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Reporter of China Business Network: Dong Tianyi Editors of China Business Network: Duan Lian, Sun Lei

Recently, the China Securities Regulatory Commission announced the registration notice for overseas issuance and listing of Horizon Robotics (hereinafter referred to as Horizon), marking that Horizon's Hong Kong IPO has officially been approved by the China Securities Regulatory Commission.

According to the information released by the China Securities Regulatory Commission, Horizon intends to issue no more than 1.15 billion overseas listed common shares and list them on the Hong Kong Stock Exchange. If Horizon fails to complete the overseas issuance and listing within 12 months from the date of issuance of this filing notice and intends to continue to advance, it shall update the filing materials.

It is reported that Horizon Robotics has submitted its prospectus to the Hong Kong Stock Exchange in April this year.Goldman Sachs、Morgan Stanleyand CITIC Construction Investment International serve as joint sponsors. Regarding the above situation, the reporter of Daily Economic News asked Horizon for information, but no response was received as of press time.

SAIC,BYD、IntelOther investment

Net loss in the past three years exceeded 17.5 billion yuan

The prospectus previously provided by Horizon Robotics shows that it was founded in July 2015 and is a supplier of advanced driver assistance systems (ADAS) and advanced autonomous driving (AD) solutions for passenger vehicles with proprietary software and hardware technologies.

Since its establishment in 2015, Horizon Robotics has completed 11 rounds of financing, with investors includingSAIC Motor、GAC Group、Great Wall Motors, BYD, FAW, Intel, 5Y Capital, Hillhouse Capital,Blackstone, CATL, etc., with a total financing of over US$3.4 billion (approximately RMB 24 billion). After completing a financing of US$210 million on December 28, 2023, its valuation was US$8.71 billion (equivalent to more than RMB 62.4 billion).

In terms of products, Horizon Robotics has successively released automotive-grade chips Journey 2, Journey 3, Journey 5 and Journey 6 since 2019, and has successively installed them in models such as Changan UNI-T, Ideal ONE, Roewe RX5, Ideal L8 Pro, etc. As of now, the cumulative delivery volume of processing hardware has exceeded 5 million.

According to the prospectus, Horizon Robotics' revenue from 2021 to 2023 will be 466 million yuan, 905 million yuan and 1.551 billion yuan respectively. It is reported that Horizon Robotics' revenue mainly comes from automotive solutions and non-automotive solutions. Among them, automotive solutions are the core business, with revenue continuing to grow from 410 million yuan to 1.47 billion yuan from 2021 to 2023, and the revenue share will increase from 87.9% to 94.8%.

Specifically, automotive solutions are further subdivided into product solutions and authorization and services. Product solutions mainly involve integrated hardware and software products, including L2 active safety function Horizon Mono, high-speed NOA solution Horizon Pilot, etc.; the authorization and service business provides authorization and related technical services for algorithms, software and development tool chains. Between 2021 and 2023, the proportion of authorization and service business revenue increased from 43.3% to 62.1%, while the proportion of product solution revenue decreased from 44.6% to 32.7%.

In terms of gross profit margin, an important indicator reflecting business profitability, Horizon's gross profit margins were 70.9%, 69.3%, and 70.5% from 2021 to 2023, respectively, which are higher than market competitors. However, due to high R&D expenses, Horizon's net losses from 2021 to 2023 were 2.064 billion yuan, 8.720 billion yuan, and 6.739 billion yuan, respectively. The adjusted net losses (not measured in accordance with IFRS) were 1.103 billion yuan, 1.891 billion yuan, and 1.635 billion yuan, respectively. Horizon's net loss in the past three years was 17.523 billion yuan, and the adjusted net loss reached 4.629 billion yuan.

In this regard, Horizon explained that this was mainly due to large R&D expenses incurred to enhance key core technologies, as well as changes in the fair value of preferred shares and other financial liabilities.

The founder gave up the high salary of a big company to start his own business

Experts: Competition in the smart driving market will become more intense

It only took Horizon Robotics a few years to go from being an underdog to a star unicorn.

