Horizon Robotics: HSD 2.0 – Safe Before Sharp

Research evidence excerpt

Horizon Robotics: HSD 2.0 – Safe Before Sharp

IdeaM

RiskRisk RewardReward– Horizon- HorizonRobotics (9660.HK)Robotics (9660.HK)

A leading independent autonomous driving solutions provider

PRICE TARGET HK$8.70 OVERWEIGHT THESIS

Probability-weighted DCF, with probability weightings of 25% bull case, 50% base case, 25% ▪Horizon Robotics is a leading independent

bear case. The balanced probabilities in our bull case vs. bear case reflect our constructive autonomous driving solutions provider with

view on Horizon gaining volume market share among ADAS+AD players in China, but we are scarcity value.

also aware of rising competition and potential geopolitical headwinds in the smart driving ▪We believe it is a key beneficiary of China's

business. Key DCF assumptions: 12.2% WACC (1.9 beta, 3% long-term growth rate). deepening autonomous driving trend.

autonomous driving industry's high HK$10.99 ▪The

barriers to entry favor leading players suchConsensus Price Target Distribution HK$7.83 HK$13.85 as Horizon Robotics, thanks to its MS PT

Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates technology know-how in both software and

hardware.

▪Horizon Robotics is also an early mover in

the industry with extensive cooperation

RISK REWARD CHART formed with global OEMs and Tier-1

suppliers.

HKD ▪We are OW relative to our coverage

because we believe Horizon Robotics' solid

project pipeline bodes well for its volume HK$15.00HK$15.00(+239.37%)HK$15.00(+239.37%)(+239.37%)

16 share gains among China ADAS and

autonomous driving players.

Consensus Rating Distribution

HK$8.70HK$8.70(+96.83%)HK$8.70(+96.83%)(+96.83%) 96% Overweight

8 4% Equal-weight

0% Underweight

HK$4.42HK$4.42HK$4.42 MS Rating 4

Source: Refinitiv, Morgan Stanley Research