Autonomous driving "unicorns" are flocking to Hong Kong stocks.
According to incomplete statistics from Gasgoo, since the second half of last year, more than 10 companies in the domestic autonomous driving track have confirmed or been rumored to be promoting IPOs, involving multiple core technology fields such as autonomous driving overall solutions, lidar, computing chips and simulation tests.
Among them, except for a few companies such as Momenta, WeRide, and Seyond, which insisted on sprinting to U.S. stocks, most of them eventually chose Hong Kong stocks, including Zhixing Technology and Suteng Juchuang, which have successfully "broken through".
A few days ago, according to the website of the China Securities Regulatory Commission, Momenta Global Limited (Mengteng Zhijia Global Co., Ltd.) was received by the China Securities Regulatory Commission through the overseas issuance and listing filing materials submitted by the domestic operating entity Momenta (Suzhou) Technology Co., Ltd., officially confirming the news of Momenta's IPO in the United States.
Analysis of the reasons, in addition to the relatively relaxed listing requirements of Hong Kong stocks for start-ups, the current competition in the intelligent driving industry is becoming increasingly fierce, track players are generally facing insufficient "hematopoietic" ability, and the financial pressure continues to be high, which is also a very important driving force. Especially affected by the external environment, it is becoming more and more difficult to rely on the primary market for financing, and under multiple challenges, it is inevitable to find new exports.
However, even if it successfully enters the IPO, does it mean that the crisis is really completely resolved?
Zhijia "unicorns" collectively sprint to IPO
Recently, Black Sesame Intelligence officially passed the listing hearing of the Hong Kong Stock Exchange, taking an important step in landing on the Hong Kong stock market.
Black Sesame Intelligence submitted to the Hong Kong Stock Exchange for the first time on June 30, 2023, sprinting to be the "first stock of domestic autonomous driving computing chips". However, because Black Sesame Intelligence did not pass the listing hearing within 6 months, the IPO application lapsed in early January.
Image source: Black Sesame Smart
Subsequently, Black Sesame Intelligence submitted a listing application for the second time in March this year, and once again hit the Hong Kong stock market, and the progress is good so far. If the follow-up listing process goes smoothly, Black Sesame Intelligence is expected to become the first stock of autonomous driving computing chips in China.
In the field of autonomous driving computing chips, Black Sesame Intelligence is the first domestic company to sprint to the IPO of the Hong Kong Stock Exchange, but it is not the only one. In March this year, after Black Sesame Intelligence submitted its report to the Hong Kong Stock Exchange for the second time, Horizon also submitted a prospectus to the Hong Kong Stock Exchange, officially launching the IPO listing process.
Prior to this, Horizon had repeatedly rumored plans to go public. In 2020, Horizon went to the Science and Technology Innovation Board to be listed. In 2021, it was reported that Horizon was advancing a U.S. stock IPO, raising about $1 billion. This time, with the submission of the prospectus, it means that Horizon has officially put the IPO on the agenda.
In addition, Wang Kai, founder, director and CEO of SiEngine Technology, also revealed that the shipment volume of SiEngine's "Longying No. 1" chip is expected to reach one million in 2024, and the IPO will be launched in due course when sales and revenue increase rapidly. It is reported that SiEngine Technology is expected to achieve an IPO around 2025.
This means that Hesai Technology (HSAI. US) and Suteng Juchuang (02498.HK) two major lidar "unicorns" have been listed on the IPO one after another, and the leading players in the autonomous driving computing chip track have also quietly opened a new round of capital competition.
Also lively is the camp of autonomous driving solution providers.
In addition to Zhixing Technology (01274. HK), according to Gasgoo, there are currently many companies in this field such as Youjia Innovation, Zongmu Technology, WeRide, Pony.ai, and Momenta in the queue for IPO.
Image source: Youjia Innovation
Among them, Youjia Innovation initially planned to list on the A-share market and officially launched the IPO process in August 2023. However, in consideration of the changes in the overall market environment and the future development opportunities in the international market, Youjia Innovation finally suspended the A-share listing in May this year, chose to move to the Hong Kong Stock Exchange (a wholly-owned subsidiary of the Hong Kong Stock Exchange), and officially submitted a listing application to the Stock Exchange on May 27.
Zongmu Technology submitted a listing application to the main board of the Hong Kong Stock Exchange on March 28 this year. It is worth noting that this is also the company's third IPO.
As one of the earliest domestic start-ups to deploy autonomous driving, Zongmu Technology was approved to be listed on the National Equities Exchange and Quotations (NEEQ) as early as January 19, 2017, with the stock code of 870816. However, the listing did not last long, and in December 2017, Zongmu Technology submitted an application to terminate the stock listing, and the listing was terminated on the 11th of that month.
Five years later, Zongmu Technology sprinted to IPO again and applied for listing on the Science and Technology Innovation Board in November 2022, which was also unsuccessful. On September 27, 2023, Zongmu Technology announced that it would withdraw its listing application on the Science and Technology Innovation Board, and it broke through the IPO for the second time.
