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Recently, the China Securities Regulatory Commission announced the registration notice for overseas issuance and listing of Horizon Robotics, which also means that the intelligent driving supplier Horizon's IPO in Hong Kong has taken another step forward.

As early as March 26 this year, Horizon Robotics submitted an application for an IPO on the Hong Kong stock market, with Goldman Sachs, Morgan Stanley and CICC International serving as joint sponsors.

It is worth noting that Horizon Robotics’ last round of financing before submitting its prospectus was disclosed in September 2022.Chery AutomobileThe post-investment valuation is approximately US$8.71 billion (approximately RMB 62.4 billion at the current exchange rate).

Ten years of hard work has created the first intelligent driving computing solution in China

Founded in 2015, Horizon Robotics is a market-leading supplier of advanced driver assistance systems (ADAS) and advanced autonomous driving (AD) solutions for passenger vehicles equipped with proprietary software and hardware technologies. Relying on its large-scale pre-installed mass production solutions, Horizon Robotics has become a key driver of the transformation and commercialization of smart cars. Horizon Robotics' solutions integrate leading algorithms, dedicated software and advanced processing hardware to provide core technologies for advanced driver assistance and advanced autonomous driving, thereby improving the safety and experience of drivers and passengers.

Horizon can provide a comprehensive portfolio of advanced driver assistance and high-level autonomous driving solutions, namely Horizon Matrix Mono, Horizon Matrix Pilot and Horizon Matrix SuperDrive, to meet customers' different needs from mainstream advanced driver assistance to high-level autonomous driving.

Horizon's advanced driver assistance and advanced autonomous driving solutions are built on a comprehensive technology stack, including algorithms for driving functions, underlying processing hardware, and various tools to facilitate software development and customization. Horizon's basic core key technologies, namely algorithms, BPU, Horizon Tiangong Kaiwu, Horizon Tage and Horizon Eddie, also have the potential for independent commercialization.

With its full-stack technical strength combining software and hardware and deep application accumulation, Horizon's Journey® family for intelligent driving has achieved mass production and application of three generations of products, and can provide high-performance computing solutions for all low-, medium- and high-level intelligent driving market segments. The market share of intelligent driving computing has increased year by year since mass production began in 2021.

In the front-view integrated camera market, Horizon Robotics has jumped to the first place, thanks to its success in BYD, Chery,auspiciousCurrently, the front-view integrated machine solution based on Journey 2 and Journey 3 has been applied to many mainstream models in the industry, including Lynk & Co 07 EM-P, the new generationJETOUR X70 PLUS,auspiciousGalaxy E5、Nezha S、Star Era ES、Venucia VX6 Etc., to realize the cross-level assisted driving function.

In the more advanced NOA track, Horizon Robotics also ranks first in the market with the mass production and application of Journey 3 and Journey 5. Among them, Journey 5 is the first 100 TOPS-ClassThe car-grade intelligent computing solution has been installed in Ideal L6 Pro, Ideal L7 Pro,Ideal L8 Pro、Ideal L9 Pro and BYD Han EV Honor Edition and other hot-selling models, covering the mid-to-high-end car market with a price range of 200,000 to 400,000 yuan.

In 2024, with the continuous maturity and popularization of intelligent driving technology, the penetration rate of intelligent driving continues to rise. According to Gaogong Intelligent Automobile data, from January to June 2024, the Chinese market (excluding imports and exports) delivered 6.1385 million passenger cars equipped with standard ADAS (including L0 warning and active safety functions), a year-on-year increase of 15.51%, and the pre-installation rate rose to 63.42%; among them, the delivery volume of L2/L2+ and L2++ markets both achieved significant year-on-year growth and are in an upgrade cycle.

In response to the continuous upgrading of market demand, Horizon Robotics launched the new generation of the Journey 6 series in April this year, based on the Journey 2, Journey 3 and Journey 5. From all-in-one machine to domain control, from active safety to full-scenario intelligent driving, the Journey 6 series has achieved all-round coverage and comprehensive upgrades, launching six versions: Journey 6B, Journey 6L, Journey 6E, Journey 6M, Journey 6H and Journey 6P, which can provide the optimal solution that takes into account performance and cost for different intelligent driving scenarios.

As of the time of filing the prospectus, Horizon's hardware and software integrated solutions have been adopted by 24 OEMs (31 OEM brands) and equipped in more than 230 models. All ten major Chinese OEMs have selected our solutions for mass production of their passenger car models. In 2023 alone, Horizon has obtained orders for more than 100 new models.

