Core Insights - Hesai has been selected as the exclusive provider of long-range lidar for Changan Automobile's new intelligent driving platform, with an expected order volume of over 1.5 million units for the ATX model in the coming years [1][2]. Group 1: Partnership and Product Details - Hesai will supply lidar products for more than 10 vehicle models across various Changan brands, with the first model set for mass production in the second half of 2025 [2]. - The Changan Nevo E07, equipped with two Hesai AT128 lidars, was launched in October 2024 and has received positive market feedback [2]. - The ATX model is a compact ultra-high-resolution long-range lidar that utilizes proprietary technology to improve point cloud resolution while reducing volume, weight, and power consumption [3]. Group 2: Future Developments - The ATX model is expected to enhance road safety across multiple brands and vehicle models within Changan's intelligent driving platform [4]. - Hesai aims to collaborate closely with Changan to expand the reach of advanced intelligent driving functions globally [4].

Investment Rating - The report maintains an "Add" rating for the company [1][3]. Core Insights - The company achieved a quarter-on-quarter delivery growth of 50%, indicating a positive trend towards profitability for the full year [1]. - The total shipment of LiDAR units reached a record high of 134,208 units in Q3 2024, representing a significant year-on-year increase of 182.9% [3]. - The financial performance showed a quarterly revenue of 539.4 million RMB, a year-on-year growth of 21.1%, with a gross margin increase to 47.7% from 30.6% in the same period last year [3]. - The company provided optimistic guidance for Q4 2024, projecting revenue of 100 million USD and a net profit of 20 million USD on a GAAP basis [3]. Summary by Relevant Sections Delivery and Revenue - The company’s total LiDAR shipments for the first nine months of 2024 reached 279,835 units, a year-on-year increase of 108.2%, with ADAS product deliveries at 263,148 units, up 129.9% [3]. - The gross margin improved significantly to 47.7%, attributed to cost management and scale optimization [3]. Market Expansion and Customer Collaborations - The company deepened its domestic market collaborations, becoming a strategic supplier for SAIC Volkswagen and securing exclusive orders from emerging EV manufacturers [3]. - Internationally, the company successfully delivered prototypes for a global automotive manufacturer and signed two proof-of-concept projects with a top Japanese automaker [3]. Financial Projections - For Q4 2024, the company expects to deliver approximately 201,000 LiDAR units, with total shipments for the year projected at 480,000 units, leading to an anticipated revenue growth of 11% to 2.083 billion RMB [3]. - The forecast for 2025 indicates a potential 100.3% increase in LiDAR deliveries to 962,000 units, with revenue expected to grow by 33.5% to 2.781 billion RMB [3].

Investment Rating - Maintains an "Outperform" rating with a target price of $7.20 per share [1] Core Views - The company's Q3 revenue and gross profit margin exceeded market expectations, with Q4 expected to achieve GAAP profitability [1] - The company aims to ship over 1 million LiDAR units in 2025, driven by strong demand in the ADAS market [1][9] - The company's ADAS LiDAR maintains a leading market share in the front-load passenger vehicle market, with the more cost-effective ATX series set for mass production next year [1] Financial Performance - Q3 revenue reached RMB 539 million, a 27% YoY and 32% QoQ increase, significantly exceeding management guidance [1] - Gross profit margin reached 47.7%, surpassing market expectations due to cost optimization, economies of scale, and additional NRE service contributions [1] - GAAP net loss narrowed to RMB 70 million in Q3, with Q4 expected to achieve a GAAP net profit of $20 million [1] - Q3 LiDAR shipments reached 134,000 units, a 183% YoY increase, with ADAS LiDAR accounting for 97% of total shipments [1] Market Expansion - The company has secured design cooperation agreements with 5 global leading OEMs, including 4 joint venture automakers [1] - A new development and verification project was signed with a top 3 Japanese automaker in Q3, further demonstrating the company's product competitiveness [1] Valuation and Forecast - The target price of $7.20 is based on a 2.0x PS multiple for 2025, considering the company's historical average PS of 2.3x [1] - Revenue forecasts for 2024-2026 are RMB 2.071 billion, RMB 3.267 billion, and RMB 4.257 billion, respectively, with growth rates of 10%, 58%, and 30% [1][6] - Net profit is expected to turn positive in 2025, reaching RMB 69 million, and further increasing to RMB 302 million in 2026 [6]

