UBS initiates coverage on Momenta with a Buy rating and a target price of HK$360.00

Overview

This is UBS's initiation report on Momenta (6880.HK). The report positions Momenta as China's leading independent autonomous driving solutions provider, covering mass-production vehicle L2/urban NOA solutions and L4 businesses such as robotaxi. UBS believes that, against the backdrop of automotive intelligence upgrades and rising penetration of advanced ADAS, Momenta's technological capabilities, customer coverage, and asset-light software model are likely to drive rapid revenue growth and strong operating leverage.

Core views

The core views are: first, Momenta holds a leading commercial position among independent urban NOA solution providers, with more than 170 cumulative design wins, over 68 of which have reached SOP, and partnerships with 24 global OEMs. Second, L2+ ADAS is rapidly becoming a key feature for competitive vehicle models, and Momenta is well positioned to expand installations through its technology and cost efficiency. Third, a rising share of software licensing and subscription revenue should help improve gross margin and operating leverage. Fourth, although competition, pricing pressure, rising memory costs, and regulatory constraints pose risks, UBS believes strong medium-term revenue growth and high contribution margins can support a relatively high P/S valuation.

Analysis framework

The report mainly combines a top-down assessment of industry opportunity with bottom-up company forecasting: it first evaluates L2/L4 autonomous driving TAM, ADAS penetration, and OEM intelligent upgrade trends, then derives 2026-2030E revenue, profit, and valuation forecasts based on Momenta's design wins, SOPs, customer mix, installation assumptions, and segment revenue projections. For valuation, the report uses a 2028E P/S multiple and compares the company with peers such as Pony, WeRide, Tesla, Mobileye, and Horizon.

Methodology notes

• Valuation methodsRelative P/S valuation

  8x 2028E P/S

  UBS believes Momenta is still in a loss-making stage, making traditional near-term P/E, P/B, and EV/EBITDA less applicable; therefore it values the company based on 2028E revenue and 8x P/S, with reference to valuation levels of comparable autonomous driving companies.

• Industry analysisTAM and penetration framework

  Rising penetration of advanced ADAS

  The report concludes that the market opportunity for advanced ADAS will continue to expand, based on rising installation penetration of L2++ ADAS, increasing software value per vehicle, and the migration toward end-to-end intelligent driving architectures.

• Company forecastInstallation volume-driven model

  OEM design wins and annual installation volume

  The report derives Momenta's mass-production vehicle solution installation volume based on customer design wins, SOPs, brand pipeline, and vehicle launch cadence, and maps installation volume to revenue growth.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Momenta (6880.HK)

  Core covered stock

  Strengths

  Broad OEM coverage, leading commercialization in urban NOA, asset-light software model, high gross margin in 2025, and relatively strong visibility on installation growth.

  Weaknesses

  The company is still loss-making, commercialization visibility for L3 and L4 is limited, and it is highly dependent on OEM project timing and vehicle sales volumes.

  Comparison

  Relative to Horizon, the report believes Momenta has a lighter cost structure and greater operating leverage potential; relative to Mobileye, Momenta has lower earnings maturity but faster revenue growth; relative to Wayve, Momenta has a longer commercialization track record, a larger installation base, and stronger customer relationships.

  Risks

  Intensifying competition, OEM in-house autonomous driving development substitution, downstream pricing pressure, rising memory chip costs, and overseas data security and geopolitical regulatory constraints.

• Horizon Robotics

  Comparable company and competitor

  Strengths

  Provides both hardware and software solutions and operates in a similar ADAS segment.

  Weaknesses

  The report believes its cost structure is relatively heavier as a hardware supplier.

  Comparison

  Momenta and Horizon are in a similar market cap range, but UBS believes Momenta's software model offers higher potential operating leverage.

  Risks

  Faces the same ADAS penetration, cost, and competitive risks as Momenta.

• Mobileye

  Global comparable company

  Strengths

  Its business is more mature and already profitable.

  Weaknesses

  The report believes its 2025-2028E revenue growth momentum is weaker than Momenta's.

  Comparison

  UBS forecasts Mobileye's 2025-2028E revenue CAGR at 10%, below Momenta's 64%.

  Risks

  Global autonomous driving platform competition and valuation rerating risk.

Key data

• RatingBuyUBS assigns a Buy rating in its initiation of coverage.
• Target priceHK$360.00Based on 8x 2028E P/S.
• Current priceHK$288.00As of 2026-07-16.
• Implied upside25%Calculated from the target price relative to the current price.
• 2025-2030E revenue CAGRAbout 50%Driven by expanding OEM coverage, installation growth, and medium-term contributions from robotaxi/robovan.
• Annual installation forecast510,000 vehicles in 2025; 2.5 million in 2028EEquivalent to an increase in share of annual vehicle sales in China from below 2% to about 10%.
• Number of OEM partners24Covering domestic and global automakers.
• Cumulative design winsMore than 170Of which more than 68 have reached SOP.
• Cumulative installationsMore than 680,000 vehiclesThe report says the company serves 9 of the global top 10 automakers.
• 2028E revenueRmb10,770mRevenue assumption in the target price derivation table.
• 2025 gross margin72%The report attributes this to a relatively fixed R&D cost structure and software synergies.

Impact & implications

If UBS's assumptions materialize, Momenta will gradually evolve from a pure high-growth autonomous driving software supplier into a platform-type autonomous driving company with scaled vehicle installations, high-margin software licensing, and L4 operating optionality. For investors, the key question is whether advanced ADAS penetration, OEM project execution, and progress in overseas/L3/L4 regulation can support a high P/S valuation.

Risks

• Competition in China's L2+ / urban NOA market is intense, with competitors including Huawei, Horizon, Zhuoyu DJI, DeepRoute.ai, and QCraft.
• OEM customers may increase in-house autonomous driving technology development, weakening third-party software suppliers' pricing power and market share.
• Intense competition among downstream automakers may lead to pricing pressure on software suppliers and compress Momenta's margins.
• Rising memory chip prices may increase the cost of advanced NOA solutions and affect penetration growth.
• Tightening regulation in China and overseas on intelligent driving functional safety, accident liability, data security, data sovereignty, and cybersecurity may increase compliance costs and delay deployment.
• Geopolitical tensions and restrictions on Chinese technology may constrain overseas expansion and long-term TAM.
• Commercialization of robotaxi, robovan, and L3 subscription models still faces uncertainty in regulation and implementation timing.

What to watch

• Whether annual installation volumes in 2026-2028E are delivered in line with the path of 1.1 million, 1.8 million, and 2.5 million vehicles.
• SOP and mass-production progress of major customer projects such as BYD, SAIC, Chery, GWM, Dongfeng Nissan, and GAC.
• Changes in penetration of L2++ / urban NOA across vehicle models at different price points.
• Whether the share of software licensing and subscription revenue increases, and whether gross margin can remain at a high level.
• Whether pre-SOP for L3 projects, OEM acceptance, and early-2027 mass-production plans are affected by regulation.
• Progress in robotaxi testing and operating permits in Suzhou, Shanghai, Wuxi, Abu Dhabi, and other locations.
• Changes in overseas data security, software certification, localization deployment, and geopolitical restrictions.
• Memory chip price trends and their impact on advanced ADAS configuration rates.