Investment Rating - The report maintains a "BUY" rating for Intron (01760.HK) with a target price of HKD 2.85 per share, down from HKD 6.13 [2][10]. Core Insights - Intron reported a year-on-year revenue increase of 20.1% to RMB 5,802.3 million for FY 2023, but the gross margin fell by 2.9 percentage points to 18.7%, which was lower than estimates [3][4]. - The company experienced a significant decline in net profit, retreating by 23.0% year-on-year, attributed to increased R&D expenses and a competitive pricing environment [4][10]. - The revenue growth was driven primarily by NEV Solutions, but competition led to manufacturers opting for lower-cost solutions, impacting growth in advanced driver-assistance systems (ADAS) [4][10]. - A shift in pricing strategy was noted, with a gross margin of 17.1% in the second half of 2023, indicating adjustments to cope with market pressures [4][10]. - The report anticipates continued challenges in 2024, with profit margins expected to remain under pressure due to lower gross margins and high R&D expenses [4][10]. Financial Summary - Revenue projections for the next few years are as follows: RMB 6,840.5 million in 2024, RMB 7,524.0 million in 2025, and RMB 8,174.4 million in 2026, reflecting a year-on-year growth rate of 17.9%, 10.0%, and 8.6% respectively [15]. - The gross profit is projected to increase from RMB 1,083.6 million in 2023 to RMB 1,247.8 million in 2024, with gross margins expected to stabilize around 18.8% in 2026 [15][17]. - The net profit is forecasted to decline significantly in 2024, with estimates of RMB 219.4 million, before recovering to RMB 301.3 million in 2025 and RMB 398.7 million in 2026 [15]. Operational Outlook - The report indicates a cautious operational outlook, with estimates cut by 51% to 58% due to ongoing difficulties, including lower gross margins and increased financial expenses [4][10]. - The company is expected to face a tightening working capital situation due to a longer cash conversion cycle and high R&D expenses [13][17].

Investment Rating - The report maintains a "BUY" rating for Intron Tech with a new target price (TP) of HK$5.53, based on a 12x FY24E P/E valuation methodology [13][14][21]. Core Insights - Intron's FY23 revenue was RMB 5.8 billion, reflecting a 20% year-over-year (YoY) growth, while net income decreased by 23.5% YoY to RMB 317 million. The gross profit margin (GPM) was 18.7%, down 2.8 percentage points YoY, attributed to intensified price competition [21][32]. - The company expects solid growth in the New Energy Vehicle (NEV) and Hybrid Electric Vehicle (HEV) segments, driven by increasing demand and export opportunities in China. However, margin pressure may persist due to heightened competition [21][32]. - The report highlights a significant increase in R&D expenses, which reached 9.0% of revenue due to talent recruitment and upfront investments. Management anticipates a normalization of these expenses in FY24E [21][32]. Revenue Forecasts - Revenue is projected to grow from RMB 6,975 million in FY24E to RMB 10,805 million in FY26E, with a YoY growth rate of 20.2% in FY24E and 24.2% in FY25E [21][26]. - The breakdown of revenue by segment shows strong growth in New Energy (131.6% YoY in 2021, 91.0% in 2022) and Automation & Connectivity (151.3% YoY in 2022) [21][26]. Earnings Summary - The earnings forecast for FY24E includes a revenue estimate of RMB 6,975 million, a gross profit of RMB 1,298 million, and a net profit of RMB 441 million, indicating a 39% YoY growth in net profit [21][26][32]. - The report notes that the EPS for FY24E is expected to be RMB 0.41, with a consensus estimate of RMB 0.55 for FY25E [21][26]. Valuation Metrics - Intron is currently trading at 4.5x FY24E P/E, significantly lower than the average P/E of 22.8x for its peers, indicating that it is undervalued [14][21]. - The report emphasizes the attractive risk/reward profile of Intron, especially in light of potential catalysts such as favorable NEV policies and increasing penetration of Advanced Driver Assistance Systems (ADAS) [14][21].

