Intron Technology To Benefit From EV and Data Centre Growth; FVE Increased To HKD 3.64

Intron Technology reported full-year revenue down 14% to CNY 1,993 million with net profit down 20% to CNY 95 million. The result included a foreign-exchange gain of CNY 28 billion so we estimate underlying profits were down around 41%. The second half was slightly better with a revenue decline of 7.3% compared with the 20.8% decline reported in the first half. The revenue declines are on the back of a 1.9% decline in total automotive unit sales in China over 2020 with new energy vehicle sales up 10.9%. Intron is mainly exposed to local brands, which also lost market share in 2020 so the impact on Intron was even higher. December Chinese auto sales were up 6.4% with new energy vehicle sales up 50%. Given sales to the new energy market contributed 44% of Intron’s revenue in 2019 and 29% in the second half of 2020, the outlook for this industry is important for Intron. The government has set a target for electric vehicles, or EVs, to account for 20% of Chinese auto sales by 2025, up from 5.4% in 2020 and is forecasting 5.3 million EVs to be sold in 2025 implying a five-year CAGR of 31%.