<p>ROBOSENSE, as the highly anticipated &#34;first stock of LiDAR on the Hong Kong Stock Exchange,&#34; has successfully seized the last opportunity to go public at the end of the year and has started its IPO process. It plans to be listed on the main board of the Hong Kong Stock Exchange on January 5, 2024.</p>
<p>This move not only resolves the cash flow risk of CNY 6.2 billion in its gambling contract but also marks an important step in its competition with rivals such as Hesai, which went public on NASDAQ in the United States in February this year. With the growing demand for advanced intelligent driving from domestic new energy vehicle companies and the active promotion of national intelligent driving policies, the potential of the LiDAR market is rapidly expanding.</p>
<p>In this growing market, both Hesai and ROBOSENSE, as leading companies in the global LiDAR industry, are expected to achieve significant growth and profitability.</p>
<p>Huawei Wall Street Research will compare Hesai and ROBOSENSE in terms of LiDAR shipments, revenue, profitability, R&amp;D expenses, and the number of designated customers and covered vehicle models, among other dimensions, to examine the differences between the two LiDAR representative companies.</p>
<h2>Hesai Focuses on LiDAR, While ROBOSENSE Emphasizes Both LiDAR and Perception Solutions</h2>
<p>Hesai and ROBOSENSE are both outstanding players in the domestic LiDAR industry, ranking first and third in global shipments in the ADAS (Advanced Driver Assistance Systems) field, respectively. However, there are also differences in their business structures. ROBOSENSE appears to have a more diversified business, involving perception software and vehicle-road coordination solutions. Hesai's business, on the other hand, is more focused, with its main business now being ADAS LiDAR.</p>
<p>Specifically, ROBOSENSE's main business and products are not limited to ADAS LiDAR alone. It has the M platform, which designs ADAS LiDAR products such as M1 and M2, as well as the R platform, which designs higher-end autonomous driving LiDAR. ROBOSENSE also has HyperVision, which involves perception software, and V2X solutions for vehicle-road coordination, among others.</p>
<p>According to the 2022 annual report, ROBOSENSE's revenue from its robotics and other product businesses in the agricultural robotics, V2X solutions, and perception solutions accounted for 45% of its total revenue. The revenue from ADAS LiDAR business only accounted for 30%, which is not ROBOSENSE's largest source of income.</p>
<p>Hesai, on the other hand, is completely different. The company is fully focused on the ADAS LiDAR track, and its revenue mainly comes from ADAS LiDAR, with sales of its flagship product, AT128, accounting for 80%.</p>
<h2>The Gap in LiDAR Shipments is Small, and Both Maintain High Growth Rates</h2>
<p>In terms of LiDAR shipments, there is not much difference between Hesai and ROBOSENSE, both of which are in the top tier, and both maintain a high YoY growth rate in sales. Overall, the two companies are still in a stage of fierce competition in the LiDAR market.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/d647c7cf-4356-45fe-a233-b2d912594989.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/d647c7cf-4356-45fe-a233-b2d912594989.png"/>
In the first three quarters of this year, Hesai sold 134,000 units of LiDAR, a year-on-year increase of about 300%, with ADAS LiDAR accounting for 85% of the sales. Meanwhile, RoboSense sold 107,000 units of LiDAR, with a year-on-year growth rate of 250%, and ADAS LiDAR accounted for nearly 90% of the sales.</p>
<h2>Hesai's revenue is significantly better</h2>
<p>From the perspective of revenue, both Hesai and RoboSense have achieved rapid growth as the new energy vehicle industry increasingly values LiDAR.</p>
<p>RoboSense's revenue increased from CNY 171 million in 2020 to CNY 530 million in 2022, and reached CNY 329 million in the first half of 2023. In comparison, Hesai's growth is more significant, with its revenue increasing from CNY 416 million in 2020 to CNY 1.203 billion in 2022, and reaching CNY 870 million in the first half of 2023.</p>
<p>Throughout almost all time periods, Hesai's revenue has been more than double that of RoboSense. This indicates that although both companies are growing rapidly, Hesai has a more significant advantage in terms of revenue.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/5d9157b7-db4e-43e5-aa73-f3b2844f8b1a.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/5d9157b7-db4e-43e5-aa73-f3b2844f8b1a.png"/></p>
<h2>Both Hesai and RoboSense are not profitable, but RoboSense's losses are more severe</h2>
<p>In terms of profitability, both the newly listed RoboSense and the significantly corrected Hesai are still in a loss-making state, striving to achieve a balance between profit and loss. RoboSense's financial situation shows that its net loss increased from CNY 221 million in 2020 to CNY 2.086 billion in 2022, and the net loss in the first half of 2023 increased by 24% year-on-year to CNY 619 million.</p>
<p>In comparison, Hesai's loss situation is relatively lighter, with its net loss increasing from CNY 107 million in 2020 to CNY 300 million in 2022, and the net loss in the first half of 2023 was CNY 193 million.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/cb97728d-b91e-467d-98ca-94b26a05be5d.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/cb97728d-b91e-467d-98ca-94b26a05be5d.png"/></p>
<p>In terms of gross profit margin, due to the previous uncertainty of domestic intelligent driving policies and the gradual reduction of subsidies for new energy vehicles, new energy vehicle companies have limited investment in the development of advanced intelligent driving, which has also increased cost pressure. Therefore, LiDAR companies have generally adopted a price reduction strategy in order to compete for market share. Taking Hesai's products as an example, the price of its LiDAR has dropped from $17,000 in 2019 to approximately $500 in 2023, reflecting intense market competition and cost reduction.
