Maintain Overweight: deeper cooperation with major customers drives sentiment recovery, HSD design-win pipeline improving
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Maintain Overweight: deeper cooperation with major customers drives sentiment recovery, HSD design-win pipeline improving
J.P. Morgan believes Horizon Robotics still has flexibility in its cooperation model within major customers' supply chains. Although it lowered its 2026-2028 revenue forecasts by 7%-10%, it maintains an Overweight rating and a Jun-27 target price of HK$10.60.
- The share price rose 15% on June 29, outperforming the Hang Seng Index, which the report attributes to sentiment recovery driven by deeper cooperation with key customers.
- Year to date, the share price has fallen 52.9%, underperforming the Hang Seng Index by 42.7 percentage points, mainly due to weak downstream demand, intensified competition, and concerns over customers' in-house chip development.
- The report forecasts 2026-2028 revenue at RMB5.292 billion, RMB8.864 billion, and RMB15.587 billion, representing year-on-year growth of 40.8%, 67.5%, and 75.8%, respectively.
- Valuation uses the P/S method, with the Jun-27 target price of HK$10.60 based on 11x 12-month rolling forward P/S, lower than the previous 18x assumption.
Report interpretation
Overview
This report focuses on the market sentiment recovery of Horizon Robotics-H after deeper cooperation with major customers. J.P. Morgan believes that, as a full-stack intelligent driving solution provider, the company can maintain wallet share in leading automakers' supply chains through flexible models such as IP licensing, chip sales, and turnkey solutions. Despite short-term forecast cuts due to weak downstream demand and price competition, the report remains positive on the support from the HSD design-win pipeline, product mix optimization, and market share expansion for revenue growth in 2027 and beyond.
Core views
The core views are: first, deeper cooperation with major customers has eased market concerns that OEM in-house chips will squeeze the space for third-party suppliers; second, integrated cockpit-driving platforms such as Horizon Starry are expected to win more new vehicle model designations; third, 2026 will still be dragged by weak demand and competitive pricing, but revenue growth in 2027-2028 is expected to accelerate significantly; fourth, Overweight is maintained even after lowering the valuation multiple, indicating the report believes the peak of pessimistic expectations has passed.
Analysis framework
The report first breaks down the reasons for the year-to-date share price underperformance, then evaluates the impact of deeper cooperation with key customers on investor confidence and order visibility, and supports the target price through earnings forecast revisions, peer P/S valuation comparisons, style exposure, and financial modeling.
Methodology notes
11x 12-month rolling forward P/S
As the company is still in a stage of rapid revenue growth and improving profitability, the report uses P/S valuation rather than earnings multiples; the Jun-27 target price of HK$10.60 is based on 11x 12-month rolling forward P/S.
2026-2028 revenue forecasts lowered by 7%-10%
The report lowered its 2026-2028 revenue forecasts to reflect weak downstream demand, competitive pricing, and a more flexible cooperation strategy.
higher than Hong Kong-listed peers, close to the global average for intelligent driving-related peers
The report believes Horizon's strengthened leadership in intelligent driving justifies a valuation premium relative to Hong Kong-listed peers.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- 9660.HKcovered stock in the report, Hong Kong-listed Horizon Robotics-H
- Strengths
- full-stack intelligent driving capabilities, chip and algorithm portfolio, flexible business model, deeper cooperation with major customers, potential improvement in the HSD design-win pipeline.
- Weaknesses
- still in a loss-making stage at present, with short-term pressure from weak downstream demand, competitive pricing, and fluctuations in investor confidence.
- Comparison
- Its valuation commands a premium relative to Hong Kong intelligent driving peers, which the report believes is supported by its leadership position in intelligent driving.
- Risks
- OEM in-house solutions, weaker-than-expected orders, new product delays, lack of a long operating history.
- Hong Kong and global intelligent driving-related peersvaluation reference group
- Strengths
- used to compare P/S, gross margin, EBIT margin, and expected revenue growth.
- Weaknesses
- Peers differ significantly in business model, profitability stage, and market liquidity, limiting direct comparability.
- Comparison
- The report states that the target multiple is about 80% higher than Hong Kong-listed peers, but close to the average of global intelligent driving or related peers.
- Risks
- Lower industry valuation multiples, declining risk appetite, or a deteriorating competitive landscape would affect relative valuation.
Key data
- current share priceHK$4.08As of June 30, 2026.
- target priceHK$10.60Jun-27 target price, previous value was HK$13.00.
- 2026E revenueRMB5.292 billionUp 40.8% year on year, about 7% lower than the previous forecast.
- 2027E revenueRMB8.864 billionUp 67.5% year on year, about 8% lower than the previous forecast.
- 2028E revenueRMB15.587 billionUp 75.8% year on year; the report expects profitability in 2028.
- year-to-date share price performance-52.9%Underperformed the Hang Seng Index by 42.7 percentage points.
- 2028E adjusted net profitRMB2.169 billion2026E and 2027E are still loss-making; 2028E is expected to turn positive.
- valuation assumption11x P/SBased on 12-month rolling forward P/S, lower than the previous 18x assumption.
Impact & implications
In terms of investment implications, the short-term key is whether the market believes that deeper cooperation with major customers can offset the share pressure from OEM in-house chip development; in the medium term, it depends on whether HSD design-win expansion, product mix optimization, and revenue scaling can drive the realization of the 2028 profitability inflection point. If cooperation and design wins continue to materialize, the current valuation may reflect excessive pessimism; if downstream demand remains weak or price competition worsens, there is still downside risk to the target price and profitability path.
Risks
- Intensifying competition, especially pressure from OEM in-house intelligent driving solutions and chips.
- Demand contraction or delays in new projects leading to weaker-than-expected orders.
- R&D or supply chain disruptions causing delays in new products.
- The company has a short post-listing operating and profitability track record, making the profitability inflection point uncertain.
- Competitive pricing and flexible cooperation strategies may suppress revenue quality or margins.
What to watch
- Whether the HSD design-win pipeline expands in 2H26 and beyond.
- Whether cooperation with key customers continues to deepen through forms such as IP licensing, chip sales, and turnkey delivery.
- Progress of design wins for the Horizon Starry integrated cockpit-driving platform in new vehicle models.
- Changes in downstream intelligent driving demand and urban NOA penetration.
- Whether 2026-2028 revenue growth, gross margin, and expense ratio support a return to profitability in 2028.