Summary of Horizon Robotics Conference Call Company Overview - **Company**: Horizon Robotics (9660.HK) - **Industry**: Autonomous Driving Technology Key Financial Highlights - **1H25 Revenue**: Rmb1.6 billion, representing a **68% YoY increase** and **8% HoH increase**, exceeding estimates by **6%** and **9%** respectively [1][3] - **Gross Margin**: 65.1% in 1H25, consistent with expectations [3] - **Operating Loss**: Rmb1.855 billion in 1H25, higher than the estimated loss of Rmb1.412 billion due to increased cloud service fees [3][7] - **Net Loss**: Rmb5.233 billion in 1H25, significantly worse than the expected loss of Rmb1.4 billion [3][7] Product Development and Market Strategy - **Mass Production Plans**: The company plans to start mass production of the Horizon Robotics SuperDrive (HSD) on the Journey 6P platform in **2H25**, targeting urban NOA features in vehicles [1][2] - **Product Mix Upgrade**: Anticipated ramp-up of HSD and J6P platform in **2026**, with expectations for higher dollar content per vehicle due to increased ASP [2] - **Urban NOA Penetration**: The HSD solution is expected to penetrate lower-priced car models, enhancing the product mix towards higher-end integrated solutions [1][2] Market Performance and Future Outlook - **Highway NOA Shipments**: Shipments of highway NOA-capable products reached **0.98 million** in 1H25, accounting for **50%** of total shipments, contributing to improved blended ASP [1] - **Revenue Projections**: Revenue estimates for 2025E revised up to Rmb3.605 billion, reflecting a **1% increase** from previous estimates [8][16] - **Target Price**: The 12-month target price is set at **HK$14.00**, indicating a potential upside of **76.3%** from the current price of **HK$7.94** [16] Risks and Challenges - **Competitive Landscape**: Risks include increased competition and pricing pressure in the auto supply chain amid slow demand [15] - **Product Mix Transition**: Potential delays in the transition towards advanced driver-assistance systems (ADAS) could impact growth [15] - **Supply Chain Vulnerabilities**: Geopolitical tensions may pose supply chain risks [15] Conclusion - Horizon Robotics is positioned for growth with strong revenue increases driven by product innovation and market expansion. However, the company faces significant challenges, including operational losses and external market pressures. The outlook remains positive with a maintained "Buy" rating based on anticipated product advancements and market penetration strategies.

Summary of Horizon Robotics Conference Call Company Overview - **Company**: Horizon Robotics - **Ticker**: 9660.HK - **Industry**: China Autos & Shared Mobility - **Market Cap**: Rmb97,476.6 million - **Fiscal Year Ending**: December 2025 Key Financial Highlights - **1H25 Shipments**: Total shipments doubled year-over-year to 1.98 million units, with nearly 50% from AD products compared to less than 20% in 1H24, driven by major customers BYD and Li Auto, which accounted for over 50% of AD shipments [2] - **Full-Year Guidance**: Management maintains a full-year shipment guidance of approximately 4 million units, supported by increased orders from Geely, Chery, and Chang'an in 2H25 [2] - **Gross Profit Margin (GPM)**: GPM fell 13.6 percentage points year-over-year to 65.4% in 1H25, attributed to a shift in revenue mix away from licensing revenue. Management expects blended GPM to stabilize between 60-70% [3] - **R&D Expenses**: R&D expenses increased by 62% year-over-year to Rmb2.3 billion, reflecting investments in computing power for cloud training. Management indicated that while R&D expenses will continue to rise, other expenses such as headcount will be contained [3] Product Developments - **New Chip Launch**: The newly launched J6B chip is expected to see growing demand overseas for ADAS applications, with higher average selling price (ASP) and margin compared to legacy models [4] - **Upcoming Products**: The J6P and HSD debut on Chery and Chang'an in 2H25, along with the upcoming J6B, are anticipated to support further ASP growth [2] Market Position and Opportunities - **Market Share Gains**: Horizon Robotics is gaining market share in the AD chip market, with key bright spots including ASP expansion and overseas project wins, including several global projects from two Japanese OEMs projected to yield 7.5 million shipments over their lifecycle [8] - **Customer Base Expansion**: The company has secured 30 projects from nine joint venture brands in China, indicating a broadening customer base [8] Financial Projections - **Adjusted Net Loss**: Horizon reported an adjusted net loss of Rmb1.3 billion in 1H25, widening from Rmb804 million in 1H24 due to lower GPM and higher R&D spending [8] - **Revenue Forecast**: Projected revenue for the fiscal year ending December 2025 is Rmb3,590 million, with an expected EBITDA loss of Rmb2,539 million [5] Risks and Considerations - **Upside Risks**: Faster-than-expected ADAS/AD adoption growth in China and expanding customer base with additional key customers [11] - **Downside Risks**: Slower-than-expected ADAS/AD adoption, supply chain disruptions, and successful in-house hardware design initiatives by OEMs [11] Analyst Ratings and Price Target - **Stock Rating**: Overweight - **Price Target**: HK$10.50, representing a 32% upside from the current price of HK$7.94 [5] Conclusion Horizon Robotics is positioned for growth in the AD chip market, with strong shipment performance and new product launches. However, the company faces challenges related to profitability and competition in the rapidly evolving automotive technology landscape.

