Sagiteng Juchuang (02498), a global leader in lidar and sensing solutions, has become one of the hottest investment targets in the Hong Kong stock market today.

On May 17, Hang Seng Index Company announced the latest quarterly inspection results. Among them, Suteng Juchuang was included in the Hang Seng Composite Index. The changes will take effect on June 11. Being selected as a constituent stock of the Hang Seng Composite Index indicates that Sagiteng Juchuang has met the eligibility requirements for inclusion in the Hong Kong Stock Connect. It is expected that the future will have a positive impact on the company's stock liquidity and attract more capital inflows.

Following this, Sagiteng Juchuang's stock price rose in volume on May 20. At one point, it reached HK$79 in the intraday period, with a maximum increase of 89.7%. On May 21, the company's stock price opened high, with an intraday increase of more than 20%. The Zhitong Finance App noticed that investors who bought Suteng Juchuang shares on the 21st were not only to chase “liquidity,” but also to confirm the company's long-term development prospects. Because, on the evening of May 20, Beijing time, Sutengjuchuang handed over a high-profile Q1 financial report for 2024.

Revenue doubled, ADAS lidar exploded

Financial reports show that in the first quarter of 2024, Sagiteng Juchuang achieved total revenue of about 360 million yuan (RMB, same below), up 149.1% year on year, of which ADAS product revenue was about 310 million yuan, up 327% year on year; total sales volume of lidar products was about 120,000 units, of which ADAS lidar products sold about 116,000 units, an increase of 542% year on year.

As the scale effect of lidar products became apparent, in the first quarter of 2024, Sagiteng Juchuang's overall gross margin reached 12.3%. Among them, the gross margin of products used in ADAS increased significantly to 10.6%, an increase of 69.1 percentage points over the previous year, driving the adjusted net loss to narrow 11.5% year-on-year to 84.1 million yuan.

According to the Zhitong Finance App, sales volume of Suteng Juchuang's core products has exploded, and profitability has improved markedly. The external reason for this is that the lidar market sentiment has improved markedly. According to Chedi's data, in April 2024, the lidar penetration rate for new energy passenger vehicles reached 8.87%, an increase of 7.3 percentage points over the previous year, and the lidar penetration rate among new power brands reached 37.93%.

This “warm air” in the lidar market is being transmitted in the supply chain. HSAI (HSAI), which released its 2024 quarterly report on the same day as Suteng Juchuang, sold 591,000 lidar units in the first quarter, up 69.7% year on year, and sales volume of ADAS lidar products reached 52,500 units, up 86.1% year on year.

It should be noted that in this round of lidar “racing”, the growth rate of first-tier team members varied. In the first quarter, Suteng Juchuang's revenue reached 361 million yuan at a year-on-year growth rate of 149.1%, an obvious advantage. In terms of profitability, Hesai obtained a gross profit margin of 38.77% with the RoboTaxi business, while Sagiteng Juchuang's gross margin continued to increase with ADAS expansion. The company's overall gross margin improved from negative 7.4% in 2022 to positive 8.4% in 2023, and further increased to 12.3% in the first quarter of 2024, achieving a “triple jump”.

At the same time, Suteng Juchuang's shipments in the ADAS lidar market are more explosive, thanks to the company's stronger ability to acquire customers based on results.

At this stage, Suteng Juchuang announced that it has reached a strategic cooperation with Zhiji Auto and has successively obtained new models from Zhiji Auto and Xiaopeng Motor. As of May 17, 2024, Saguteng Juchuang has successfully obtained mass production orders for 71 Tier 1 models from 22 automakers and an increase of 9 models compared to the 62 fixed-point models up to the end of December 2023. By the end of the first quarter, it had helped 12 customers achieve large-scale mass production and delivery of 25 models.

In terms of ADAS installed capacity, Sagitengjuchuang is exerting a strong “Matthew effect”. According to the intelligent driving configuration database of the Gaiser Automobile Research Institute, from January to March 2024, the lidar market grew strongly. Among them, Sagiteng Juchuang occupied 51.6% of the market share with an installed capacity of 116,000 units, and Hesai ranked third with an installed capacity of 34,300 units, with a market share of 15.2%. According to Pacific Auto Statistics, the number of cars equipped with lidar on display at the 2024 Beijing International Auto Show reached 72. Among them, Suteng Juchuang ranked first with 37 models carrying capacity, accounting for more than 51%.

