Flash | 16 Nov 2025 21:08:44 ET │ 11 pages Horizon Robotics (9660.HK) What's New from Citi 2025 China Conference: 2026E Outlook CITI'S TAKE We hosted management update meeting with Horizon Robotics on Nov 14 during the Citi 2025 China Conference, with key takeaways as below. Mgmt. expects 2026 high-end shipment (HSD) at 300-500k units (vs 10- 15k units guided for 2025), mid-end shipment around 3mn units and low- end shipment around 2mn units. Among its expected 2026 high-end shipment (HSD), mgmt. anticipate ...

Group 1: Semiconductor Industry - The analog semiconductor industry is experiencing a clear internal differentiation, with power management ICs (PMIC) and signal chain markets stabilizing and entering a cyclical recovery phase after a deep downturn [2] - The mobile radio frequency front-end (RFFE) is still under pressure, while the automotive RFFE is becoming a new strategic growth area [2] - Global analog market recovery is indicated by Texas Instruments' price increases, with WSTS forecasting a 3% growth in global analog revenue in 2025 and 5% in 2026, although growth lags behind AI-driven sectors [6] Group 2: Automotive Companies - Geely Automobile (175 HK) reported a robust performance in Q3 2025, with revenue up 48% year-on-year, driven by resilient pricing of its Zeekr models [9] - Geely's gross margin improved to 16.6%, with expectations for continued growth in sales and margins due to new high-margin models and accelerated exports of new energy vehicles [8][9] - XPeng Motors (XPEV US/9868 HK) is expected to turn profitable in Q4 2025, with a projected 36% year-on-year sales growth in 2026, driven by new models and increased average selling prices [10][11] - Leap Motor (9863 HK) is also expected to see strong sales momentum, with a projected 52% year-on-year increase in total sales in 2026, supported by new model launches [12][13]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 totaled $0.3 million, up from $0.1 million in Q3 2024, indicating a significant increase [10] - Gross profit for Q3 2025 was negative $0.2 million, an improvement from negative $0.3 million in the same period last year [10] - Operating loss for Q3 2025 was $11.5 million, compared to a loss of $12.4 million in Q3 2024, showing a reduction in losses [11] - Net loss in Q3 2025 was $11 million, down from a net loss of $12.6 million in Q3 2024 [11] - As of September 30, 2025, the company held $52.6 million in cash and cash equivalents [12] Business Line Data and Key Metrics Changes - The company is focused on securing design wins with OEMs for its radar technology, which is crucial for ADAS and autonomous driving programs [4][5] - A top Japanese OEM has ordered radar kits for level 4 development activities, indicating strong demand for Arbe's technology [5] Market Data and Key Metrics Changes - Global economic shifts are causing some OEMs to postpone new model launches, but Arbe's market position continues to strengthen [6][12] - The company is seeing increasing demand in the defense sector and has expanded into the maritime domain [7][8] Company Strategy and Development Direction - Arbe aims to secure four design wins with OEMs in the next three quarters, focusing on premium models initially, with plans to expand to non-premium models over time [6][17] - The company expects initial revenues from its radar technology to begin in 2027, with a ramp-up in 2028 as chipsets are used in high-volume production [7] Management's Comments on Operating Environment and Future Outlook - Management noted that dialogues with OEMs are progressing well, with a clearer path to decision-making emerging [26] - The company anticipates that most revenues in 2026 will come from non-automotive sectors, with a ramp-up in revenues from China expected [29][30] Other Important Information - Arbe won two prestigious automotive technology industry awards in Q3 2025, highlighting its technological advantages [8] - The company welcomed a new board member with extensive experience in the automotive industry, which may enhance its strategic direction [9] Q&A Session Summary Question: Is the guidance for four design wins referring to four separate OEMs? - Yes, it refers to four different OEMs, with decisions expected from at least five OEMs in the next three quarters [17] Question: What factors could swing the revenue guidance for Q4 from low to high? - The timing of customer decisions on NRE programs will significantly impact revenue recognition in Q4 [20] Question: Can you provide insights into the conversations with OEMs and reasons for decision delays? - Dialogues are positive, but earlier delays were due to uncertainty regarding tariffs; now, a clearer path to decisions is expected [26] Question: How should one model revenue and expenses for 2026 and 2027? - Most revenues in 2026 are expected from non-automotive sectors, with stable operating expenses anticipated [30]

Radar Revolution. Delivered. Q3 2025 Financial Results Disclaimer This Presentation contains "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended by the Private Securities Litigation Reform Act of 1995. The words "expect," "believe," "estimate," "intend," "plan," "anticipate," "may," "should," "strategy," "future," "will," "project," "potential" and similar expressions indicate forward-looking statements. Forward-looking state ...

