Core Viewpoint - The company exceeded revenue expectations for 2025, driven by strong demand for the J6 chip and rapid growth in high-end solutions, despite a decline in gross margin due to changes in revenue composition [4]. Revenue Performance - The company achieved a revenue of 3.758 billion RMB in 2025, a year-on-year increase of 57.7%, surpassing Bloomberg's consensus estimate of 3.590 billion RMB [4]. - The gross margin for 2025 was 64.5%, a decrease of 12.8 percentage points year-on-year, primarily due to an increase in the revenue share from automotive product solutions, which have lower margins [4]. Research and Development - R&D investment significantly increased to 5.154 billion RMB in 2025, up 63.3% year-on-year [4]. - The adjusted operating loss expanded to 2.372 billion RMB, compared to a loss of 1.495 billion RMB in 2024, with a net loss of 10.469 billion RMB largely due to fair value changes in preferred shares and other financial liabilities [4]. Product Solutions - The company delivered over 4 million sets of product solutions in 2025, generating revenue of 1.622 billion RMB, a year-on-year increase of 144.2% [5]. - The contribution of product solutions to total revenue rose from 27.9% in 2024 to 43.2% in 2025, with a gross margin of 34.5%, down 11.9 percentage points year-on-year [5]. - The J6 series products maintained a leading market share in advanced driver assistance systems, capturing 47.7% of the market for basic auxiliary driving solutions among self-branded car manufacturers [5]. Licensing and Service Business - Revenue from licensing and service business reached 1.935 billion RMB in 2025, a year-on-year increase of 17.4%, with a gross margin of 94.5%, up 2.5 percentage points [7]. - The growth in revenue was attributed to an increase in IP licensing and a rise in Tier-1 customers [7]. Non-Automotive Solutions - Revenue from non-automotive solutions surged to 201 million RMB in 2025, a year-on-year increase of 179.9%, driven by higher shipments of non-automotive processing hardware and peripheral devices [8]. - The gross margin for non-automotive solutions was 18.1%, down 5.3 percentage points year-on-year, and the company’s stake in D-Robotics was diluted, leading to its classification as an associate company [8].

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected investment return exceeding the market benchmark by more than 15% over the next 6-12 months [4]. Core Insights - The company achieved a revenue of 3.758 billion RMB in 2025, representing a year-on-year growth of 57.7%, surpassing Bloomberg's consensus estimate of 3.590 billion RMB [1]. - The revenue growth was primarily driven by strong demand for the J6 chip and rapid growth in high-end solutions, which contributed to an increase in average selling price (ASP) [1]. - The gross margin for 2025 was reported at 64.5%, a decline of 12.8 percentage points year-on-year, attributed to a higher proportion of automotive product solutions, which have lower margins compared to licensing and service revenues [1]. - Research and development (R&D) expenses significantly increased to 5.154 billion RMB, a 63.3% rise year-on-year, leading to an adjusted operating loss of 2.372 billion RMB [1]. Revenue Breakdown - The company's product solutions generated revenue of 1.622 billion RMB in 2025, a substantial increase of 144.2% year-on-year, with the revenue contribution rising from 27.9% in 2024 to 43.2% in 2025 [2]. - The delivery volume of product solutions exceeded 4 million units, with mid-to-high-end products accounting for 45% of total deliveries, marking a 4.8-fold increase from 2024 [2]. - The company holds a leading market share in the basic auxiliary driving solutions for self-owned brand car manufacturers, with a 47.7% share in the mid-to-high-end intelligent driving market [2]. Profitability and Forecast - The licensing and service business revenue grew to 1.935 billion RMB, a 17.4% increase year-on-year, with a gross margin of 94.5%, up 2.5 percentage points [3]. - The report projects revenue for 2026 and 2027 to be 5.905 billion RMB and 9.097 billion RMB, respectively, reflecting an upward revision of 10% and 15% from previous estimates [4]. - The net profit forecast for 2028 is expected to reach 1.278 billion RMB, with a corresponding price-to-sales (P/S) ratio of 7x based on the stock price of 7.25 HKD as of March 19 [4].

Core Viewpoint - Yihang Intelligent is set to further undertake the mid-tier market expansion task for the J6 series chips, indicating a strategic focus on enhancing its market presence in the automotive sector [1]. Group 1: Company Developments - On May 12, 2023, Yihang Intelligent underwent a business change, adding new shareholders including Beijing Horizon Information Technology Co., Ltd. and others, indicating a shift in its investment structure [2]. - The recent financing round is identified as a C+ round rather than a D round, with Yihang Intelligent's valuation estimated to be within 3 billion yuan [2]. - Horizon holds a 9.27% stake in Yihang, suggesting a significant investment amount based on this shareholding [2]. Group 2: Strategic Partnerships - During the 2024 Beijing Auto Show, Yihang Intelligent announced a strategic partnership with Horizon, becoming one of the first algorithm partners for the Journey 6 (J6) [3]. - The collaboration between Horizon and Yihang extends beyond capital to business synergies, with Horizon focusing on the high-end autonomous driving market [3]. - Horizon's HSD solution will debut with the Journey 6P chip in the global launch of the Starway brand, set for mass production in September 2025 [3]. Group 3: Technological Advancements - Horizon introduced the BEV+Transformer end-to-end algorithm framework in 2023, which has been validated in production models from companies like Li Auto and BYD [4]. - Yihang Intelligent can utilize both Horizon's perception algorithms and its own self-developed algorithms, providing clients with a broader range of options [4]. - Yihang aims to be the first to develop and mass-produce the city memory navigation feature on the J6E/M platform, targeting an optimal solution for high-speed NOA [4].