On January 5, RoboSense (hereinafter referred to as Suteng Juchuang) officially landed on the main board of the Hong Kong stock market, becoming the first IPO of Hong Kong stocks in 2024, and with a total market value of more than 19 billion Hong Kong dollars, it has become the world's most valuable LiDAR listed company.
Unexpectedly, this year, the global capital market has suffered a "hell mode" start. According to Bloomberg data, in the first week of 2024, the total market value of the global stock market evaporated by more than $2 trillion, and the global bond market fell by $1 trillion, totaling $31,800 (about 230,000 yuan), the worst start since 2004.
In the face of such an unfavorable situation, Suteng Juchuang "went against the wind", and the opening performance after the listing was quite strong. As of 9:49 a.m. on January 11, Suteng Juchuang reported HK$43.70 per share, with a market value of nearly HK$19.7 billion. In the current "headwind" situation, such a good performance is often strongly related to its high-value growth attributes.
It should be noted that Suteng Juchuang has just released the fourth product of its M platform at CES 2024 - the first ultra-long-range lidar M3, which uses a 940nm laser transceiver scheme and has 300m@10% ultra-long-range ranging capability. At the same time, the latest year-end sales report released by Suteng Juchuang is also extremely good, which is undoubtedly a substantial benefit.
Image source: The company's official WeChat public account
According to the data, in December 2023, the monthly sales of lidar will be about 72,200 units, of which the sales of lidar for ADAS will reach 71,000 units, and in the fourth quarter of the same year, the sales volume of lidar will be about 151,000 units, a year-on-year increase of 545.3%, of which the sales of lidar for ADAS will be about 147,500 units.
In 2023, the annual sales volume will reach about 256,000 units, exceeding the 250,000 unit mark for the first time, of which 240,000 units of LiDAR for ADAS will be sold. This also means that Suteng has become the new "first brother" of the industry.
Why is Sutar so fierce?
01
Lidar reversed, and Sutar began to lead
In the past two years, the fortunes of the lidar industry have been dramatically reversed. Since 2021, the "bad news" of various industries in the field of autonomous driving, such as abandonment, bankruptcy, consolidation, and delisting, has not stopped, which inevitably makes the industry start to worry about the prospect of lidar. However, with the release of domestic ADAS dividends, especially the rapid increase in the penetration rate of high-end intelligent driving represented by NOA, the loading of lidar in the passenger car market has ushered in a "small climax".
Among them, 2022 is recognized as the first year of mass production of automotive-grade lidar, and the second half of the year is the critical point for the collective volume of lidar host manufacturers. According to the monitoring data of the Gaogong Intelligent Vehicle Research Institute, the number of lidars equipped with lidar in China's passenger cars was less than 8,000 last year, and from January to September this year, the number of lidars equipped with pre-installed lidar has reached 57,000, and it is expected to reach 120,000 throughout the year, an increase of more than 10 times.
With the rapid increase in market demand, Suteng Juchuang has become an industry leader, and the performance of ADAS delivery has also been running wildly.
As mentioned earlier, Suteng Juchuang will deliver 240,000 vehicles in 2023. This means that the delivery volume of Sutar alone has exceeded the number of lidars installed in the front of China's passenger cars predicted by the Gaogong Intelligent Vehicle Research Institute by 2 times.
According to public information, in the third quarter of this year, Suteng LiDAR delivered nearly 60,000 units, of which the total sales of vehicle-mounted LiDAR exceeded 53,000 units, both exceeding the total sales volume in the first six months of 2023. At the same time, the total sales volume in the first three quarters of this year exceeded 106,000 units, of which the total sales volume of vehicle-mounted lidar exceeded 93,000 units, both exceeding the sum of lidar sales in the past three years from 2020 to 2022.
In addition, it is worth mentioning that from June to December 2023, the monthly sales of Suteng Juchuang vehicle radar soared from nearly 10,000 units to 71,000 units, which lasted half a year and increased by more than 6 times. Moreover, since October, it has significantly left Hesai Technology behind and led the global market.
According to the statistics of YOLE Group, by the third quarter of this year, 36 Chinese car companies have announced the use of lidar, and it is expected that as many as 106 models equipped with lidar will be listed in China, accounting for nearly 90% of the total number of new models equipped with lidar in the same period in the world.
The intensive listing of high-end intelligent driving models and the batch "onboarding" of lidar show that car companies have basically recognized the importance of high-end intelligent driving to model sales and the necessity of the existence of lidar, so all car companies are vigorously developing related product technologies and joining the competition in this direction.
