Zhixing Auto Technology (hereinafter referred to as “Zhixing Auto”), which landed on the Hong Kong Stock Exchange at the end of last year, recently handed over its first annual report card since its listing.

Judging from the performance, the company's overall operation is steady and steady, and profit potential is constantly being unleashed.

Currently, the autonomous driving circuit continues to be popular. Zhixing Auto continues to consolidate its core advantages and continue to realize its potential for growth, and the room for imagination in the future is constantly being opened up.

1. The business progresses steadily and opens overseas layout

Focusing on the company's revenue side, its core revenue sources come from the three major business segments of Zhixing Auto, namely,It provides autonomous driving solutions and products, provides R&D services related to autonomous driving, and sells assembled printed circuit board (PCBA) products.

Over the past year,The revenue from Zhixing Auto's autonomous driving solutions and products was approximately RMB 1,130 million, accounting for about 92.94% of total revenueAmong them, revenue from the sale of autonomous driving domain controllers is about 1,115 billion yuan, which is the company's largest source of revenue.

This year, the company actively responded to market competition. Although the revenue of the business segment declined due to product price adjustments, sales increased dramatically. In 2023, the company's sales volume of autonomous driving domain controllers increased from about 80,000 units in 2022 to 100,000 units in 2023.

In addition, the company's full-stack self-developed autonomous driving domain controller product iDC Mid had strong revenue growth with the purchase of the Chery Starway series, reaching 13.955 million yuan, an increase of more than 30 times over the previous year. In the future, with the gradual mass production of iDC Mid's targeted projects, the revenue from this business is expected to increase further. The company's self-developed smart front-view camera product iFC revenue also increased significantly, reaching 15.396 million yuan, an increase of nearly 4 times over the previous year.

inIn terms of R&D services related to autonomous driving, the sector recorded revenue of about 63.112 million yuan in the past year, an increase of 66.28% over the previous year.This business segment further increased its share of total revenue, accounting for approximately 5.19% of the company's total revenue recorded in 2023.

inIn terms of selling PCBA products, the business segment recorded revenue of 22.735 million yuan in the past year, accounting for 1.87% of the company's total revenue.

(Source: Company Financial Report)

In addition to steady performance at the revenue level, the company has also continued to make breakthroughs in project acquisition. In the past year, Zhixing Auto received 16 fixed-point letters from well-known OEM customers including Geely, Great Wall, Chery and Dongfeng Motor.

Furthermore, the company actively promoted overseas layout and achieved milestones.

On the one hand, a subsidiary was set up in Germany in October 2023, which is dedicated to the development of European business. By setting up an entity in Europe, the company can better understand local market needs, provide solutions closer to customer needs, and strengthen partnerships with domestic car companies' customers. This move is expected to push the company to further explore the European market, expand its business scope, and achieve global development.

On the other hand, in February 2024, the company helped a leading Chinese car company equipped with its autonomous driving products successfully obtain EU GSR certification for the first time, which indicates that the company's products fully meet the requirements for export to the EU. Obtaining this certification not only proves the excellent technical and quality performance of the company's products, but also lays a solid foundation for its further development in the European market. At the same time, it also provides more opportunities and possibilities for the company to expand its business in the European market in the future.

2. Optimistic about the three core logics of Zhixing Auto's development

When evaluating the future development prospects of Zhixing Auto, I think we can start from the following three core logics:

First, leading edge and scale effect.

Zhixing Auto has a clear leading edge in the field of autonomous driving. The company was the first to enter the market and is one of the few companies in the industry to commercialize autonomous driving solutions on a large scale.

Through an already successful business model and continuous cumulative scale growth, the company has the ambition to continue to expand the market and invest in R&D. At the same time, it will continue to reap the dividends of the autonomous driving market explosion with the core competitiveness built over a long period of time during the rapid development of the industry.

Currently, Zhixing Auto is also continuously expanding its business scale, achieving scale effects, reducing costs, and improving competitiveness by expanding production capacity and expanding sales networks. In the field of autonomous driving, where technology is the core competitive advantage, the future “Matthew effect” will continue to show. In other words, the leading edge of Zhixing Auto is likely to be difficult for latecomers to surpass.

Second, brand accumulation and deep technical cultivation.

With a long period of immersion in the industry, Zhixing Auto has accumulated strong brand influence in the field of autonomous driving, and its products and solutions have been widely recognized and trusted, and has become one of the leading brands in the industry.

In addition to this, Zhixing Auto has always been committed to deepening the cultivation of technology and continuously expanding the boundaries of autonomous driving technology. The company has independently developed core algorithms, software middleware and cloud platforms. In the future, it will continue to optimize software, improve technical barriers and cost performance of solutions, and continuously enhance the core competitiveness of the company's products.

Judging from R&D investment, in the past year,Zhixing Automobile's R&D expenditure reached 217 million yuan, an increase of 108.20% over the previous year. R&D expenditure as a percentage of revenue increased 9.96 percentage points over the same period last year to 17.81%.From this series of data, it is enough to see the determination and investment of Zhixing Automobile in technological innovation and product development. Based on this, it will also provide a continuous impetus and competitive advantage for its future development.

Third, overseas expansion and diversified business opportunity exploration.

Zhixing Auto responds positively to market changes and explores more opportunities in the market through overseas expansion and exploration of diverse business models.

The company is committed to building an international brand with global influence and continuing to promote overseas expansion strategies. On the one hand, it serves the overseas business of Chinese OEMs, and on the other hand, actively develops international customers.

According to the company's plan, this year, Zhixing Auto's products and solutions will follow its customers and expand to North America, South Korea, Japan and other countries. Currently, the company is also actively planning a global sales and service network. At the same time, with the accumulation of strong resources, the company is fully motivated to expand in overseas markets. The company also stated that it will use resources provided by strategic overseas shareholders such as HL Klemove to explore new overseas business opportunities and establish more international strategic alliances.

In addition to this, the company's current solutions mainly focus on autonomous driving for passenger cars. The company is also fully aware that autonomous driving technology has broad application prospects in special scenarios such as public transportation, freight logistics, agricultural machinery, industry and warehousing, mining areas and ports, and is actively exploring it. Based on this, the company is expected to further expand its business scope and achieve diversified development. This will not only help the company reduce market risk and improve the stability of revenue streams, but will also help the company continue to maintain its leading position in autonomous driving technology.

3. Conclusion

It is undeniable that autonomous driving is undoubtedly a hot topic in the capital market today, and Zhixing Auto has huge growth prospects. The 2024 BEV+ Transformer has become the hottest topic of autonomous driving today, and according to data, Zhixing Auto's IDC High will be mass-produced in 2024. More advanced BEV Transformer algorithms are being deployed on this platform, which will greatly improve performance and support more autonomous driving scenarios. Currently, iDC High has been selected by two car companies, including leading domestic car companies. In the future, with the extension of the product line, Zhixing Auto is expected to further unleash its potential.