Horizon Robotics launches the Starry integrated cockpit-driving solution; Morgan Stanley maintains Overweight

Overview

Morgan Stanley published this company research after attending Horizon Robotics' technology day in Beijing. The key event was the company's launch of the Starry 6P integrated smart cockpit and driving solution, alongside HSD v1.6 and Kaka Claw, with mass production targeted to begin in 3Q26 and an initial debut on Chery iCar. The report believes the timing of the integrated solution launch is appropriate as the approach of L3/L4 is simultaneously raising demand for AI computing power, storage, and system coordination in both smart cockpits and autonomous driving.

Core views

The report maintains an Overweight rating on Horizon Robotics. The core views are: first, the Starry integrated solution has clear advantages in cost, space, component count, and delivery cycle; second, the company already has an ecosystem of leading OEMs such as BYD, Geely, and Chery, and has built a relatively complete technology combination across the J6 hardware platform and HSD software capabilities; third, the industry is shifting from separate smart cockpit and smart driving solutions toward integration, and Horizon has a first-mover advantage among domestic peers; fourth, the rollout of the integrated cockpit-driving solution in 2H26 and the J6P+HSD order pipeline could be key catalysts for further share price recovery.

Analysis framework

The report assesses Horizon Robotics' relative competitive position and valuation by combining the company's technology day releases, OEM validation and mass production progress, cost-saving calculations, customer interest, the industry integration trend, and Morgan Stanley's ModelWare financial forecasts. Valuation uses a probability-weighted DCF supplemented by bull, base, and bear case scenario weights.

Methodology notes

• Valuation methodProbability-weighted DCF

  A probability-weighted DCF valuation using 25% bull case, 50% base case, and 25% bear case scenarios.

  The report states that the balanced bull/bear scenario weights reflect its constructive view on Horizon gaining volume share among China's ADAS+AD players, while also considering intensifying competition and potential geopolitical headwinds for the autonomous driving business.

• Valuation assumptionsMorgan Stanley ModelWare

  Key DCF assumptions include 12.2% WACC, 1.9 beta, and a 3% terminal growth rate.

  The report notes that unless otherwise stated, all metrics are based on Morgan Stanley's ModelWare framework, and some metrics are Morgan Stanley research forecasts.

Asset mapping & comparison

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

• Horizon Robotics (9660.HK)

  Core covered target

  Strengths

  Has the Starry 6P/6H integrated solution, J6 hardware platform, HSD software capabilities, a leading OEM ecosystem, and a domestic first-mover advantage.

  Weaknesses

  The company is still in the earnings improvement stage, with 2025-2027e EPS and EBITDA remaining negative and only expected to turn positive in 2028e.

  Comparison

  The report says the Starry integrated solution is about Rmb5k cheaper than the traditional Nvidia Thor AD chip plus Qualcomm 8295 smart cockpit chip solution.

  Risks

  Slower-than-expected ADAS/AD penetration, supply chain disruptions, successful OEM in-house development, and pressure on China sales of key customers.

• Starry 6P / Starry 6H

  Key new product platform

  Strengths

  The 6P features a 5nm process and 650 TOPS of computing power, while the 6H is a 500 TOPS economical solution that can reduce components, space usage, and delivery time.

  Weaknesses

  It still needs to complete scaled rollout after planned 3Q26 mass production and OEM adoption validation.

  Comparison

  Compared with traditional separate smart cockpit and smart driving solutions, it has advantages in cost and integration.

  Risks

  Mass production delays, customer adoption below expectations, and declining prices of competing solutions.

• BYD, Chery, Chang'an, BAIC, FAW, Volkswagen, Bosch, Denso

  Potential or interested customers / ecosystem partners

  Strengths

  Multiple mainstream automakers and tier-1 suppliers have expressed interest, helping expand Horizon's ecosystem.

  Weaknesses

  The report only discloses strong interest and does not confirm mass production orders one by one.

  Comparison

  A leading customer ecosystem is an important support for Horizon relative to peers.

  Risks

  OEM in-house development, changes in procurement timing, or weaker-than-expected vehicle sales could affect the speed of adoption.

Key data

• Stock ratingOverweightThe main text of the report explicitly states Stay OW.
• Target priceHK$10.00The target price time frame is typically 12 to 18 months.
• Closing priceHK$7.63As of 2026-04-22.
• Upside to target price31%Based on the HK$10.00 target price and HK$7.63 closing price.
• 52-week rangeHK$11.32-4.80Disclosed in the report table.
• Market capitalizationRmb85,887.7mnDisclosed in the report table.
• Enterprise valueRmb76,937.7mnDisclosed in the report table.
• Starry 6P computing power650 TOPSBuilt on a 5nm process; the report says it is the first 5nm smart cockpit solution in China.
• Starry 6H computing power500 TOPSA more economical version.
• Mass production timing3Q26The integrated solution completed OEM validation in 1Q26 and is planned for mass production in 3Q26.
• Space and component reduction50%+Relative to the traditional smart cockpit plus smart driving solution.
• Delivery time reduction56%Disclosed during the company's technology day.
• Technical cost savingsRmb1.5-4kFrom reductions in wiring harnesses and housings.
• Memory chip cost savingsRmb2-3kBenefiting from the integrated solution.
• 2026e revenueRmb6,329mnReport financial forecast.
• 2028e revenueRmb13,300mnReport financial forecast.

Impact & implications

If the Starry integrated solution enters mass production as planned in 3Q26, Horizon Robotics may gain greater share in China's smart driving and smart cockpit integration upgrade cycle, while attracting more OEM customers through cost advantages. For the stock price, product rollout in 2H26, the J6P+HSD order pipeline, and changes in ADAS/AD penetration are the main catalysts; however, competition, supply chain issues, OEM in-house development, and sales pressure at key customers could still weigh on the pace of realization.

Risks

• China ADAS/AD adoption is slower than expected.
• Supply chain disruptions.
• OEMs succeed in in-house hardware design, reducing reliance on external solutions.
• Vehicle sales of key customers in China come under pressure.
• Competition in the autonomous driving business intensifies.
• Potential geopolitical headwinds affect the autonomous driving business.

What to watch

• Whether the Starry integrated solution enters mass production as planned in 3Q26.
• The launch pace of Chery iCar and follow-on model expansion.
• Delivery of the J6P+HSD order pipeline in 2H26.
• Progress of cooperation with leading OEMs such as BYD, Geely, and Chery.
• Whether rising memory costs continue to drive OEM adoption of integrated solutions.
• China's ADAS/AD penetration and the pace of L3/L4 advancement.
• Whether improvements in company revenue, EBITDA, and net profit match 2026-2028e forecasts.