DEEP RESEARCH · HANJUNG NCS (107640.KQ)
Hanjung NCS deep dive — the hidden enabler of the energy transition and AI infrastructure
From ICE auto parts to ESS liquid-cooling tier-1 — dual tailwinds from Samsung SDI SBB and the US IRA
0. Bottom line first
After 26 years as an internal-combustion auto-parts maker, Hanjung NCS has successfully pivoted into ESS immersion / liquid-cooling thermal-management. It is the lead supplier of cooling solutions for Samsung SDI's next-gen Samsung Battery Box (SBB). US policy and the IRA effectively bar China's #1 player Envicool from the North American market, making Hanjung the near-only non-China alternative. As of 3Q25, ESS accounts for 77.26% of revenue, ESS sales are up roughly +80% YoY, and the company has flipped to a cumulative operating profit — the turnaround has already begun.
1. Preface
Two megatrends — digital and energy transition — are reshaping global industry. AI datacenters in particular are pushing ESS from an "auxiliary" status into the realm of national-security infrastructure. Hanjung NCS sits in the middle of the ESS value chain through liquid-cooling thermal management, captive to Samsung SDI's SBB and benefiting from US policy that excludes Chinese competitors.
2. Corporate snapshot and business reinvention
2.1 From auto parts to energy
Founded 1995, ~26 years of brake/exhaust ICE parts. In 2021 the board re-classified the company into "energy storage system manufacturing" — the bet that defined everything since. Same year: selected as Samsung SDI's Strategic Supply Partner (SSP). 2022: Samsung SDI Manufacturing Innovation Award. 2023: liquid cooling system (E5S) initial mass production. June 2024: uplisting from KONEX to KOSDAQ.
2.2 Subsidiary structure and vertical integration
As of 3Q25, 6 consolidated subsidiaries cover "design → parts → module assembly → system integration."
| Subsidiary | Location | Stake | Role |
|---|---|---|---|
| HDC | Korea | 100% | Core thermal devices (Chiller, HVAC). Took to 100% in Aug 2025. The "brain and heart" of the cooling system. |
| HJ Future | Korea | 51% | Metal forming/press — cooling plates, brackets and other hardware (rear base). |
| HanJung America (Indiana) | USA | 100% | North American production hub. Founded Apr 2025. IRA + proximity to Samsung SDI's US JV — the biggest growth driver. |
| HanJung America (Michigan) | USA | 100% | CS & sales — repurposed from ICE support into ESS technical support / local sales. |
| Jiangsu HanJung NCS | China | 100% | Non-US markets — converted ICE lines into ESS lines by Jun 2025, low-cost lineup. |
| Changshu HanJung Trading | China | 100% | Procurement / trading — sources cheap China raw materials, optimizes logistics. |
Interpretation: Taking HDC to 100% (from ~55%) is the key change. Chillers and HVAC carry higher margins than basic hardware, so consolidating fully steps up the quality of group profits.
2.3 Structural shift in revenue mix
ESS was negligible until 2021. By 3Q25 it is 77.26% of revenue (~KRW 89.1B). Auto parts are down to 20.35%.
SBB 1.5 ramping
Liquid-cooled SBB 1.5 production for Samsung SDI is driving the P&L.
Deliberate cleanup
Exiting low-margin SKUs and rotating into high-value EV parts (cooling fan modules, active air flaps).
3. Battery value chain and technical moat
3.1 Mid-stream core: thermal management
The battery value chain runs upstream (minerals) → midstream (materials/parts) → downstream (cells/packs/recycling). Hanjung sits in midstream thermal management, which decides pack-level safety and lifecycle. Even an excellent cell becomes dangerous without thermal control at the pack level — Hanjung is not just a parts vendor but a system integrator.
3.2 Paradigm shift: air → liquid cooling
ESS is moving rapidly from air cooling to liquid cooling as high-capacity, high-density designs make air-only insufficient.
| Item | Air cooling | Liquid cooling — Hanjung's stronghold | Implication |
|---|---|---|---|
| Cooling medium | Air via fans | Antifreeze/coolant via plates/pipes | Liquids conduct heat far better than air — precise control. |
| Cell-to-cell temperature delta | ±10°C or more | Within ±3°C | Battery life +20–30%, lower fire risk. |
| Energy density | Low (needs air channels) | Thin cooling plates → high density | More MWh per area. |
| Parasitic power | High (strong fans) | Pump-driven → ~30–40% lower | Better round-trip efficiency. |
Core technology elements
- Cooling plate: Direct cell contact, large-area brazing + flow-path design. Hanjung owns Korea's largest brazing facility.
- Chiller: Coolant circulation with precision control logic. Brought in-house via HDC.
- Manifold & piping: "Double shut-off" quick-couplers eliminate leaks and cut replacement time from 2 hours to 30 minutes.
- Safety: Spray-pipe system that releases suppressant only on the affected module.
3.3 Position in the Samsung SDI "SBB" ecosystem
3.8 MWh
First model to adopt Hanjung's liquid cooling.
5.2 MWh — current workhorse
Energy density +37%. Only possible if more heat is removed in less space — Hanjung is the enabling tech.
LFP-based (upcoming)
LFP has lower energy density, so pack-level density matters more — liquid cooling's space advantage stands out.
4. Macro backdrop — the butterfly effect of US-China and the IRA
4.1 Exclusion of Chinese players
Global ESS thermal-management leader Envicool (China) dominated on price. The US, treating grid-connected ESS as critical infrastructure, has effectively restricted Chinese parts.