This price competition has led to a decline in the gross profit margins of both Hesai and ROBOSENSE. Hesai's gross profit margin has dropped from 57.5% in 2020 to approximately 35% in the first half of 2023, while ROBOSENSE's situation is even more severe, with its gross profit margin dropping from 44% to 3.9%, and even experiencing negative gross profit margin (-7.4%) in 2022. However, it is worth noting that ROBOSENSE has already achieved positive gross profit margin in 2023.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/e1eb43b9-5013-4142-bedf-52ee058e866f.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/e1eb43b9-5013-4142-bedf-52ee058e866f.png"/></p>
<h2>High R&amp;D expenses remain rigid</h2>
<p>In terms of R&amp;D investment, both Hesai and ROBOSENSE have shown a strong willingness to invest in order to maintain their competitive advantage. Although Hesai's R&amp;D funding exceeds that of ROBOSENSE in absolute value, ROBOSENSE's R&amp;D expenses as a percentage of revenue are much higher than Hesai's.</p>
<p>From 2020 to 2022, Hesai's R&amp;D expenditure increased from CNY 230 million to CNY 560 million, reaching CNY 369 million in the first half of 2023. In contrast, ROBOSENSE's R&amp;D expenditure increased from CNY 82 million in 2020 to CNY 306 million in 2022, reaching CNY 246 million in the first half of 2023. This indicates that ROBOSENSE's R&amp;D expenditure as a percentage of revenue is as high as 75%, far exceeding Hesai's 42.41%.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/09eed768-08bc-4932-b03e-5a65adb489e7.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/09eed768-08bc-4932-b03e-5a65adb489e7.png"/></p>
<h2>ROBOSENSE takes the lead in vehicle coverage and customer numbers</h2>
<p>In terms of OEM models and customer numbers, both ROBOSENSE and Hesai have achieved significant success. ROBOSENSE has obtained designated orders from 21 automobile manufacturers and Tier 1 suppliers, including Geely, SAIC, GAC, Xiaopeng, BYD, and Desay SV, covering 62 vehicle models, ranking first among global LiDAR manufacturers.</p>
<p>Hesai, on the other hand, has partnered with 14 companies including Li Auto, FAW, Great Wall, and Leapmotor, covering approximately 50 vehicle models. Although the quantity is less than ROBOSENSE, the shipment volume is considerable due to the hot sales of some supporting models such as Li Auto L7, L8, and L9.</p>
<p>With the advancement of commercialization of autonomous driving in China, as well as mainstream new energy vehicle companies such as Xiaopeng, NIO, WeRide, and Li Auto actively conducting urban NOA pilot projects, the demand for LiDAR is expected to continue to grow.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/48112037-04f8-40e3-9c6c-0ff96487dd1a.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/48112037-04f8-40e3-9c6c-0ff96487dd1a.png"/>
The multi-sensor fusion solution using cameras, LiDAR, and mmWave radar, which is adopted by most new energy vehicle companies, means that the demand for LiDAR will continue to expand. This is a huge performance support for LiDAR companies and also indicates the continuous growth of the LiDAR market.</p>
<p>Therefore, Hesai and ROBOSENSE are expected to achieve significant improvement in profitability and reach the breakeven point in the near future. With the expansion of the market and technological advancements, these two companies may seize more opportunities in the intelligent battle and achieve rapid growth in performance.</p>

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<p>Compared to Hesai's focus, RoboSense tends to be more diversified.</p>

The second LiDAR manufacturer goes public, ROBOSENSE refuses to replicate Hesai | Insight Research