1Q26 gross margin missed expectations, but RoboSense is still viewed favorably as a beneficiary of the LiDAR upgrade cycle

Overview

This report is a company research update by J.P. Morgan on RoboSense Technology (02498.HK). The core conclusion is that 1Q26 gross margin missed expectations, mainly due to insufficient UTR during the capacity ramp-up phase and relatively high material costs; however, the company is well positioned to benefit from ADAS LiDAR penetration in China's new energy vehicle market, specification upgrades, and expanding demand from robotics applications. The report maintains an Overweight rating and rolls the target price forward to HK$45.00 for Jun-27.

Core views

The report believes that in the short term, aggressive pricing of entry-level LiDAR, soft downstream demand, declining ASP, and R&D investment will weigh on revenue and margins; in the medium term, LiDAR is penetrating from premium models into more affordable vehicles, while specification upgrades in resolution, detection range, and size are accelerating. RoboSense's in-house SPAD-SoC solution is expected to improve performance at lower cost, helping the company win more design wins, optimize product mix, stabilize ASP, and drive gross margin recovery. Deeper cooperation with BYD and mass production of its in-house solution after 2H26 are seen as important catalysts.

Analysis framework

The report combines the company's 1Q26 results, shipment volume, ASP, gross margin, expenses, and net loss performance to assess short-term earnings pressure; at the same time, it uses China's new energy vehicle ADAS LiDAR penetration, upgrades to BYD's intelligent driving solutions, demand from robotics applications, and the company's in-house SPAD-SoC platform as the basis for medium-term growth. Valuation uses a one-year forward P/S approach and compares it with LiDAR peers.

Methodology notes

• Relative valuationP/S valuation method

  One-year forward price-to-sales ratio

  The report derives the Jun-27 target price of HK$45.00 using 3.8x one-year forward P/S, and describes this multiple as in line with LiDAR peer valuations.

• Industry cycle analysisLiDAR specification upgrade cycle

  Higher penetration combined with specification upgrades

  The report believes ADAS LiDAR continues to expand into more affordable vehicle models, while upgrades toward higher channel counts, higher resolution, longer detection range, and smaller size are accelerating, from which RoboSense is expected to benefit directly.

• Earnings path assessmentShipment growth and gross margin recovery

  Volume ramp-up, product mix improvement, and cost reduction

  The report expects mass production of the in-house SPAD-SoC solution after 2H26 to support shipment growth and gross margin recovery, but continued R&D investment and pricing pressure may delay breakeven until 2027.

Asset mapping & comparison

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

• RoboSense Technology (02498.HK)

  The core covered name in this report, with J.P. Morgan maintaining an Overweight rating.

  Strengths

  In-house SPAD-SoC platform, beneficiary of ADAS LiDAR specification upgrades, growing demand from robotics applications, deeper cooperation with BYD, and potential mass-production volume ramp after 2H26.

  Weaknesses

  1Q26 gross margin was below expectations, ASP declined sharply, entry-level LiDAR pricing strategy is aggressive, short-term revenue and margins are under pressure, and breakeven may be delayed.

  Comparison

  The target price uses 3.8x one-year forward P/S, which the report says is in line with LiDAR peer valuations.

  Risks

  Delays or cancellations of design wins, intense industry competition, continued price and gross margin pressure, and escalating geopolitical tensions.

Key data

• Current share priceHK$31.64As of 2026-05-29.
• Target priceHK$45.00Jun-27 target price; previous value was Dec-26 HK$53.00.
• Implied upsideApproximately 42.2%Calculated from the HK$45.00 target price and the HK$31.64 current price.
• 1Q26 revenue growthYoY +40%Revenue performance was in line with J.P. Morgan's expectations.
• 1Q26 LiDAR revenue growthYoY +46%Driven by rapid shipment growth.
• 1Q26 LiDAR shipment growthYoY +204%Momentum was stronger in the robotics segment.
• 1Q26 ASP changeYoY -52%Reflecting pricing pressure in the entry-level LiDAR market.
• 1Q26 gross margin21.7%Down 1.8 percentage points year over year and 6.7 percentage points quarter over quarter, below expectations.
• 1Q26 adjusted net lossRmb44mnExpenses rose 13% year over year, mainly due to R&D investment.
• Revenue growth forecast2026E/2027E YoY +49%/+57%Based on demand growth in ADAS and robotics.
• Valuation multiple3.8x one-year forward P/SPreviously 4.7x, lowered due to margin pressure and delayed breakeven.

Impact & implications

For investors, the report conveys the message that 'short-term margins are under pressure, but the medium-term growth thesis remains intact.' If the in-house SPAD-SoC solution enters mass production smoothly after 2H26 and deeper cooperation with BYD leads to more ADAS LiDAR shipments, the share price could see catalysts; conversely, if price wars, material costs, or delays in design wins persist, valuation and the earnings path may remain under pressure.

Risks

• Delays or cancellations of design wins could weaken shipment growth expectations.
• Intensifying industry competition could cause further declines in prices and ASP.
• Persistent pricing pressure and gross margin pressure could weigh on earnings recovery.
• Sustained high R&D investment could delay breakeven.
• Escalating geopolitical tensions could affect the supply chain, customer demand, or valuation.

What to watch

• Progress of mass production for the in-house SPAD-SoC solution in 2H26.
• Changes in orders and shipments driven by upgrades to BYD's intelligent driving and LiDAR solutions.
• The pace of ADAS LiDAR penetration into more affordable vehicle models.
• Growth in LiDAR demand from robotics applications, including lawn-mowing robots, robotaxis, and logistics robots.
• Whether ASP, material costs, UTR, and gross margin begin to stabilize and recover.
• Whether the company's breakeven is delayed to 2027 as the report expects.