At the same time, consumers are also voting with real money, and high-end intelligent driving functions have become one of the core selling points to drive car sales. For example, Xpeng and Wenjie, two leading car companies in intelligent driving, currently account for more than 70% of the sales of their high-end intelligent driving models (essential lidar).
On the other hand, high-end intelligent driving models have been able to gradually move towards the mass market, thanks to the obvious decline in the cost of hardware such as lidar. According to public information, at present, the ASP of ADAS lidar has dropped from tens of thousands of yuan in 2020 to about 3,000 yuan at present, and the industry is expected to further drop to the level of around 2,000 yuan in the future;
Perhaps it is precisely because of the increasingly high "cost performance" of lidar that even Musk, the biggest bear, seems to have begun to waver--- in May last year, there was market news that Tesla had signed a contract with Luminar for testing and development using laser sensor technology. And the report said that as part of the agreement, Luminar sold the sensors used in the Model Y to Tesla.
In addition, when Musk appeared in the audio chat room at Clubhouse, he admitted that he "made inappropriate remarks" about lidar and said that his rocket company, SpaceX, developed an internal lidar.
Judging from the above signs, the spring of lidar has just begun, especially ADAS lidar, which has achieved mass production and is entering the 1-N stage.
But it is undeniable that the market is extremely hot and cruel.
Six years ago, Velodyne, the inventor of lidar and the former leader, had about 70% of the global lidar market, and there was no limit to what the future holds. Six years later, the former "first brother" has completely withdrawn from the stage of history, and there is no capital to talk about tomorrow.
A similar situation happened to Ibeo, the originator of the German lidar company, which had supplied Great Wall and Audi to the lidar giant, and finally ended in bankruptcy.
The heroes of the past have left the scene, and the automotive lidar industry has ushered in a new round of car launches, especially in the Chinese market.
For industry players, the spring of lidar has just begun, which may also mean the opening of a new round of elimination.
In fact, from the amazing performance of Suteng in the second half of this year, we can already see the first clues. In the face of strong competitors from all walks of life and fierce competition, how can Suteng achieve "overwhelming the crowd"? Can this competitive situation continue in the future?
02
The key is to play the "three cards" well
First of all, it should be pointed out that the large-scale launch of lidar is premised on a significant cost reduction, which shows that the real barriers in the industry at this stage lie in cost and mass production capacity. Among them, low cost is the core of market competition, and low-cost manufacturing mainly depends on less component count, ASIC and more efficient optical packaging.
In these aspects, Suteng also has a lot of experience, and is at the forefront of the industry in terms of chip integration, software and hardware integration.
According to the prospectus, the company started with mechanical lidar in 16 years, and since 2017, it has developed drive scanning based on self-developed chips. From the launch of mass production of M1 platform products in 2021--- becoming the world's first LiDAR company to realize the mass production and delivery of automotive-grade LiDAR products equipped with self-developed chips, and then completed two rounds of iterations in the following two years, until the recent release of M3. In addition, in November 2022, the company also released the E platform product equipped with a self-developed integrated chip for transmission, reception and processing systems, achieving higher integration, reliability, and lower cost at the performance level.
At present, Suteng has realized the closed-loop of three core technologies of lidar hardware, perception software and chips, and has the advantages of software and hardware integration. This is also reflected in the company's "hard-and-soft" business model, which is different from Hesai's model of selling almost exclusively hardware.
According to the data of Suteng's prospectus, in the past three years, the revenue from solutions accounted for at least 22% of the total revenue. While dominating the hardware market, it is "nuggets" the software market. Perhaps, the fundamental difference in business models is an important reason for the large gap in market value between the two sides.
Obviously, the continuous leading technological advantage is inseparable from the company's strong investment in research and development. According to the prospectus, in 2020, 2021, 2022 and the first half of 2023, Suteng will generate R&D expenses of 81.5 million yuan, 133 million yuan, 306 million yuan and 246 million yuan respectively, and the R&D rates will be 47.7%, 40.2%, 57.7% and 74.9% respectively. The radical pace of investment at this stage actually reflects that the technology of lidar is still in a period of rapid iteration.
In addition to the product design and manufacturing end, "upper volume" also contributes to the further reduction of costs. For Suteng, the advantageous market layout and significant customer advantages can be described as the ballast stone for its rapid start-up.
In terms of the market, Sutar currently mainly lays out two major fields: ADAS and robots. In recent years, the company's revenue from ADAS and robotics and other markets has remained around 70%. Among them, the revenue from ADAS has increased exponentially.
In contrast, Hesai prioritized the deployment of autonomous driving and then turned to the ADAS field (2021), while Sutar took the lead in the ADAS field (2019). Therefore, it is natural to expect Suteng, which has an advantageous ADAS layout, to be the first to benefit.