Financial Data and Key Metrics - Q3 2024 net revenue reached RMB 539.4 million (USD 76.9 million), surpassing the high end of revenue guidance [6][30] - LiDAR shipments exceeded 134,000 units in Q3, marking a second consecutive quarter of nearly 50% sequential growth [6][30] - Blended gross margin remained robust at 47.7%, supported by effective cost management and NRE revenues from L4 LiDAR [31] - GAAP net loss narrowed for four consecutive quarters, reflecting operational efficiency and financial discipline [7][32] - Q4 2024 projected revenue is nearly USD 100 million with an estimated net profit of USD 20 million, achieving full-year profitability on a non-GAAP basis [7][33][34] Business Line Data and Key Metrics - LiDAR adoption accelerated, with over 134,000 units shipped in Q3, driven by strong demand in the ADAS sector [6][30] - The company secured new platform wins with Leapmotor and a premium EV brand, with production expected to commence in 2025 [14] - The ATX LiDAR is nearing SOP phase, with significant interest from multiple customers planning to adopt it as a standard feature in their 2025 line-ups [15] - The OT128 LiDAR, designed for scalable applications like robotaxis and industrial robotics, has secured contracts with over 90 global and domestic clients [23][24] Market Data and Key Metrics - LiDAR adoption in China is growing, with 2/3 of highway NOA models and 100% of city NOA models equipped with LiDAR [9] - Level 2 and Level 2+ ADAS adoption in China is projected to reach 40% penetration in 2024 and 50% by 2025 [9] - The company expanded its global reach, securing design wins with 5 prominent global OEMs, including joint ventures in China and collaborations with SAIC Volkswagen [16][17][19] - Two new development projects were secured with top 3 OEMs in Japan, covering Level 2+ passenger vehicles and Level 4 robotaxi applications [20] Company Strategy and Industry Competition - The company aims to capitalize on the growing recognition of LiDAR technology in autonomous driving, with a focus on both ADAS and autonomous mobility markets [22] - The OT128 LiDAR, with its 360-degree perception and all-weather capabilities, positions the company as a leader in scalable applications like robotaxis and industrial robotics [23][24] - The company is leveraging its strong position in the ADAS sector to explore opportunities in the broader autonomous mobility market, where performance is prioritized over price sensitivity [22] Management Commentary on Operating Environment and Future Outlook - Management highlighted the critical role of LiDAR in vehicle safety systems, especially in low visibility conditions, as demonstrated by recent NHTSA investigations [11][12] - The company is confident in its momentum, projecting full-year profitability on a non-GAAP basis for 2024, a first for an automotive LiDAR company [7][34] - The introduction of Level 3 autonomous driving solutions in 2026 is expected to drive further demand for LiDAR technology, with multiple LiDAR units likely to be employed for enhanced safety [10] Other Important Information - The company introduced its new CFO, Andrew Fan, who brings over 18 years of expertise in accounting and corporate finance [26] - The OT128 LiDAR played a key role in the success of the Champion Autonomous Race car at Formula Student Germany 2024, showcasing its advanced capabilities [25] Q&A Session Summary Question: Updates on the contention with the U.S. DoD and its impact on 2025 projects - The company was removed from the 1260H list in October but was relisted on a different basis, with ongoing legal challenges to correct the DoD's erroneous claims [38][39][40][41][42][43] Question: Expectations for GAAP profitability in 2025 - The company is on track for GAAP profitability in Q4 2024 and is targeting full-year profitability in 2025, driven by strong revenue growth and cost control [44][45][46][47][48][49] Question: 2025 volume, revenue, and margin guidance - The company expects significant design wins for new car models in 2025, with millions of units projected to be shipped, supported by three different AT modules [52][53] - Normalized LiDAR gross margin, excluding NRE impact, is expected to remain around 40% [54] Question: LiDAR production for robotics and ASP differences - Robotics LiDARs have higher ASPs compared to ADAS due to lower volumes and different technical requirements, with the company leveraging its ADAS capabilities to maintain high profitability in robotics [59][60][61][62][63][64] Question: ATX shipment proportion and long-term outlook - The company expects ATX shipments to grow rapidly in 2025, with a focus on maintaining healthy blended gross margins through effective cost management [65][66] Question: Cooperation with Huawei in the intelligent driving market - The company views Huawei as a strong competitor within its ecosystem but remains focused on maximizing market share outside of Huawei's supply chain [68][69][70][71] Question: OT128 adoption and partnership with Cruise - OT128 has secured deals with over 90 clients, with production and deliveries already underway, while the partnership with Cruise remains strong, with NRE revenues recorded in Q3 [73][74][75][76][77][78] Question: Normalized OpEx and Q1 2025 margin guidance - OpEx growth is expected to be less than 5% on a GAAP basis and 10-15% on a non-GAAP basis in 2024, with active expense management planned for 2025 [81][82] Question: ATX design wins and potential switching from AT128 - The ATX is a cost-effective alternative to the AT128, with many customers expected to switch to ATX for better cost structures, while premium models will adopt higher-performance LiDARs like the AT512 [84][85][86][87][88][89]

