【行业研究报告】英恒科技-FY23E Preview: industry headwinds mostly priced in; Awaiting recovery in FY24E

12Mar202412Mar2024CMBInternationalGlobalMarkets|EquityResearch|CompanyUpdateIntronTech(1760HK)FY23EPreview:industryheadwindsmostlypricedin;AwaitingrecoveryinFY24EIntronTechwillannounceitsFY23resultsnextweek.WeestimateFY23ErevenueofRMB5.76bn(+19%YoY)andnetincomeofRMB319mn(-23%YoY),mainlyduetopricingpressurefromdownstreamOEM,weakercloudserver,higherR&Dexpensesandinterestcosts.Lookingahead,whilewethinkindustryheadwindswillremainin1H24EgivendownstreamOEMs’pricepressure,wearepositiveonIntron’ssharegainonindustryleadershipandseculartrendsofautomotiveelectrificationandintelligence.WeadjustedFY23-25EEPStofactorinslowersalesgrowthandhigherR&D/interestexpenses.Tradingat6.3x/4.1xFY23/24EP/E(1-sdbelow5-yearavg.),wethinkrisk-rewardisattractivecomparedtoA/Hpeers.MaintainBUYwithnewTPofHK$6.10onrollover12xFY24EP/E.Upcomingcatalystsinclude2024guidance,risingADASpenetrationandeasingNEVpricepressure.FY23Epreview:slowergrowthamidchallengingmarket.WeestimateFY23ErevenueofRMB5.76bn(+19%YoY)andnetincomeofRMB319mn(-23%YoY).Bysegment,weexpectrevenuefromnewenergy/bodycontrol/safety/powertrain/automation&connectivitytodeliver34%/3.5%/29.9%/1.9%/57.1%growthYoY;whilecloudserverdeclined53.9%YoY,givencontinuedNEVgrowth,ADASpenetrationandnewproductramp-up,offsetbycloudserverweaknessanddownstreamOEMspricepressure.WeexpectFY23EGPMtotrenddownto19.0%(vs.FY22/1H23GPM21.5%/20.6%),andweexpect1H24GPMtoremainsluggishgivenintensifieddownstreamOEMspricecompetitionatthestartoftheyear.FY24Eoutlook:ADASsegmentasnextgrowthdriver,outperformingpeersdespitemixedindustryoutlook.WeexpectIntron’ssalestooutgrowNEVindustrygivenitsleadingmarketposition,newproductramp-upandsolidclientbase.Withcost-pluspricingstrategyandeconomiesofscaleofR&Dinvestments,webelieveIntroniswell-positionedtooutperformpeerswithfurthersharegainintheautoelectronicsindustry.Overall,weestimaterevenue/netprofittorecoverwith20%/52%YoYgrowthinFY24E.Near-termconcernsmostlypricedin;attractiverisk/rewardwithgooddividendyield.WetrimmedFY23-25EEPSby15-37%mainlytofactorinslowerbusinessgrowthandongoingmarginpressure.OurnewTPofHK$6.10isbasedonrolled-oversame12xFY24EP/E(24%below5-yearhist.avg.).Tradingat6.3x/4.1xFY23/24EP/E,significantlylowerthan1-sdbelow5-yearavg.,wethinkrisk-rewardisattractivewithadividendyieldof7%.MaintainBUY.TargetPriceHK$6.10(PreviousTPHK$6.37)Up/Downside203.7%CurrentPriceHK$2.01ChinaTechnologyAlexNG(852)39000881alexng@cmbi.com.hkClaudiaLIUclaudialiu@cmbi.com.hkHanqingLIlihanqing@cmbi.com.hkStockDataMktCap(HK$mn)2,182.2Avg3mthst/o(HK$mn)1.652wHigh/Low(HK$)5.92/1.86TotalIssuedShares(mn)1085.7Source:FactSetShareholdingStructureMagnateEraLtd48.3%LukWingMing6.9%Source:HKExSharePerformanceAbsoluteRelative1-mth-3.8%-8.7%3-mth-20.2%-22.1%6-mth-41.2%-35.9%Source:FactSet12-mthPricePerformanceSource:FactSetRelatedreports:1.IntronTech(1760HK)-1H23resultsbelow;expectback-loadedin2H23E(link)2.IntronTech(1760HK)-1H23EPreview:stronggrowthdespiteindustryheadwinds;expectback-loadedin2H23E(link)EarningsSummary(YE31Dec)FY21AFY22AFY23EFY24EFY25ERevenue(RMBmn)3,1764,8305,7576,9268,604YoYgrowth(%)59.452.119.220.324.2Netprofit(RMBmn)200.6415.0318.8486.0690.7YoYgrowth(%)111.6106.9(23.2)52.442.1EPS(Reported)(RMB)0.190.380.290.440.63ConsensusEPS(RMB)N/AN/A0.440.580.65P/E(x)22.710.26.34.12.9P/B(x)2.62.00.80.70.6Yield(%)1.63.44.87.310.3ROE(%)13.221.314.119.123.3Source:Companydata,Bloomberg,CMBIGMestimates