.7 billion won in 2027 (+72%), though it did not issue an investment rating or price target.

First-half operating profit already rose 167.54% year over year, surpassing last year's full-year operating profit, making the earnings trajectory in the latter half—once expansion effects fully kick in—a key point to watch.

Valuation

PER

19.5×

PBR

2.3×

ROE

13.3%

EPS

₩309

BPS

₩2,600

Dividend per share

₩0

The share price trades at a premium to net asset value, which can be read as partly reflecting expectations for the recent profit recovery and capacity-driven growth.

While a clear shift from a loss in Q2 2025 to consecutive profitable quarters thereafter is evident, quarter-to-quarter volatility remains notable, as seen when record revenue in Q2 2026 still came with compressed margins.

Dividends have not yet been paid, so shareholder-return appeal is not a distinguishing feature at this stage. DS Investment & Securities offered earnings forecasts but withheld an investment rating and price target, suggesting the market's view on valuation has not yet clearly converged.

Until the margin trajectory becomes clearer once expansion is fully operational, the current trading multiple may be best considered alongside the direction of earnings rather than in isolation.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Structural Beneficiary of the Power-Grid Investment Cycle

Analysts suggest the company stands to benefit as front-end demand grows amid aging grid replacement and rising power density from data center expansion. TC Materials, whose core products include enamel wire and the key transformer materials square wire and CTC, is seen as a direct beneficiary of this trend.

It counts HD Hyundai Electric, Hyosung Heavy Industries, Iljin Electric, and LS Cable & System among its customers, positioning it to benefit from related investment growth.

Profitability Upside from CTC Capacity Expansion

Expansion aimed at raising the share of higher-margin CTC output is nearing completion, with CTC lines set to increase from 5 to 13 units and monthly output expected to more than triple.

Once this expansion is fully operational in 2027, both the top line and profitability are expected to improve as the CTC mix rises and productivity gains materialize. Additional profitability upside has also been noted as the share of large-capacity, ultra-high-voltage transformers increases.

Customer Diversification in the Automotive Segment

Automotive segment revenue grew 65.2% year over year in the first half of 2026, with electric-vehicle-related sales continuing to expand on the back of customer diversification. This can broaden the business portfolio and reduce reliance on the power-infrastructure segment over time.

The company's parallel push into large motor stator manufacturing and repair/maintenance services provides another avenue for diversification.

Bear factors

Earnings Volatility from Customer Concentration

The top three customers account for roughly 50% of revenue, and two customers alone reached 33% last year. The company had already disclosed in its listing prospectus that it has relatively low bargaining power versus customers and that revenue concentration could persist. Under this structure, changes in a specific customer's investment cycle can directly affect results.

Margin Pressure from the Cost-to-Price Pass-Through Lag

During periods of rising input costs, differing timing of cost pass-through across customers has been flagged as a structural source of margin volatility. This materialized in Q2 2026, when revenue hit a record high even as the operating margin fell from 6.3% in Q1 to 3.1%.

The company is reportedly negotiating a pricing structure based on the shipment-month copper price to address this, but full implementation may take time.

Weak Demand in the Home Appliance Segment

Revenue from the home appliance and other segment fell 16.43% year over year in the first half of 2026 due to weakness in the underlying appliance market.

In contrast to the strong growth in the power-infrastructure and automotive segments, the appliance segment has lagged, highlighting a clear divergence across business lines. Unless appliance-end demand recovers, this segment's revenue contribution could remain limited.

Risk factors

Customer Concentration Risk

With the top three customers accounting for roughly 50% of revenue, a pullback in orders or investment from a key customer could directly hit results. The fact that the company had already flagged this risk in its listing prospectus suggests it is structural in nature. This risk is likely to persist until tangible progress on customer diversification is achieved.

Raw Material Price and Pricing Pass-Through Risk

In periods of sharp increases in copper and other input costs, differing timing in customer pricing pass-through can compress margins, as seen in the Q2 2026 results. A revised pricing structure is reportedly under negotiation, but applying it uniformly across all customers may take time. The direction of copper prices itself remains an external variable.

Capacity Expansion Execution Risk

The plan to expand CTC lines from 5 to 13 units sequentially by October this year carries some risk of delays in equipment installation or ramp-up stabilization. If demand does not keep pace with the expanded capacity, utilization could underperform expectations.

On the financial side, with the debt ratio rising from 33.9% in 2024 to 55.5% in 2025, managing the financial burden of further investment also remains a challenge.

What to watch next

October 2026
Check whether CTC lines are completed sequentially to 13 units as planned and whether monthly output rises to around 1,600 tons.
Around November 2026
Third-quarter (July–September 2026) results are expected around this time; watch whether the gap between revenue growth and margin pressure seen in Q2 persists.
Fourth quarter 2026
Monitor whether demand in the home appliance segment recovers and track copper and other raw-material price trends.
2027
This is when the expanded capacity is expected to be fully operational; verify whether profitability actually improves as the CTC mix rises and large-capacity, ultra-high-voltage transformer sales are reflected.

Overall view

TC Materials has entered a growth phase in 2026, with quarterly revenue repeatedly hitting new highs on the back of expanding power-grid investment and customer diversification in the automotive segment.

However, even as the company turned profitable following a loss in Q2 2025, quarterly volatility remains significant, as seen in Q2 2026 when revenue growth and margin pressure appeared simultaneously.

Customer concentration and the cost-to-price pass-through lag remain unresolved structural risks, and 2027—when the CTC capacity expansion from 5 to 13 units is expected to be fully operational—looks to be a pivotal year for earnings normalization.

The fact that DS Investment & Securities cited high visibility for sharp profit growth in 2026 and 2027 while withholding an investment rating and price target suggests the growth narrative and execution risk currently coexist.

Changes in financial metrics such as the rising debt ratio and shrinking operating cash flow also warrant attention.

The timing of CTC expansion completion, third-quarter results, and any recovery in home-appliance demand will be key variables in determining whether the recent profit recovery is a structural shift or a temporary rebound.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.