Intron Tech will announce its FY23 results next week. We estimate FY23E revenue of RMB 5.76bn (+19% YoY) and net income of RMB 319mn (-23% YoY), mainly due to pricing pressure from downstream OEM, weaker cloud server, higher R&D expenses and interest costs. Looking ahead, while we think industry headwinds will remain in 1H24E given downstream OEMs' price pressure, we are positive on Intron's share gain on industry leadership and secular trends of automotive electrification and intelligence. We adjusted FY23- 25E EPS to factor in slower sales growth and higher R&D/interest expenses. Trading at 6.3x/4.1x FY23/24E P/E (1-sd below 5-year avg.), we think risk- reward is attractive compared to A/H peers. Maintain BUY with new TP of HK$ 6.10 on rollover 12x FY24E P/E. Upcoming catalysts include 2024 guidance, rising ADAS penetration and easing NEV price pressure.

FY23E preview: slower growth amid challenging market. We estimate FY23E revenue of RMB 5.76bn (+19% YoY) and net income of RMB 319mn (-23% YoY). By segment, we expect revenue from new energy/ body control/ safety/ powertrain/ automation & connectivity to deliver 34%/ 3.5%/ 29.9%/ 1.9%/ 57.1% growth YoY; while cloud server declined 53.9% YoY, given continued NEV growth, ADAS penetration and new product ramp-up, offset by cloud server weakness and downstream OEMs price pressure. We expect FY23E GPM to trend down to 19.0% (vs. FY22/1H23 GPM 21.5%/20.6%), and we expect 1H24 GPM to remain sluggish given intensified downstream OEMs price competition at the start of the year.

FY24E outlook: ADAS segment as next growth driver, outperforming peers despite mixed industry outlook. We expect Intron's sales to outgrow NEV industry given its leading market position, new product ramp- up and solid client base. With cost-plus pricing strategy and economies of scale of R&D investments, we believe Intron is well-positioned to outperform peers with further share gain in the auto electronics industry. Overall, we estimate revenue/net profit to recover with 20%/52% YoY growth in FY24E.

Near-term concerns mostly priced in; attractive risk/reward with good dividend yield. We trimmed FY23-25E EPS by 15-37% mainly to factor in slower business growth and ongoing margin pressure. Our new TP of HK$6.10 is based on rolled-over same 12x FY24E P/E (24% below 5-year hist. avg.). Trading at 6.3x/4.1x FY23/24E P/E, significantly lower than 1-sd below 5-year avg., we think risk-reward is attractive with a dividend yield of 7%. Maintain BUY.