Intron Leveraged to New Energy and Automated Vehicle Growth in China

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 and automated vehicles currently contribute around 55% of its revenue and we see long runways for growth for both of these segments. The company grew very strongly over 2015-19, slowing only in 2020 as the number of new energy vehicles sold in China declined due to a reduction in government rebates on those vehicles, and the impact of the coronavirus pandemic. However, the demand reduction was short-lived, with a 90% increase in new energy vehicle sales in China in 2022 and a further 21% forecast in 2024 by the China Association of Automobile Manufacturers. We forecast high-teens growth thereafter until 2026. 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.