HSBC Maintains a Buy Rating on WeRide, Target Price USD 11.40

Overview

This is HSBC's 1Q26 earnings review on WeRide (WRD.US). The report says the company's 1Q26 performance was broadly in line with expectations, with revenue growth but quarter-to-quarter volatility mainly driven by project-based revenue recognition, customer validation schedules, holiday effects, and some deferred overseas deliveries rather than a deterioration in underlying demand trends. HSBC maintains a Buy rating and a USD11.40 target price.

Core views

The core view is that fleet expansion and commercialization progress remain intact: as of end-April, about 1,300 robotaxis had been deployed, and the 2026 fleet guidance is unchanged; China operations continue to improve in user growth and utilization, while overseas expansion is progressing in markets such as Dubai, Singapore, and Slovakia. The report also believes the current share price is close to its bearish-scenario assumption, and with USD61m of the USD100m buyback plan already completed, the stock looks attractive.

Analysis framework

The report analyzes 1Q26 operating data, fleet deployment, robotaxi utilization, overseas project progress, and a DCF valuation framework. Forecasts and DCF assumptions are unchanged, and the ADR target price is derived using HSBC Global Investment Research's 2026 year-end USD/RMB forecast of 6.75.

Methodology notes

• Valuation methodsDCF

  Discounted cash flow valuation

  HSBC values the company using the present value of free cash flow from 2026e-2035e and a 2.5% terminal growth rate. With a WACC of 11.6%, this implies enterprise value of RMB22.5bn and equity value of RMB26.5bn, which translates into a WRD.US target price of USD11.40.

• ratingHSBC stock rating framework

  Upside relative to the current share price

  HSBC discloses that its Buy rating typically corresponds to more than 20% upside to the current share price; this report implies about 49% upside versus the current price.

Asset mapping & comparison

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

• WRD.US

  Core coverage name

  Strengths

  Fleet ramp guidance remains unchanged, robotaxi utilization is improving, overseas commercialization continues to advance, and the buyback plan is still being executed.

  Weaknesses

  The company remains in a loss-making and cash-consuming phase, and revenue recognition is heavily influenced by project delivery timing.

  Comparison

  The report believes the current valuation is close to its bearish-scenario assumption, while the target price still implies about 49% upside versus the current share price.

  Risks

  Regulatory approval delays, competition from scaled L3 players, overseas execution uncertainty, and potential equity financing dilution.

• 800 HK

  Corresponding H-share listing

  Strengths

  HSBC also maintains a HKD29.60 target price.

  Weaknesses

  Affected by ADR/H-share conversion, exchange rates, and liquidity.

  Comparison

  Derived using USD/HKD 7.80 and an ADR:H-share conversion ratio of 3.

  Risks

  Shares the same commercialization, regulatory, and financing risks as WRD.US.

• Joyson Electronics A (600699.SS)

  Related beneficiary stock

  Strengths

  As a key safety hardware supplier to robotaxi players, it could benefit from broader robotaxi adoption.

  Weaknesses

  It is not a core coverage name in this report, so information is limited.

  Comparison

  HSBC mentions its Buy rating and RMB38.90 target price.

  Risks

  Affected by the pace of robotaxi industry adoption and supply chain competition.

Key data

• 1Q26 revenueRMB114mUp 58% YoY.
• 1Q26 gross profitRMB39.6mUp 56% YoY, with a 35% gross margin.
• Target priceUSD11.40Unchanged from the prior target price.
• Current share priceUSD7.65Market data as of the May 13, 2026 close.
• Expected upside+49.0%Based on the USD11.40 target price and the USD7.65 share price.
• Robotaxis deployedabout 1,300As of end-April.
• 1Q26 average daily orders per vehiclemore than 17Peak daily orders reached 28.
• DCF WACC11.6%Cost of equity 13.8%, cost of debt 3.0%.
• 2026e revenue forecastRMB962mThe chart shows revenue continuing to grow from 2025a to 2028e.
• 2028e revenue forecastRMB3,554mHSBC expects revenue to increase significantly versus 2026e.

Impact & implications

If fleet deployment, city-level commercialization, and overseas project execution proceed as expected, WeRide's revenue recognition could improve during the rest of 2026, and valuation may benefit from greater visibility into robotaxi commercialization. But the company is still in an investment phase, net profit and free cash flow are expected to remain negative in 2026e-2028e, and the share price is sensitive to regulatory progress, the competitive landscape, and financing expectations.

Risks

• Regulatory approvals or commercialization permits could move slower than expected, especially for cross-district and city-level operations in Tier-1 cities.
• Safety incidents could temporarily tighten the regulatory pace, increasing share price volatility.
• The entry of scaled L3 players, OEMs, and Tier-1 suppliers could compress the window for independent robotaxi operators to build density and operating moats.
• If the company overinvests in overseas expansion while domestic fleet scale lags, its competitive position in China could weaken.
• Overseas markets such as the Middle East involve policy, geopolitical, and local execution uncertainties.
• The international model built around partnerships with third-party platforms such as Uber creates cross-border execution, profitability, and scalability risks.
• Continued cash burn and the early-stage nature of the business may create equity financing needs, which could dilute shareholders and pressure sentiment.

What to watch

• Whether 2026 fleet deployment continues to meet guidance.
• Disclosure on commercialization progress in the 2Q26 update.
• Licensing, operations, and order progress in overseas projects such as Dubai, Singapore, and Slovakia.
• Changes in China robotaxi registered users, average daily orders per vehicle, and peak utilization.
• Whether regulators support cross-district and city-level commercial operations in Tier-1 cities.
• The execution pace of the remaining portion of the USD100m buyback plan.
• Free cash flow, cash balance, and any signs of potential equity financing.