Intron Leveraged to Electric Vehicle and Autonomous Driving Growth

Intron provides design services and solutions for Chinese auto electronics and has around 50% market share in the areas that it specializes in. Electronics for new energy vehicles currently contribute to around half of its revenue. The company grew very strongly over 2015-19 but the number of new energy vehicles, or NEVs, sold in China declined in the second half of 2019 as a reduction in government rebates on those vehicles hit demand from the middle of the year. The pandemic in the first half of 2020 also hit demand. We expect the demand reduction to be short-lived and expect the Chinese auto market to rebound to 5% average annual growth in the medium term and 27% per year growth for NEV sales from 2019 to 2030, implying growth from 1 million units per year to 14 million units per year over that period. Intron looks well placed to benefit from a strongly growing end market for its products and services. The further proliferation of electronics into future cars, particularly in advanced driver-assistance system and eventually autonomous driving, provides further growth opportunities for Intron.