Sinolink Securities issued a research report stating that Horizon Robotics (09660) officially listed on the Hong Kong Stock Exchange on October 24, 2024, with an IPO price of HK$3.99 per share, raising HK$5.407 billion.

The bank stated that the large-scale application of advanced intelligent driving relies on high processing power, high reliability, low latency, low power consumption, and cost-effective solutions. Therefore, advanced intelligent driving solutions require hardware and software co-design to achieve the necessary system-level performance and reliability. In terms of hardware, the company has mass-produced the Journey 2, Journey 3, Journey 5 chips, and is about to mass-produce the Journey 6 chip family, suitable for different applications. In terms of algorithms, the company provides a series of software and algorithm solutions from low-level to high-level intelligent driving, named Horizon Mono, Horizon Pilot, Horizon Super Drive. In terms of the ecosystem, the company has connected with more than 100 upstream and downstream industry partners including software and hardware Tier1, ODM, IDH, chips, graphics, sensors, etc. In terms of the business model, the company aims to create the most open business model in the industry, providing different levels of cooperation from BPU architecture, chips, operating systems to autonomous driving software algorithms and hardware. In terms of joint ventures and partnerships, in October 2022, Horizon reached a strategic cooperation with Volkswagen, and Volkswagen's subsidiary CARIAD will invest in Horizon and establish a joint venture with the company. In November 2023, the joint venture Kurevot officially established, with Volkswagen holding 60% of the shares. In the first half of 2024, the company generated revenue of 0.351 billion yuan from providing automotive solutions to Kurevot, accounting for 37.6% of the revenue.

The bank predicts that the company will achieve revenues of 2.867/5.105/8.629 billion yuan in 2024/2025/2026 respectively. Based on the closing price on October 25, 2024, the PS ratios are 16.6/9.3/5.5 times respectively. The company's business is similar to Nvidia, Mobileye, Nanfang Black Sesame Group and other companies, involving chip design or autonomous driving solutions, thus being set as comparable companies. A comparison shows that Horizon's PS ratios for 2024-2026 are slightly lower than the average of comparable companies. As a leading company in the industry, and with the rapid growth of the intelligent driving chip market and the clear trend of domestic substitution, a PS multiple of 11 times is given for 2025, with a target price of HK$4.7, initiating coverage with a "shareholding" rating.