Summary of Hang Seng Indexes Rebalancing Review and Flow Industry Overview - The report focuses on the Hang Seng Indexes, specifically the Hang Seng Index (HSI), Hang Seng China Enterprises Index (HSCEI), Hang Seng TECH Index (HSTECH), and Hang Seng Composite Index (HSCI) [1][2]. Key Points and Arguments Constituent Changes - Pop Mart (9992.HK), China Telecom (728.HK), and JD Logistics (2618.HK) will be added to the HSI, increasing the total number of constituents from 85 to 88 [2]. - Pop Mart will replace J&T Global Express (1519.HK) in the HSCEI [2]. - No changes were made to the HSTECH [2]. - A total of 24 stocks were added and 22 removed from the HSCI [2]. Index Weight Adjustments - The weights of the HSI, HSCEI, and HSTECH will be adjusted by 2.5%, 2.9%, and 5.7% respectively after rebalancing [2]. - The proforma index cap is expected to rise to US$2,090 billion for HSI (+1.6%), US$1,420 billion for HSCEI (+1.1%), and US$480 billion for HSTECH (+9%) [3]. Valuation Changes - The forward 12M P/E ratios and EPS growth rates are projected to change as follows: - HSI: from 11.3x to 11.4x and EPS growth from 5.4% to 5.7% - HSCEI: from 10.7x to 10.8x and EPS growth from 6.3% to 6.6% - HSTECH: from 17.6x to 18.0x and EPS growth from 17.5% to 16.8% [3]. Passive AUM Tracking - Passive AUM tracking the Hang Seng Family of Indexes reached nearly US$90 billion, accounting for approximately 3% of the Hang Seng Composite Index free float [3]. Sector Implications - Consumer Retail, Software & Services, and Autos are expected to see the largest passive inflows, estimated between US$300 million to US$780 million [4]. - Conversely, Internet/Media & Entertainment, Tech Hardware & Semis, and Banks may experience outflows ranging from -US$270 million to -US$950 million [4]. Stock Implications - The top six stocks expected to see the largest passive net buying flows include: - Horizon Robotics, Pop Mart, BYD, Meituan, Xiaomi, and Alibaba, with potential inflows ranging from US$185 million to US$610 million [4]. - Stocks anticipated to face the largest outflows include Tencent, SMIC, Kuaishou, and JD, with outflows ranging from -US$150 million to -US$550 million [4][9]. Historical Performance Patterns - Current additions to the HSCEI and HSCI have outperformed typical past patterns pre-announcement, while the HSI has shown less volatility [9]. - Historical performance tends to reverse after the first day following the announcement for HSI, while HSTECH stabilizes and HSCEI shows volatility [9]. Southbound Implications - Changes in HSCI constituents typically affect Southbound (SB) eligibility, with historical ownership rising by 1 percentage point within two days after inclusion becomes effective [10]. Additional Important Insights - The report emphasizes that investors should consider this analysis as one of many factors in their investment decisions [7]. - The report includes detailed data on potential passive flows, trading patterns, and sector weight changes, which are crucial for understanding market dynamics post-rebalancing [15].

