Investment Rating - The report maintains an "Outperform" rating for the automotive intelligence industry [5][6]. Core Insights - The Ministry of Industry and Information Technology has approved two L3 autonomous driving vehicle models, marking a significant step towards commercial application in China [15]. - Tesla's Full Self-Driving (FSD) technology is expected to receive full approval in China by early 2026 [16]. - XPeng Motors has obtained a road testing license for L3 autonomous driving in Guangzhou, indicating progress in the industry [18]. - WeRide's Robotaxi service has successfully launched in over 10 cities globally, showcasing the commercial viability of autonomous driving technology [20]. - Xidi Intelligent Driving has officially listed on the Hong Kong Stock Exchange, becoming the first public company focused on commercial vehicle intelligent driving [22]. Summary by Sections Industry News - The approval of L3 autonomous driving models by the Ministry of Industry and Information Technology [15]. - Tesla's FSD technology is on track for full approval in China [16]. - XPeng Motors and Xiaomi have both received L3 road testing licenses [18][19]. - WeRide's Robotaxi service has expanded to multiple cities worldwide [20]. - Xidi Intelligent Driving has successfully listed on the Hong Kong Stock Exchange [22]. High-Frequency Core Data Updates - The penetration rate of 8 million pixel cameras in passenger vehicles is projected to reach 66.1% by October 2025, with a year-on-year increase of 7 percentage points [2]. - The market share of LiDAR in passenger vehicles is expected to rise to 14.3% by October 2025, reflecting a year-on-year increase of 7.9 percentage points [2]. Intelligent Driving - The penetration rate of passenger vehicles with L2 and above functions has increased by 19 percentage points year-on-year, reaching 33% by October 2025 [3]. - The penetration rates for various sensors, including front-view cameras and LiDAR, have shown significant growth [3]. Investment Recommendations - Recommended companies for investment include XPeng Motors, Leap Motor, and Geely for complete vehicles, while L4 recommendations include Pony.ai and WeRide [3]. - For components, recommended companies include SUTENG for data acquisition and Horizon Robotics for data processing [3].

Core Viewpoint - Jiangsu Zejing Automotive Electronics Co., Ltd. (Zejing Electronics) is facing dual challenges of technological opportunities and capital structure imbalance as it prepares for its IPO amid intense competition and price wars in the automotive industry [1][4]. Group 1: Company Overview - Zejing Electronics was established in 2015, focusing on the research and production of automotive HUD (Head-Up Display) solutions, which project driving information to reduce accidents [2]. - The founding team consists of two brothers, with Zhang Bo as the technical lead and Zhang Tao managing strategic development, which has been key to the company's rapid rise [2][3]. - By 2016, Zejing Electronics won a bid for NIO's ES8 HUD despite being a new player, leveraging a low-cost strategy that undercut competitors [3]. Group 2: Financial Performance and Challenges - As of the end of 2022, 2023, and 2024, the company's total liabilities were approximately 820 million, 1.21 billion, and 1.674 billion RMB, respectively, indicating over a 100% increase in two years [5]. - The company's net equity deteriorated from -486 million to -897 million RMB, with a debt-to-equity ratio exceeding 200% for three consecutive years [5]. - Net losses for 2022, 2023, and 2024 were 256 million, 175 million, and 138 million RMB, totaling 569 million RMB over three years [5][6]. Group 3: Market Dynamics - The HUD market is experiencing intense price competition, with average prices for HUD solutions dropping from 974.31 RMB in 2022 to 865.47 RMB in 2024, despite increasing sales volume [10]. - The company aims to achieve over 1 billion RMB in sales by 2026, but revenue growth is showing signs of significant slowdown, with a projected increase of only 5.1% in 2024 compared to 156.6% in 2023 [9][12]. - The automotive industry is facing a "revenue increase but profit decrease" scenario, with Zejing Electronics' average product prices declining due to fierce competition [10][11]. Group 4: IPO and Future Prospects - The company has a strong backing from notable investors and clients, including Geely, NIO, and Xiaomi, with a valuation increase from 60 million to 2.585 billion RMB over seven years [5]. - However, the company faces liquidity risks due to redeemable preferred shares classified as liabilities, which could exacerbate financial pressures if the IPO is unsuccessful [7][8]. - The success of the IPO before the end of 2027 is critical for the company's survival amid the challenges of capital and competition [12].