Revenue Performance - Total revenue for the year ended December 31, 2023, was RMB 5,802.3 million, representing a 20% increase compared to RMB 4,829.9 million in 2022, driven by growth across all automotive business segments, particularly in new energy vehicles and intelligent connected vehicles [4]. - Total revenue for the year increased by approximately 20% to RMB 5,802.3 million, driven by growth in the new energy vehicle, intelligent driving, and safety system segments [41]. - Total revenue for the year ended December 31, 2023, was RMB 5,802.33 million, representing a 20% increase from RMB 4,829.94 million in 2022 [45]. - Revenue from the new energy vehicle solutions grew by over 35% to RMB 2,787.6 million, increasing its share of total revenue from 42.8% in 2022 to 48.0% in 2023 [30]. - Revenue from safety system solutions rose by 33% to RMB 844.7 million, accounting for 14.6% of total revenue [31]. - The intelligent driving business saw a significant revenue increase of 59%, contributing 7% to total revenue [41]. - The revenue from the new energy segment reached RMB 2,787.59 million, a 35% increase compared to RMB 2,066.81 million in the previous year [45]. - Revenue from external customers in mainland China was RMB 5,623,425 thousand, up 17% from RMB 4,795,684 thousand in the previous year [173]. Profitability - The company reported a net profit of RMB 312.5 million for the year, compared to RMB 411.1 million in the previous year [39]. - Net profit for the year was RMB 312.55 million, a decrease of 24% from RMB 411.11 million in 2022, resulting in a net profit margin of 5.4% [45][56]. - The gross profit for the year was RMB 1,083.6 million, with a gross margin of 18.7%, down 2.8 percentage points from the previous year due to increased competition in the automotive industry [41]. - The gross profit margin decreased to 18.7% from 21.5% in the previous year, reflecting a 2.8 percentage point decline [45]. - The group’s pre-tax profit for 2023 was RMB 531,950 thousand, compared to RMB 392,097 thousand in 2022, marking a 36% rise [184]. Expenses and Costs - The group’s employee costs amounted to RMB 597.7 million, accounting for 10.3% of total revenue, an increase from RMB 481.3 million in 2022 [16]. - The group’s sales and distribution expenses were RMB 113.5 million, a 7% increase from the previous year, mainly due to higher travel and business entertainment expenses [6]. - Financing costs rose by 125% to RMB 1 billion, attributed to increased bank borrowings and rising interest rates [128]. - Cost of goods sold for the year was RMB 4,631,206 thousand, compared to RMB 3,752,535 thousand in 2022, reflecting a 23% increase [184]. Research and Development - The group continues to invest in R&D, focusing on advanced power semiconductors and collaborative robotics, aiming for long-term sustainable growth [3]. - Research and development expenses increased by 56% to RMB 520.2 million, accounting for 9.0% of total revenue, up from 6.9% in the previous year [62]. - The group has established a new R&D center in Hong Kong Science Park, focusing on intelligent driving software and advanced power semiconductor applications, set to operate in November 2023 [71]. - The group has completed the testing and validation capabilities for the zonal control unit solution and hybrid dual-motor drive testing, with over 669 testing projects undertaken in 2023, a 35.7% increase year-on-year [70]. Financial Position - The group maintained a strong cash position with cash and cash equivalents totaling RMB 517.0 million as of December 31, 2023, up from RMB 336.9 million in the previous year [9]. - As of December 31, 2023, the group had outstanding bank loans of RMB 1,651.8 million, an increase from RMB 950.2 million in the previous year [10]. - The net debt-to-equity ratio rose to 51% as of December 31, 2023, up from 41% in the previous year [100]. - The net value of current assets reached RMB 1,672.2 million, up from RMB 1,444.2 million as of December 31, 2022 [130]. - Total assets less current liabilities rose to RMB 2,644.5 million for the year ended December 31, 2023, up from RMB 2,168.2 million in 2022 [162]. Corporate Governance and Compliance - The company aims to maintain high levels of corporate governance to protect shareholder interests and enhance corporate value [141]. - The board proposed amendments to the company's articles of association to comply with the latest regulatory requirements effective from December 31, 2023 [143]. - The audit committee reviewed the accounting principles and policies adopted by the group for the year ended December 31, 2023, confirming compliance with applicable accounting standards [145]. Market Outlook and Strategy - The group is cautiously optimistic about business growth in the automotive sector, particularly in the context of global trends towards electrification and smart connectivity [3]. - The company plans to enhance its market presence in the international arena as domestic new energy vehicle exports accelerate [56]. - The company will maintain a flexible business model focused on light assets and heavy R&D to adapt to high global interest rates [120]. - The Chinese automotive market is expected to grow by approximately 3% in 2024, with sales projected to exceed 31 million vehicles [120].

FY23E Preview: industry headwinds mostly priced in; Awaiting recovery in FY24E PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG: RESP CMBR OR http://www.cmbi.com.hk1 Source: Company data, CMBIGM estimates 28% 37% 15% -14% 59%52% 19% 20% 24% 0 2,000 4,000 6,000 8,000 10,000 12,000 2017 2018 2019 2020 2021 2022 2023E 2024E 2025E (RMB mn) Revenue YoY Source: Company data, CMBIGM estimates PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON ...