Core Insights - The company reported a significant increase in net income and profit for Q3 2025, achieving a net income of RMB 795 million, a year-on-year increase of 47.5%, and a net profit of RMB 256 million, compared to a loss of RMB 70.4 million in the same period last year [1][2] Financial Performance - The basic earnings per share reached RMB 1.88 [1] - The gross margin for Q3 remained stable at 42%, while operating expenses decreased by 23% year-on-year, indicating effective cost control and operational efficiency [2] - The total net profit for the first three quarters reached RMB 283 million, with an upward revision of the full-year net profit guidance to between RMB 350 million and RMB 450 million [2] Market Position and Strategy - The company has maintained its position as the industry leader in the automotive lidar sector for seven consecutive months, with a market share of 46% in August, significantly higher than its competitors [2] - The company has secured partnerships with major ADAS clients for 2026, ensuring lidar will be standard across all models, and anticipates that each L3 vehicle will be equipped with 3 to 6 lidar units [2] - The company aims to transform into a full-stack technology infrastructure builder over the next decade, focusing on innovation in automotive and robotic perception and interaction [2] Recent Developments - The company became the first in the world to produce over one million lidar units annually as of September [2] - Successful dual listing in Hong Kong raised a total of USD 614 million, strengthening the company's financial foundation [2]

Core Viewpoint - The company achieved significant financial growth in Q3 2025, with a net income of RMB 795 million, a year-on-year increase of 47.5%, and a net profit of RMB 256 million, compared to a loss of RMB 70.4 million in the same period last year [1][2]. Financial Performance - The net income for Q3 2025 reached RMB 795 million (approximately USD 112 million), marking a 47% year-on-year increase [2]. - The net profit for Q3 2025 was RMB 256 million (approximately USD 36 million), with total net profit for the first three quarters reaching RMB 283 million (approximately USD 40 million) [2]. - The gross margin for Q3 2025 remained stable at 42%, while operating expenses decreased by 23% year-on-year, reflecting effective cost control and operational improvements [2]. Market Position and Strategy - The company has maintained its position as the industry leader in the onboard main laser radar sector for seven consecutive months, achieving a market share of 46% in August, which is 1.5 times that of the second-ranked company and 2.4 times that of the third [2]. - The company has secured partnerships with the top two ADAS clients for 2026 model year vehicles, ensuring 100% standardization of laser radar [2]. - The company anticipates that each L3 vehicle will be equipped with 3 to 6 laser radars, with a unit value of approximately USD 500 to 1,000, significantly expanding its potential market size [2]. Future Outlook - The company aims to transform into a full-stack technology infrastructure builder over the next decade, leading a new wave of technological innovation in automotive and robotic perception and interaction [2]. - The successful dual listing in Hong Kong has strengthened the company's financial foundation, with total financing amounting to USD 614 million [2].

Core Viewpoint - Hesai Technology (禾赛-W, 02525) has seen its stock price increase by over 5%, currently trading at 185.8 HKD, with a trading volume of 15.21 million HKD. The company is set to hold a board meeting on November 11 to consider and approve its unaudited quarterly results for the three and nine months ending September 30, 2025. [1] Company Performance - Hesai has maintained its position as the industry leader in the installation of automotive lidar systems, achieving the highest market share for seven consecutive months, with a current market share of 46%. [1] - The company has contributed to the launch of several popular vehicle models this year, including Li Auto's i6, Xiaomi's YU7, and Leap Motor's B10. [1] - Hesai has secured mass production contracts with over 24 OEMs for more than 120 vehicle models, with plans for deliveries scheduled between 2025 and 2027. [1] Industry Trends - According to a report from Goldman Sachs, the adoption of lidar technology in the Chinese market is accelerating, with expectations for large-scale production among global automakers starting in 2026-2027. [1] - It is projected that by 2030, the overseas ADAS lidar shipment volume will reach 3 million units, which is equivalent to the scale of the Chinese market in 2025. [1]