- Data security: US utilities now avoid systems with Chinese communication modules / control boards (including chillers/HVAC).
- Tariffs: USTR Section 301 hikes erase the price advantage of Chinese sourcing.
4.2 Direct beneficiary of the IRA
- AMPC (Sec 45X): tax credit for US-produced battery modules — the explicit driver behind the Indiana plant.
- ITC (Sec 48): utility-side investment tax credit with a "Domestic Content" bonus — practically forces developers to choose US-manufactured suppliers like Hanjung.
Official fact: Hanjung is the near-only "validated tech + non-Chinese" alternative to Envicool. This is not a price contest — it's about eligibility to participate.
5. Global footprint — staging for North America
5.1 US Indiana plant (HanJung America Indiana)
- Setup: Founded Apr 2025. USD 5M initial capital + Sep 2025 rights offering / CBs adding ~USD 25.7M (≈KRW 30B+) — a bet-the-company investment for a mid-cap.
- Location: Indiana — same state as the Samsung SDI × Stellantis StarPlus Energy JV; the heart of the US Midwest battery belt.
- Schedule: Test runs 2H 2026, full production 1Q 2027.
- Size: ~16,000 pyeong site, ~3,300 pyeong building — ESS cooling modules and chiller/HVAC assembly.
- Strategic value: Qualifies as "Made in USA" — decisive advantage in US ESS RFPs.
5.2 China plant (Jiangsu HanJung)
ICE auto-parts lines were converted into ESS lines by Jun 2025. Serves China domestic + Europe/SEA (non-IRA) + handles labor-intensive front-end → the group's cost-reduction hub.
5.3 Korea plants (HQ in Yeongcheon, HDC, HJF)
The mother factory — advanced product development, early-stage volume runs, and continuous automation investment (brazing, etc.) to maximize yield.
6. Competition and differentiation
6.1 Global
- Envicool (China): #1 globally with both tech and price; blocked from US by geopolitics.
- Boyd (US): Strong thermal generalist, but ESS-specific agility may be weaker than Hanjung's.
- Modine (US): Auto/industrial thermal, expanding into EV/ESS — strongest US manufacturing base and the most credible long-term competitor.
6.2 Korea
- Dong-A Hwasung: Focused on pack gaskets — non-overlapping with Hanjung's full active-cooling module.
- Hanon Systems / SNT Motiv: Auto thermal leaders, but mainly EV-focused; lack stationary large-scale ESS cooling lineup.
6.3 Differentiation
- Full-system turnkey: from plates → manifold → chiller/HVAC, one supplier — radically reduces customer supply-chain complexity.
- Field response (CS): Michigan-based CS network — essential to win 10–20 year ESS contracts.
7. Earnings turnaround and financials
7.1 3Q25 — first signs of turnaround
- Revenue: 9M25 sales KRW 115.4B. Total dipped slightly (intentional auto-parts shrinkage), but ESS sales surged ~+80% YoY.
- Operating profit: 9M25 cumulative OP KRW 1.3B (back to black). Standalone margins are higher; HDC's swing to profit boosts consolidated numbers.
- QoQ: 3Q25 sales +25.9% vs 2Q25 — SBB 1.5 mass production is now showing up.
7.2 Outlook
- 4Q 2025: Seasonal ESS delivery peak + SBB 1.5 ramp → likely record-high quarter.
- 2026+: With auto wind-down complete and ESS approaching ~90% of mix, OP margin should land in the 5–10% zone. Once the US plant is live in 2027, a quantum jump in revenue is plausible.
7.3 Customer diversification
- LG Energy Solution vendor registration: Target shipment in 2027 — opens the path beyond Samsung SDI single-customer concentration.
- EV cooling plates: Reverse-applying ESS know-how to EV batteries — a cushion against ESS volatility.
8. Risk factors
- Near-term financial strain: CB / RCPS issued for the US plant create interest expense and potential dilution overhang.
- Raw-material swings: Aluminum / copper spikes can squeeze margins (partially hedged via cost-pass-through clauses).
- Downstream slowdown: Prolonged high rates could delay or cancel renewable projects, reducing ESS orders.
9. Conclusion and investment idea
Hanjung NCS should be redefined as an "energy-infrastructure company for the AI era". AI datacenter power demand → ESS demand → high-density ESS → liquid cooling required — Hanjung is the enabling link in that chain.
- Clear direction: Leading the air → liquid-cooling shift, raising entry barriers.
- Policy moat: Biggest beneficiary of US-China and IRA tailwinds, with a real shot at North American dominance.
- Turnaround: Exit low-margin auto + grow high-margin ESS → structural improvement in profit quality.
- Optionality: Samsung SDI → LG Energy Solution; ESS → next-gen EV parts.
One of the most dramatic transformations in the Korean battery supply-chain space. Material re-rating is plausible once the US plant lands and customer diversification becomes visible.
Sources
- Original Naver Blog post: https://m.blog.naver.com/PostView.naver?blogId=star_of_self&logNo=224098474508
- Hanjung NCS 3Q 2025 Report and IR materials (cited as [1]).
- Hanjung NCS IR — SBB 1.0/1.5/2.0, global plant status, subsidiary structure.
- US IRA references: AMPC (Sec 45X), ITC (Sec 48) Domestic Content.