The latest public data shows that Horizon Robotics has launched more than 110 mass-produced models in cooperation with more than 30 car companies, thanks to the cumulative shipments of more than 6 million units of the Journey family.

In terms of market position, according to data from CIC, Horizon is the only Chinese company among the top five advanced driver assistance and high-level autonomous driving solution providers in China. According to CIC, based on the installed capacity of solutions in 2023, Horizon is the second largest advanced driver assistance solution provider for Chinese local OEMs, with a market share of 21.3%. Based on the total installed capacity of solutions in 2023, Horizon is also the fourth largest advanced driver assistance and high-level autonomous driving solution provider in China, with a market share of 9.3%.

According to data from Gaogong Industry Research Institute, in 2023, Horizon Robotics will rank second in China's low-end and high-end intelligent driving chip markets, at 21.3% and 35.5%, respectively. Mobileye and Nvidia ranked first, with market shares of 26.6% and 49.0%, respectively.

However, in the latest lists of "Intelligent Driving Computing Solutions for Independent Brand Passenger Cars in the Chinese Market" and "Forward-looking Integrated Computer Computing Solutions for Independent Passenger Cars in the Chinese Market" released by Gaogong Intelligent Automobile in the first half of 2024, Horizon Robotics topped the list with market shares of 28.65% and 33.73% respectively.

The cumulative loss in three years was 17.523 billion yuan

The prospectus shows that in 2021, 2022, and 2023, Horizon's revenues were 467 million yuan, 906 million yuan, and 1.552 billion yuan, respectively; net losses were 2.064 billion yuan, 8.72 billion yuan, and 6.739 billion yuan, respectively, with a cumulative net loss of 17.523 billion yuan; adjusted net losses were 1.103 billion yuan, 1.891 billion yuan, and 1.635 billion yuan, with a cumulative adjusted net loss of 4.629 billion yuan; gross profit margins were as high as 70.9%, 69.3%, and 70.5%, respectively. As of December 31, 2023, Horizon held 11.36 billion yuan in cash and cash equivalents and 701 million yuan in unused bank loans.

The main reason for the continued expansion of losses is that Horizon has been investing a lot of resources in research and development. In 2021, 2022 and 2023, Horizon's research and development expenses were RMB 1.1436 billion, RMB 1.8799 billion and RMB 2.3663 billion, respectively, accounting for 245.0%, 207.6% and 152.5% of the revenue in each of those years, respectively.

In comparison, the recently listed Black Sesame Intelligent Technology achieved revenues of 60.504 million yuan, 165 million yuan, and 312 million yuan in 2021-2023, respectively, and adjusted net losses of 614 million yuan, 700 million yuan, and 1.254 billion yuan; gross profit margins were 36.1%, 29.4%, and 24.7%, respectively. As of the end of 2023, cash and cash equivalents were 1.3 billion yuan.

Obviously, although Horizon's losses are higher, its performance in terms of revenue scale, gross profit margin, cash flow, etc. is much better than that of Heizhima Intelligence.

In terms of revenue structure, Horizon's revenue mainly comes from automotive solutions (accounting for 94.8% in 2023), including product solutions (generating revenue by selling and delivering product solutions to OEMs and Tier 1 suppliers), licensing and services (generating revenue by licensing the company's algorithms, software and development tool chains to customers). In addition, a small part of the company's revenue comes from non-automotive solutions.

Revenue contribution from top five customers increased to 68.8%

In 2021, 2022 and 2023, the total revenue generated by Horizon's top five customers was RMB 283.1 million, RMB 482.1 million and RMB 1.067 billion, respectively, accounting for 60.7%, 53.2% and 68.8% of Horizon's total revenue, respectively. During the same period, Horizon's revenue from its largest customer was RMB 115.2 million, RMB 145.3 million and RMB 627.3 million, respectively, accounting for 24.7%, 16.0% and 40.4% of Horizon's revenue, respectively.

Horizon's top five customers mainly include OEMs and Tier 1 suppliers. Among them, SAIC Motor, the second largest customer in 2022, and Coretronic, the largest customer in 2023, are both shareholders of Horizon. Therefore, transactions with these customers are all related-party transactions.

Among them, Cool Ruicheng is a joint venture established by Horizon and Volkswagen's software company CARIAD. Horizon holds a 40% stake in Cool Ruicheng. Cool Ruicheng is mainly engaged in the research and development, manufacturing of high-level autonomous driving application software and high-level autonomous driving systems, and provides after-sales service, training, consulting, testing and technical services for products. In the short term, Cool Ruicheng's main customer will be Volkswagen Group, and its products will be used in Volkswagen cars sold in China.

