Core Insights - The report from Bank of America Securities highlights the rapid transformation in China's smart automotive industry driven by intense competition and the accelerated application of autonomous driving technologies by companies like BYD [1][2] Industry Overview - The penetration rate of L2+/L3 autonomous driving in China is projected to rise from 27% in 2025 to 80% by 2030, with sales of vehicles equipped with these features expected to grow from 6.1 million units in 2025 to 18.4 million units by 2030, reflecting a CAGR of 25% [2] - The Robotaxi market is anticipated to see explosive growth, with sales expected to increase from 2,500 units in 2025 to 400,000 units by 2030, representing a CAGR of 176% [3] Key Companies and Technologies - Companies such as Hesai (HSAI.US), Horizon (09660), and NIO (01316) are identified as key players in the smart automotive supply chain, particularly in laser radar, autonomous driving chips, and drive-by-wire chassis [1][4] - The report emphasizes that the integration of sensing, processing, and control systems is crucial for autonomous driving capabilities, while smart cockpit systems include components like cockpit domain controllers and heads-up displays [3] Component Market Insights - The estimated value of smart automotive components is $2,400 for entry-level vehicles and $6,000 for high-end models [4] - The penetration rate of laser radar in Chinese passenger vehicles is expected to increase from 6% in 2024 to 40% by 2030, driven by safety considerations and decreasing costs [4] - The market for autonomous driving and advanced driver-assistance system chips is projected to grow at a CAGR of 25% from 2024 to 2030 [4] Ratings and Price Targets - Bank of America Securities has provided ratings and price targets for several companies, indicating strong upside potential for stocks like PONY US, XPEV US, and HSAI US, with potential increases ranging from 24% to 61% [5][6]

Investment Rating - The report assigns a "Buy" rating for the company, indicating a potential upside of 15% to less than 35% [5][9]. Core Insights - The company is positioned to benefit from the rapid increase in high-level advanced driver-assistance systems (ADAS) penetration, with expectations of significant revenue growth driven by partnerships with major automotive manufacturers like BYD [5][7]. - The projected net profits for 2025, 2026, and 2027 are estimated to be -1.81 billion, -0.99 billion, and 0.11 billion RMB respectively, with corresponding EPS of -0.14, -0.07, and 0.01 RMB [7][8]. Company Overview - The company operates in the mechanical equipment industry and focuses on providing third-party ADAS solutions, including self-developed high-performance chips and intelligent driving algorithms [5][7]. - As of June 23, 2025, the H-share price was 6.37 HKD, with a market capitalization of approximately 884.24 billion HKD [2]. Financial Performance - The company reported a revenue of 2.38 billion RMB in 2024, with a year-on-year growth of 54%, and anticipates a revenue increase of 50% in 2025 [5][7]. - The gross margin for the company is reported at 77%, indicating strong profitability in its operations [5]. Market Potential - The penetration rate of high-level NOA (Navigation on Autopilot) is currently low, with only 8.6% of vehicles equipped with such features in 2024, suggesting significant growth potential as these technologies become more widespread [7]. - The market for intelligent driving chips is expected to exceed 100 billion RMB, with a projected annual growth rate of over 50% from 2025 to 2027 [7]. Future Projections - The company plans to raise over 4.7 billion HKD through a share placement to optimize its capital structure and support business expansion [7]. - The anticipated financial performance includes a net profit turnaround by 2027, with expectations of positive earnings for the first time in several years [8].

Core Viewpoint - The Hong Kong stock market is witnessing a surge in smart driving concept stocks, particularly driven by Tesla's recent launch of its Robotaxi pilot service in Austin, Texas, which has positively impacted related companies in the sector [1] Group 1: Stock Performance - Youjia Innovation (02431.HK) increased by 7.95% [1] - Horizon Robotics-W (09660.HK) rose by 4.40% [1] - Zhixing Technology (01274.HK) saw a gain of 3.10% [1] - Sutech Juchuang (02498.HK) experienced a rise of 1.59% [1] Group 2: Tesla's Robotaxi Service - Tesla initiated its Robotaxi pilot operation on June 22 in Austin, Texas, with an initial fleet of 10 Model Y vehicles [1] - Passengers are required to pay a fixed fee of $4.20 for the Robotaxi service [1]

