Game on – not game over

Research evidence excerpt

Game on – not game over

IdeaM

Stay OW

Estimate Changes

We revise our 2026 ADAS/AD chip shipment estimate down 9% to 5.1mn units to reflect

macro-related vehicle volume pressure this year, although the forward order pipeline

remains robust. Holding ASP and other revenue assumptions unchanged, our 2026

revenue estimate declines by 4%.

Reflecting macro headwinds and customers' in-house strategies, we lower our GPM

assumptions by 5.9ppt/3.8ppt/2.5ppt in 2026–28, respectively. That said, we expect group

GPM to remain above approximately 55% over the next three years, with disciplined opex

helping offset part of the impact. Consequently, we now forecast a net loss of Rmb2.8bn

in 2026 and Rmb1.1bn in 2027, while still expecting the company to reach net profit

breakeven by 2028.

Reflecting these earnings estimate revisions, we lower our price target by 13% to HK$8.7.

Exhibit 1: Horizon Robotics: Estimate revisions

Source: Company data, Morgan Stanley Research estimates

Valuation Methodology

We continue to apply a probability-weighted DCF valuation to derive our price target for

Horizon Robotics, assigning 25%/50%/25% weightings to our bull, base, and bear cases,

respectively, to reflect elevated stock-specific and industry volatility. The balanced

weighting between the bull and bear cases reflects our constructive view on Horizon's

ability to gain market share among ADAS and AD suppliers in China and secure additional

global OEM customers for its licensing and services business, while recognizing

intensifying competition and potential geopolitical headwinds in smart driving. We believe

DCF remains the most appropriate valuation methodology to capture Horizon's long-term

growth profile, given the likely volatility in earnings and cash flow over the near term.