Core Insights - Hesai Group reported quarterly net revenues of RMB539.4 million (US$76.9 million) for Q3 2024, marking a 21.1% increase from RMB445.6 million in Q3 2023 [11] - The company achieved total lidar shipments of 134,208 units in Q3 2024, representing an increase of 182.9% from 47,440 units in the same period of 2023 [2] - The company anticipates a record-breaking fourth quarter with projected lidar shipments reaching 200,000 units and net revenues nearing US$100 million [5][20] Financial Performance - Gross margin for Q3 2024 was 47.7%, up from 30.6% in Q3 2023, driven by effective cost management [12] - Loss from operations decreased to RMB77.2 million (US$11.0 million) in Q3 2024, a 53.8% improvement from RMB167.2 million in Q3 2023 [16] - Non-GAAP net loss for Q3 2024 was RMB44.0 million (US$6.3 million), compared to RMB101.9 million in the same period of 2023, reflecting a 56.8% reduction [18] Operational Highlights - ADAS lidar shipments reached 129,913 units in Q3 2024, a 220.0% increase from 40,593 units in Q3 2023 [2] - The company secured new partnerships and design wins with major OEMs, including a Top 3 OEM in Japan and SAIC Volkswagen [3][7] - The launch of the OT128 lidar product has attracted contracts with over 90 global and domestic clients [6] Management Changes - Andrew Fan has been appointed as the Chief Financial Officer, effective November 25, 2024, bringing extensive experience in financial strategy [4][8] Business Outlook - The company expects to achieve full-year profitability on a non-GAAP basis for 2024, positioning itself as the first automotive lidar company to reach this milestone [5] - The anticipated growth is supported by strong demand in the ADAS market and ongoing global expansion efforts [3][20]

Core Viewpoint - Hesai Group, a leader in lidar solutions, will report its third quarter 2024 unaudited financial results on November 25, 2024, after U.S. market close [1] Financial Results Announcement - The earnings conference call is scheduled for 8:00 PM U.S. Eastern Time on November 25, 2024, which corresponds to 9:00 AM Beijing/Hong Kong Time on November 26, 2024 [2] - Participants can join the call by completing preregistration and dialing in 5 minutes before the call starts [2] Conference Call Details - A live and archived webcast of the conference call will be available on the Company's investor relations website [3] - A replay of the conference call will be accessible approximately one hour after the call until December 3, 2024, with specific dial-in numbers provided for different regions [4] Company Overview - Hesai is recognized as the global leader in three-dimensional lidar solutions, with applications in passenger and commercial vehicles, advanced driver assistance systems (ADAS), and autonomous vehicle fleets [5] - The Company also supports robotics applications, including last-mile delivery and logistics robots [5] - Hesai's technology is backed by strong R&D capabilities and integrates lidar designs with in-house manufacturing, ensuring high performance and quality [5] - The Company has established relationships with leading automotive OEMs and robotics companies across over 40 countries as of December 31, 2023 [5]

Group 1 - Hesai Technology has become the exclusive provider of automotive long-range lidar for Leapmotor's next-generation vehicle platform, with the first model expected to enter mass production in 2025 [1] - The partnership will involve Hesai providing lidar products for multiple models of Leapmotor's new vehicle platform, emphasizing the long-term collaboration and trust between the two companies [1][3] - The initial strategic partnership has led to advancements in intelligent driving projects for various Leapmotor models, including the C-series, which are equipped with Hesai's AT128 lidar for advanced driving functions [2] Group 2 - Leapmotor has commenced sales in Europe as of September 23rd, with over 200 dealers across 13 countries, and plans to expand to 500 sales points by the end of 2025 [2] - The collaboration aims to enhance Leapmotor's leadership in advanced driver-assistance systems (ADAS) and the global application of this technology [3]

Group 1 - Hesai (NASDAQ: HSAI) is the market leader in the LiDAR industry, which is projected to grow at a CAGR of 39% and reach $21 billion by 2029 [1] - The company possesses significant competitive advantages over its competitors and has secured contracts that bolster its market position [1] Group 2 - The focus is on small to mid-cap companies with disruptive technology, emphasizing the importance of competitive analysis and the founders' previous endeavors [1] - The investment strategy involves a two-year time frame, with a tendency to hold investments for longer periods [1]

SHANGHAI, Oct. 1, 2024 /PRNewswire/ -- Hesai Technology (Nasdaq: HSAI), the global leader in lidar technology, announced today the signing of a cooperation framework with SAIC Volkswagen. The cooperation will establish a strong foundation for Hesai and SAIC Volkswagen to build a new ecosystem for the automotive industry, with Hesai's advanced lidar products and technology at the core. SAIC Volkswagen Automobile Co., Ltd. is a Sino-German joint venture operated by SAIC Group and Volkswagen Group. Formed in O ...

HANNOVER, Germany, Sept. 16, 2024 /PRNewswire/ -- Hesai Technology (Nasdaq: HSAI), the global leader in lidar technology, is launching its powerful new lidar solution OT128 at Europe's biggest commercial vehicle trade fair IAA Transportation in Hannover (booth location: Hall 12, #C71). Hesai's OT128 is the most mature 360° long-range lidar in the market and is driving the rapid development of autonomous vehicles' all-around sensing capabilities. Production Time Per Unit Reduced by 95% Promising exceptional ...