Investment Rating - The report initiates coverage with a "Buy" rating for Horizon Robotics, setting a target price of HK$8.60, representing a potential upside of 33% from the current price of HK$6.46 [1][6][10]. Core Insights - Horizon Robotics is positioned as a key beneficiary in the high-end assisted driving industry, with a strong market share exceeding 40% in China's OEM advanced driver assistance systems (ADAS) market as of 2024 [7][29]. - The company is expected to benefit significantly from the global growth potential of smart driving, with projections indicating that global and Chinese smart vehicle sales will reach approximately 80 million and 30 million units by 2030, respectively [7][29]. - The unique BPU (Brain Processing Unit) architecture of Horizon Robotics provides a competitive edge by optimizing hardware and software collaboration, achieving higher computational efficiency at lower power consumption [30][42]. Financial Projections - Revenue forecasts for Horizon Robotics are projected at RMB 3.43 billion, RMB 5.41 billion, and RMB 7.46 billion for the years 2025, 2026, and 2027, respectively, reflecting year-on-year growth rates of 43.7%, 57.9%, and 37.9% [9][31]. - The company is expected to achieve profitability in 2027, with a projected net profit of RMB 901 million, following losses in the preceding years [9][31]. Market Comparison - The report compares Horizon Robotics with peers such as NVIDIA, ARM, Mobileye, and Black Sesame Intelligence, applying a 20x price-to-sales (P/S) ratio to derive the target price [32][71]. - The competitive landscape indicates that Horizon Robotics has established itself as a leader in the mid-to-low-end smart driving hardware market, with plans to penetrate the high-end market further with the launch of the Journey 6 series chips [71][72]. Product Solutions - Horizon Robotics offers three main smart driving solutions: Horizon Mono, Horizon Pilot, and Horizon SuperDrive, catering to different levels of driving assistance [44][60]. - The Journey 6 series chips, set to launch in 2025, will cover a wide range of smart driving needs, enhancing the company's product matrix [62][67].

Group 1 - HSBC Research initiates a "Buy" rating for Horizon Robotics with a target price of HKD 10.2 [1] - Horizon Robotics currently serves over 40 automotive manufacturers, including BYD, Geely, and Li Auto, with more than 310 vehicle models [1] - The company is expected to achieve a compound annual growth rate (CAGR) of 64% in revenue from 2025 to 2027 and is projected to turn profitable by 2028 [1] Group 2 - Despite NVIDIA's dominance in the high-end automotive market, Horizon Robotics' lower chip prices are anticipated to enhance its market share in China, increasing from approximately 15% in 2024 to about 25% by 2027 [1] - The current trade tensions are believed to provide Horizon Robotics with higher supply chain security [1]

Core Insights - The 2025 International Automotive and Supply Chain Expo in Hong Kong showcased Horizon Robotics' Horizon SuperDrive (HSD) and the Journey 6 series, highlighting the future direction of intelligent driving technology [1][2] - Horizon Robotics' HSD received the 2025 China Automotive Supply Chain Innovation Achievement Award for its human-like driving experience and reliable technology [2] - The company aims to provide optimal performance and flexible upgrade solutions for intelligent driving, leveraging its decade-long experience in hardware-software integration [2][4] Company Developments - Horizon Robotics presented its full-stack technology achievements at the expo, emphasizing its role as a leader in the global automotive industry's transformation [2] - The HSD system is the first fully integrated urban auxiliary driving system developed in China, utilizing the Journey 6P computing solution for enhanced safety and user experience [2][3] - The company has partnered with Chery Group for the mass production of HSD, which will debut in the "Falcon" model under the Starway brand in 2025 [3] Market Position - Horizon Robotics is a leading provider of advanced driver assistance and high-level autonomous driving solutions, having established partnerships with over 40 automotive brands and produced over 8 million units of its solutions [4] - The company has secured collaborations with major Tier 1 suppliers like Bosch, Denso, and ZF, contributing to the development of differentiated intelligent driving solutions [4] - Horizon Robotics plans to raise approximately HKD 46.74 billion through a share placement to accelerate business expansion and enhance R&D capabilities [4]

Group 1: Private Car Manufacturers - The profitability of private car manufacturers is strong, with significant advancements in high-end strategies, increased export ratios, and scale effects in the new energy vehicle sector [1] - Key players like Seres, BYD, and Geely are expected to lead the acceleration of advanced driver assistance systems by 2025, enhancing their market position [1] - The overseas market is contributing considerable profits, with BYD maintaining high per-vehicle profitability due to its scale and supply chain advantages [1] Group 2: New Force Car Manufacturers - New force car manufacturers are facing increased urgency to achieve self-sustainability, with companies like Li Auto showing stable profitability and improvements in gross margins for Leap Motor and Xpeng [2] - The financing environment and valuation levels for new force manufacturers have changed significantly since their initial public offerings, necessitating quicker self-financing [2] - Product launches in 2025 will be crucial for these companies to expand their growth potential, with Li Auto focusing on pure electric models and Xpeng diversifying its product matrix [2] Group 3: State-Owned Car Manufacturers - State-owned car manufacturers are experiencing weaker profitability due to declining investment returns from joint ventures and challenges in achieving scale effects in the new energy vehicle sector [3] - Many state-owned enterprises are actively deepening strategic cooperation with Huawei to facilitate their transition towards smart and electric vehicle production [3] - The domestic automotive market is undergoing structural adjustments, leading to decreased profitability in the fuel vehicle segment [3]