The five largest suppliers account for about 50% of the total purchases

In 2021, 2022 and 2023, Horizon's total purchases from the top five suppliers were RMB 251.6 million, RMB 890.2 million and RMB 1,177.9 million, respectively, accounting for 52.0%, 61.8% and 50.2% of the total purchases, respectively. During the same period, the purchases from the largest supplier were RMB 100.7 million, RMB 226.3 million and RMB 458.5 million, respectively, accounting for 20.8%, 15.7% and 19.5% of Horizon's total purchases, respectively.

It can be seen that the top five suppliers are mainly wafer foundries, IP/EDA suppliers, semiconductor packaging and testing manufacturers, material suppliers, etc.

Horizon said that during the Track Record Period, our top five suppliers included manufacturers, assembly and test service providers, as well as IP suppliers and EDA suppliers. During the Track Record Period, we did not experience significant fluctuations in prices set by suppliers or serious defaults by suppliers. As of the Latest Practicable Date, none of our Directors, their associates or any of our shareholders (who, to the knowledge of the Directors, own more than 5% of our issued share capital) had any interest in our top five suppliers.

Yu Kai is the actual controller

The prospectus shows that Horizon Robotics adopts a different voting rights structure, in which each Class A share can cast 10 votes. In the shareholder structure of Horizon Robotics before listing (shares of the employee stock ownership platform have not yet been issued), Class A shareholders include:

Dr. Kai Yu, who holds 16.95% of the shares and 55.95% of the voting rights through Everest Robotics Limited;

Dr. Chang Huang, through String Theory Robotics Limited, holds a 3.82% stake and 12.61% of the voting rights.

Ms. Tao Feiwen, who holds 1.66% of the shares through HOPE Robotics Holdings Inc. and has 5.47% of the voting rights, will convert her Class A shares into Class B common shares after the listing;

Mr. Yang Ming, who holds 0.12% of the shares through Walnut Robotics, Inc., has delegated 0.39% of the voting rights to Dr. Yu. His Class A shares will be converted into Class B common shares after the listing, and the voting rights delegation will also be terminated after the listing.

It should be pointed out that Yu Kai, the founder and chairman of Horizon Robotics, served as the vice president of Baidu Research Institute from April 2012 to June 2015. During the same period, two other executives of Horizon Robotics, Huang Chang and Tao Feiwen, also worked at Baidu. Horizon Robotics was founded by them after they left Baidu.

It is worth noting that Horizon Robotics' shareholders include a number of automakers and well-known chip manufacturers:

SAIC Motor holds 10.02% of the shares through SAIC QIJUN I Holdings Limited;

Volkswagen Group, through CARIAD Estonia AS (convertible loans will be converted into common shares after listing), holds 2.64%;

Intel Capital Corporation, 2.13%;

SK hynix Ventures, holding 1.94%;

CATL holds 1.12% of the shares through Hong Kong Times New Energy Technology Co., Ltd.

BYD holds 0.13% of the shares through Golden Link Worldwide Limited;

Dongfeng Asset Management Co., Ltd., holds 0.26% of the shares.

The cumulative financing exceeds US$3.4 billion, and the valuation exceeds US$8.71 billion

According to the prospectus, Horizon Robotics has completed 11 rounds of financing since its establishment, with a total financing of approximately RMB 17 billion. The company's shareholder team is very impressive. Volkswagen, SAIC, BYD, CATL, Hynix, Yunfeng Fund, Hillhouse Capital, Sequoia Capital, and 5Y Capital are all its shareholders. After completing the D round of financing, Horizon Robotics' valuation has reached US$8.71 billion, or approximately RMB 62.4 billion.

It is not clear what Horizon's market value will be after its successful listing, but for reference, Mobileye (MBLY.US)'s total market value in the U.S. stock market as of August 14 was US$11.29 billion, or approximately RMB 80.85 billion.

Black Sesame Intelligence, which has a much smaller revenue scale, had an IPO price of HK$28 on the Hong Kong Stock Exchange and opened at HK$18.8, a 32.9% drop from the IPO price. At the close of the first day of listing, the stock price still fell 32.51% to HK$20.45, with a market value of approximately HK$11.64 billion.

Editor: Core Intelligence - Rurouni Ken