20230829-西牛证券-英恒科技-01760.HK-Sacrificing_short-term_profit_for_long-term_development_5页_180kb

Intron (01760.HK) is given a BUY stock rating with a lowered target price of HK$6.13. Key financial highlights from the 6-month period ended June 2022 include a YoY revenue growth of 26.5% to RMB 2,626 million. The revenue contribution from new energy and automated connected vehicles segments increased to 47.7% and 7.7%, respectively, offsetting a 71.1% YoY retreat in cloud server business. Net margin plunged by 1.5 percentage points to 5.8%, attributed to higher R&D expenses and financial costs. The gross margin normalized to 20.6%, which aligns with expectations despite a 1.0 percentage point drop, explained by the company's "Cost+" pricing strategy. Recent price wars in the downstream market had minimal impact, as Intron remains a key supplier for automotive manufacturers using cost-effective local alternatives. The company is sacrificing short-term profit for long-term development, evident in surged financial costs due to higher debt—debt-to-equity ratio hit 63.8%—and increased R&D investments, with expenses rising 59.2% YoY to RMB 232.8 million in 2023. Target price reduction reflects concerns over inventory, R&D costs, and cash flow, leading to revised earnings estimates and a forward P/E ratio of 13.7x to 9.6x for 2023-2025.

Financial projections show robust revenue growth from 2022 to 2025, with YoY increases declining to 14.2%. Gross and net profit margins gradually normalize, but net profit margin faces pressure from higher operating expenses. Risk factors include cash flow strain from business expansion, unfavorable interest rate hikes, ongoing R&D costs, and slower L3 penetration. Peer comparison places Intron among new energy car manufacturers, with a P/E ratio averaging 30.5x versus traditional manufacturers' 10.0x.

Key metrics from 2022 include revenue YOY growth of 105.3%, net profit margin of 8.5%, and a debt-to-equity ratio of 44.2%. The analysis emphasizes that while expansions and R&D investments pose near-term challenges, Intron maintains a BUY recommendation based on its long-term growth potential and market position.