Group 1: Private Car Manufacturers - Private car manufacturers exhibit strong profit resilience, driven by high-end breakthroughs, increased export ratios, and scale effects in the new energy vehicle sector [1] - Key players like BYD and Geely are expected to lead the push for advanced driver assistance systems by 2025, capitalizing on their scale and industry advantages [1] - The profitability of major private car manufacturers is improving, with Seres benefiting from the popularity of its AITO series and Great Wall Motors leveraging its core brands like Tank and pickup trucks [1] Group 2: New Forces in the Automotive Industry - New forces in the automotive sector are facing increased urgency to achieve self-sustainability, with companies like Li Auto maintaining robust profitability while others like Leap Motor and Xpeng show significant improvements in gross margins [2] - The upcoming product launches in 2025 are crucial for these new entrants to expand their growth potential, with Li Auto focusing on pure electric models and Xpeng enhancing its product matrix with range-extended models [2] - The financing environment and valuation levels for new forces have changed significantly since their initial public offerings, necessitating a quicker path to self-sufficiency [2] Group 3: State-Owned Car Manufacturers - State-owned car manufacturers are experiencing weaker profitability due to declining investment returns from joint ventures and challenges in achieving scale effects in the new energy vehicle market [3] - Many state-owned enterprises are actively deepening strategic partnerships with Huawei to facilitate their transition towards smart and electric vehicle production [3] - The domestic automotive market's structural adjustments have led to decreased profitability in the traditional fuel vehicle segment, adding to the pressures faced by state-owned manufacturers [3]

Market Overview - The Hong Kong stock market opened lower, with the Hang Seng Index down 0.59% at 24,223.12 points, the Hang Seng Tech Index down 1.13% at 5,389.56 points, and the National Enterprises Index down 0.78% at 8,796.99 points [1] - Major tech stocks generally declined, with Alibaba down 2.28%, JD Group down 1.79%, and Xiaomi down 1.11%. However, Netease rose by 1.05% [1] Company News - XPeng Motors reported that its delivery volume has exceeded 30,000 units for seven consecutive months as of 2025 [2] - Morgan Stanley upgraded the rating of Wei Long Delicious to "Overweight" [3] - Junshi Biosciences received a clinical trial application acceptance notice from the National Medical Products Administration for JT118, aimed at preventing monkeypox virus infection [3] - Vanke Enterprise sold 30.1 million A-shares, raising a total of RMB 198 million [4] - Horizon Robotics plans to issue 681 million shares, aiming to raise approximately HKD 4.674 billion, at a discount of about 6.85% from the previous closing price [4] Institutional Insights - Guotai Junan noted that the narrative of asset revaluation in China has gained traction this year, with the Hong Kong stock market showing a volatile upward trend, although valuations remain relatively low. Future trade environments may disrupt the market, but domestic policy efforts could drive fundamental recovery [5] - CITIC Securities reported that Hong Kong stocks saw a 3.4% year-on-year revenue increase and an 8.5% profit increase in 2024, indicating a significant improvement compared to 2023. The performance of technology and finance sectors was particularly strong, while the real estate and some consumer-related companies still showed weak performance [6]

Investment Rating - The report maintains a "Buy" rating for the company, citing its leading position in the domestic intelligent driving solutions market and strong growth potential [4][6]. Core Insights - The company has transformed into a leading provider of intelligent driving solutions over the past decade, focusing on full-scene intelligent driving solutions and achieving significant revenue growth from 470 million RMB in 2021 to 2.384 billion RMB in 2024, with a CAGR of 72.2% [1][39]. - The industry is experiencing a shift towards "intelligent driving equity," with major automakers like BYD and Geely accelerating their strategies, indicating a potential inflection point for high-level intelligent driving penetration in 2025 [2][48]. - The company has established a comprehensive technology stack covering L2 to L4 intelligent driving chip solutions, with over 310 models targeted by the end of 2024, and aims to leverage its performance and cost advantages to expand market share [3][4]. Summary by Sections Company Overview - The company has developed a full-stack product portfolio that includes both automotive and non-automotive solutions, with automotive solutions accounting for 97% of its revenue in 2024 [29][45]. - The automotive solutions include product solutions and licensing services, with the latter contributing 69.1% of the revenue, indicating a strong focus on software and IP licensing [29][39]. Industry Analysis - The intelligent driving market is expected to see accelerated penetration, with 2025 projected as the year of "intelligent driving equity," driven by decreasing costs and increasing availability of high-level driving features across various price segments [2][48]. - The report highlights the importance of third-party suppliers in the intelligent driving ecosystem, as they can provide scalable solutions to automakers, which face high barriers to self-development in this complex field [2][12]. Financial Forecast - The company is projected to achieve revenues of 3.603 billion RMB in 2025, 5.264 billion RMB in 2026, and 7.645 billion RMB in 2027, with corresponding price-to-sales ratios of 25, 17, and 12 times, respectively [4][5].