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.