Financial Performance - In the first half of 2023, the revenue from intelligent driving and networking business surged by 118% to RMB 203.3 million, driven by increased solution assembly rates and penetration [11]. - The group's revenue for the first half of 2023 reached RMB 2,626.2 million, a year-on-year increase of 27%, driven by strong performance in the automotive sector, particularly in new energy vehicles [42]. - Revenue from the new energy business increased by 58% year-on-year to RMB 1,253.0 million, outperforming the growth rate of the new energy vehicle market [30]. - The safety systems business saw a 43% year-on-year increase in revenue to RMB 390.2 million, supported by the growing application of advanced driver-assistance systems [31]. - The intelligent driving network revenue surged by 118% year-on-year to RMB 203.3 million, reflecting significant growth in this segment [43]. - Gross profit for the first half of 2023 increased by 21% year-on-year to RMB 541.0 million, with an overall gross margin of 20.6% [43]. - The group’s shareholder profit for the period was RMB 154.5 million, with a shareholder profit margin of 5.9%, down from 7.4% in the previous year [28]. - The company’s profit rose by 1% to RMB 152.1 million for the six months ended June 30, 2023, compared to RMB 151.4 million for the same period in 2022 [59]. - The net profit attributable to the parent company was RMB 154,456,000, slightly increasing from RMB 152,556,000 in the previous year, reflecting a growth of 1.2% [163]. Research and Development - Research and development expenses increased by 59% year-on-year, accounting for 8.9% of total revenue, up from 7.0% in the previous year [29]. - The group continues to enhance its research and development capabilities in electric, intelligent, and hydrogen-powered control systems to align with market trends [15]. - The group plans to expand its R&D capabilities with new centers in Shanghai and Shenzhen, and a new R&D center in Hong Kong expected to commence operations in November 2023 [38]. - The group has developed a high-performance intelligent driving system, MADC2.5, which has received certification from Horizon Matrix, enhancing its competitive edge in the autonomous driving sector [33]. - R&D expenses for the period amounted to RMB 205,811 thousand, a significant rise of 49.9% compared to RMB 137,244 thousand in the previous year [183]. Market Trends and Demand - The market share of new energy vehicles reached 28.3% in the first half of 2023, indicating a steady increase in demand [24]. - The company expects continued positive prospects in the Chinese automotive market, focusing on new energy and intelligent connected vehicles [51]. Financial Position and Cash Flow - Cash and cash equivalents totaled RMB 534.8 million as of June 30, 2023, up from RMB 336.9 million at the end of 2022 [60]. - The company’s total assets as of June 30, 2023, amounted to RMB 4,912,297,000, compared to RMB 3,974,913,000 as of December 31, 2022, indicating a significant increase of 23.4% [166]. - The company’s total liabilities increased to RMB 2,537,983,000 from RMB 1,906,676,000, representing a growth of 33.1% [166]. - The company reported a net cash inflow from operating activities of RMB 7,573,000, compared to a net outflow of RMB 8,917,000 in the same period of 2022 [199]. - The financing activities generated a net cash inflow of RMB 318,699,000, a recovery from a net outflow of RMB 29,127,000 in the same period last year [199]. Corporate Governance - The company has adopted the corporate governance code as per the listing rules and believes that its governance practices are in compliance, with a noted deviation regarding the roles of the chairman and CEO [157]. - The board of directors confirmed compliance with the corporate governance code throughout the review period [187]. - The company maintained a high level of corporate governance to enhance shareholder value and transparency [185]. Employee and Administrative Expenses - Administrative expenses rose by 35% to RMB 274.4 million, driven by increased travel and office-related costs [56]. - The company employed 1,517 staff as of June 30, 2023, compared to 1,171 a year earlier, with total employee costs amounting to RMB 226.5 million [73]. - The company has implemented attractive compensation packages, including competitive base salaries and annual performance bonuses [97]. Financing and Debt - The net debt-to-equity ratio increased to 48% as of June 30, 2023, compared to 41% at the end of 2022 [61]. - Financing costs surged by 197% to RMB 46.8 million due to increased bank borrowings and rising interest rates [58]. - The company has entered into a financing agreement for a syndicated loan of up to USD 60,000,000, with a repayment period of 36 months from the first drawdown date [160]. Shareholder Information - Major shareholder Magnate Era Limited holds 48.28% of the shares, totaling 525,000,000 shares [107]. - The combined shareholding of the top two shareholders, Magnate Era Limited and Treasure Map Ventures Limited, is approximately 55.18% [107]. - The company has a stock option plan with a maximum issuance limit of 10% of the shares outstanding as of July 12, 2018, which is approximately 100,000,000 shares [119].

