Core Viewpoint - Horizon has achieved significant revenue growth and market performance, but faces increasing operational and net losses, raising questions about its valuation and sustainability in the competitive autonomous driving market [1][2][9]. Group 1: Financial Performance - Horizon's revenue for the first half of 2025 reached 1.567 billion RMB, a year-on-year increase of 67.6%, while operational losses and net losses expanded to 1.592 billion RMB and 1.333 billion RMB, respectively [1][4]. - The company's automotive products and solutions revenue surged from 220 million RMB in the same period last year to 778 million RMB, marking a growth of over 250% [1]. Group 2: Market Position and Competition - The autonomous driving market is becoming increasingly competitive, with companies like NIO, Geely, and XPeng developing their own chips, which may threaten Horizon's position as a supplier [6][9]. - Horizon's reliance on major clients is growing, with the top five clients contributing 71.8% of its revenue in 2024, raising concerns about customer concentration risk [4]. Group 3: Strategic Partnerships - Horizon has formed strategic partnerships with several automakers, including GAC Capital, Chery, Great Wall, BYD, and FAW Group, to alleviate concerns about losing control over the "soul" of the vehicles [2][4]. - The establishment of joint ventures with companies like Volkswagen and Changan has allowed Horizon to integrate into the supply chains of these automakers [2]. Group 4: Product Strategy and Pricing - The shift towards lower-tier autonomous driving solutions has led to a decrease in average selling prices, impacting profit margins; for instance, the average price of the Horizon Mono solution dropped from 185 RMB in 2021 to 142 RMB in 2024 [12][15]. - The company's gross margin has declined from 80.5% in 2024 to 67.1% in the first half of 2025, primarily due to the lower margins associated with product solutions compared to its software business [14]. Group 5: R&D Investment and Future Outlook - Horizon's R&D expenses reached 2.3 billion RMB in the first half of 2025, a 62% increase year-on-year, as the company invests heavily to maintain its competitive edge in high-tier autonomous driving technology [17][22]. - The company is also exploring new markets, such as Robotaxi and robotics, but these ventures require substantial ongoing investment and carry significant uncertainty [22][23].

Summary of Horizon Robotics Conference Call Company Overview - **Company**: Horizon Robotics - **Industry**: Automotive and AI Semiconductor Solutions - **Market Position**: Leading provider of intelligent driving SoC and solutions in China [doc id='13'][doc id='11'] Key Points and Arguments Revenue Growth Projections - **Revenue Growth Rate**: Expected to maintain approximately 50% revenue growth over the next five years [doc id='2'][doc id='28'] - **Driving Factors**: 1. Rapid increase in L2+/L3 autonomous driving penetration, expanding market reach within China [doc id='11'] 2. Accelerated domestic semiconductor replacement in the automotive and AI sectors [doc id='11'] 3. Growing demand for edge AI, contributing to AIoT and robotics SoC business growth [doc id='11'] Financial Performance Expectations - **EBIT Margin**: Anticipated to turn positive by 2027 and reach over 20% by 2029, aligning with industry peers [doc id='4'][doc id='60'] - **2024 Financials**: Projected EBIT loss of 2.36 billion RMB due to high R&D expenses (31.6 billion RMB, 132% of revenue) [doc id='4'][doc id='62'] - **Revenue Forecast**: Expected to reach 20.77 billion RMB by 2029, with a compound annual growth rate (CAGR) of 65% from 2024 to 2027 [doc id='6'][doc id='3'] Market Valuation - **Target Price**: Set at HK$10.50, based on a discounted cash flow (DCF) valuation with a WACC of 9.5% [doc id='5'] - **Current Valuation**: The stock is currently trading at a price-to-sales (P/S) ratio of 16 times for 2026, slightly above competitors, but with a significantly higher revenue growth forecast [doc id='88'][doc id='95] Market Dynamics - **Automotive Market Size**: The ADAS/AD SoC market for major Chinese OEMs is projected to grow from US$783 million in 2024 to US$7.34 billion by 2029 [doc id='17'] - **Domestic Semiconductor Market**: Domestic suppliers are expected to capture a larger share of the automotive SoC market, with significant growth anticipated from 2025 onwards [doc id='17'] Non-Automotive Business Growth - **Non-Automotive Revenue**: Expected to grow at a CAGR of 125% from 2024 to 2028, reaching 1.5 billion RMB by 2028 [doc id='32'][doc id='33'] - **Key Drivers**: Increased demand for consumer AIoT products, drones, and humanoid robots [doc id='32'] R&D and Cost Structure - **R&D Investment**: High R&D costs are a significant factor in current losses, but expected to normalize as revenue scales [doc id='76'] - **Cost Efficiency**: Anticipated reduction in R&D expense ratio from 132% in 2024 to 29% by 2029, aligning with industry averages [doc id='76'] Competitive Advantages - **Technological Edge**: Horizon Robotics holds a competitive advantage in integrated hardware and software capabilities, positioning it favorably against domestic peers [doc id='21'] - **Client Base**: The company has established partnerships with major domestic and multinational automotive manufacturers [doc id='22'] Additional Important Insights - **Market Sentiment**: The stock has seen a 7% decline since February 2023, attributed to market concerns over the short-term trends in autonomous driving technology and regulatory challenges [doc id='87] - **Long-term Outlook**: Despite current challenges, the long-term outlook remains positive due to structural growth factors in the automotive and AI sectors [doc id='11'] This summary encapsulates the key insights from the conference call, highlighting the company's growth potential, financial expectations, and market dynamics within the automotive and AI semiconductor industry.

