Jinwu Financial News | Guosheng Securities pointed out that Horizon Robotics (09660) had a company revenue of 1.55 billion in 2023, with automotive product solutions, automotive licensing and services, and non-automotive solutions accounting for 33%/62%/5% respectively. According to Zhi Shi Consulting, based on the 2023 China market's ADAS (Advanced Driving Assistance Systems) and AD (Advanced Autonomous Driving) solution installation volume, Horizon ranked fourth and is the only Chinese company to enter the top five. Excluding assisted driving, in the market for NOA high-level intelligent driving computing solutions for passenger vehicles in China in 2023, Horizon holds a 35% market share, second only to NVIDIA's 49%.

The firm believes that there is vast market potential in the future, driven by several factors: 1) From the quantitative perspective, rapid technological iterations pull the penetration of intelligent driving up and increase installation volumes; 2) From the quantitative viewpoint, advanced autonomous driving is gradually advancing, and the chip solutions for different levels of automation vary widely (for example, NVIDIA's intelligent driving chips range from $100 to $2000), suggesting that the overall ASP of intelligent driving chips is expected to rise; 3) The encouragement policies from various countries lay the foundation. According to Zhi Shi Consulting, in 2023, the global market size for advanced driving assistance and advanced autonomous driving solutions is approximately 61.9 billion yuan, and by 2030, the intelligent driving solutions market is expected to reach one trillion, with the majority composed of advanced autonomous driving solutions. The firm also believes that domestic substitutes are becoming a trend, and the segmented market for domestic chips where Horizon operates shows even better growth potential.

The firm states that it predicts the company's revenues for 2024-2026 to be 2.2/3.3/5 billion, with year-on-year growth rates of 44%/45%/53%; the attributable net income is forecasted at -5.3/-1.5/-0.2 billion yuan; non-GAAP attributable net income is projected as -1.7/-1/-0.3 billion yuan. Since the company is not yet profitable, the firm adopts a PS valuation. Considering the company’s industry-leading position and future growth potential, the firm believes the reasonable market cap for the company in 2025 is 50.4 billion HKD (3.82 HKD/share, using an exchange rate of 0.9378 yuan on December 17), corresponding to a 9.5 times 2026 P/S. If the company achieves stable future revenues of 7 billion and a stable net profit margin of 25%, then the target market cap corresponds to a future PE of less than 30 times. The initial coverage gives a shareholding rating.