Financial Performance - Total revenue for the first half of 2023 reached RMB 2,626,160, an increase of 27% compared to RMB 2,075,301 in the same period of 2022[29] - Net profit for the first half of 2023 was RMB 152,114, reflecting a slight increase of 1% from RMB 151,397 in the previous year[29] - Basic earnings per share rose to RMB 14.21, a 1% increase from RMB 14.06 in the same period of 2022[29] - The gross profit margin decreased to 20.6% from 21.6% year-on-year, indicating a slight decline in profitability[29] - The company's gross profit for the period was RMB 541.0 million, with a gross margin of 20.6%, remaining stable compared to the same period last year[62] - Shareholders' profit attributable to the company was RMB 154.5 million, with a profit margin of 5.9%, down from 7.4% in the previous year[62] - The group reported a profit of RMB 152.1 million for the six months ending June 30, 2023, a 1% increase from RMB 151.4 million in the same period of 2022[109] - The total comprehensive income for the six months ended June 30, 2023, was RMB 147.0 million, a decrease from RMB 151.6 million in the same period of 2022[132] Revenue Breakdown - The new energy sector experienced significant growth, with revenue increasing by 58% year-on-year, contributing RMB 1,252,967 to total revenue[29] - Revenue from new energy vehicles reached RMB 1,252.97 million, up 58% from RMB 792.74 million in the same period last year[79] - The intelligent driving and networking business revenue surged by 118% to RMB 203.3 million, driven by increased solution assembly and penetration rates[65] - The safety systems business grew by 43% year-on-year to RMB 390.2 million, supported by new projects in braking and steering applications[64] - The company's cloud server solutions revenue decreased by 71% year-on-year to RMB 87.1 million due to a decline in demand following a peak during the pandemic[43] Market Insights - The automotive market in China saw sales of 13.239 million vehicles in the first half of 2023, a year-on-year increase of 9.8%, with new energy vehicle sales reaching 3.747 million, up 44.1%[30] - The overall Chinese automotive market is expected to reach 27.6 million units in 2023, with new energy vehicle sales projected to exceed 9 million units, a year-on-year increase of 35%[75] - The group anticipates continued growth in the Chinese automotive market, particularly in new energy and intelligent connected vehicles[99] Research and Development - Research and development expenses rose by 59% year-on-year to RMB 232.8 million, representing 8.9% of total revenue, up from 7.0% in the same period last year[37][44] - The company has a total of 1,058 full-time R&D personnel, accounting for 70% of its total workforce, and holds 256 patents and 207 software copyrights, reflecting a year-on-year increase[44] - The company plans to continue enhancing its R&D capabilities in hydrogen fuel cell technology and aims to establish more R&D centers while maintaining financial health[51] - The company plans to open a new R&D center in Hong Kong Science Park in November 2023, focusing on intelligent driving software and advanced power semiconductor applications[74] - The company is committed to investing in high-power density silicon carbide (SiC) module reliability and lifespan testing platforms to strengthen its core competitiveness[52] Financial Position - Non-current liabilities totaled RMB 193,760, a significant increase from RMB 19,600 at the end of 2022[2] - The company's total assets less current liabilities amounted to RMB 2,374,314, up from RMB 2,168,237 at the end of 2022[2] - The company's cash and cash equivalents totaled RMB 534.8 million as of June 30, 2023, up from RMB 336.9 million on December 31, 2022[110] - The net debt-to-equity ratio increased to 48% as of June 30, 2023, compared to 41% on December 31, 2022[111] - The total liabilities increased to RMB 2,537,983,000 from RMB 1,906,676,000, indicating a rise of 33.1%[182] Operational Efficiency - Customer penetration rates increased, highlighting the company's unique business model and operational advantages[31] - The company maintained strong relationships with leading chip suppliers, which helped mitigate the impact of ongoing structural chip shortages in the industry[31] - The company is expanding its electromagnetic compatibility (EMC) testing facilities, adding 1,300 square meters of testing space to improve product quality and R&D efficiency[46] - The company has established testing capabilities for various new products, including a complete testing capability for zonal control units and initial testing for hybrid dual-motor electric drive systems[71] Future Outlook - The company is optimistic about future growth in the electric and intelligent vehicle sectors, focusing on enhancing its service platform to meet automotive manufacturers' needs[77] - The company plans to continue investing in research and development to maintain its industry leadership and achieve sustainable long-term growth[77] - The group is actively preparing projects related to high-level autonomous driving and next-generation domain controller platforms[98] Capital Expenditures and Investments - The group has committed but unprovided capital expenditures of RMB 44.5 million as of June 30, 2023, significantly up from RMB 4.8 million on December 31, 2022[113] - The group plans to invest RMB 196.6 million to expand R&D capabilities, which constitutes 30% of the total net proceeds[119] - The net proceeds from the fundraising amounted to RMB 252.6 million, which has been fully utilized as of June 30, 2023[149] - The company allocated 62% of the proceeds (RMB 62 million) for building an intelligent driving software platform, with no actual utilization reported[149]