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **Chinese manufacturing and consumer sectors**, highlighting trends in **capital goods**, **technology**, **leisure**, and **beauty** industries [2][3][5]. Core Insights and Arguments 1. **Global Diversification Strategy**: Amid deflation and tariff uncertainties, mid-stream corporates are diversifying capacity globally as a key strategy [3][5]. 2. **Consumer Trends**: Leisure and beauty firms are experiencing solid growth through product differentiation aimed at self-rewarding consumers [3][5]. 3. **Sector Performance**: In July, **capital goods**, **software**, and **real estate** sectors gained the most wallet share, while **technology hardware** saw a significant decline in investor interest [5][10][16]. 4. **Investor Interest Shifts**: The top sectors for investor meetings in July were **technology**, **consumer**, and **financials**, contrasting with previous quarters [3][5]. 5. **Company Visits**: Notable companies visited include **BYD**, **Transsion**, **OmniVision**, and **Mindray**, indicating strong investor interest in these firms [3][5]. Additional Important Insights 1. **Sales Growth in SMID/Materials**: Companies like **Sunresin** and **Shengquan** reported robust sales growth, particularly in overseas markets, with significant projects in the pipeline [8][26][27]. 2. **Leisure and Beauty Sector Dynamics**: Companies such as **Yiwu CCC** and **Chicmax** are focusing on online sales channels and product launches to drive growth [32][37]. 3. **Transport Sector Recovery**: Express shipping prices are recovering, particularly in key regions like Guangdong, indicating a positive trend in logistics [8][32]. 4. **Technology Sector Challenges**: The **China Wafer Level CSP Company** is expanding overseas but faces flat demand in domestic smartphone markets [25]. 5. **Automotive Insights**: Visits to car dealers revealed a shift in consumer sentiment, with a positive outlook for brands like **BYD** amid changing market dynamics [40]. Conclusion The conference call provided a comprehensive overview of the current state of various sectors in China, emphasizing the importance of diversification, consumer trends, and shifts in investor interest. The insights gathered from company visits and sector performance highlight potential investment opportunities and risks in the evolving market landscape.

Summary of Horizon Robotics Conference Call Company Overview - **Company**: Horizon Robotics (9660.HK) - **Industry**: Automotive technology, specifically focusing on autonomous driving (AD) and advanced driver-assistance systems (ADAS) Key Financial Projections - **1H25 Revenue Growth**: Expected to grow 58% YoY to Rmb1.5 billion, driven by J6 series chip deliveries [1][2] - **Segment Revenue Breakdown**: - Auto product revenues: Rmb708 million (+218% YoY) - Licenses, services, and others: Rmb768 million (+8% YoY) [2] - **Gross Margin**: Projected to decline to 65% in 1H25 from 79% in 1H24, with gross profits maintaining a 30% YoY growth to Rmb960 million [2][12] - **Operating Losses**: Anticipated operating loss of Rmb1.4 billion in 1H25, compared to Rmb1.1 billion in 1H24 [2][12] Product Developments - **J6 Series Chips**: Introduction of J6B (entry-level) and J6P (high computing) chips to enhance sales volume [1][2] - **Horizon SuperDrive (HSD)**: Integrated software/hardware solutions for urban NOA features set to begin mass shipment, expected to increase vehicle content value [1][3][7] Market Position and Strategy - **Market Share**: Anticipated growth in ADAS/AD market share from 2% in 2021 to 9% by 2025E, with significant revenue contributions from AD chips [17] - **Competitive Advantage**: Integration of software and hardware to enhance performance and build a competitive moat [7] Earnings Revisions and Valuation - **Earnings Revisions**: EPS estimates for 2025-30E revised down due to margin dilution from growing chip business, with net income projections adjusted to -Rmb2.7 billion in 2025E [12][23] - **Target Price**: Reduced 12-month target price to HK$13.13, based on an EV/EBITDA multiple of 26.0x [14][23] Risks and Challenges - **Key Risks**: - Increased competition and pricing pressure in the auto supply chain - Slower product mix upgrades towards AD - Expansion challenges in the customer base - Supply chain risks due to geopolitical tensions [24] Conclusion - **Investment Recommendation**: Maintain a "Buy" rating on Horizon Robotics, with a significant upside potential based on projected revenue growth and market expansion [1][25]

