Investors who see autonomous driving going to the moon have a new initial public offering (IPO) ahead of the Lunar New Year.
LiDAR company Hesai may light the way for Chinese IPOs in 2023, filing for the deal just days ahead of the country's traditional annual holiday festival.
The Shanghai-based firm filed with the Securities and Exchange Commission (SEC) on January 17. It did not announce a date for the launch in the submitted paperwork but plans to list on the Nasdaq under the ticker “HSAI.”
Hesai did not disclose numbers regarding total units on offer or initial pricing but put the typical placeholder sum of $100 million in its filing fee schedule.
Hesai produces LiDAR systems for robotics, autonomous transportation, and advanced driver assistance systems (ADAS). It generated revenues of $112 million over the first nine months of 2022. Yet it is currently in the red, taking a net loss of $23 million over that time period.
Founded in 2014, the company started out supplying high-performance laser sensors to the natural gas industry and other sectors before pivoting to lidar products in 2016.
It has since come to dominate LiDARs for the ADAS segment, with 60% global market share, according to Frost & Sullivan. In 2021, it serviced 12 out of the top 15 top global autonomous driving companies (as ranked by testing miles driven). In its home market, its main ADAS clients include Li Auto, Jidu, and Lotus, among China's biggest eclectic vehicle (EV) players.
Hesai's orders are picking up. It dispatched over 103,000 lidar units between 2017 and the end of 2022, with 80,400 of those units shipped last year alone.
Hands Off the Wheel
Autonomous driving is poised to accelerate in the years to come. By 2030, the global automotive software and electronics market will be worth $468 billion, according to a McKinsey forecast released this month. As a segment within that broader expansion, AD/ADAS sensors are forecast to shoot up at a compound annual growth rate (CAGR) of 7% to reach over $50 billion by the decade's end.
Autonomous driving has been home to some mega-deals, even amid the recent IPO freeze. Last October, Intel spinoff MobilEye went public at a valuation of almost $17 billion, becoming one of the year's biggest deals.
Hesai is among the first Chinese companies to launch an IPO in the U.S. this year. The deal could gauge the temperature for other Chinese firms keen to plunge into New York's deep capital pools.
There has been a growing risk of Chinese companies delisting from U.S. markets as Washington increases auditing scrutiny over China's opaque firms. While risks remain, investors welcomed news last month that accounting watchdog the Public Company Accounting Oversight Board (PCOAB) finally gained full access to inspect Chinese companies' books for the first time.
There are also dangers stemming from Beijing's efforts to exert control over Chinese tech companies and their sensitive data sets. Note that Hesai lists “complex and evolving PRC laws and regulations” as one of its top risks in the prospectus, writing the Chinese government has “significant authority in regulating our operations and may influence or intervene in our operations at any time.”
Despite the risks, Chinese stocks have rebounded well so far in 2023. The Nasdaq Golden Dragon China Index has been on fire, soaring an eye-popping 14% in the first week of trading this year.
Investors who are bullish on autonomous driving and can stomach the potential regulatory risks of Chinese tech company stocks may line up to grab the offer on this industry leader.
This post was produced and syndicated by Wealth of Geeks.