Core Viewpoint - Black Sesame Intelligence, known as the "first stock of smart driving chips" in China, continues to face significant losses despite reporting a revenue increase for the first half of 2025, raising concerns about its financial health and strategic direction [2][4]. Financial Performance - In the first half of 2025, Black Sesame Intelligence reported revenue of 253 million yuan, a year-on-year increase of 40.38%, while its net profit plummeted to -762 million yuan, a decline of 169.01% compared to a profit of 1.105 billion yuan in the same period of 2024 [4][5]. - The company's gross margin for the first half of 2025 was 24.79%, down from 50.00% in the same period of 2024, indicating a significant decline in profitability [7][8]. Product and Market Development - The revenue growth in the first half of 2025 was attributed to increased sales of advanced driver assistance products and solutions, with successful mass production deliveries based on the A1000 series chips to several major automotive manufacturers [5][6]. - Despite the losses, Black Sesame Intelligence is expanding into new sectors, including robotics and rail transit safety, with a recent announcement of entering the rail transit proactive safety market [10][11]. R&D and Investment - The company reported R&D expenditures of 618.1 million yuan in the first half of 2025, a decrease of 10.1% from the previous year, with R&D spending accounting for 244% of its revenue [9]. - Black Sesame Intelligence is actively pursuing partnerships and investments in the robotics sector, indicating a strategic move to diversify its business and enhance its market presence [10][11]. Competitive Landscape - The company faces increasing competition in the smart driving chip market, with its revenue growth rate slowing down compared to peers like Horizon Robotics, which reported a revenue increase of 67.6% in the same period [6][8]. - The decline in gross margin is attributed to increased costs associated with expanding application scenarios for its driver assistance products, as well as competitive pricing pressures in the industry [8][9].

Investment Rating - The investment rating for the company is "Outperform" (maintained) [1] Core Views - The company has narrowed its losses in H1 2025, with significant growth potential driven by overseas expansion and the robotics sector [5] - The sales of advanced driver-assistance products and solutions have increased, benefiting from the production and delivery of multiple models in the passenger vehicle sector [4][5] - The company is making substantial investments in hardware and human resources to expand downstream application scenarios, leading to revised revenue and net profit forecasts for 2025-2027 [4] Financial Summary and Valuation Indicators - For H1 2025, the company achieved revenue of 252 million, a year-on-year increase of 40.4%, but below Bloomberg consensus expectations of 420 million [5] - The revenue from advanced driver-assistance products and solutions was 237 million, up 41.6% year-on-year, driven by increased sales of driver-assistance chips and solutions [5] - The company expects revenues for 2025, 2026, and 2027 to be 765 million, 1.293 billion, and 2.027 billion respectively, with year-on-year growth rates of 61.3%, 69.0%, and 56.8% [7] - The adjusted net profit for 2025 is projected at -1.421 billion, with further losses expected in 2026 and 2027 [4][7] - The current stock price corresponds to price-to-sales ratios of 14.0, 8.3, and 5.3 for 2025, 2026, and 2027 respectively [4][7]

Core Insights - The company reported a revenue growth of 40.4% year-on-year in H1 2025, reaching 253 million yuan, primarily driven by increased sales of advanced driver assistance products and solutions [1] - Despite revenue growth, the company's gross profit decreased by 30.4% to 63 million yuan, with a gross margin of 24.8%, down 25.2 percentage points, attributed to rising hardware and labor costs [1] - The adjusted net loss narrowed to 549 million yuan in H1 2025 from 602 million yuan in H1 2024, while the net profit declined by 1.867 billion yuan due to a drop in fair value gains from financial instruments [1] Business Development - The company's advanced driver assistance products and solutions generated 237 million yuan in revenue, a 41.6% increase, supported by the ramp-up of mass production models and enhanced market penetration in commercial vehicles [2] - The A1000 series chips have entered mass production, with applications in key models such as Geely Galaxy E8 and Xingyao 8, expanding the model coverage [2] - The C1200 series chips have completed testing in multiple cities, with upcoming mass deployment for high-speed navigation and memory parking functions [2] - The A2000 series chips are under development for full urban NOA applications, aiming for partnerships with leading automakers by 2025 [2] - The company has established strategic partnerships with leading robotics firms and is co-developing multi-module perception computing modules [3] Revenue Streams - The smart imaging solutions segment achieved 16 million yuan in revenue, growing 25.1% year-on-year, driven by an expanding customer base [3] - The company is integrating advanced algorithms into its products and has commercialized new terminal imaging solutions like AI smart glasses, entering the AI business ecosystem [3] Future Outlook - The company anticipates that the shipment volume of intelligent driving products will benefit from the ongoing growth in demand for smart driving technologies and an increase in the proportion of mid-to-high-end products like the C1200 [4] - The expansion into new business scenarios, such as robotic brain and L4 level unmanned logistics vehicles, is expected to create long-term growth opportunities [4] - Revenue forecasts for 2025-2027 are set at 852 million, 1.461 billion, and 2.217 billion yuan, respectively, with corresponding price-to-sales ratios of 13x, 7x, and 5x based on the stock price of 18.93 HKD as of August 29 [4]

Core Insights - The article discusses the evolving landscape of the automotive auxiliary driving chip industry, emphasizing the importance of long-term partnerships and platform capabilities over short-term gains [1][2][5]. Industry Overview - The auxiliary driving chip market has gained significant attention, with a shift from merely counting "hit models" to understanding the deeper needs of automotive manufacturers [1][2]. - Automotive manufacturers are increasingly prioritizing "controllable, reliable, and evolvable" chip platforms that offer better computing power, energy efficiency, system adaptability, and long-term service capabilities [2][5]. Company Developments - Black Sesame Intelligence (02533.HK) launched a new generation chip platform and announced mass production of the first domestic single-chip central computing platform based on the Wudang C1296 chip, set to be used in multiple new models from Dongfeng Motor by 2025 [3][4]. - The collaboration with Intel to create the "Intel & Black Sesame Intelligent Cabin-Driving Integration Platform" aims to integrate standard vehicle functions into a long-lifecycle platform, addressing cost control for economic models while supporting high-end models [4]. Financial Performance - Black Sesame Intelligence reported a revenue of 474 million yuan for 2024, a 51.8% increase from 312 million yuan in 2023, with a net profit of 313 million yuan, marking a turnaround from previous losses [7]. - The growth in revenue is attributed to the successful sales of auxiliary driving products and solutions, with significant contributions from partnerships with major automotive OEMs like BYD, Dongfeng, and Geely [7]. Market Trends - The auxiliary driving industry is transitioning from early adoption to widespread use, with L2-level auxiliary driving systems expected to see a 25.33% increase in deliveries in 2024, reaching 8.67 million units [8][9]. - The high-level automated navigation driving (NOA) segment is projected to grow significantly, with a 162.31% increase in deliveries, indicating a strong market demand for advanced driving assistance technologies [8][9]. Strategic Focus - The article highlights the importance of deep collaboration between chip manufacturers and automotive companies, emphasizing that the ability to co-evolve and adapt is crucial for long-term success in the industry [9][10]. - Black Sesame's commitment to high R&D investment, amounting to 340 million yuan in 2024, reflects its strategy to enhance product competitiveness and secure a favorable position in the smart automotive chip market [9].