Smart vehicle transformation is a mega trend that has been reshaping the automotive industry. In China, it is estimated that the commuters in China’s top tier cities spend an average of over 80 minutes every day on the road. Smart vehicles with autonomous features can free up time and boost productivity for drivers and passengers during these long commutes. According to CIC, the global advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions market presents a RMB61.9 billion opportunity in 2023 and is expected to grow at a CAGR of 49.2% through 2030 to reach RMB1,017.1 billion.
Faced with a broad market prospect, there are also more and more players participating in the smart vehicle industry. Recently, Horizon Robotics, a leading provider of ADAS and AD solutions for passenger vehicles, submitted its IPO application to the Hong Kong Stock Exchange and plans to list on the Main Board. Empowered by its proprietary software and hardware technologies, the Company’s solutions combine cutting-edge algorithms, purpose-built software and state-of-the-art processing hardware, providing the core technologies for assisted and autonomous driving that enhance the safety and experience of drivers and passengers.
The relevant information shows that Horizon Robotics is the first and has consistently been the largest Chinese company providing integrated ADAS and AD solutions in terms of annual installation volume since the mass deployment of its solutions in 2021. The Company has a large, global customer base of industry-leading OEMs and tier-one suppliers.
Collaborative optimization of hardware and software grants Horizon Robotics a distinct competitive edge, allowing it to rapidly penetrate the market with a comprehensive product matrix
Based on its localized expertise, extensive research and development efforts, coupled with years of local business operations, Horizon has insightful knowledge and practicable experience in designing its ADAS and AD solutions to address China’s unique and challenging road conditions.
With the approach of software and hardware co-optimization, Horizon has built a comprehensive product portfolio, offering three solutions: Horizon Matrix Mono, Horizon Matrix Pilot and Horizon Matrix SuperDrive, to address different customer needs from mainstream assisted driving to advanced level autonomous driving with high efficiency at affordable costs.
In 2023 alone, the Company obtained more than 100 new design-wins for car models, more than three times of that in 2021. The installation volume of its solutions increased by fourfold from 2022 to 2023. According to CIC, Horizon Robotics is the second-largest ADAS solution provider with a market share of 21.3% in 2023, in terms of ADAS solution installation volume to Chinese OEMs in China.
As of the Latest Practicable Date, the Company’s ADAS and AD solutions have been adopted by 24 OEMs (or 31 OEM brands) for implementation in over 230 car models. All of the top 10 Chinese OEMs including SAIC, BYD, Geely, in terms of sales volume in China are all customers of Horizon Robotics.
Revenue maintains high growth and localized expertise supports long-term performance growth
On the financial front, Horizon Robotics also achieved an impressive revenue performance. The Company’s revenue increased significantly during the Track Record Period and amounted to RMB466.7 million, RMB905.7 million and RMB1,551.6 million in 2021, 2022 and 2023 respectively, representing revenue growth rates of 94.1% in 2022 and 71.3% in 2023, respectively. The compound annual growth rate (CAGR) from 2021 to 2023 is 82.3%.
As a company under rapid growth, in the future, Horizon Robotics intends to further expand the company’s revenue scale by leveraging positive industry tailwind, capitalizing on robust backlogs of orders for vehicles not yet mass produced, attracting new customers, expanding cooperation with existing customers, introducing new solutions with higher value, and expanding new geographies. The Company plans to extend its reach beyond markets in China, although it does not sell products to customers in the United States or to customers who incorporate them into products for sale to the United States.
In terms of profitability, the gross profit increased significantly from RMB331.0 million in 2021 to RMB627.7 million in 2022, and further to RMB1,094.3 million in 2023, and gross profit margin amounted to 70.9%, 69.3% and 70.5%, respectively, maintaining at a stable high-level. This indicates that Horizon Robotics’ growth was not achieved at the expense of its own interests, highlighting the competitiveness and high consumer acceptance of its products.
Meanwhile, it is further disclosed in the company’s prospectus that in order to maintain high margin profile, in the future, the Company will optimize its gross profit margin by implementing a series of measures such as continuously introducing new solutions with a relatively high margin profile, optimizing the supply chain to drive cost reduction and further adjusting the business mix.
From an industry perspective, China is the world’s largest smart vehicles market, with sales volume of smart vehicles of 12.4 million in 2023. However, China’s unique traffic conditions also bring challenges to autonomous driving, and both market opportunities and challenges exist.
Leveraging on the Company’s product maturity, technological strengths, localized expertise and commercial success, Horizon is expected to capture the opportunities and continue to provide ADAS and AD solutions that enhance the safety and experience of drivers and passengers. As stated in its corporate mission, it aims to make human life safer and better through driver assistance and autonomous driving.