In fact, after the termination of the previous IPO on the Science and Technology Innovation Board, some analysts believe that Zongmu Technology will most likely seek to be listed, and may turn to overseas capital markets represented by Hong Kong stocks and US stocks. After all, in the matter of IPO, Zongmu itself does not have many choices, and the next thing is to see if it can "keep the clouds open and see the moon".
Like Zongmu Technology, as a leading representative in the field of intelligent network simulation testing, SIMU Technology has also experienced a bumpy IPO journey.
As a leading representative in the field of intelligent network simulation testing, SAIM Technology was jointly established by CCID Group and Beijing Bangbang Security Technology Co., Ltd., a subsidiary of the Ministry of Industry and Information Technology, and introduced investments from Huawei, Jingwei Hengrun, etc. According to relevant statistics, in 2023, SIMMON will rank first in China's ICV simulation test software and platform market, accounting for about 5.9% of the market share.
On May 29, SAIM submitted a listing application to the Hong Kong Stock Exchange, which is also the third time that the company has entered the Hong Kong Stock Exchange. The first two were in December 2022 and October 2023, and both chose the Hong Kong Stock Exchange, but they were unsuccessful.
According to relevant sources, Foretek is also entering the final sprint stage of the declaration of Hong Kong stock IPO materials, and Momo Zhixing has also previously said that it is considering an IPO in Hong Kong this year. There are also online car-hailing platforms such as Cao Cao Travel and Ruqi Travel that are betting heavily on the autonomous driving business, and have also submitted prospectuses to the Hong Kong Stock Exchange in the past two months. It can be seen that behind this round of intelligent driving IPO boom, most companies finally chose Hong Kong stocks.
Behind this, on the one hand, compared with A-shares, listing in Hong Kong is more conducive to the "unicorns" of intelligent driving to grasp the opportunities of the international market, obtain more financing channels and business development opportunities, and seek more possibilities for overseas market development.
On the other hand, the current A-share IPO issuance policy continues to tighten and slow down, while Hong Kong stocks continue to lower the threshold for overseas listing of technology companies, which is also an important consideration. For example, the introduction of the 18C rules of the Hong Kong Stock Exchange last year greatly lowered the market value threshold for start-up IPOs.
What's more, at present, the policy level is still continuing to provide benefits for mainland enterprises to list in Hong Kong. In April this year, the China Securities Regulatory Commission (CSRC) issued the "Five Measures for Capital Market Cooperation in Hong Kong", proposing to further strengthen communication and coordination with relevant departments to support eligible leading enterprises in the mainland industry to list in Hong Kong.
According to the official website of the China Securities Regulatory Commission, as of May 31, in addition to the enterprises that have obtained the filing notice, there are still 110 companies that have submitted filing applications, of which 87 plan to list in Hong Kong. It is foreseeable that under this IPO fever in Hong Kong, more intelligent driving companies may seek to be listed in Hong Kong in the future.
The "promoter" behind the IPO
The lowering of the listing threshold has certainly allowed more intelligent driving startups to have IPO listing opportunities.
But fundamentally speaking, the current shortage of funds within the industry, or the problem of performance loss, is the key driver for intelligent driving companies to seek IPO.
This is especially evident in the prospectuses of various companies.
According to the financial report data disclosed by Black Sesame Intelligence, as of December 31, 2023, the cumulative shipment of Black Sesame Intelligence's SoC products exceeded 152,000 pieces. In terms of number of deliveries, it will account for 7.2% of China's high-computing SoC market in 2023.
Despite this, at present, Black Sesame Intelligence has not been able to get rid of losses.
Image source: Black Sesame Smart Prospectus
From 2021 to 2023, Black Sesame Intelligence will achieve revenue of 61 million yuan, 165 million yuan, and 312 million yuan respectively. While the revenue has increased steadily, the loss of Black Sesame Intelligence has also expanded year by year, with net losses of 2.357 billion yuan, 2.754 billion yuan, and 4.855 billion yuan respectively in the past three years, with a total loss of nearly 10 billion yuan in three years; The adjusted net loss for the same period was 610 million yuan, 700 million yuan and 1.25 billion yuan respectively, and the total net loss for the three years was 2.56 billion yuan, which is still in the midst of a huge loss.
Black Sesame Intelligence pointed out that the company's large losses were mainly caused by excessive R&D investment. As we all know, the chip itself has multiple typical characteristics such as capital-intensive, talent-intensive and technology-intensive, each of which requires a large amount of capital investment.
From 2021 to 2023, the R&D investment of Black Sesame Intelligent will be 595 million yuan, 764 million yuan and 1.363 billion yuan respectively, accounting for 984%, 461.8% and 436.2% of the total revenue of the current period, respectively.
Similar to the situation of black sesame intelligence, due to the high input-output ratio and insufficient hematopoietic capacity, Horizon is also facing a large loss.
