Horizon Robotics 1H26 revenue came in below expectations, but gross margin remained resilient

Overview

This report is Bernstein's review of Horizon Robotics' preliminary 1H26 results. The core conclusion is that revenue was significantly below the firm's forecast and market consensus, mainly due to declining China passenger vehicle sales and slower-than-expected progress in new design wins; however, gross margin remained around 63.1%, and cost control kept the non-GAAP recurring loss broadly in line with forecasts, limiting the earnings impact.

Core views

Bernstein maintains its Outperform rating on Horizon Robotics, believing that market concerns over weak revenue, PV sales pressure, and competition from OEM in-house chips have already been largely reflected in the stock's pullback over the past six months. The report emphasizes that gross margin above 60% shows the company still has pricing power; the BYD partnership, especially the J6H-driven GodEyeB models and rising share in GodEyeC, is expected to improve visibility in 2H26 and 2027.

Analysis framework

The report compares preliminary 1H26 results with Bernstein's own forecasts and Bloomberg consensus expectations, focusing on the revenue shortfall, gross margin, differences between GAAP and non-GAAP earnings, cost control, and progress in customer partnerships; it then assesses, in conjunction with EV/Sales valuation, target price, and the stock's pullback, whether downside risks have already been priced in by the market.

Methodology notes

• valuation methodEV/Sales

  enterprise value-to-sales multiple valuation

  Bernstein applies a 10.3x EV/Sales multiple to 2BF, meaning 2H27-1H28 sales of RMB11.5bn, to derive its HKD10 target price for Horizon Robotics.

• rating frameworkBernstein equity rating

  definition of the Outperform rating

  Bernstein's equity ratings are based on relative performance versus the market index over the next 12 months; Outperform means the stock is expected to outperform the relevant market index by more than 15 percentage points.

Asset mapping & comparison

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

• 9660.HK Horizon Robotics

  Covered stock in the report; Bernstein maintains an Outperform rating.

  Strengths

  Gross margin remains around 63.1%, with strong cost control; the report believes the company is one of the few credible third-party suppliers capable of taking share from Nvidia, while progress in the BYD partnership improves market confidence.

  Weaknesses

  1H26 revenue came in below both Bernstein's forecast and Bloomberg consensus, new design wins were slower than expected, and the company was affected by weak China passenger vehicle sales.

  Comparison

  Compared with Nvidia and OEM in-house chips, the report believes Horizon remains competitive among third-party smart driving chip suppliers; even if OEMs strengthen in-house development, meaningful room should still remain for third-party suppliers.

  Risks

  Slower-than-expected growth in smart driving penetration, OEM in-house development taking more share, or delays in shipments or deployment by major customers could all weigh on revenue growth.

Key data

• 1H26 median revenueRMB2.0bnUp 30% year-on-year, about 10.6% below Bernstein's forecast of RMB2.24bn and about 15.1% below Bloomberg consensus of RMB2.36bn.
• 1H26 median gross margin63.1%The report believes that remaining above 60% despite intensified competition reflects pricing power driven by software and hardware advantages.
• GAAP net profitRMB3.5-4.0bnThe swing to profit was mainly due to non-cash fair value gains on convertible bonds after the share price decline in 1H26.
• Non-GAAP recurring net lossRMB1.4-1.7bnAlthough revenue was clearly below expectations, the loss was close to Bernstein's forecast, indicating relatively strict cost control.
• GodEyeC share targetabove 90% in 2027Management expects Horizon's wallet share in BYD's GodEyeC solution to rise rapidly from about 40% in 2025.
• Rating and target priceOutperform / HKD10.00Current price HKD4.45, implying approximately 124.7% upside to the target price.
• 2026E EV/Sales6.2xThe table shows 2025A, 2026E, and 2027E EV/Sales at 9.7x, 6.2x, and 3.7x, respectively.

Impact & implications

The revenue miss may intensify market concerns over China PV demand, the pace of design wins, and substitution by OEM in-house chips, but the report believes that gross margin resilience, controlled non-GAAP losses, and progress in the BYD partnership mean the investment thesis remains intact. If a recovery in 2H26 and execution of the BYD projects materialize, the current low valuation could offer attractive risk compensation.

Risks

• Smart driving penetration may increase more slowly than expected.
• OEM in-house chips may gain a greater share than expected.
• Delays in shipments or deployment by major customers may drag down revenue growth.
• Weak China passenger vehicle sales may continue to pressure near-term revenue.
• There is still uncertainty over the share Horizon can obtain in BYD's GodEyeB solution.

What to watch

• Whether the 2H26 revenue recovery materializes and whether the full-year shipment target is maintained.
• Launch progress of the first BYD GodEyeB model equipped with J6H.
• Whether Horizon's wallet share in BYD's GodEyeC solution can rise from about 40% in 2025 to above 90% in 2027.
• Whether gross margin can continue to stay above 60%.
• Whether progress in new design wins reaccelerates.
• The actual impact of OEM in-house chips on third-party supplier share.