Core Viewpoint - Horizon Robotics (9660.HK) is a leading provider of intelligent driving assistance solutions for passenger vehicles in China, ranking first in the advanced driver assistance systems (ADAS) market with over 40% market share in 2024 [1] Business Segments - The main business segments include product solutions, licensing and service business, and non-vehicle solutions [2] Product Solutions - The company offers a comprehensive range of advanced driver assistance and high-level autonomous driving solutions, from mainstream assistance (L2) to advanced autonomous driving (L2+) compliant with Chinese regulations, including Horizon Mono, Horizon Pilot, and Horizon SuperDrive [3] Horizon Mono - Positioned as an active safety advanced driving assistance solution, it enhances daily driving safety and comfort, utilizing visual sensors and optional radar to identify various objects [5] Horizon Pilot - This solution provides a safe and efficient driving experience on highways, featuring advanced tasks such as automatic lane changes and parking assistance [6][7] Horizon SuperDrive - An end-to-end urban driving assistance system that theoretically supports high-level autonomous driving up to L4, utilizing a combination of visual sensors, radar, and LiDAR [8] Non-Vehicle Solutions - The non-vehicle solutions are primarily managed by the subsidiary Diguo Robotics, offering products like lawn mowers and air purifiers, benefiting from significant synergies with automotive solutions [9] Licensing and Service Business - The company provides algorithm and software licensing and technical support to automotive clients, which has become a major revenue source, significantly increasing overall gross margins [10] Financial Performance - The company achieved revenues of 910 million, 1.55 billion, and 2.38 billion yuan for 2022, 2023, and 2024, respectively, with year-on-year growth rates of 94%, 71%, and 54% [11] - The gross margins for the same years were 69.3%, 70.5%, and 77.3% [11] - By 2024, the revenue breakdown is expected to be 664 million from product solutions, 1.647 billion from licensing and services, and 72 million from non-vehicle solutions [11] Market Outlook - According to the China Association of Automobile Manufacturers, China's vehicle sales are projected to reach 31.436 million units in 2024, with new energy vehicle sales at 12.888 million units, indicating a growth rate of 34.4% [15] - The penetration rate of L2+ intelligent driving functions is expected to rise to 8.5% in 2024, with significant growth anticipated in urban NOA functions by 2030 [15] Market Performance - In the Chinese market, Horizon Robotics delivered 67,853 units in May 2025, capturing a market share of 9.8%, with a total delivery of 253,241 units in the first five months [18] - The company ranks third in ADAS front camera chip manufacturing, with a market share of 13.0% [21] Recent Shareholding Changes - As of the end of 2024, Baiji held 5.27% of the company's shares and increased its stake to 4.95% in June 2025 [22] Stock Price Drivers - The company anticipates delivering approximately 2.9 million product solutions in 2024, with cumulative deliveries reaching around 7.7 million [23] - The launch of the "Journey 6P" SoC is expected to enhance the company's market position significantly [23]

