The profit problem has not yet been resolved, and Tudatong, which is deeply bundled with NIO, used a backdoor approach to go public in Hong Kong.

Source of the chart: Visual China

Blue Whale News, February 14 (Reporter Wang Xiaonan)On January 12, Seyond Holdings Ltd. (hereinafter referred to as Tudatong) disclosed the prospectus for listing in Hong Kong. On December 20 last year, the special purpose company TechStar Acquisition Corporation (7855.HK) announced that it had reached a business merger agreement with Tudatong and its wholly-owned subsidiaries, and the latter would be listed on the Hong Kong Stock Exchange through a special purpose company merger.

As a supplier of the popular lidar track in recent years, Tudatong received many capital bets shortly after its establishment, including NIO Capital, Staw Capital, Temasek Temasek, etc. NIO has multiple identities in the development of Tudatong. It is not only a shareholder, a major customer, and a former supplier of Tudatong. Thanks to the deep bundling with NIO, Tudatong has hit the capital market after many years of development. The agreed valuation is HK$11.7 billion.

As the penetration rate of autonomous driving applications continues to increase, the revenue of Tudatong’s lidar business continues to grow, but it is still in a loss, with a cumulative loss of US$355 million in more than two years. At the same time, the company’s core product Falcon Series unit price has continued to decline in recent years.

Backdoor listings sprint Hong Kong stocks, and the unit price of core product Falcon series continues to decline

The prospectus shows that in 2016, Tudatong, founded by Bao Junwei and Li Yimin, started operating in the United States. Both founders have a working background in Baidu.

Since March 2014, Bao Junwei has served in Baidu America and has held multiple positions including head of the autonomous driving hardware and sensor team of the autonomous driving division and head of HPC. Before the IPO, Bao Junwei was the single largest shareholder of Tudatong, controlling approximately 21.16% of the company’s voting rights. He is currently the executive director, chairman, president and chief executive officer of the company. Li Yimin, the current executive director and chief technology officer of Tudatong, has served as a senior architect of Baidu America since March 2016.

As a supplier of vehicle-scale lidar solutions, Tudatong provides lidar solutions for advanced driver assistance systems, autonomous driving systems and other automotive and non-automotive application scenarios. Customers include Nilai, Shenxiang, Yingche Technology, Shaanxi Heavy Duty Truck.

According to information from Zhuoshi Consulting, in 2023, Tudatong delivered a total of more than 147,000 vehicles of scale lidar. In 2023, ADAS lidar solutions ranked first in the world in sales revenue, with a market share of 18.6%, but it is not far from the second place. The gap is not big, the second place market share is 18.2%.

Currently, Tudatong’s lidar solution includes two key components, various series of lidar sensor hardware and OmniVidi software, which expands the appropriate functions of the lidar sensor hardware. The company’s lidar sensor hardware products mainly include Falcon, Springer and Jaguar, which are designed for various automotive and non-automotive application scenarios.

Selling lidar sensor hardware products is the main way Tudatong generates revenue. In 2022, 2023 and the first nine months of 2024, the revenue from the Falcon series accounted for more than 97%, while the revenue from the Lingque series accounted for US$2.25 million, accounting for 1.9%. The Jaguar series failed to contribute revenue in 2024.

However, while sales of the Falcon series, which is the main source of revenue for Tudatong, are increasing, their sales prices are decreasing year by year. In 2022, 2023 and the first nine months of 2024, sales of the Falcon series are 74,000 units, 147,700 units and 164,700 units respectively, showing an upward trend, but the average selling price is US$879/unit, US$804/unit and US$703/unit.

The prospectus shows that Tudatong has established sales teams around the world, including China, the United States, Germany, Japan and South Korea. However, by geographical region, in recent years, sales revenue from China has accounted for more than 97%, which is still the main source of revenue for Tudatong.

In fact, since the establishment of the company, Tudatong has been highly sought after by capital. From November 2016 to December 2023, Tudatong completed multiple rounds of financing. Investors include Gao Rong Venture Capital, NIO Capital, Sidow Capital, Temasek and Heshun Capital, etc., with a cumulative financing amount of approximately US$459 million.

The profit issue remains unresolved, and the single risk of deeply bundling NIO customers is intensifying

As the penetration of autonomous driving applications continues to increase, global lidar sales revenue has reached US$1.2 billion in 2023 and is expected to increase from US$4 billion in 2024 to US$65.2 billion in 2030, with a compound annual growth rate of 59.5%.

Tudatong’s revenue continues to grow, but it is still at a loss, with a cumulative loss of US$355 million over two years. In the first nine months of 2022, 2023 and 2024, the company’s revenue was US$66.302 million, US$121 million and US$118 million respectively; adjusted net losses were US$142 million, US$137 million and US$76.172 million respectively.

During the same period, Tudatong’s gross loss ratios were 62.3%, 35% and 15.2% respectively, showing a narrowing trend. The company expects to achieve positive gross profit in the fourth quarter of 2024.

Regarding the loss, Tudatong said that it was mainly due to operating in emerging markets, continuous investment in R & D and product development, and the establishment of innovative product supply chains.

Due to continuous investment in the research and development of new products and autonomous driving technology, Tudatong has invested a lot in research and development. In 2022, 2023 and the first nine months of 2024, the company incurred R & D expenditures of US$78.1 million, US$63.8 million, and US$32.2 million respectively, accounting for 117.8%, 52.7%, and 27.2% of revenue respectively.

At the same time, Tudatong’s cost of sales is also increasing day by day. In 2022, 2023 and the first nine months of 2024, the company’s costs of sales were US$107 million, US$163 million and US$136 million respectively, accounting for 162.3%, 135.0% and 115.2% of revenue for the same period respectively.

Tudatong, whose revenue growth is inseparable from the strong help of the new energy vehicle NIO. As far as Tudatong is concerned, NIO plays a more multifaceted role, being both a shareholder and a customer, and previously a supplier.

Starting from 2022, Tudatong has started mass production of lidar products for NIO. Currently, NIO has chosen to use Tudatone’s lidar solutions on nine of its models.

In 2022, 2023 and the first nine months of 2024, Tudatong’s revenue from NIO, its largest customer, was US$58.8 million, US$109 million and US$109 million respectively, accounting for 88.7%, 90.6% and 92.4% of total revenue respectively. In 2022, NIO ranks first among the top five suppliers of Tudatong, providing R & D services to it, with a purchase amount of US$36.235 million, accounting for 17.3% of the total purchase.

Tudatong also admitted in the prospectus that given that the company’s large revenue is concentrated in NIO, if NIO decides to terminate its cooperation with the company or reduce the depth of cooperation in the future, it may have a material adverse impact on the company’s business, financial condition and operating results. However, the directors believe that although customers are concentrated in NIO and products are concentrated in the Falcon series, the company’s business model is still sustainable.

Tudatong, which has insufficient blood production, has its net debt increasing day by day. In 2022, 2023 and the first nine months of 2024, Tudatong’s net liabilities were US$361 million, US$574 million, and US$703 million respectively. As of September 30, 2024, Tudatong held cash and cash equivalents. It is only US$34.51 million.

The net proceeds received by Tudatong from the special purpose acquisition company M & A transaction is estimated to be approximately HK$473 million, of which approximately HK$284 million will be used to develop new lidar architecture, hardware and software upgrades, and approximately HK$94.8 million will be used to build self-operated production facilities and upgrade existing production lines, and approximately HK$47.4 million will be used for global expansion.