Financial Performance - The company's total revenue for the year ended December 31, 2022, was RMB 4,829.9 million, representing a 52% increase compared to RMB 3,176.2 million in 2021[6]. - In 2022, the company's total revenue increased significantly to RMB 4,829.9 million, a 52% year-on-year growth, driven by the surge in demand for new energy vehicles in China[29]. - Gross profit reached RMB 1,040.6 million, up 66% year-on-year, with a gross margin improvement from 19.7% to 21.5%[29]. - Net profit surged 105% year-on-year to RMB 411.1 million, with a net profit margin increase of 2.2 percentage points to 8.5%[30]. - Other income and gains increased by 31% to RMB 399 million for the year ended December 31, 2022, primarily due to gains from the sale of financial assets[98]. - The group reported a total revenue of RMB 4,829,943,000 for the year ending December 31, 2022, representing a 52% increase from RMB 3,176,164,000 in the previous year[70]. - The gross profit for the year increased by 66% to RMB 1,040.6 million, with a gross margin improvement from 19.7% to 21.5%[70]. - Net profit increased by 105% from RMB 200.2 million for the year ended December 31, 2021, to RMB 411.1 million for the year ended December 31, 2022[103]. Revenue Segments - The revenue from the new energy vehicle solutions business grew significantly by 91% year-on-year, reaching RMB 2,066.8 million, accounting for 43% of total revenue[4]. - Revenue from the core solutions for new energy vehicles surged by 91%, accounting for 43% of the total revenue[48]. - The newly classified intelligent driving and networking solutions segment saw a revenue increase of 151% to RMB 254.8 million, attributed to higher assembly and penetration rates[33]. - The intelligent driving and connectivity segment saw a remarkable growth of 151%, with revenue reaching RMB 254,781,000 compared to RMB 101,378,000 in the previous year[70]. - The industrial solutions business, reclassified as cloud server-related electronic solutions, experienced a revenue decline of 24% to RMB 420.5 million due to a slowdown in new projects[35]. Research and Development - Research and development (R&D) investment increased by 61% year-on-year, totaling RMB 332.5 million, which is 6.9% of total revenue, slightly up from 6.5% in the previous fiscal year[26]. - The number of R&D personnel increased by 31% to 916, representing 67% of the total workforce[20]. - The company plans to continue investing in R&D to maintain its competitive advantage and leadership position in the industry[27]. - The company has achieved multiple R&D milestones, including the development of an 800V high-voltage BMS platform and a domain controller technology platform for autonomous driving[59]. - The group plans to invest in expanding testing capabilities in 2023, focusing on ADAS hardware and various testing systems to meet future demands[67]. - The company plans to expand its R&D capabilities with new satellite offices in Chengdu, Changchun, and Shanghai, totaling approximately 3,000 square meters[62]. Market Position and Strategy - The retail sales of passenger vehicles in China reached 5.67 million units, a 90% year-on-year increase, with a market share of 26% for new energy vehicles[24]. - The overall automotive sales in China for 2022 recorded a mild growth of 2.1%, with the company capitalizing on this trend through its established competitive advantages in the new energy vehicle sector[18]. - The company is focused on expanding its market share in the electric and intelligent vehicle sectors, which are seen as global trends in the automotive industry[36]. - The company is optimistic about the growth potential of its new energy vehicle solutions, expecting them to drive overall business performance in 2023[64]. - The group anticipates continued growth in the new energy vehicle sector, with projected sales in China expected to exceed 9 million units in 2023[92]. Corporate Governance - The board believes that the arrangement of having the same individual serve as both chairman and co-CEO is appropriate in the group's context, enhancing decision-making and execution efficiency[121]. - The board of directors is responsible for overseeing the group's business, strategic decisions, and performance, ensuring decisions are made in the best interest of the company[145]. - The company has adopted a corporate governance code that aligns with the standards set out in the listing rules, ensuring high levels of governance to protect shareholder interests[148]. - The board consists of seven members, including three independent non-executive directors, exceeding the requirement of having at least three independent directors[149]. - The company has established a code of conduct for employees and directors to comply with securities trading regulations, ensuring adherence to insider trading laws[166]. Financial Position - The net debt-to-equity ratio as of December 31, 2022, was 41%, up from 21% on December 31, 2021[5]. - The group secured a three-year syndicated loan of USD 60 million, enhancing liquidity and demonstrating strong market confidence[68]. - The group has a net current asset value of RMB 1,444.2 million as of December 31, 2022, compared to RMB 1,196.9 million as of December 31, 2021[104]. - The group has committed but not provided for capital commitments of RMB 4.8 million as of December 31, 2022[112]. - The group plans to fully utilize the remaining unutilized net proceeds of RMB 53.9 million by the end of 2023[111]. Employee and Operational Insights - The group employed 1,359 staff as of December 31, 2022, compared to 1,098 staff in the previous year, with total employee costs amounting to RMB 481.3 million, representing 10% of the group's revenue[139]. - The employee gender ratio as of December 31, 2022, was 70% male and 30% female[196]. - The remuneration range for employees was between RMB 2,000,001 and RMB 3,000,000, with 3 employees falling within this range[195]. - The group has issued a total of 60,278,050 stock options to eligible employees under the stock option plan adopted on June 22, 2018, to enhance compensation attractiveness and encourage better performance[140]. Strategic Partnerships and Collaborations - The company has established collaborations with automakers and tier-one suppliers for mass production projects, including ADAS controllers and domain controllers for L2+ automation levels[34]. - The company has established a strong partnership with chip suppliers, ensuring a stable supply despite the ongoing global chip shortage[50]. - The group has established a strategic partnership with Horizon Robotics for the development of new sensor functionalities and software platforms[84]. - The group is collaborating with domestic semiconductor companies to develop cross-platform connected products, expected to launch in Q2 2023[95]. - The group has implemented measures to manage foreign exchange risks and closely monitors currency fluctuations to mitigate potential impacts[137].