Investment Rating - The report initiates coverage with a "Buy" rating for Horizon Robotics, setting a target price of HK$8.60, representing a potential upside of 33% from the current price of HK$6.46 [1][6][10]. Core Insights - Horizon Robotics is positioned as a key beneficiary in the high-end assisted driving industry, with a strong market share exceeding 40% in China's OEM advanced driver assistance systems (ADAS) market as of 2024 [7][29]. - The company is expected to benefit significantly from the global growth potential of smart driving, with projections indicating that global and Chinese smart vehicle sales will reach approximately 80 million and 30 million units by 2030, respectively [7][29]. - The unique BPU (Brain Processing Unit) architecture of Horizon Robotics provides a competitive edge by optimizing hardware and software collaboration, achieving higher computational efficiency at lower power consumption [30][42]. Financial Projections - Revenue forecasts for Horizon Robotics are projected at RMB 3.43 billion, RMB 5.41 billion, and RMB 7.46 billion for the years 2025, 2026, and 2027, respectively, reflecting year-on-year growth rates of 43.7%, 57.9%, and 37.9% [9][31]. - The company is expected to achieve profitability in 2027, with a projected net profit of RMB 901 million, following losses in the preceding years [9][31]. Market Comparison - The report compares Horizon Robotics with peers such as NVIDIA, ARM, Mobileye, and Black Sesame Intelligence, applying a 20x price-to-sales (P/S) ratio to derive the target price [32][71]. - The competitive landscape indicates that Horizon Robotics has established itself as a leader in the mid-to-low-end smart driving hardware market, with plans to penetrate the high-end market further with the launch of the Journey 6 series chips [71][72]. Product Solutions - Horizon Robotics offers three main smart driving solutions: Horizon Mono, Horizon Pilot, and Horizon SuperDrive, catering to different levels of driving assistance [44][60]. - The Journey 6 series chips, set to launch in 2025, will cover a wide range of smart driving needs, enhancing the company's product matrix [62][67].

Core Viewpoint - Company has transformed into a leading supplier of intelligent driving solutions over the past decade, focusing on full-scene intelligent driving solutions and achieving significant revenue growth with a CAGR of 72.2% from 2021 to 2024 [2][36]. Company Overview - Company has established a comprehensive technology stack covering algorithms, dedicated processing architecture (BPU), and development toolchains, positioning itself as a "chip + software" system-level intelligent driving company [4][9]. - The company has formed a complete layout of intelligent driving chip solutions covering levels L2 to L4, with over 310 models targeted by the end of 2024 [4][12]. - The company has built a large and high-quality customer base, including over 40 cooperative automakers and covering more than 290 models [4][36]. Business Segments - The company's revenue is primarily derived from automotive solutions, which accounted for 97% of total revenue in 2024, with product solutions contributing 27.9% and authorized service business contributing 69.1% [28][36]. - Non-automotive solutions, which focus on smart home applications, accounted for 3% of total revenue in 2024 [28][36]. Financial Performance - The company's revenue increased from 467 million RMB in 2021 to 2.384 billion RMB in 2024, with a CAGR of 72.2% [36][41]. - The gross margin has remained stable around 70%, increasing to 79% in 2024 due to the higher contribution from high-margin authorized service business [36][41]. - Operating losses have been controlled, with losses around 2 billion RMB, and the company is expected to achieve breakeven in the coming years as revenue increases and costs are managed [37][41]. Industry Trends - The intelligent driving market is expected to accelerate penetration, with 2025 anticipated to be a pivotal year for "intelligent driving equality," as traditional automakers ramp up their intelligent driving strategies [3][54]. - The price of high-level intelligent driving packages is decreasing, making advanced driving features more accessible to consumers [3][54]. - The integration of intelligent driving technology into mainstream vehicles is expected to become a standard feature, with major automakers like BYD and Xpeng leading the charge [3][54].

Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook on its future performance [4][6]. Core Insights - The company is positioned as a leading provider of domestic intelligent driving solutions, having undergone significant transformation over the past decade. It has established a comprehensive product portfolio that includes both automotive and non-automotive solutions, with a strong focus on intelligent driving technology [1][15]. - The intelligent driving industry is expected to accelerate its penetration into mainstream markets, with 2025 projected to be a pivotal year for "intelligent driving equality." Major automotive manufacturers are increasingly adopting intelligent driving strategies, which will create opportunities for leading suppliers [2][48]. - The company has built a robust ecosystem that empowers partners in the intelligent driving space, leveraging its complete technology stack that spans algorithms, specialized processing architectures, and development tools [3][4]. Summary by Sections Company Overview - The company has evolved into a key player in the intelligent driving sector, providing comprehensive advanced driver assistance systems (ADAS) and high-level autonomous driving (AD) solutions. It has a significant market share in the domestic market, exceeding 40% in the advanced driving assistance segment [15][18]. - The company has established a large and high-quality customer base, with over 310 models targeted for production by the end of 2024, reflecting its strong market presence [29][39]. Industry Insights - The intelligent driving market is witnessing a shift towards affordability, with traditional manufacturers like BYD and Geely launching strategies to democratize intelligent driving technology. This trend is expected to reshape the industry landscape [2][48]. - The report highlights the importance of third-party suppliers in the intelligent driving ecosystem, as they can provide scalable solutions to traditional manufacturers, thereby accelerating the adoption of advanced driving technologies [12][13]. Financial Performance - The company has experienced significant revenue growth, with a compound annual growth rate (CAGR) of 72.2% from 2021 to 2024, increasing from 467 million RMB to 2.384 billion RMB. The automotive solutions segment accounts for 97% of total revenue, with a strong contribution from licensing and service fees [39][46]. - The gross margin has remained stable, with an increase to 79% in 2024, driven by the higher proportion of high-margin licensing and service revenues [39][46]. Future Outlook - The company is expected to continue expanding its market share in the intelligent driving sector, with projected revenues of 3.603 billion RMB, 5.264 billion RMB, and 7.645 billion RMB for 2025, 2026, and 2027, respectively [4][5].

Investment Rating - The report initiates coverage on Horizon Robotics with a "Buy" rating, setting a target price of HKD 9.28 based on a 31.1X PS for 2025 [1][7][5]. Core Views - Horizon Robotics is a leading supplier of advanced driver assistance systems (ADAS) and autonomous driving solutions, focusing on empowering vehicles and robots through intelligent solutions [14][23]. - The company is expected to benefit from the rapid growth of high-level assisted driving functions driven by major automakers like Li Auto, BYD, and Volkswagen [1][2]. - The domestic market for intelligent driving SoC chips is projected to grow significantly, with the market expected to expand from approximately USD 2 billion in 2024 to USD 6.2 billion by 2030 [2]. Company Overview - Horizon Robotics has a complete product matrix and strong software delivery capabilities, with a focus on high-performance chips and proprietary algorithms [3][14]. - The company has achieved significant milestones, including the mass production of various chip series and partnerships with major Tier 1 suppliers [4][14]. - The company’s revenue is projected to grow significantly, with expected revenues of RMB 3.66 billion, RMB 5.54 billion, and RMB 7.82 billion for 2025, 2026, and 2027 respectively, reflecting year-on-year growth rates of 53%, 51%, and 41% [5][6]. Market Dynamics - The intelligent driving industry is entering a high-growth phase, with the penetration rate of advanced intelligent driving expected to increase rapidly [2][20]. - Domestic chip suppliers are well-positioned to meet the demand for cost-effective and reliable solutions, which aligns with the needs of downstream automakers [2][21]. - The report highlights the potential for Horizon Robotics to expand into international markets, particularly as domestic brands seek to innovate globally [21][24]. Financial Projections - The company is expected to achieve a chip shipment volume of 4 million, 5.22 million, and 6.93 million units in 2025, 2026, and 2027 respectively, with corresponding revenues of RMB 3.66 billion, RMB 5.54 billion, and RMB 7.82 billion [5][6]. - The report anticipates a significant increase in average selling price (ASP) per vehicle as the company scales its operations and introduces new algorithms [20][21]. Competitive Landscape - Horizon Robotics faces competition from international players like Mobileye and NVIDIA, but the report suggests that its domestic advantages in cost and supply chain reliability will be beneficial [4][21]. - The company has established partnerships with leading global Tier 1 suppliers, which may enhance its competitive positioning in the international market [21][24].

