20220926-西牛证券-英恒科技-01760.HK-Hiking_uncertainty_doesn_t_bring_any_impact_in_the_short-term,_maintain__BUY__9页_407kb

Intron (01760.HK) Summary

Core Content

Intron (01760.HK) is a company that is positioned to benefit from the long-term growth trends in New Energy Vehicles (NEV) and Automated Driving Assistance Systems (ADAS). Despite rising global political uncertainties, particularly between China and the US, the company's short-term performance remains unaffected, and the investment rating is maintained at "BUY" with a target price of HK$7.76 per share.

Main Points

Financial Performance (2022 1H)

• Revenue: RMB 2,075.3 million, representing a 57.2% YoY increase.
• Gross Profit: RMB 990.8 million, with a gross margin of 19.6%.
• Net Profit: RMB 366.0 million, showing a 138.7% YoY growth.
• EPS: 0.337, indicating strong earnings per share performance.

Revenue Breakdown

• New Energy Segment: Accounted for 38.2% of total revenue, remaining the primary contributor.
• Automated & Connected Vehicles Business: Contributed 4.5% of the topline, marking a new reporting segment.

Market Trends

• PV Sales Recovery: China's retail sales of passenger vehicles (PV) showed a promising recovery, with 28.3% of sales being new energy vehicles in August 2022.
• EV Penetration: The penetration rate of new energy vehicles reached 25.2% for the first 8 months of 2022.
• ADAS Market Growth: The penetration rate of L2 assisted driving systems in China reached a record high of 36.1% in June 2022, with an average of 32.4% for 2022 1H.

Government Support

• Shanghai Intelligent Car Plan: Highlights a target of RMB 500bn economic value by 2025 for intelligent cars, with 70% of vehicles expected to be equipped with L2 or L3 systems.
• Self-Driving Test Road: A new self-driving test road for complicated traffic situations was opened in Shanghai, signaling progress in ADAS development.

US-China Trade Tensions

• Impact on ADAS Development: The US export restrictions on AI chips and EDA software may push manufacturers to adopt local AI chips such as Horizon Robotics' Journey 5.
• Intron's Position: Intron, as an authorized IDH hardware partner of Journey 5, has launched the MADC2 domain controller solution, supporting L3 autonomous driving.

Key Information

• Current Price: HK$4.36
• 52-Week Range: HK$2.52 – HK$7.55
• Market Cap: HKD 4.7 billion
• Forward P/E Ratios: 19.4x (2022), 15.9x (2023), 12.3x (2024)
• P/S Ratio: 1.1
• P/B Ratio: 2.3

Financial Statement Highlights

Revenue

• 2021 (A): RMB 3,176.2 million
• 2022 (E): RMB 5,045.5 million
• 2023 (E): RMB 6,114.1 million
• 2024 (E): RMB 7,461.5 million

Gross Profit

• 2021 (A): RMB 625.2 million
• 2022 (E): RMB 990.8 million
• 2023 (E): RMB 1,197.8 million
• 2024 (E): RMB 1,458.4 million

Net Profit

• 2021 (A): RMB 200.2 million
• 2022 (E): RMB 366.0 million
• 2023 (E): RMB 446.7 million
• 2024 (E): RMB 576.6 million

Operating Margin

• 2022 1H: 8.6%
• 2023 1H: 8.6%
• 2024 1H: 9.0%

Net Profit Margin

• 2022 1H: 7.3%
• 2023 1H: 7.3%
• 2024 1H: 7.7%

Return on Equity (ROE)

• 2022 1H: 19.2%
• 2023 1H: 19.9%
• 2024 1H: 21.7%

Risk Factors

• Slower-than-expected EV penetration
• Regulatory delays in L3 and above ADAS adoption
• US-China trade tensions limiting access to foreign chips
• Auto chip supply shortages
• Economic downturn and pandemic impact on car demand

Investment Outlook

• Target Price: HK$7.76
• Rating: "BUY"
• Reasoning: The company is expected to benefit from the secular trends in NEV and ADAS. Despite the long-term uncertainties, no immediate impact is observed, and the target price remains unchanged.

Peer Comparison

Conclusion

Intron (01760.HK) is well-positioned to benefit from the growing adoption of NEV and ADAS technologies in China. Despite the uncertainties caused by global political issues, the company's performance and strategic initiatives, such as the launch of MADC2, suggest a strong potential for future growth. The "BUY" rating is maintained with a target price of HK$7.76, reflecting the analyst's confidence in the company's long-term prospects.