Core Viewpoint - The article discusses the advancements in AI technology, particularly in autonomous driving and embodied intelligence, highlighting the saturation of the autonomous driving industry and the challenges faced by job seekers in this field [2]. Group 1: Industry Developments - The autonomous driving sector has seen significant breakthroughs, with L2 to L4 functionalities being mass-produced, alongside advancements in humanoid robots and quadrupedal robots [2]. - The industry has a clear demand for technology and talent, as evidenced by the experiences shared by job seekers [2]. Group 2: Job Seeking Platform - A new platform called AutoRobo Knowledge Community has been launched to assist job seekers in the fields of autonomous driving, embodied intelligence, and robotics, currently hosting nearly 1,000 members [2][3]. - The community includes members from various companies such as Horizon Robotics, Li Auto, Huawei, and Xiaomi, as well as students preparing for upcoming recruitment seasons [2]. Group 3: Resources and Support - The platform provides a wealth of resources including interview questions, industry reports, salary negotiation tips, and resume optimization services [3][4]. - Specific interview questions related to autonomous driving and embodied intelligence have been compiled, covering various technical aspects and practical skills [9][10][11]. Group 4: Industry Reports - The community offers access to numerous industry reports that help members understand the current state, development trends, and market opportunities within the autonomous driving and robotics sectors [15][19]. - Reports include insights on trajectory prediction, occupancy perception, and the overall landscape of the embodied intelligence industry [14][19].

Core Viewpoint - The article emphasizes the establishment of a comprehensive community for autonomous driving, aiming to gather industry professionals and facilitate rapid responses to challenges, with a target of building a community of 10,000 members within three years [2]. Group 1: Community Development - The community aims to integrate academic research, product development, and recruitment, creating a closed-loop system for education and technical discussions [2][5]. - It has already attracted notable figures from the industry, including talents from Huawei and leading researchers in autonomous driving [2]. - The community will provide resources such as video courses, hardware, and practical coding experiences related to autonomous driving [2][3]. Group 2: Learning Resources - A structured learning roadmap is available, covering essential topics for newcomers, including how to ask questions and access weekly Q&A sessions [3][4]. - The community offers a variety of courses on foundational topics like deep learning, computer vision, and advanced algorithms in autonomous driving [4][21]. - Members can access exclusive content, including over 5,000 resources and discounts on paid courses [19][21]. Group 3: Industry Engagement - The community collaborates with numerous companies in the autonomous driving sector, providing direct recruitment channels and job postings [5][6]. - It aims to connect students and professionals with industry leaders, enhancing networking opportunities and knowledge sharing [5][6]. - The community is positioned as a hub for both academic and industrial advancements in autonomous driving technology [12][14]. Group 4: Technological Focus - The article highlights the rapid evolution of technology in autonomous driving, with a focus on end-to-end systems and the integration of large models [7][24]. - Key areas of interest include visual language models, world models, and closed-loop simulations, which are critical for the future of autonomous driving [7][24]. - The community plans to host live sessions with experts from top conferences to discuss practical applications and research advancements [23][24].

Investment Rating - The report assigns an "In-Line" investment rating for the Greater China Tech Semiconductors industry [5]. Core Insights - The report emphasizes a positive outlook for auto semiconductor localization in China, driven by the dominance of Chinese EVs in the global market, government support, and sufficient mature node foundry supply [1][19]. - Three key investment themes are identified within the China auto semiconductor supply chain, focusing on power semiconductors, autonomous driving chips, and microcontroller units (MCUs) [20][21]. Summary by Sections Investment Themes - The report identifies three main investment themes in the China auto semiconductor supply chain: 1. **Power Semiconductors**: Companies like Yangjie Technology and Starpower are highlighted for their strong positions in the market, with Yangjie showing a stable net margin of approximately 18% over the last three years [2][20]. 2. **Autonomous Driving Chips**: Companies such as Horizon Robotics and Alchip are noted for their roles in the growing ADAS market, with increasing adoption in more affordable EVs [21][23]. 3. **Microcontroller Units (MCUs)**: GigaDevice is recognized for its potential to benefit from localization trends, despite the current low self-sufficiency ratio of 3% in auto MCUs [21][40]. Market Dynamics - The report discusses the competitive landscape, noting that global auto semiconductor vendors from Europe, Japan, and the US dominate the market, with Greater China's share accounting for less than 5% [8][22]. - The growth of the electric vehicle (EV) market in China is highlighted, with expectations for EV production to nearly triple by 2030, leading to increased semiconductor content per vehicle [22][36]. Self-Sufficiency and Growth Potential - The report projects that China's auto semiconductor self-sufficiency will reach 28% by 2027, with significant growth opportunities in power discretes and MCUs due to their current low self-sufficiency ratios [10][46]. - The report indicates that local power semiconductor companies are willing to sacrifice margins for market share, which may lead to increased competitiveness against global players [26]. Export Opportunities - The potential for direct exports of auto semiconductors from China is deemed low, with the focus instead on leveraging EV exports, which are expected to grow by 31% in 2025 [4][19]. Stock Recommendations - The report provides a list of recommended stocks, with Yangjie Technology and OmniVision favored for their growth prospects in the auto segment, while Horizon Robotics faces challenges due to heavy R&D investments [2][18].

