Intron Technology's 2022 interim net profit soars 1.4 times to RMB 153 million - Revenue from New Energy segment increases by 107%, continuing high growth Automated and Connected Vehicles soars by 217%, building another high growth segment

2022.09.01


Financial Highlights

(Hong Kong, 31 August 2022) – Intron Technology Holdings Limited ("Intron Technology" or the "Group"; HKEX: 1760), a fast-growing automotive electronics solutions provider in China, recorded excellent business performance in the first half of this year, with satisfactory growth in all financial data. Total revenue increased by 57% year-on-year to RMB 2,075.3 million. Profit attributable to owners of the parent company increased significantly by 140% to RMB 152.6 million.

In the unaudited interim results for the six months ended 30 June 2022 (the "Review Period"), total revenue increased by 57% year-on-year to RMB 2,075.3 million, mainly benefited from the vigorous development of the overall automobile market in Mainland China. Gross profit margin rose by 2.4 percentage points to 21.6%; gross profit was RMB 447.8 million, up 77% year-on-year; net profit also increased by 2.5 percentage points to 7.3%. The profit attributable to owners of the parent company was RMB 152.6 million, a sharp increase of 140%. The Group continued to maintain a satisfactory and healthy liquidity position. As at 30 June 2022, cash and cash equivalents totalled RMB 451.5 million.

Mr Davy Luk, Chairman, Co-CEO and Executive Director of Intron Technology, said, "In the first half of 2022, automobile production and supply in China faced unfavourable factors such as chip shortages and rising prices of raw materials for power batteries. In addition, Shanghai and other regions were affected by COVID-19 outbreak, which caused serious impact on the supply of the automobile industry chain. Despite the difficulties in the industry, however, we maintain solid and close long-term cooperative relations with upstream suppliers, coupled with our research and development capabilities, enabling us to receive greater orders from automakers for mass production during a tight supply chain period and welcome more customers, thus highlighting our unique business model and business advantages successfully. We will continue to build a better foundation for the future."

To keep abreast of new automotive industry trends, Intron Technology has reclassified and presented its revenue breakdown in a new format since 2022, comprising seven segments in total: New Energy Vehicle, Body Control, Safety, Powertrain, Automated & Connected Vehicles, Cloud Server and Rendering of Service and Other.

The new energy segment is the core solutions for electric vehicles and hydrogen fuel vehicles, including solutions for electronic control systems and thermal management systems. The business remained active and became the Group's main growth driver during the Review Period. Revenue increased significantly by 107% year-on-year to RMB 792.7 million. The increase was mainly attributable to a higher volume of new energy vehicles and the successive rise in mass production by customers via the Group’s new platform solutions. Moreover, by leveraging the core technologies of its Electronic Control Unit (ECU), including power electronics, embedded software, functional safety, and system integration, which the Group has been developing over the years, it successfully secured R&D projects from start-up brands, and thereby was able to further explore the new energy vehicle market and deepen partnerships with multiple customers.

The general chip shortage has amplified the unique advantages of the Group, resulting in more existing and new customers adopting its business model and solutions. The Group has not only maintained strong partnerships with upstream suppliers, but has also provided advanced mass production solution services, enabling it to meet the diversified needs of different customers amid the severe market environment. In addition, the Group has devel-oped more advanced and optimised solutions for its core solutions (such as BMS, VCU and MCU) and thermal management systems for electric vehicles.

Revenue from the Group’s three major categories of automotive electronic components for body control, safety, and powertrain all recorded year-on-year growth, rising by 81%, 22% and 10%, respectively. In terms of body control, the Group secured more electronic solution projects from major customers, particularly for LED lighting solutions, and rapidly introduced body control solutions when main competitors were experiencing shortages in brand-name supplies. As for safety, as global braking and steering system suppliers faced shortages of dedicated chips, the Group was able to secure more projects with its local braking system solutions as replacements. Regulations on electric power steering systems also helped to enlarge the Group’s market share. With regard to powertrain, stable growth was achieved owing to customers’ widespread acceptance due to the increasing proportion of the Group’s diesel electronic fuel injection (EFI) projects for local commercial vehicles.

