Intron (01760.HK) Financial Overview and Key Insights
Revenue and Profit Margins:
- Revenue: Intron reported a 20.1% YoY increase in revenue to RMB 5,802.3 million in FY 2023.
- Gross Margin (GM): GM decreased by 2.9 percentage points to 18.7%, lower than expected.
- Net Profit: The net profit declined by 23.0% YoY to RMB 312.5 million.
Segmental Performance:
- NEV Solutions: Remained the primary contributor, growing by 34.9% YoY.
- Automated & Connected Vehicles Solutions: Continued to drive growth, increasing by 32.8% YoY.
- Other Segments: Experienced mixed growth, with some segments showing negative growth.
Cost and Expense Trends:
- R&D Expenses: Increased significantly, contributing to lower profit margins.
- Financing Costs: Rising due to higher borrowings and a 70.0% debt-to-equity ratio.
- Inventory Management: Normalization of inventory levels and prepayment for fixed assets led to increased borrowings.
Financial Projections:
- Revenue Forecast: Expected to grow at 17.9% in 2024, 10.0% in 2025, and 8.6% in 2026.
- Gross Margin: Projected to stabilize at around 19.4%.
- Net Profit: Expected to recover gradually, reaching RMB 398.7 million in 2026.
Key Ratios:
- Debt-to-Equity Ratio: Decreasing from 70.0% to 34.8% over the forecast period.
- Current Ratio: Improving from 157.7% to 202.2%.
- Net Debt-to-Equity Ratio: Declining from 48.1% to 22.1%.
Risk Factors:
- Competition and Pricing Pressure: Intense competition and price wars are expected to continue.
- Working Capital: Higher financing costs and longer cash conversion cycles.
- High R&D Expenses: Sustained high spending on R&D.
Stock Rating and Target Price:
- Stock Rating: Maintained at "BUY".
- Target Price: Reduced to HKD 2.85 per share.
Summary:
Intron faces significant operational challenges due to declining gross margins, increased R&D and financing costs, and intense competition. Despite these challenges, the company is expected to gradually improve its profitability over the next few years.
