Intron Technology: Share Price Fall Leaves Stock Attractively Priced

Intron Technology’s share price has fallen by around 58% over the past six months and we believe this provides a good opportunity for entry into the stock given it trades on a 2024 price/earnings ratio of less than 5 times and the company retains its leverage to long-term growth of the electric vehicle and autonomous driving markets. The price performance of Intron over this period was worse than the 13% decline in the Hang Seng China A Automobiles Index over the same period and we believe this reflects Intron’s lower year-on-year net profit growth in first-half 2023 of 1.2%, despite revenue growing 27%. This was mainly due to Intron’s research and development expenses increasing 59% year on year in the first half, accounting for 8.9% of total revenue, up from 7% of total revenue in the first half of 2022. We expect Intron to spend around 7% of revenue on R&D in the medium term, broadly in line with its historical spending.