In 2022, the Group officially launched intelligent driving and connected solutions to more accurately capture market opportunities in automated driving, intelligent driving and con-nected vehicles. During the Review Period, revenue from this business increased by 217% year-on-year to RMB 93.4 million. Advanced Driver-assistance System (“ADAS”) and L2 Automated Driving System have entered mass production, and projects involving the mass production of controllers in related fields have been delivered in batches, further serving as growth driver of the Group and laying a solid foundation for its future development. In terms of connected vehicles, benefitting from the general trend of digital transformation of the au-tomotive industry, the segment’s growth was mainly derived from a number of new advanced driver-assistance/automated driving projects, as well as ongoing penetration of next-gener-ation Electrical and Electronic Architecture systems as found in new energy vehicles (NEV).

The Group has renamed revenue from “industrial solutions” to revenue from “cloud server related electronics solutions” to more accurately reflect the power/electronic solutions that have been designed for high-performance CPUs and graphic processors, and used in data centres and cloud servers. During the Review Period, revenue from this segment increased by 6% year-on-year to RMB 301.8 million, keeping pace with the growth of the cloud server industry. Number of related customers was 981, an increase of 9% when compared with the same period last year. With comprehensive portfolio of solutions, Intron Technology stands out in the industry, captures market share and occupies a leading position in the industry.

During the Review Period, the Group’s R&D expenses increased by 50% year-on-year to RMB 146.2 million, accounting for 7% of the Group’s revenue. The Group also achieved breakthroughs in product development, including the development of an 800V high-voltage BMS platform solution certified as a functional safety product; a network control unit tech-nology platform developed based on the automated driving control unit platform equipped with “Journey®5” of Horizon Robotics; and 59 intellectual property rights containing six in-vention patents. As at 30 June 2022, the Group possessed a total of 204 patents and 159 software copyrights, a year-on-year increase of 52 patents and 30 software copyrights, re-spectively.

The Group established a subsidiary, named Qingheng Automotive Electronics Co., Ltd. (“Qingheng”), in the second half of last year that focuses on full product development and commercialisation of core electronic control system for hydrogen fuel cells. Established for less than a year, Qingheng in August 2022 secured a strategic investment valued in the millions of RMB from Huzhou Yongming Equity Investment Partnership (Limited Partner-ship), a fund under the Group’s strategic investor Shanghai Yonghua Investment Manage-ment Company Limited. The investment provided Qingheng with the working capital neces-sary for developing and expanding the market for innovative products, which in turn will allow it to build a hydrogen energy technological development service platform and strengthen the Group’s overall competitiveness in the market.

Mr Eddie Chan, Co-CEO and Executive Director of Intron Technology, said, “Looking ahead, we anticipate the automotive market in China to further grow, and new energy and intelligent driving as well as connected vehicle solutions will become the focus of develop-ment. We will continue to promote electrification and intelligent development, increase in-vestment in the R&D of semiconductor application technologies and also enhance our tech-nological advantages in embedded software and system design and engineering. We will strive to offer more advanced technologies and premium services, support the development of China’s automotive sector and consolidate our leading position in the industry so as to achieve long-term sustainable growth and bring satisfactory returns to our shareholders.”

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About Intron Technology Holdings Limited (英恒科技控股有限公司)
Intron Technology Holdings Limited is a fast-growing automotive electronics solutions provider in China focuses on providing solutions targeting critical automotive electronic components applied in New Energy, Automated Driving, Connectivity, Body Control, Safety and Powertrain systems. The Group utilises its research and development and engineering capabilities to provide solutions incorporating advanced semiconductor devices to help OEMs achieve industry leading performance.

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                               Email address: sprg_intron@sprg.com.hk

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