The reason why a large number of models “want to be equipped” with Sagiteng Juchuang lidar products stems from the company's focus on lidar patents, algorithms, and chip technology, and has accumulated extensive R&D and technical experience. Unlike most pure lidar hardware vendors on the market, Suteng Juchuang insists on the simultaneous promotion of software and hardware. Currently, the company's products cover lidar hardware, Hyper Vision integrated sensing software and integrated solutions.

Suteng Juchuang insists on customer needs as the core, deep research and innovation around lidar hardware and chip lidar technology, and continuously launches products with powerful performance and leading technology to promote the “technological improvement” development of the industry. In January 2024, the Group officially released the first ultra-long-range lidar M3 based on the 940nm laser launch scheme. It has 300m @10% distance measurement capability, 0.05°×0.05° optimal angular resolution, and performance equivalent to 500 lines. Combined with leading solution maturity, it will provide a solid guarantee for customers to land L3 to L4 high-end intelligent driving assistance vehicle pre-installed mass production applications.

The “Thousand Yuan Machine” came out of nowhere, and the next flashpoint is within easy reach

Looking forward to the future, Sagiteng Juchuang will continue to use lidar as a foundation to deeply enrich its business footprint and open up more room for growth.

According to the Zhitong Finance App, in the passenger car sector, lidar is currently mainly installed in high-end models worth 200,000 yuan or more. However, models in the 150,000-200,000 yuan range are still mainstream in the passenger car market. Taking new energy vehicles as an example, China Automobile Association data shows that in January-April of this year, sales of new energy passenger vehicles were still mainly concentrated in the price range of 150,000 to 200,000, with cumulative sales volume of 762,000 units, an increase of 18.6% over the previous year. In the same period, domestic sales of new energy vehicles were 2.52 million units.

This means that if lidar can break through the price barrier and use more models below 200,000 yuan, its penetration rate is expected to increase exponentially. With customer needs as the core, Sagiteng Juchuang is taking action.

Qiu Chunchao, CEO of Suteng Juchuang, explained that Suteng Juchuang's goal is for 150,000 yuan cars to be equipped with lidar, so that more consumers can enjoy the safer and more convenient intelligent travel experience brought by advanced smart driving.

Suteng Juchuang is committed to promoting “technological equality” of automotive-grade lidar in the field of smart cars and driving safe and smart driving through technological innovation. In April 2024, Suteng Juchuang released a new generation of automotive-grade medium- and long-range lidar MX, which combines excellent cost performance, leading performance and compactness, and realized the chip-based restructuring of the full-stack scanning, processing, and transceiver modules, leading the industry into the “1000 yuan machine” era.

Supported by innovative technology, MX is unusually affordable. According to reports, the MX is not only equipped with the M-Core SoC chip developed by Sagiteng Juchuang, but also uses a proprietary 2D MEMS scanning chip. At the same time, its transceiver system enables iterative chip upgrades, which is the culmination of lidar chipization. The landmark technical architecture enables the MX to achieve a lightweight profile of 25mm, ultra-quiet operation sound, and ultra-low power consumption performance of less than 10W. It also has powerful performance such as a maximum distance of 200 meters, a 120° x 25º field of view, 126 lines (251 line equivalent in the ROI area), and global ROI adjustment. With leading product advantages, MX has now been targeted for three new mass production projects, the first of which is expected to achieve large-scale mass production in the first half of 2025.

The rise of MX not only made car companies “want to install” lidar products, but also “be able to afford” them. The significance and value of its existence is self-evident. MX is expected to become a new “detonator” for Sagiteng Juchuang's lidar business, transforming it into impressive sales growth data in the company's future financial reports.

As the so-called “numbers are the best litmus test,” Sagiteng Juchuang is a leading company in the lidar market, and the continuous growth of core financial indicators clearly shows the undertone of both stability and growth to the outside world. From the company's clear and effective strategic layout, it can also be seen that Sagiteng Juchuang will be more and more certain to maintain business growth in the future, which is worthy of investors' long-term attention.