Demand for electric vehicles (including autonomous vehicles) is driving the growth of related technologies; Insight Consulting expects the global market for lidar autonomous driving solutions to grow from RMB 3.4 billion in 2022 to RMB 1 trillion by 2030.

Suteng Juchuang has an advantage and is the world's leading lidar company. It has long been committed to R&D, manufacturing and global sales, and will benefit from the expansion of the lidar market.

First coverage, with a “buy” rating, with a target price of HK$48.26.

Under the trend of autonomous driving, the market prospects are impressive; global lidar sales are expected to reach 1.3 trillion yuan by 2030. With the global focus on electric vehicles and autonomous driving, demand for ADAS and related technologies is growing rapidly. Technological advancements and trends in this field are driving the recent strong demand for lidar—a solution for precise positioning and speed parameters for advanced industrial products such as automobiles and robots. We believe this momentum will continue to advance in the next few years: Insight Consulting said in an autonomous driving report in 2023 that autonomous vehicles will reach 74 million in 2030, and the market size of lidar solutions in the autonomous driving market is expected to reach 1.3 trillion yuan by then. The report further predicts that the global market size of lidar solutions (in terms of total sales volume) will reach about 1.3 trillion yuan in 2030, with an average growth rate of 78.8% from 2022 to 2030, including automotive and non-automotive use cases.

Sagiteng Juchuang has an advantageous position and is a leader in the global lidar and sensing solutions market. We believe that judging from the growth prospects of lidar demand, Sagiteng Juchuang will benefit in many ways. The company sells its products and solutions to automakers and tier-1 suppliers in domestic and foreign markets. The company's customer-centered technology and products have become a major advantage. The typical approach is to integrate self-developed software and hardware into lidar systems. Its mass production capacity (including product verification, design, and manufacturing) supports the company's large-scale growth in production, capacity utilization, and logistics. We believe that the company's dedicated R&D and manufacturing capabilities help obtain industry-leading fixed-point orders and customer stickiness, and attract new customers. The management and R&D team are experienced, further enhancing the competitiveness of Suteng Juchuang in the industry.

First coverage, with a “buy” rating, with a target price of HK$48.26. We expect Sagiteng Juchuang's lidar shipments in 2024/25/26 to be 950,790/1,431,663/2,027,610 sets, respectively, up 266.3%/50.6%/41.6% year-on-year. At the revenue level, we expect the company to use its own technology, fixed-point orders, and leading customer base to maintain its current leadership position. We expect to achieve 2024/25/26 revenue of 29.05/45.14/74.70 billion yuan, respectively, an increase of 159.4%/55.4%/65.4% year on year; NON-GAAP net profit for 2024/25/26 is expected to be -2.9/-0.29/41 billion yuan, up 92.6%/72.0%/493.2% year on year.

In terms of valuation, we used P/S to value Sagiteng Juchuang, which is slightly lower than the average value of 8.4 times the 2024 P/S of comparable companies. We gave the company 7 times P/S in 2024, and obtained a target price of HK$48.26.

Risk warning: demand for new energy vehicles falls short of expectations; reduction in the number of lidars used in ADAS and other products; increased competition; failure to improve overseas market position.