A global leader in lidar and perception solutions

The scale effect was remarkable, and profit margin increased: in 2023, the company achieved revenue of 1.12 billion yuan, an increase of 111.2% year on year, and the overall gross margin changed to 8.4%, mainly benefiting from the increase in ADAS lidar sales. The sales volume of automotive lidar was about 243,000 units, an increase of 558.5% year on year; ADAS product revenue reached 777 million yuan, an increase of 384.6% year on year. The scale effect brought about by the improved supply and demand for semiconductor chips and the expansion of production will improve the company's gross profit.

The global autonomous driving penetration rate has increased, and the market prospects are good: with the maturity of lidar technology and falling costs, the price band for models equipped with lidar is gradually being lowered. At the same time, the global autonomous vehicle market is entering a stage of rapid growth. The penetration rate will increase dramatically from 42.7% in 2022 to 84.6% in 2030, and the company's products will also face a wider market.

It has received orders from many domestic and foreign OEMs, and its market share is stable: the company was recognized as the first company in the world to achieve mass production of automotive-grade solid-state lidars. From January to January 2024, the company's product market share ranked first, reaching 55.3%. Currently, the company has many partner car companies. Wanjie, Xiaomi, BYD, Extreme Krypton, etc. all use the company's products, and popular models will drive product sales.

Adhere to self-developed chips and strengthen the technology moat: The company has strong R&D capabilities. For example, the latest lidar MX uses self-developed SoCs with a higher degree of integration, drastically reducing optical devices, replacing FPGAs with self-developed SoCs, and optimizing product design to reduce costs and enhance competitiveness. Furthermore, the company will expand its main business to AI+ robots, lay out artificial intelligence sensing software to form solutions, and establish new competitive barriers.

We are optimistic about the company's future development. The target price is HK$51.40, which covers and gives a purchase rating for the first time: we used the PS valuation method to value the company and referred to the average value of listed companies in the lidar industry. Given that the company is still in a period of rapid growth, has a very stable market position and order brand cooperation, and also has a hardware and software solution business, we estimated the company's revenue of 4.8 times PS in 2025, with a corresponding target price of HK$51.40, an increase of 33.49% over the previous closing price. For the first time, we covered and gave a purchase rating.

Risk factors: Overall sales in the NEV market fall short of expectations, lidar loading rates fall short of expectations, capacity expansion falls short of expectations, and raw material and chip costs are likely to rise.