Investment Rating - The report maintains a "Buy" rating for Horizon Robotics with a 12-month price target of HK$13.33, indicating an upside potential of 106.0% from the current price of HK$6.47 [11]. Core Insights - The management is optimistic about the growth of autonomous driving (AD) and advanced driver-assistance systems (ADAS) in China, particularly with local car OEMs pushing for urban Navigate on Autopilot features in the mainstream price segment of Rmb150,000 (approximately US$21,000) [2][3]. - Horizon Robotics is focusing on product mix upgrades from ADAS to AD, which is expected to drive an increase in average selling price (ASP) due to enhanced computing power [3]. - The company is committed to increasing its R&D investments, particularly in developing integrated software-hardware solutions, which will allow it to charge software fees based on car shipments rather than project-based fees [7]. Summary by Sections 1. Market Outlook - The total addressable market (TAM) for AD and ADAS is growing, with management highlighting the competitive landscape among local car OEMs as a key driver for increased demand [2]. - The Journey 6 product is identified as a significant driver for shipment increases in the AD solutions segment [2]. 2. Product Development - The transition from ADAS products (e.g., Journey 2 and 3) to more advanced AD products (e.g., Journey 6) is expected to enhance ASP due to the substantial increase in computing power from 4-5 TOPS to 560 TOPS [3]. - Future plans include the development of a higher computing power J7 platform, estimated at around 2000 TOPS, to meet the growing demand for advanced features [3]. 3. R&D Commitment - Horizon Robotics is allocating more resources to R&D, particularly in cloud computing, to develop stronger algorithms and enhance its software-hardware integration [7]. - The company aims to penetrate the majority of car OEMs in China that lack in-house algorithms for advanced ADAS/AD features [7]. 4. Strategic Partnerships - The joint venture with Volkswagen, Carizon, is expected to yield its first car model by the end of 2025, with management anticipating a significant share of Volkswagen's car models in the China market [8].

Investment Rating - The report upgrades the investment rating for several companies, including Cambricon, SMIC, AMEC, and VeriSilicon to "Buy" [3][70]. Core Insights - The semiconductor demand in the China market continues to grow, supported by advancements in generative AI, RISC V technology, and local suppliers gaining market share [2][4]. - Integrated circuit (IC) production in China showed a year-on-year growth of 4.0% in April 2025, while the import value increased by 8.9% year-on-year in May 2025 [4][22]. - The total revenue for semiconductors in China was reported at US$16.2 billion in April 2025, reflecting a 14.1% year-on-year increase [5][38]. Summary by Sections IC Production and Imports - IC production volume in April 2025 was 42 billion units, with a year-on-year growth of 4.0% [4][39]. - IC import volume increased by 9.9% year-on-year to 50 billion units in May 2025, while the import value rose by 8.9% year-on-year to US$34 billion [11][32]. - The average selling price (ASP) of IC imports decreased by 1% year-on-year in May 2025 [11][24]. Revenue Growth - The semiconductor sector's total revenue in April 2025 was up 14.1% year-on-year, indicating sustained growth in the industry [5][38]. - Taiwan's semiconductor companies reported a revenue growth of 25.3% year-on-year in May 2025 [9][42]. Inventory and Market Dynamics - The days of inventory (DOI) for China's electronics sector was 59 days in April 2025, lower than the historical average, indicating a healthy inventory level [28][9]. - Increased capital expenditure (capex) plans from local suppliers are expected to drive further market share expansion in the semiconductor sector [4][15].