Revenue Growth - The total revenue for the year ended December 31, 2022, increased by 52% to RMB 4,829.9 million compared to RMB 3,176.2 million in 2021[5] - Revenue from the new energy vehicle segment surged by 91% to RMB 2,066.8 million, accounting for 43% of total revenue[7] - The group's total revenue for 2022 reached RMB 4,829.9 million, a significant increase of 52% year-on-year, driven by the surge in demand from the Chinese new energy vehicle market[29] - Revenue from the new energy segment increased by 91% to RMB 2,066.8 million in 2022, while the total revenue rose by 52% to RMB 4,829.9 million[66] - Revenue from mainland China increased significantly to RMB 4,795,684 thousand in 2022 from RMB 3,094,145 thousand in 2021, marking a growth of 55%[149] Profitability - The net profit for the year rose by 105% to RMB 411.1 million, up from RMB 200.2 million in the previous year[9] - Gross profit for the year was RMB 1,040.6 million, up 66% from the previous year, with a gross margin improvement from 19.7% to 21.5%[29] - Net profit surged 105% year-on-year to RMB 411.1 million, with a net profit margin increase of 2.2 percentage points to 8.5%[29] - The annual profit for the year ended December 31, 2022, was RMB 411.1 million, compared to RMB 200.2 million in 2021, reflecting a significant increase[124] - The net profit attributable to equity holders of the parent company for 2022 was RMB 414,963,000, compared to RMB 200,606,000 in 2021, reflecting an increase of approximately 106.7%[195] Research and Development - Research and development costs accounted for 6.9% of total revenue, slightly up from 6.5% in the previous year, indicating continued investment in innovation[5] - Research and development expenses increased by 61% year-on-year to RMB 332.5 million, representing 6.9% of total revenue[37] - The group maintained a workforce of 916 full-time R&D personnel, accounting for 67% of total employees[37] - The group established a digital transformation of its R&D system, ensuring project development processes and quality[29] - The group is focusing on R&D investments in intelligent driving and the development of third-generation semiconductor products[63] Dividends and Shareholder Returns - The company proposed a final dividend of HKD 13.1 per share, representing a 93% increase from HKD 6.8 in the prior year[5] - The proposed final dividend for 2022 is HKD 0.131 per share, up from HKD 0.068 per share in 2021, indicating a dividend increase of approximately 93%[177] - The company has issued a final dividend of HKD 0.131 per share for the year ended December 31, 2022, compared to HKD 0.068 per share in 2021[94] Financial Position - As of December 31, 2022, the group's cash and cash equivalents totaled RMB 336.9 million, down from RMB 571.7 million on December 31, 2021[42] - The net debt-to-equity ratio increased to 41% as of December 31, 2022, compared to 21% on December 31, 2021, indicating a rise in financial leverage[42] - Current assets increased to RMB 3.35 billion in 2022 from RMB 2.29 billion in 2021, showing a strong liquidity position[135] - Current liabilities rose to RMB 1.91 billion in 2022 from RMB 1.10 billion in 2021, reflecting increased operational activities[135] - The equity attributable to owners of the parent company was RMB 2.14 billion as of December 31, 2022, compared to RMB 1.74 billion in 2021, indicating improved shareholder value[137] Market Outlook - The group anticipates that its new energy vehicle core solutions will continue to drive overall business performance in 2023, maintaining an optimistic outlook for future growth[52] - The group expects the overall automotive market's localization ratio to continue increasing, with the new energy vehicle market projected to grow rapidly, with sales expected to exceed 9 million units in 2023[60] - The group anticipates continued growth in body, safety, and power systems due to increasing localization demand and rising order volumes[61] Operational Efficiency - The gross profit margin improved to 21.5%, up from 19.7% in the previous year, reflecting enhanced operational efficiency[5] - The group recorded a significant increase in other expenses, which rose by 2,511% to RMB 49.6 million in 2022, primarily due to increased foreign exchange losses[48] - Financing costs for the year were RMB 44.5 million, an 89% increase from 2021, attributed to higher bank borrowings and rising interest rates[49] Employee and Workforce - Employee costs totaled RMB 481.3 million, accounting for 10% of the company's revenue for the year, up from RMB 361.4 million in 2021[100] - The company employed 1,359 employees as of December 31, 2022, an increase from 1,098 employees in 2021[100] Asset Management - Non-current assets totaled RMB 724.1 million as of December 31, 2022, compared to RMB 565.4 million in 2021, indicating growth in asset base[135] - Trade receivables as of 2022 amounted to RMB 1,478,132,000, an increase from RMB 989,317,000 in 2021, representing a growth of approximately 49%[182] - The group implemented strict credit control measures to minimize credit risk, with overdue balances reviewed regularly by senior management[180]

