On June 16th, the Sci-Tech Innovation Board Daily News (Reporter Chen Mei) reported that recently, Hezhima Intelligence has passed the HKEX hearing and is expected to become the 'first domestic self-driving calculation chip stock.' The behind-the-scenes of this first stock is the cooperation of two Tsinghua alumni. According to the prospectus, Hezhima Intelligent co-founders Dan Jizhang and Liu Weihong both came from the Tsinghua system. Among them, Dan Jizhang received a bachelor's and master's degree in electronic engineering from Tsinghua University, and Liu Weihong received a master's degree in chemical engineering from Tsinghua University.

In 2016, Dan Jizhang chose to quit his job and enter the entrepreneurship wave, and Liu Weihong did the same. The two of them focused their attention on the self-driving calculation chip field. As of IPO, the estimated value of Hezhima Intelligence co-founded by the two Tsinghua alumni has reached 2.23 billion U.S. dollars, becoming a unicorn in the field of 'self-driving calculation chips'.

Valuation has grown by 122% in 5 years, with Xiaomi and Nio Capital investing.

Dan Jizhang and Liu Weihong's entrepreneurship originated from a gathering of old friends. At a party, the two, who had rich experience in the chip and automotive industries, believed that artificial intelligence would profoundly affect the automotive industry when discussing the future development of the automotive industry. So, they hit it off and started their business, Hezhima Intelligence.

This is a self-driving calculation chip company. The company's co-founder, Dan Jizhang, has more than 20 years of experience in the semiconductor field. He previously worked for a well-known imaging semiconductor company, OmniVision Technologies Inc, and was the vice president of the software engineering department. Liu Weihong, on the other hand, has rich professional knowledge and understanding in the automotive field. He has worked for Bosch Automotive Components (Suzhou) and General Motors (China) Investment Company.

The entrepreneurship of the two 'old soldiers' has resulted in Hezhima Intelligence being favored by capital since its inception. According to the prospectus, Hezhima Intelligence has undergone 10 rounds of financing, and its valuation has grown from 18.1 million U.S. dollars when it was founded in 2016 to 2.23 billion U.S. dollars at the C+ round of financing in 2021, a 122% increase over 5 years.

According to the prospectus, Aurora Venture Capital is the company's A-round investor, with a total ownership of approximately 10.47%, with a cost per share as low as 0.1 U.S. dollars, corresponding to an equity value of 233 million U.S. dollars. Compared with the initial investment of 7.1 million U.S. dollars, this represents a 31-fold increase. Nio Capital also invested at A-1 and A-2 rounds of financing in 2017, with a low per-share price of 0.336 U.S. dollars. Lei Jun's investment fund, Xiaomi Changjiang Industrial Fund, invested in 2021, and the cost per share has risen to over 3 U.S. dollars.

Xiaomi Changjiang Industrial Fund's cost per share is 29 times that of Arctic Aurora Venture Capital's. Calculated by Shanghai Ziyue Enterprise Management Consulting's 3.69% stake before IPO, this equity corresponds to a value of 82.287 million U.S. dollars.

It is worth noting that Xiaomi has invested heavily in the field of intelligent driving. According to data from Venture Channel-Zhizhong, in addition to Hezhima Intelligence, Xiaomi has also invested in Zongmu Technology, Hesai Technology, Shenlan Technology, among others. Among them, Zongmu Technology is an advanced driver assistance system provider, Hesai Technology is a lidar research and manufacturing company, and Shenlan Technology was acquired by Xiaomi Group. The former is a stereoscopic ADAS equipment and visual crowdsourcing high-precision map company.

Returning to Hezhima Intelligence, the company also has a long list of investors, including Haisong Capital, Wuyuefeng Capital, Tencent, CITIC Investment, Geely Group, and SAIC, among others.

Loss in the past three years exceeds 1.5 billion, and commercialization is still in the early stages.

As a self-driving calculation chip company, although Hezhima Intelligence has technical expert Dan Jizhang, the company has still been losing money since its inception.

According to the prospectus, from 2021 to 2023, Hezhima Intelligence's revenue was 61 million yuan, 165 million yuan, and 312 million yuan, respectively, with corresponding net losses of 2.357 billion yuan, 2.754 billion yuan, and 4.855 billion yuan. The adjusted net losses were 614 million yuan, 700 million yuan, and 1.254 billion yuan, respectively.

