Key points of investment

The development of smart driving is driving the increase in vehicle usage, and it is a key component of advanced domestic smart driving solutions. With the development of electrification, intelligence, and connectivity of automobiles, the global automotive lidar market is expected to exceed 3.6 billion US dollars in 2029, with a CAGR of 38% in 2023-2029. According to Yole data, the average price of lidar sales in China in 2023 is about 450-500 US dollars, which is a sharp drop from 2022. Once the pace of mass production of lidars begins, the cost will be reduced and lidar penetration will be promoted, forming a virtuous cycle. FSD's entry into China is forcing domestic car companies to speed up the smart driving layout, but we think domestic car companies will choose a multi-sensor fusion solution: 1) At this time, domestic manufacturers are deploying pure visual solutions, making it difficult to obtain sufficient driving data, and it will take at least 3 years to improve accuracy. 2) Compared with pure vision solutions, lidar safety and reliability are higher and algorithm requirements are lower. Along with the rapid decline in lidar prices, multi-sensor fusion solutions have outstanding cost performance advantages.

Driven by the demand for robotics+vehicle-road collaboration, it is expected to usher in a trillion dollar market. Due to the intelligent development of robots, the promotion of lidar miniaturization and cost performance advantages, and national strategic support, demand in the robotics field is expected to grow rapidly. According to insight consulting data, the robotic lidar market size will grow from 8.2 billion yuan to 216.2 billion yuan in 2022 to 2030, and the CAGR will reach 50.5%. Since 2024, favorable policies for vehicle-road collaboration have been introduced frequently, and vehicle-road collaboration projects have been launched one after another. According to 100 million European think tank data, the domestic vehicle-road collaboration market size will increase from 59.2 billion yuan to 496 billion yuan in 2021-2030, with a CAGR of 26.6%. Lidar is a key sensing device for vehicle side and road side, and the scale is expected to increase as demand for vehicle-road collaborative construction increases.

Software and hardware collaboration highlights product competitiveness, and mass production capacity guarantees profit levels. The company is the world's leading supplier of lidar. As of June 30, 2024, the company has obtained targeted mass-production orders for 80 models from 22 automakers and tier-1 suppliers, helping 29 models achieve SOP. According to Gaiser Auto data, 24H1's domestic automotive lidar market share is as high as 40%.

The new MX product aims to sink lidar to models below 0.2 million yuan, and lead lidar prices into the 1,000 yuan era. In the future, as the cost performance ratio of the company's products continues to improve, and the penetration rate of superimposed in-vehicle lidars continues to rise, the company's shipments are expected to maintain a high increase, scale effects will gradually become apparent, and profitability is expected to increase rapidly.

Profit forecast and investment rating: We expect the company's 2024-2026 revenue to be 2.22/3.56/5.1 billion yuan, and 2024-2026 net profit to mother of -0.53/-0.19/0.13 billion. The P/S valuation method was selected for valuation. The closing price on September 5, 2024 corresponds to P/S of 2.0/1.3/0.9, and the average P/S corresponding to comparable companies is 1.2/0.9/0.7. Considering that compared with comparable companies or their industry segments, the penetration rate of automotive and robotic lidars is still low, 2) the company currently has the highest market share of automotive lidars in China, and 3) robots still have a large potential volume of space, and the first coverage gave a “buy” rating.

Risk warning: Demand for new energy vehicles falls short of expectations, competition in the NEV market intensifies, lidar penetration rate falls short of expectations, and industry competition intensifies.