Revenue Growth - In the first half of 2022, the company recorded a revenue increase of 57%, reaching RMB 792.7 million, with a significant growth in the new energy vehicle sector, which saw a 107% increase in revenue[7]. - The overall automobile sales in China for the first half of 2022 were 12.057 million units, representing a year-on-year growth of 23.8%, with new energy vehicle sales reaching 2.6 million units, up 129.2%[3]. - The total revenue for the six months ended June 30, 2022, was RMB 2,075.3 million, representing a 57% increase year-on-year, driven by strong performance in the automotive industry, particularly in new energy vehicles[26]. - Revenue from new energy products increased by 107% to RMB 792.7 million, while revenue from intelligent driving and connectivity solutions surged by 217% to RMB 93.4 million[26]. - Revenue from product sales was RMB 2,073,721 thousand, up from RMB 1,313,247 thousand, indicating a growth of 57.9% year-over-year[86]. Profitability - The gross profit margin improved by 2.4 percentage points to 21.6%, while the net profit margin increased by 2.5 percentage points to 7.3%, resulting in a net profit of RMB 151.4 million, a 139% increase compared to the previous year[7]. - Profit for the period increased by 139% to RMB 151.4 million, attributed to efficient operations and economies of scale[33]. - The company reported a profit of RMB 152,556,000 for the six months ended June 30, 2022, compared to RMB 63,437,000 in the same period last year, indicating a substantial increase of 140.5%[74]. - Basic earnings per share for the parent company shareholders was RMB 14.06 cents, up from RMB 5.90 cents in the same period last year[68]. Research and Development - Research and development expenses accounted for 7% of total revenue, reflecting the company's commitment to maintaining its technological and innovative leadership in the industry[8]. - R&D expenses amounted to RMB 146.2 million, representing 7% of the group's revenue, with a 50% increase compared to the same period last year[18]. - The group has developed a high-voltage BMS platform and a connected control unit technology platform based on Horizon's Journey 5 chip, contributing to its R&D achievements[18]. - The company plans to continue investing in R&D, particularly in semiconductor applications and embedded software, to enhance operational efficiency and support the growth of electric and intelligent vehicles[24]. Market Position - The company maintained its leadership position in the new energy vehicle market, which continued to be a major driver of revenue and profit growth[3]. - The overall favorable development of the automotive market in mainland China contributed positively to the company's performance, with all business segments recording growth[8]. - The company has reclassified its sales revenue to better reflect future development directions and opportunities in the new energy and hydrogen fuel vehicle sectors[7]. Financial Position - The net debt-to-equity ratio as of June 30, 2022, was 31%, up from 21% at the end of 2021, indicating an increase in leverage[35]. - The company’s cash and cash equivalents decreased to RMB 451,470,000 from RMB 571,747,000, a decline of 21.0%[71]. - Total liabilities increased to RMB 1,371,249,000, compared to RMB 1,096,628,000, reflecting a rise of 25.0% year-over-year[73]. - The company reported a net cash flow from operating activities for the six months ended June 30, 2022, was a negative RMB 8,917 thousand, compared to a positive RMB 101,095 thousand in the same period of 2021[75]. Shareholder Information - Major shareholders include Magnate Era Limited with a 48.38% stake, and Treasure Map Ventures Limited and Heroic Mind Limited each holding 6.91%[51]. - The controlling shareholders, Mr. Lu and Mr. Chen, each hold 60.58% of the company through their respective entities[54]. - The company has a total of 3,050,000 stock options granted to executive directors with an exercise price of HKD 2.662, and 360,000 options with an exercise price of HKD 4.25[60]. Operational Challenges - The company has established a strong and close long-term partnership with upstream suppliers, which has enabled it to secure more production orders from automakers despite supply chain challenges[4]. - The group continues to enhance its partnerships with upstream suppliers while providing advanced mass production solutions, maintaining its competitive edge in a challenging market environment[11]. - The group successfully captured more project opportunities in the local braking system solutions due to the shortage of dedicated chips in the global market[12]. Capital Expenditures - The company's capital commitments as of June 30, 2022, were RMB 14.4 million, a significant increase from RMB 3.1 million as of December 31, 2021[36]. - The company plans to utilize RMB 62 million (25%) for building an intelligent driving software platform, with RMB 23.8 million already utilized as of June 30, 2022[47]. - RMB 35 million (14%) is allocated for enhancing the R&D of electric vehicle control systems, with RMB 14.2 million utilized by June 30, 2022[47]. Employee Information - The group employed 1,171 staff as of June 30, 2022, up from 986 employees a year earlier, with total employee costs amounting to RMB 176.1 million, representing 8.5% of the group's revenue[39]. - The group has 755 full-time R&D personnel, accounting for 64% of total employees, with a total of 204 patents and 159 software copyrights[18].