Core Viewpoint - Horizon Robotics is a leading provider of advanced driver assistance systems (ADAS) and high-level intelligent driving (AD) solutions in China, focusing on a software-hardware integrated technology path to cover low, medium, and high-end markets with its chips and algorithms [2][3]. Group 1: Company Overview - Horizon Robotics was established in 2015 and has released multiple generations of its Journey series chips since 2017, with cumulative shipments expected to exceed 10 million by 2025 [3]. - The company has a diverse customer base, including major automakers such as Volkswagen, BYD, and Geely, and is projected to hold over 40% and 30% market shares in the Chinese OEM ADAS and AD markets by 2024, ranking first and second respectively [3][4]. - The company has experienced strong revenue growth, with a CAGR of 72% from 2021 to 2024, expecting total revenue of 2.4 billion yuan in 2024 [3][18]. Group 2: Market Potential - The intelligent driving solutions market is expected to reach a scale of 1 trillion yuan by 2030, with significant growth driven by the penetration of high-level intelligent driving technologies [4][44]. - The market for high-level intelligent driving is anticipated to rapidly penetrate the 100,000 to 200,000 yuan segment, with a forecasted increase in demand for intelligent driving solutions [4][35]. - The global market for advanced driver assistance systems and high-level autonomous driving solutions is projected to grow from 61.9 billion yuan in 2023 to 1,017.1 billion yuan by 2030, with a CAGR of 49.2% [44]. Group 3: Financial Performance - Revenue from automotive solutions is expected to grow significantly, with automotive product solutions revenue projected to reach 664 million yuan in 2024, reflecting a CAGR of 47% [25]. - The company has maintained a high gross margin, with gross margins of 71%, 69%, 71%, and 77% from 2021 to 2024 [19]. - Despite strong revenue growth, the company has reported net losses from 2021 to 2024, primarily due to high R&D expenditures, with an adjusted net loss of 1.681 billion yuan in 2024 [18][19]. Group 4: Technological Advancements - The company has developed a comprehensive product matrix, including the Journey series chips, which cover all levels of intelligent driving needs, with the latest Journey 6 series expected to achieve significant performance improvements [54][55]. - Horizon Robotics has a strong focus on R&D, with R&D expenditures projected to reach 3.16 billion yuan in 2024, and a high proportion of its workforce dedicated to R&D [30][32]. - The company has secured numerous patents, with a total of 673 patents, including 585 invention patents, establishing a strong competitive barrier [32].

Core Viewpoint - Daiwa Research expects Horizon Robotics (09660.HK) to deliver over 4 million Advanced Driver Assistance System (ADAS) chips this year, up from 2.9 million last year, indicating strong growth potential in the smart automotive sector [1] Group 1: Company Performance - Horizon Robotics is projected to ship approximately 1.9 million units of Horizon Mono, 1.9 million units of Horizon Pilot, and 40,000 units of Horizon SuperDrive [1] - The increase in shipments and pricing of Horizon Pilot is anticipated to be the main driver of revenue growth this year [1] Group 2: Financial Outlook - Daiwa has upgraded its target price for Horizon Robotics from HKD 6.5 to HKD 9.6, reflecting confidence in the company's growth trajectory [1] - The net profit forecast for 2026-27 has been revised down by 28% to 57%, due to an expected decrease in the revenue share from licensing and service businesses by 6-7 percentage points [1] Group 3: Industry Context - Despite a more cautious attitude towards ADAS in the domestic automotive industry following an incident involving Xiaomi's SU7, the trend towards smart vehicles is not expected to slow down [1]

核心观点 智能驾驶芯片行业：千亿市场空间大赛道，国产芯片厂商崭露头角 技术进步+成本下降+消费者接受度高，智能驾驶行业渗透率加速提升，在ADAS功能进一步普及的推动下， 全球 ADAS SoC市场预计从2023年的275亿元增至2028年的925亿元，CAGR为27.5%。自动驾驶SoC供应商方面， 中国的 主要自动驾驶SoC市场参与者包括地平线、黑芝麻智能等；其他国家的主要自动驾驶SoC市场参与者包括英伟达、 Mobileye、高通、Texas Instruments（TI）及瑞萨。目前英伟达、高通、地平线、华为、黑芝麻等均推出了适配L3级及 以上高阶智能驾驶的芯片方案。 地平线机器人-W：自主智能驾驶解决方案龙头 地平线产品包括汽车解决方案（2023年营收占比95%，下同）和非车解决方案（5%）两部分，2023年，公司收入15.52 亿元，同比增长71%，净利润为-67.4亿元。 1）产品端， 汽车解决方案方面，地平线作为国内头部智能驾驶SoC芯片 厂商，征程系列芯片布局包括征程2、征程3、征程5、征程6，已完全覆盖L1-L4智能驾驶。 2）客户端， 依托完整成 熟的软硬件产品矩阵与智驾全栈技术，从IP开 ...