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The issue price was HK$28 and the opening price was HK$18.8.Black sesame smartIt was listed on the Hong Kong Stock Exchange on August 8. This automotive-grade computing SoC (system-on-chip) and SoC-based smart car solution supplier was founded in 2016 and has launched two series of automotive-grade SoCs, Huashan and Wudang.

From 2021 to 2023, Black Sesame Smart's revenue increased from 60.504 million yuan to 312 million yuan, and its adjusted net loss expanded from 614 million yuan to 1.254 billion yuan. In the first quarter of 2024, its revenue decreased by 6% year-on-year, and its adjusted net loss expanded by 30%.

Compared with Horizon Robotics, a domestic company in the same field, Black Sesame Intelligence was founded a year later and ranked lower than Horizon Robotics in terms of shipment volume of high-computing autonomous driving SoCs in China, but Black Sesame Intelligence won the first intelligent driving chip stock before Horizon Robotics. From another perspective, continued losses and fierce competition are still challenges facing the industry.

Be the first to market

"Black Sesame Smart successfully listed on the main board of the Hong Kong Stock Exchange," Black Sesame Smart announced through its official WeChat account on August 8. On that day, Black Sesame Smart opened at HK$18.8 on the Hong Kong Stock Exchange, down 32.9% from the issue price of HK$28. Based on the closing share price of HK$20.45, Black Sesame Smart's total market value was HK$11.64 billion.

At the listing ceremony, Black Sesame Smart’s founder and CEO Shan Jizhang and co-founder and president Liu Weihong rang the opening gong, saying, “The successful listing marks a new beginning. Standing at a new starting point, Black Sesame Smart will actively embrace the broad market opportunities brought about by the rapid development of the global autonomous driving industry.” Shan Jizhang did not mention the stock price performance during his speech.

In July 2016, Heizhima Intelligence was established and operates in the midstream of the autonomous driving value chain as a Tier 2 SoC supplier, providing autonomous driving products and solutions in the form of SoC-based bundled solutions and algorithm-based solutions.

According to Frost & Sullivan, the scale of China's automotive-grade SoC market will grow from 26.7 billion yuan in 2023 to 38.1 billion yuan in 2024, and is expected to increase to 102 billion yuan in 2028, with a global market scale of 205.3 billion yuan. In terms of revenue of autonomous driving chip and solution suppliers in the Chinese market in 2023, Black Sesame Intelligence ranked fifth with a market share of 2.2%, while the first place had a market share of 27.5%; in terms of shipments of high-computing autonomous driving SoCs in China in the same year, Black Sesame Intelligence ranked third with a market share of 7.2%, while the first place had a market share of 72.5%.

"China's major autonomous driving SoC market participants include Horizon Robotics, HiSilicon and Black Sesame Intelligence. Major autonomous driving SoC market participants in other countries include NVIDIA, Mobileye, Qualcomm, Texas Instruments and Renesas." Black Sesame Intelligence listed its peers, and industry insiders often compare Black Sesame Intelligence with Horizon Robotics, which was founded at the same time, has a larger scale and is also targeting the Hong Kong Stock Exchange.

"In the short term, Black Sesame Intelligence is listed first and can invest in research and development and marketing earlier, which is a good thing. In the long term, the development of Black Sesame Intelligence still depends on performance support." Zhang Xiang, secretary-general of the International Association for Intelligent Transportation Technology, told Beijing Business Daily.

L2 to L3 products are preferred

"Automotive-grade chips are a hot track recently. Horizon Robotics has been preparing for listing for some time. Although Black Sesame Intelligence has taken the lead, it will not have a direct impact on Horizon Robotics' listing. However, onceBlack sesameThe poor performance of the IPO may affect the confidence of capital in Horizon Robotics and other automotive-grade chip companies. "Wang Qinglin, manager of Ruidaheng Research Institute, shared another point of view with the Beijing Business Daily reporter.

According to the prospectus, Heizhima Intelligence has designed two series of automotive-grade SoCs, the Huashan series of high-computing power SoCs and the Wudang series of cross-domain SoCs. The Huashan series focuses on autonomous driving, and the A1000 series SoCs support BEV (battery electric vehicles) for L3 and above application scenarios. The Wudang series focuses on cross-domain computing. This series of SoCs combines autonomous driving, smart cockpit, body control and its computing functions into one SoC.

"We started with the Huashan series of high-computing power SoCs and commercialized them, and recently launched the Wudang series of cross-domain SoCs to expand from core autonomous driving functions to cover more diverse and complex requirements for advanced functions such as smart cars, such as smart cockpits and car gateways, all on a single SoC." said Heizhima Intelligence.

According to the prospectus, Heizhima Intelligent will start mass production of Huashan A1000/A1000L SoCs in 2022 and deliver more than 25,000 pieces. As of December 31, 2023, the total shipments of the flagship A1000 series SoC will exceed 152,000 pieces. At present, the automation level of most passenger cars in China and around the world is no higher than L2+, and it is expected to remain so in the next few years. Heizhima Intelligent currently strategically prioritizes the development and commercialization of L2 to L3 products.

According to the plan, Black Sesame Smart's next-generation SoC Huashan A2000 will be launched in 2024. The A2000 series SoC uses 7nm FFC automotive process. Wudang C1200 is expected to get intention orders in 2024. Regarding the research and development and commercialization progress of the above-mentioned chips, a Beijing Business Daily reporter interviewed Black Sesame Smart via email, but the relevant person did not respond as of press time.

Revenue declines, net loss widens

According to the prospectus, Heizhima Intelligent's revenue comes from two parts: autonomous driving products and solutions, and intelligent imaging solutions. The autonomous driving products and solutions business consists of SoC-based solutions and algorithm-based solutions.

From 2021 to 2023, Heizhima Intelligent's revenue continued to grow, reaching 60.504 million yuan, 165 million yuan, and 312 million yuan, respectively. The bulk of the revenue has always been from autonomous driving products and solutions, accounting for 56.6%, 86%, and 88.5% of the revenue, respectively.

By the first quarter of 2024, Heizhima Intelligent's revenue was 27.473 million yuan, a year-on-year decrease of 6%. Specifically, the revenue from SoC-based solutions continued to grow, accounting for 59.1% of total revenue, but the revenue from algorithm-based solutions and intelligent imaging solutions decreased by 39.4% and 40.9% year-on-year respectively.

In the first quarter of 2024, Heizhima Smart's gross profit margin increased from 18.7% to 60.9%, but it has not yet achieved profitability, and its adjusted net loss has expanded from 246 million yuan in the same period last year to 320 million yuan. The adjusted net losses in 2021-2023 are 614 million yuan, 700 million yuan, and 1.254 billion yuan, respectively, and the corresponding gross profit margins are 36.1%, 29.4%, and 24.7%, respectively.

Among many operating data, Zhang Xiang believes that revenue performance is more important, while Wang Qinglin pays more attention to operating data. "The SoC business is in a vigorous development stage, the business moat is still unclear, and customer retention is still in a period of fluctuation and rapid running-in. The profit margin has a certain room for growth, which is a relatively favorable signal for such projects."

Black Sesame Intelligence emphasized new products and solutions, R&D investment, etc. in the risk factor section. "We expect to continue to incur adjusted net losses and operating losses by the end of 2024, mainly due to the expected large amount of R&D expenses. In the future, we are committed to maintaining sustainable development and achieving profitability by enriching and expanding our products and solutions, expanding our customer base, and improving operational efficiency and economies of scale."

Beijing Business Daily reporter Wei Wei