The Sci-Tech Innovation Board Daily News noticed that the main reason for Hezhima's losses was the fair value adjustment of preferred shares and the growth of R&D investment.

In terms of fair value changes of preferred stocks, from 2021 to 2023, Nanfang Black Sesame Group's fair value changes of preferred stocks reached 1.631 billion yuan, 1.714 billion yuan, and 3.18 billion yuan respectively. An investor told a reporter from the STAR Market Daily, "The increase in company valuation increases the value of preferred stocks, which reflects as a loss in accounting. Therefore, the larger the loss in the 'Fair Value Changes of Convertible Redeemable Preferred Shares,' the higher the company valuation is proven to be."

In terms of R&D investment, from 2021 to 2023, Nanfang Black Sesame Group's R&D investment will be 595 million yuan, 764 million yuan, and 1362 million yuan respectively, which is 8.75 times, 3.63 times and 3.36 times the corresponding revenue. In response, Nanfang Black Sesame Group stated that commercialization is still in its early stages. "Especially in SoC design, it takes a long time for market promotion to achieve commercialization."

The aforementioned investor stated that in the field of SoC design and R&D for smart automobile computing, Nanfang Black Sesame Group has potential, but the market is still in its developmental stage. "The non-scale realization and application of commercialization has limited the company's revenue and profit capabilities. At the same time, Nanfang Black Sesame Group also relies on Taiwan Semiconductor to manufacture SoCs."

In the prospectus, Nanfang Black Sesame Group stated that due to the complex proprietary nature of SoCs, they are susceptible to the risk of Taiwan Semiconductor being unable to satisfy our SoC requirements or completely ceasing operations.

The wave of overseas listings in Hong Kong has arrived, with 33 overseas listings approved.

Nanfang Black Sesame Group, which may become the first domestic self-driving computing chip stock, is actually the second stock in the 18C sector.

Looking at the Hong Kong IPO, incomplete statistics show that more than 100 companies have gone to the Hong Kong Stock Exchange since this year, of which 33 have received approval for the China Securities Regulatory Commission's overseas listing record. Among them, biomedicine, big data, and artificial intelligence companies are the pioneers approved. The aforementioned investor told the STAR Market Daily, "The reasons why more than 100 companies have gone to Hong Kong for IPOs this year is mainly due to the relatively short listing process, which generally takes 6-12 months to complete. At the same time, the listing threshold is low, with a market cap of over 500 million yuan to be listed on the main board, while China's A-share growth enterprise board requires a market value of 2 billion yuan."

The aforementioned investor told the STAR Market Daily, "The reasons why more than 100 companies have gone to Hong Kong for IPOs this year is mainly due to the relatively short listing process, which generally takes 6-12 months to complete. At the same time, the listing threshold is low, with a market cap of over 500 million yuan to be listed on the main board, while China's A-share growth enterprise board requires a market value of 2 billion yuan."

This year, a wave of Hong Kong listings has erupted in the intelligent driving field, with Suteng Juchuang firing the first shot of the IPO on the Hong Kong Stock Exchange in January, with a market cap of 33.4 billion Hong Kong dollars after going public. Since then, Nanfang Black Sesame Group, Ruqi Rides, Horizon Robotics, and Zongmu Technology and other companies in the autonomous driving sector have either submitted or updated their IPO prospectus in March.

The investor interviewed by the STAR Market Daily stated that many self-driving related companies, including Nanfang Black Sesame Group, hope to actively raise funds through listings to promote commercialization processes, increase R&D efforts, and establish partnerships with automobile OEMs and Tier 1 suppliers to establish a moat and more favourable industry position in the commercialization wave of autonomous driving.

"At present, the cost, supply chain, and manufacturing process of mass-produced self-driving cars need to be solved by self-driving companies. And the reliability of autonomous driving technology in complex environments and extreme conditions is still a challenge. Although the acceptance of consumers is gradually increasing, the trust needs to be enhanced in terms of market education and practical experience. "

The aforementioned investor believes that under policy support and the growth of self-driving vehicle pilot cities, the trend towards the commercialization turning point in the industry is becoming apparent, and listing will undoubtedly support self-driving companies to go further.