Core Viewpoint - Horizon faces significant challenges in business, profitability, and technology despite reporting a revenue increase in the first half of 2025 [1] Financial Performance - In the first half of 2025, Horizon reported revenue of approximately 1.567 billion yuan, a year-on-year increase of 67.6%, while losses expanded to 5.233 billion yuan from 5.098 billion yuan in the same period last year [2] - Adjusted operating losses grew by 34.9% year-on-year to 1.111 billion yuan, primarily due to rising sales costs and R&D expenses [2] - Sales costs surged to 543 million yuan, a staggering increase of 177.13% compared to 196 million yuan in the previous year [2] - The automotive product solutions segment contributed 778 million yuan in revenue, a 250% increase from 222 million yuan year-on-year, with a gross margin improvement of 3.9 percentage points to 45.6% [3] - The automotive licensing and services business saw a 6.9% revenue increase to 738 million yuan, but its gross margin declined from 93% to 89.7% [3] - Overall gross margin decreased by 13.7 percentage points to 65.36% due to fluctuations in gross margins across different business segments [3] R&D and Operational Costs - R&D expenses reached 2.3 billion yuan, a 62% increase from 1.42 billion yuan year-on-year, driven by a strategic shift towards mid-to-high-end assisted driving solutions [5] - Administrative expenses rose by 26.33% to 307 million yuan, while sales and marketing expenses increased from 198 million yuan to 272 million yuan [6] Competitive Landscape - Despite significant R&D investments, Horizon's technology still lags behind international chip giants like Intel, Qualcomm, and NVIDIA, which are advancing to 4nm/5nm processes [7][8] - The self-research trend among automotive manufacturers is reducing Horizon's market space, as clients like BYD and Li Auto begin to develop their own chips and algorithms [9] Customer Dependency - Horizon's revenue is heavily reliant on a few major clients, with the top five clients accounting for 52.48% of revenue in the first half of 2025, and the largest client contributing 19.7% [10][11] - The instability of client business has become evident, with significant drops in revenue contribution from major clients compared to the previous year [12]

Investment Rating - The investment rating for Horizon Robotics (9660.HK) is "Buy" [1] Core Insights - The company reported a significant increase in revenue and gross profit for the first half of 2025, with revenue reaching 1.567 billion yuan, a year-on-year growth of 67.6%, and gross profit of 1.024 billion yuan, up 38.61% [2] - The net profit attributable to shareholders was -5.233 billion yuan, compared to -5.098 billion yuan in the same period last year, indicating ongoing challenges in profitability [2] - The gross margin was 65.36%, a decrease of 13.68 percentage points year-on-year, while the sales expense ratio decreased by 3.86 percentage points to 17.37% [2] - Research and development expenses increased by 62% year-on-year, with a ratio of 146.8%, down 5.1 percentage points from the previous year [2] - The automotive product solutions segment saw revenue growth of 249.97% year-on-year, reaching 777.8 million yuan, driven by a doubling of delivery volume and an increase in average selling price [2] Financial Performance Summary - For the first half of 2025, the company achieved a revenue of 1.567 billion yuan, with a gross profit of 1.024 billion yuan and a net profit of -5.233 billion yuan [2] - The average selling price (ASP) of automotive products and solutions reached 1.7 times that of the same period last year, with mid-to-high-end solutions accounting for 49.5% of total deliveries [2] - The company maintained a leading market share in China's ADAS front-view integrated machine (45.8%) and assisted driving computing solutions (32.4%) [2] - The forecast for revenue from 2024 to 2027 shows a growth trajectory, with expected revenues of 2.384 billion yuan in 2024, 3.610 billion yuan in 2025, 5.697 billion yuan in 2026, and 8.053 billion yuan in 2027 [3] Market Position and Expansion - The company has solidified its market share and is experiencing high demand for mid-to-high-end products, with a significant increase in deliveries [2] - Horizon Robotics has made strides in international expansion, securing model designations with two Japanese automakers and collaborating with multiple joint ventures in China [2] - The company is positioned to benefit from the rapid penetration of intelligent driving technology and the ongoing release of downstream demand [2]