20211108-西牛证券-英恒科技-01760.HK-Strong_focus_in_the_future_New_Energy_Vehicles_and_ADAS_34页_2mb

Intron (01760.HK) Summary

Core Content

Intron (01760.HK) is a leading automotive electronics solutions provider in China, offering a wide range of products and services targeting new energy vehicles (NEVs), body control, safety, and powertrain systems. The company focuses on R&D, providing modularized, cost-effective, and high-efficiency solutions to OEMs and automotive parts suppliers.

Main Points

• Stock Rating and Target Price:

  • Stock Rating: HOLD
  • Target Price: HK$ 4.20
  • Current Price: HK$ 4.40
  • 52-Week Range: HK$ 2.68 – 9.53
  • Market Cap: HK$ 4.8 billion

• Business Model:

  • Asset-Light Model: Intron does not engage in manufacturing or assembly; it outsources these processes to contract manufacturers.
  • Focus on R&D: The company emphasizes R&D to deliver cutting-edge solutions and has a strong R&D department with 607 employees (62% of total staff).
  • Cost+ Pricing Strategy: It applies a simple cost-plus pricing model across all solution categories.
  • Supplier Relationships: Intron has a non-exclusive distribution agreement with Infineon, the largest supplier in the automotive semiconductor market.

• Products and Services:

  • New Energy Solutions: Includes Battery Management System (BMS), Motor Control Unit (MCU), Vehicle Control Unit (VCU), DC-DC converters, battery power inverters, On-Board Chargers (OBC), PTC Heaters, and more.
  • Assisted Driving and ADAS Solutions: Offers components such as ADAS controllers, domain controllers, and Telematics Boxes (T-Boxes).
  • Conventional Vehicle Solutions: Provides "ready-to-use" and "ready-for-mass-production" solutions for body control, safety, and powertrain systems.
  • Industrial Solutions: Includes power supply solutions for high-performance CPUs and graphics processors.

• Key Supplier – Infineon:

  • Intron has been a distributor of Infineon's automotive semiconductor devices since 2016.
  • Infineon is a global leader in the automotive semiconductor market, with a market share of about 13.2% in 2020.
  • Infineon's products cover automotive, industrial power control, power & sensor systems, and connected secure systems.

• Company Background:

  • Founded in 2001 by Mr. Luk Wing Ming and Mr. Chan Cheung Ngai.
  • Listed on the Hong Kong Stock Exchange in 2018 under the stock code 01760.HK.
  • Has established partnerships with multiple semiconductor manufacturers, including Microchip, Atmel, Infineon, and others.

• Industry Overview:

  • Automotive Electric Components Market in China:
    • Market size grew from USD 65.7bn in 2015 to USD 96.2bn in 2019, and is projected to reach USD 141.2bn by 2025.
    • Electronics now account for an increasing percentage of total vehicle manufacturing costs.
  • Global Automotive Semiconductor Market:
    • Reached USD 42.0bn in 2019 and is expected to expand to USD 62.3bn by 2025.
    • Top 5 suppliers account for significant market shares in sensors, MCUs, and power semiconductors.
  • EV Cost Breakdown:
    • The direct cost of a BEV in 2020 was approximately EUR 20.3k, expected to decline to EUR 16.0k by 2030.
    • Battery cost is the largest component, currently accounting for ~39.4% of total BEV cost, projected to drop to ~26.9% by 2030.
    • Lithium battery cell prices have dropped significantly, from USD 147/kWh in 2018 to USD 123/kWh in 2020, with further declines expected.

• Autonomous Driving Market:

  • SAE International defines six levels of driving automation, from Level 0 (no automation) to Level 5 (full automation).
  • In China, the penetration rate of Level 2 autonomous driving systems rose from 3.0% in 2018 to 13.0% in 2020, and is expected to reach 30.4% by 2025.
  • Level 3 and Level 4 systems are expected to be introduced in 2021 and 2024 respectively, increasing the overall penetration rate of autonomous driving systems.

• Market Trends:

  • The adoption of ADAS and autonomous driving technologies is increasing, leading to higher demand for components such as camera modules, radar, lidar, and sensor fusion.
  • BOM costs for these components are expected to rise significantly as autonomous driving levels increase.

• Investment Thesis:

  • Intron benefits from the government's support for NEVs and ADAS.
  • It leverages its strong R&D capabilities and strategic supplier relationships to offer high-quality, cost-effective solutions.
  • The company's asset-light model and focus on innovation position it well for future growth in the automotive electronics sector.

Key Information

• R&D Focus: Intron has a strong R&D department, holding 152 registered patents and 129 software copyrights.
• Strategic Partnerships: Collaborates with major players like Infineon, Xilinx, Horizon Robotics, and Antobot.
• Future Outlook: The growth of the NEV and ADAS markets is expected to significantly boost Intron's demand and revenue.
• Valuation:
  • The fair value is estimated using DCF and P/E methodologies.
  • Forward P/E ratios are 31.6x (2021), 22.6x (2022), and 18.9x (2023).
• Financial Forecast:
  • Revenue is expected to grow from RMB 1,993.2 million in 2020 to RMB 4,021.4 million in 2023.
  • Gross Margin is projected to increase from 18.0% to 19.8%.
  • Net Profit is expected to rise from RMB 94.8 million in 2020 to RMB 233.8 million in 2023.