Inovance Q4 Sales Expected to Regain Steam; FVE Unchanged on Sound NEV and Software Execution

We maintain our fair value estimate on narrow-moat Shenzhen Inovance at CNY 64 per share after slightly trimming the growth rate of the 2022 new energy vehicle, or NEV, segment in view of short-term product mix shifts in its customers. Our base case on long-term NEV sales growth at over 30% CAGR fueled by both content growth and vehicle shipments is unchanged. The stock is trading at 35 times 2023 adjusted P/E. Inovance is fairly valued in our view, but there are chances of overshoot if the Chinese government relaxes pandemic control measures or introduces new infrastructure projects.