CITIC Securities: Horizon's revenue in the second half of last year exceeded expectations, raising revenue forecasts for this year and next

CITIC Securities International published a research report indicating that Horizon Robotics-W (09660.HK) saw a year-on-year revenue growth of 51% to RMB 2.19 billion in the second half of last year, exceeding market expectations; the adjusted net loss widened to RMB 1.51 billion, higher than the market's expected adjusted loss of RMB 1 billion, primarily due to increased R&D investment. The gross margin during the period was 64%, lower than market expectations, due to a temporary increase in the proportion of low-priced products, with mid-to-high-end products concentrated in volume at the end of the year and this year, along with the promotion of non-core hardware volume-price matching solutions and more competitive product pricing strategies.

Management guided for a shipment volume growth of approximately 35% this year, with the proportion of high-end chips increasing to over 55%; the average selling price continues to rise driven by product structure upgrades, with high-speed NOA still having about 50% room for improvement, and urban NOA having several times the potential; gross margin is expected to maintain a high level of 60%. The automotive solutions business is expected to continue to double in growth, with intellectual property licensing and service revenue expected to grow steadily.

Horizon SuperDrive (HSD) has been designated for over 20 vehicle models, with a shipment target of 400,000 sets this year, serving as a core source of incremental growth. The company also launched the cabin-driving integrated Agentic Car system chip, achieving system-level cost reduction at the thousand-yuan level through "chip + OS + AI" full-stack capabilities and enhancing customer stickiness, creating differentiated competition with Qualcomm and NVIDIA. In terms of overseas markets, it has cumulatively covered multiple international automakers, with lifecycle shipment volumes reaching the tens of millions. The domestic ADAS and mid-to-high-end intelligent driving market share remains leading at approximately 47%, with an open ecosystem cooperation model driving 95% of NOA chips delivered through ecosystem partners.

CITIC Securities raised Horizon's revenue forecasts for this year and next by 9% and 10%, reflecting the increase in product mix due to the ramp-up of high-end products. It maintains an "Overweight" rating and a target price of HKD 13.8, corresponding to a forecasted price-to-sales ratio of 25.5 times for 2026 (previously 30 times), close to the average valuation of peers in the intelligent driving supply chain, due to a market style switch leading to a valuation adjustment in the intelligent driving supply chain