英恒科技：Maintaining conservative outlook

Investment Rating - The report maintains a "BUY" rating for Intron (01760.HK) with a target price of HK$1.95, down from a previous target of HK$ 2.85 [3][4]. Core Insights - Intron faced a challenging first half of 2024, with revenue growth slowing to 8% year-on-year and a significant drop in gross margin to 15.9%, resulting in a net margin of 3.4% [3][4]. - The automotive market's sluggishness has adversely affected Intron's performance, particularly in the Advanced Driver Assistance Systems (ADAS) and new energy vehicles (NEV) segments, which were previously key growth drivers [4]. - Despite increasing penetration rates for NEVs, intense price competition has pressured profit margins and hindered original equipment manufacturers (OEMs) from upgrading ADAS hardware [4]. - The report anticipates a potential recovery in 2025, driven by the mass production of new solutions and a significant year-on-year increase in revenue from rendering services, which grew by 83.4% [4][3]. Revenue Breakdown - Intron's revenue segments showed varied performance, with NEV growth at 13.0%, Body Control at 24.9%, Safety at -8.9%, Powertrain at -26.3%, and Automated & Connected Vehicles at 15.9% [4]. - The overall revenue for 2024 is projected to be RMB 6,277.2 million, with a year-on-year growth of 8.2% [10]. Financial Performance - The gross profit for 2024 is estimated at RMB 1,002.7 million, with a gross margin of 16.0% [10]. - Net profit is projected to decline by 31.9% year-on-year to RMB 212.9 million in 2024, with a subsequent recovery expected in 2025 [10]. - The report highlights a significant drop in the company's stock performance, with a 63.9% decline over the past year [4]. Market Context - The report notes that Intron's pricing strategies have limited room for improvement due to fierce competition in the automotive market, particularly in the ADAS segment [4]. - The anticipated mass production of the "Motor Control Unit Power Brick" in the second half of 2025 is expected to contribute positively to revenue and profit margins in 2026 [4].