In terms of customers, in the automotive market, Sutar basically includes the top OEMs and Tier1 in China and around the world. According to the prospectus, nine of the top 10 Chinese automakers (in terms of sales volume in 2022) have chosen to cooperate with Sutar. By the end of March this year, Sutar's share of fixed-point models in the fixed-point market of vehicle-grade lidar solutions had also reached nearly 50%.
It is understood that as of the first half of this year, Sutar has provided services for more than 250 OEMs and first-tier suppliers, an increase of more than 50 customers compared with the first quarter of this year, ranking first in the world in terms of the number of partners.
The automotive supply chain often has significant customer certification barriers, and the certification process is cumbersome, but once passed, OEMs will not easily replace them, but will also provide technical support, and automotive lidar is related to safe driving, which undoubtedly needs to meet more requirements such as reliability and stability. Therefore, being able to enter the supply chain of the vast majority of head customers is also a recognition of the strength of Suteng's products. At the same time, a strong customer pipeline is undoubtedly a strong guarantee for the company's sustainable development in the future.
In addition, in the non-vehicle field, Suteng's cooperation is also very extensive, involving many application scenarios such as industrial, inspection, and logistics robots. According to CIC, by the end of the first half of 2023, Sutar will have about 2,200 robots and other non-automotive customers. In addition, in 2022, the company's cumulative sales of lidar in the robotics industry (excluding lidars with less than 16 lines) ranked first in the world.
To sum up, Suteng can eat the ADAS dividend, and quickly become large-scale, and has the potential to continue to lead the industry, which is inseparable from its advantages in technology, market and customers for many years.
Of course, this may be just the beginning for Suteng, which is beginning to lead. Because the growth rate of lidar sales in 2024 is likely to be faster - as the standard equipment for autonomous driving (from L3 onwards), the higher you go, the more you will be equipped.
03
Economies of scale have driven significant improvements in earnings
The future growth is expected
Benefiting from the booming supply and demand of the ADAS lidar market, Suteng's performance is in the cashing period of rapid growth. According to the prospectus data, from 2020 to 2022, Suteng's revenue increased from 171 million yuan to 530 million yuan, with a compound annual growth rate of 76.05%, and in the first three quarters of 2023, the company's revenue was 593 million yuan, a year-on-year increase of 62.0%.
Image source: The company's official website
Thanks to the rapid expansion of revenue scale, the scale effect has emerged, and the gross profit margin of Suteng has improved significantly. According to the prospectus, the overall gross profit margin in the first three quarters of this year increased to 6.0% from 2.3% in the same period in 2022, of which the gross profit margin in the third quarter of this year reached 8.7%. In particular, ADAS products have improved significantly compared to the same period last year.
For LiDAR manufacturers, fixed-point orders and the number of SOP models are leading indicators of revenue growth. According to the prospectus, the number of fixed-point models for mass production has increased from 52 in the first quarter to 62 (as of December 18), continuing to maintain the world's leading level. At the same time, the number of customers who have achieved SOP fixed-point cooperation is also growing. As of the first half of this year, SOPs have been achieved for 13 models for 9 customers, and as of December 18, SOPs for 24 models have been achieved for 12 customers. The number of fixed-point and mass-produced models continues to increase, indicating that Sutar's performance stamina is still sufficient.
According to Suteng's guidance, the company's future profitability still has room for continuous upward movement. In addition to the marginal cost reduction brought about by the scale effect, there are two growth expectations: first, as the company completes chip-on-chip, optimizes product design and simplifies product structure, and improves the level of production line automation to improve production efficiency, the gross profit margin of LiDAR applied to ADAS is likely to further increase, and second, the overall gross profit and gross margin will continue to improve as the company continues to obtain a stable source of raw materials and consumables at commercially reasonable prices, improve production efficiency and strategically optimize the revenue mix.
In addition, the adjusted net profit margin also increased in the first half of 2022 compared to the first half of 2022. Sutar expects to further reduce the ratio of operating expenses to revenue by improving the efficiency of R&D, sales and administrative activities, thereby contributing to the continuous improvement of profitability.
04
End
It is no exaggeration to say that the era of intelligent driving has made Suteng, and Suteng is also expected to lead the lidar industry. At present, the industry and the market have high consensus and expectations for the lidar industry, and this year is regarded by institutions as expected to become an inflection point in the penetration rate of electric vehicles similar to 20 years. In addition, L3 mass production has also started in 2023, and the trend is expected to accelerate in 2024.
If you go back to 3 years ago, when domestic electric vehicles broke out in full swing, car companies at that time had a "guest", that was CATL. Now, when LiDAR is dawning, Suteng Ju is the most developing head player at present, will it be the next CATL era?