Financial Data and Key Metrics Changes - The company reported Q3 2025 total revenue of $53.7 million, consistent with expectations and showing solid quarter-over-quarter performance [6][15] - Non-GAAP gross margin was 49.6%, while non-GAAP operating loss was $11.3 million, improving from $14.5 million in the previous quarter and $16.8 million a year ago [15] - The company exited the quarter with total cash of $171.2 million, down from $202.9 million in Q2 2025, which included $17.7 million related to a recent M&A transaction [15][16] Business Line Data and Key Metrics Changes - The strategic backlog increased to $7.4 billion from $7.1 billion a year ago, with a stronger product mix contributing to higher gross margins [8][15] - The radar segment saw significant advancements, including the launch of a next-generation radar solution by a tier one partner, enhancing long-range detection capabilities [9] - The power group reported broader market adoption of the 10-watt Qi 2.0 wireless charging platform, with production starting at Ford in Q1 2026 [11] Market Data and Key Metrics Changes - The automotive market is expected to grow by 0.46% in 2026, with production projected at approximately 91 million vehicles, driven by increased semiconductor content per vehicle [5] - China's automotive market continues to dominate global production, representing over one-third of worldwide vehicle production, where the company's ADAS solutions are gaining traction [10] Company Strategy and Development Direction - The company is expanding into adjacent markets such as quantum computing and humanoid robotics, indicating a diversification strategy [6][8] - The acquisition of Emotion3D aims to enhance the company's capabilities in AI perception software for automotive applications, expected to contribute positively to revenue in the future [16][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged short-term supply chain disruptions due to substrate shortages but expects resolution by Q1 2026, with revenue recovery anticipated [18][24] - The company remains optimistic about growth in 2026, driven by radar and vision programs, despite current operational challenges [27][39] Other Important Information - The company is actively working on second sourcing strategies to mitigate supply chain risks and enhance production capabilities [20][46] - The divestment of Wuxi is expected to improve the company's margin profile and lower the break-even revenue threshold [17][19] Q&A Session Summary Question: Can you explain the supply shortages and their resolution timeline? - Management indicated that the supply shortage was unexpected and is anticipated to resolve by Q1 2026, with revenue recovery expected [24] Question: What is causing the gross margin declines into Q4? - The decline is attributed to a mix of products, with higher-margin products being affected by the inability to meet market demand [25] Question: What is the visibility on radar ramp and customer engagement? - The company is preparing for a significant ramp in radar production, with strong customer engagement and expectations for high-volume market share [38] Question: Can you provide insights on the quantum laser market and design wins? - The company has begun shipping production in the quantum laser market, with rapid acceleration expected [31] Question: What are the primary contributors to backlog growth? - The backlog growth is primarily driven by expansions in radar and vision programs, along with some contributions from quantum-related optics products [32][36] Question: How will the acquisition of Emotion3D impact revenue and gross margin? - While immediate revenue synergies are not expected in Q4, contributions are anticipated to increase in 2026 [39]

Core Viewpoint - The global CMOS image sensor market is recovering from a cyclical low, with a projected growth of 6.4% to reach $23 billion in 2024, indicating a new phase of structural differentiation and sustained growth in the industry [1] Market Dynamics - The mobile terminal segment, which accounts for over 60% of industry revenue, is stabilizing, with future growth driven by an increase in average selling prices due to consumer shifts towards high-end models and generative AI smartphones, despite moderate growth in device shipments [2] - The automotive CMOS image sensor market is expected to maintain double-digit growth from 2025 to 2027, driven by increased camera penetration in ADAS, in-cabin monitoring, and ongoing resolution upgrades, rather than vehicle production [2] - Emerging applications such as smart glasses and machine vision are opening new growth avenues, requiring specialized sensors with ultra-low power consumption, miniaturization, and global shutter technology, providing high-value growth opportunities for technology leaders [2] Competitive Landscape - The CMOS image sensor market is consolidating around a few leading companies, with firms establishing advantages through technological differentiation and strategic focus [3] - Sony continues to lead the high-end market with its technological advantages and significant R&D investment, while Samsung solidifies its second position through an IDM model focused on high-resolution and small pixel technology, although its strategic tilt towards HBM may limit its market share growth in CMOS image sensors [3] - Chinese manufacturers are becoming key industry changers, with OmniVision demonstrating exceptional execution to surpass ON Semiconductor and become the leader in the automotive CMOS image sensor market by 2024, while companies like SmartSens are rapidly expanding their market share in mobile terminals and security markets through high-cost performance solutions [3] - Intense competition in the CMOS image sensor market is expected to continue, with successful players needing to maintain ongoing innovation, strategic market focus, and strict cost control capabilities [3]

Group 1 - HERE Technologies and Gaode have formed a strategic partnership to provide ADAS and seamless navigation solutions for over 30 Chinese automotive brands, leveraging HERE's global AI mapping technology and Gaode's extensive applications in the Chinese automotive sector [2] - Haima Automobile has made progress in the hydrogen vehicle sector, exploring a full industry chain from photovoltaic power generation to hydrogen vehicle operation, aiming for a green transition leveraging resources and policy advantages in Hainan Free Trade Port [2] - WM Motor has hinted at positive developments, indicating potential successful restructuring after bankruptcy, with plans to resume mass production of the EX5 and E5 models at its Wenzhou base [2] - Elon Musk announced that Tesla has reviewed the progress of the AI 5 chip for smart assisted driving, with subsequent versions AI 6 and AI 7 to follow, and AI 8 expected to exceed expectations [2]