In this process, founder and CEO Yu Kai played an important role. According to public information, Yu Kai, a native of Nanchang, Jiangxi, graduated from Nanjing University with a bachelor's and master's degree. In 2004, he received a doctorate in computer science from the University of Munich in Germany. He began to work in the field of computer engineering for a long time and worked for Microsoft, Siemens and NEC. In 2012, Yu Kai joinedBaidu, he has served as the vice president of Baidu Research Institute and is highly valued by Robin Li.

According to China Entrepreneur Magazine, Yu Kai was keenly aware of the broad future of artificial intelligence, in which the deep integration of software algorithms and hardware chips was crucial. In 2015, he decided to leave Baidu to work on edge artificial intelligence chips and computing platforms. Horizon Robotics was established in Beijing, focusing on intelligent driving and AIoT, becoming China's first startup company to work on edge artificial intelligence chips.

By 2019, Horizon Robotics predicted that the era of automotive intelligence was coming. Coupled with limited funds in the company's account, it decided to narrow its front lines and focus its development on the field of intelligent driving. In the same year, it released its first automotive-grade chip "Journey 2", and then began to negotiate cooperation with car companies.

With the acceleration of trends such as automotive intelligence, electrification, and networking, as well as the rise of smart driving functions represented by NOA, the market demand for automotive-grade SoCs, as one of the core components of automobiles, continues to rise, and the global automotive-grade SoC industry market size is experiencing significant growth.

According to a report by the Gaogong Intelligent Automobile Research Institute, a research institute, Horizon Robotics' NOA computing solution will rank second with a market share of 30.7% by 2023, behind 52% of the market.NvidiaAccording to a report by CSI Consulting, among the top five Chinese advanced driver assistance solutions (ADAS) providers providing solutions to Chinese OEMs in terms of solution installations in 2023, Horizon ranks second with a market share of 21.3%.

In addition, as of the last practical feasible date in the prospectus, Horizon Robotics has been adopted by 24 vehicle manufacturers (31 brands) by providing two versions of NOA computing solutions, high and low versions of chips, and equipped with more than 230 models, including popular models in the market such as Ideal L8.

Frost & Sullivan, a well-known market research and consulting company, believes that the global automotive-grade SoC market for ADAS (Advanced Driver Assistance System) will grow at a compound annual growth rate of 24.2%. The global market size of SoC-based smart road solutions is expected to reach approximately RMB 14.8 billion in 2026 and further reach RMB 39.2 billion in 2030. At present, the major players in the global automotive-grade SoC market include NVIDIA, Mobileye, Intel, etc., and Horizon Robotics has a certain market share.

Despite good market performance, some believe that automotive-grade SoC technology has high technical barriers and a long R&D cycle. If Horizon wants to remain competitive in the market, it will require continuous and large-scale capital injection and technology iteration.

Hong Wanting, senior analyst at IDC China, said that competition in China's smart driving market will become increasingly fierce. Whether companies can establish a competitive advantage will depend on their long-term investment in the research and development of smart driving technology, the effective management and efficient use of smart driving data assets, and the continuous improvement of their own products in terms of safety and reliability.

As for the purpose of the funds raised from the IPO, Horizon Robotics clearly stated in its prospectus that the funds will be used to strengthen its research and development capabilities in the field of intelligent driving, including the core technology development of advanced driver assistance and high-level autonomous driving solutions. In addition, the funds will also be used to expand sales and market promotion.

After 9 years of hard work, Yu Kai, who holds 15.32% of Horizon's shares before its listing, has a net worth of more than 9 billion yuan.

(This article does not constitute investment advice, and you are responsible for your own operations)

Reporter|Dong Tianyi Liu Xi (Intern)

EDIT|||Duan Lian Sun Lei Du Bo Gai Yuanyuan

Proofreading|Wang Yuelong

Cover image: Visual China (image and text are unrelated)

｜Original article from nbdnews, Daily Economic News｜

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