Financial Performance - For the year ended December 31, 2021, the company's revenue reached RMB 3,176,164 thousand, a 59.5% increase from RMB 1,993,190 thousand in 2020[4] - Gross profit for the same period was RMB 625,183 thousand, with a gross margin of 19.7%, up from 18.0% in 2020[4] - The company's profit attributable to owners of the parent was RMB 200,606 thousand, compared to RMB 94,800 thousand in 2020, reflecting a 111.1% increase[4] - Total revenue for the year ended December 31, 2021, was RMB 3,176.2 million, a 59% increase from RMB 1,993.2 million in 2020, driven by growth across all business segments, particularly in the new energy vehicle sector[35] - Gross profit increased by 75% to RMB 625.2 million, with gross margin rising from 18.0% to 19.7%[36] - The company recorded a net profit of RMB 200.2 million for the year, an increase of 111% from RMB 94.8 million in 2020, attributed to significant revenue growth[43] Assets and Liabilities - Total assets as of December 31, 2021, amounted to RMB 2,858,894 thousand, an increase from RMB 2,054,378 thousand in 2020[5] - The total liabilities increased to RMB 1,115,678 thousand in 2021 from RMB 762,466 thousand in 2020[5] - Cash and cash equivalents totaled RMB 571.7 million as of December 31, 2021, up from RMB 388.3 million in 2020, indicating a strong liquidity position[44] - The net debt-to-equity ratio was 21% as of December 31, 2021, compared to 19% in 2020, reflecting a slight increase in leverage[44] Research and Development - The company invested 6.5% of its total revenue in R&D, maintaining its commitment to innovation and technology leadership[20] - Research and development expenses amounted to RMB 206.0 million, accounting for 6.5% of total revenue, with 700 full-time R&D personnel representing 64% of the workforce[28] - The new R&D testing and validation center in Shanghai has been certified by CNAS, enhancing the company's R&D capabilities and product reliability[13] - The company has completed three Level-2 and autonomous driving technology developments during the year, enhancing its capabilities in smart driving solutions[28] - The company has established a strategic partnership with Beijing Huayu Tongsoft Technology Co., Ltd., leading a multi-million RMB Series A financing round to accelerate the integration of hardware systems and smart driving middleware[13] Market and Industry Trends - The sales volume of new energy vehicles in China reached 3.521 million units in 2021, a year-on-year increase of 160%, providing a favorable business environment for the company[10] - The penetration rate of new energy vehicles in the domestic retail market reached 21.8% in February 2022, up 13 percentage points year-on-year, indicating strong market demand[10] - The company aims to leverage its leading technology and market position to capture a growing share of the Chinese new energy vehicle market, projected to reach 5 million units in 2022, a 42% increase year-on-year[30] - The automotive market in China saw a total sales volume of 26.275 million vehicles in 2021, with new energy vehicles sales reaching 3.521 million, a 160% increase year-on-year[18] Strategic Partnerships and Acquisitions - The company continues to explore strategic acquisitions and alliances to expand its business footprint and capitalize on market growth opportunities[15] - The company has strengthened relationships with major automotive manufacturers, including top ten new energy passenger vehicle brands in China[21] - A strategic acquisition of a local competitor is anticipated to enhance the company's R&D capabilities and is expected to close by Q3 2024[119] Corporate Governance - The company has adopted the corporate governance code as per the listing rules and believes it has complied with all applicable provisions during the year[62] - The board consists of four executive directors and three independent non-executive directors, ensuring a balance of skills and experience[65] - The company has implemented a securities trading code for directors and employees to prevent insider trading, confirming compliance from all directors for the year[63] - The board will continue to review the effectiveness of the corporate governance structure and make necessary adjustments as appropriate[68] - The independent non-executive directors confirm their independence according to the listing rules, ensuring compliance with the requirement of having at least three independent directors[69] Risk Management - The company emphasizes the importance of risk management for efficient operations, actively setting up appropriate risk management and internal control mechanisms[139] - The board confirms its responsibility for risk management and internal control systems, which aim to manage risks rather than eliminate them[93] - The group conducted a formal risk assessment to identify and evaluate enterprise risks, including environmental, social, and governance risks[94] - No significant deficiencies were identified in the internal control processes, and recommendations for improvement were reported to the board[95] Employee and Compensation - Employee costs totaled RMB 361.4 million, accounting for 11.4% of the company's revenue for the year[58] - The company has implemented an employee compensation system based on performance, experience, and current market salaries, including a stock option plan[135] - The company plans to increase its workforce by 20% to support its growth strategy and new product launches[115] Shareholder Relations - The company emphasizes effective communication with shareholders to strengthen investor relations and understanding of business performance and strategies[108] - The board proposed a final dividend of HKD 0.068 per share for the year ending December 31, 2021, subject to shareholder approval at the annual general meeting on May 30, 2022[140] - The company maintains a public float of at least 25% of its issued share capital in compliance with listing rules[197] Environmental and Social Responsibility - The management team emphasized a commitment to sustainability, aiming for a 50% reduction in carbon emissions by 2025[116] - The company has maintained compliance with relevant environmental and occupational health and safety laws and regulations, with no significant incidents or complaints during the reporting period[133] Future Outlook - The company has set a revenue guidance of $500 million for the next fiscal year, indicating a projected growth of 15%[116] - The company is focusing on market expansion in Southeast Asia, targeting a 30% market share within the next three years[118]