【行业研究报告】英恒科技-Cautious outlook in operation

Intron|01760.HK
Intron|01760.HK
Cautiousoutlookinoperation
STOCKRATING
BUY
TARGETPRICE
HK$2.85
Intron(01760.HK)reportedaYoY20.1%increaseinrevenuetoRMB5,802.3mninFY2023,
andtheGMplungedby2.9p.p.to18.7%,lowerthanourestimates.AnabnormallylowGM
andboomingR&DexpensebroughttheGroupaYoY23.0%retreatinthebottom-line.
Decelerationofthetop-linegrowth:Breakingdowntherevenuebysegment,Intron
(01760.HK)recordedYoY34.9%(2022:34.9%)/7.7%(50.0%)/32.8%(33.5%)/3.3%(39.9%)
/58.8%(151.3%)/-52.0%(-23.5%)growthintheNEV/BodyControl/Safety/Powertrain/
Automated&ConnectedVehicles/CloudServersegmentsrespectively,missingour
estimates.NEVSolutionsremainedtheprimarycontributorandAutomated&Connected
VehiclesSolutionsremainedthemajordriver.However,manufacturerstendtoadoptlower-
costsolutionsorlower-specificationsolutionsduetothekeencompetition,resultingina
slowerpenetrationforADASandbringingslowergrowthtotheGroup.
Forcedchangesinthepricingstrategy:Intron(01760.HK)recordeda17.1%GMin20232H,
implyingachangeinthe“Cost+~20%”pricingstrategywhichwasunaffectedbythemarket
fluctuationsinthepastyears.Anadjustmentto“tideoverthedifficultieswithupstreamand
downstreampartners”impliesahugepressurebroughtbythepricewarindownstream,and
wecannotseeanyameliorationin2024Q1.AlthoughmorecomplicatedsolutionslikePower
BrickSolutionwithbettermarginsmayhelpstabilizethemarginin2H,theprofitmarginmay
remainatalowerlevelduetothelower-costsolutionsorlower-specificationsolutions
adoptedbythemanufacturers.
Rocketingfinancingexpenses:Tighteningworkingcapitalwasprimarilydrivenbyi)the
normalizationofinventorylevelfromthechipsshortageera,ii)theprepaymentforfixed
assetsinNantong,leadingtoaRMB1,651.8mnborrowingsanda48.1%netdebt-to-equity
ratio.WeexpectthatthegearingratiowillpeaksoonduetolowerCAPEXincurredin
Nantongandimprovingcashconversioncyclefromthechipsshortageera,theprofitmargin
willbeerodedbythefinancialcoststoalesserextent.
Cautiousoutlookinoperation:Wecutourestimatesby51%-58%toreflecttheserious
difficultiesfacedbytheGroup,profitmarginmaybesqueezedbylowerGM,higher-than-
averageR&Dexpensesandfinanceexpenses.Unfortunately,wecannotseeaturnaround
duetothekeenpricewar.We,thus,slashtheTPtoHKD2.85/share,maintaining“BUY”.