Image source: Horizon Prospectus
From 2021 to 2023, Horizon will achieve revenue of 467 million yuan, 906 million yuan, and 1.552 billion yuan respectively, with a compound annual revenue growth rate of 82.3%. Since then, the scale of mass production of Horizon has continued to expand, which is the core support for the steady improvement of its business.
According to the data disclosed in the prospectus, as of the latest practicable date, the Horizon software and hardware integrated solution has been adopted by 24 OEMs and installed in more than 230 models. Since mass production began in 2021, Horizon's processing hardware solutions have been delivered to 5 million.
However, due to the high R&D investment, and the fact that Horizon as a whole is still in the early stage of commercialization, it requires a large amount of upfront investment in market expansion, brand marketing and continuous strengthening of technical strength, and Horizon's performance loss has remained high in the past few years.
From 2021 to 2023, Horizon's net loss will be 2.064 billion yuan, 8.72 billion yuan, and 6.739 billion yuan respectively, with a total net loss of 17.523 billion yuan in the three years, and the adjusted net loss will be 1.103 billion yuan, 1.891 billion yuan, and 1.635 billion yuan respectively, totaling 4.629 billion yuan. Among them, the R&D investment in the same period was 1.14 billion yuan, 1.88 billion yuan and 2.366 billion yuan respectively, accounting for 245%, 207.6% and 152.5% of the revenue in the same period.
In addition, Youjia Innovation, Zongmu Technology, and even Hesai Technology, Suteng Juchuang and Zhixing Technology, which have been successfully listed, have not yet achieved a turnaround, and the losses of some of these companies continue to expand.
The only exception may be SAMU.
Image source: SAMU Technology Prospectus
According to the data disclosed by the company, from 2021 to 2023, Saimu Technology will achieve revenue of 106 million yuan, 145 million yuan and 176 million yuan respectively, and net profit of 37.571 million yuan, 48.686 million yuan and 53.431 million yuan respectively.
On the one hand, the main business continues to lose money, on the other hand, the intelligent driving track has gone through several years of big waves, although some head players have been born in various subdivisions, but the overall market pattern is far from mature and stable, even the head enterprises still need to continue to invest in funds, technology upgrading and market expansion, in order to build sustainable competitiveness.
In the past, in the case of the lack of "hematopoietic" ability of intelligent driving enterprises, everyone can still obtain sufficient financial support through financing in the primary market. According to the information disclosed by Tianyancha, before submitting the IPO application, Horizon, Black Sesame Intelligence, Youjia Innovation, Zongmu Technology, Suteng Juchuang and Hesai Technology disclosed 14, 9, 12, 10, 14 and 10 financings respectively.
At the same time, affected by multiple factors such as the epidemic and changes in the international situation, coupled with the emergence of a valuation bubble of leading enterprises, it is becoming more and more difficult for intelligent driving companies to raise funds in the primary market.
Under the dual pressure of internal and external, IPO listing will inevitably become the choice of more and more enterprises to open up new financing channels and business development space.
However, on the other hand, although IPO listing can alleviate the current financial pressure of intelligent driving companies to a certain extent, it is more important to build a stable and sustainable business model. Otherwise, relying solely on capital market financing, while ignoring the endogenous growth momentum and the sustainability of the profit model, is tantamount to "building in the sky".
Image source: Oriental Fortune Network
For example, overseas lidar companies such as Velodyne, Luminar, Aeva, Innoviz, Ouster, and Quanergy, which were listed in the early stage, have shrunk their stock prices and market capitalization in the past two years due to the lack of follow-up business development and the lack of sustainable profit model support.
Among them, when Luminar went public at the end of 2020, its valuation reached $3.4 billion, once becoming the highest lidar company in the U.S. stock market, but now it is less than $700 million, a decrease of nearly 80%. When Quanergy went public through a SPAC in early 2022, it was also valued at $2 billion, but filed for bankruptcy protection just 10 months later.
In comparison, several local intelligent driving industry chain companies that have successfully IPOed since 2023 have performed relatively steadily so far. For example, Zhixing Technology, when it was listed at the end of 2023, the issue price was HK$29.65 per share, and as of press time, it was close to HK$80 per share, with a total market value of HK$18 billion, while it was only a little over HK$6 billion at the time of listing.
Image source: Oriental Fortune Network
Suteng's performance is also very bright. At the beginning of the year, the issue price of Suteng Juchuang was HK$43 per share, and now it has risen to HK$70, with a total market value of more than HK$30 billion, of which the market value of Suteng Juchuang once stood at HK$40 billion on June 11.
Behind this, in addition to the strong development momentum of the listed companies themselves, the continuous improvement of technology maturity and the continuous acceleration of commercial applications, to a large extent, may also benefit from the vigorous development of China's intelligent driving industry as a whole, so that the value chain of the track has been re-emphasized and reshaped, and the long-term investment value and growth potential have been further highlighted.
Whatever the reason, the situation that intelligent driving industry chain companies are undervalued and treated coldly in the overseas secondary market is being quietly rewritten.