Hesai Technology’s IPO in the United States: the gross profit rate has decreased by 26% in four years. Xiaomi and Baidu are both customers and shareholders

Recently, Hesai Technology submitted a listing prospectus to the US Securities and Exchange Commission, and plans to list on NASDAQ under the stock symbol “HSAI”. Goldman Sachs, Morgan Stanley, Credit Suisse, and Huatai International acted as co lead underwriters.
Hesai Technology submitted its listing application to the Science and Technology Innovation Board of the Shanghai Stock Exchange in early 2021, but voluntarily withdrew two months later. This time, Hesai Technology transferred from A-share to US stock. According to market rumors, Hesai Technology plans to raise $150 million, with a valuation of $3 billion. If successful, it will become “the first share of China’s laser radar”.
No customer growth in 2022, four years
Founded in 2014 with a loss of over 600 million, Hesai Technology is a company mainly engaged in products such as laser radar and gas detection. By the end of 2019 to the end of September 2022, Hesai Technology had 223, 279, 337, and 337 customers, respectively. The number of customers of the company did not increase in 2022.
From 2019 to the first nine months of 2022, Hesai Technology’s revenue was 348 million, 416 million, 721 million, and 794 million, respectively. Among them, more than 90% of the revenue of Hesai Technology comes from the laser radar business, mainly used in the fields of ADAS, autonomous driving, robotics, and so on. In the six years from 2017 to 2022, Hesai Technology shipped more than 100000 laser radars. Among them, more than 80400 laser radars will be shipped in 2022. According to a report by Frost Sullivan, by the end of 2021, 12 of the top 15 autonomous driving companies in the world had used laser radars from Hesai Technology.
The revenue of Hesai Technology has increased year by year, but the gross profit margin has decreased year by year. From 2019 to the first nine months of 2022, the company’s gross profit margin was 70%, 58%, 53%, and 44%, showing a downward trend. Like SciDev, SciDev is still at a loss. From 2019 to the first nine months of 2022, the company’s net losses reached 120 million, 107 million, 245 million, and 165 million, respectively. Over the past three years, the company has accumulated a loss of 638 million yuan.
The AT128 is on the ideal car, and it is rumored that every time it is sold
In 2021, Hesai launched the second generation chip “AT128” vehicle level semi solid state laser radar, quickly becoming a major customer of the ideal car. Currently, the AT128 is used for the ideal L8 MAX and the ideal L9 models.
According to public information, AT128 has received millions of fixed points from main engine factories such as Ideal, Jidu, Gaohe, Lutes, SAIC Feifan, and Chang’an Automobile, and has delivered more than 60000 sets in total. In September 2022, the monthly delivery of AT128 exceeded 10000 units. Although Hesai has won the reputation of “ideal”, there are media reports that the ideal supply price of Hesai is 50% of the cost price of the product, with a loss of at least 3000 yuan per unit sold. The loss behind the glory may be one of the reasons for the decline in gross profit margin of Hesai Technology in the past two to three years.
As for why Hesai won the first round of Ideal.com, there are rumors that Hesai Technology founders Li Yifan and Li Xiang are alumni of Hubin University. During the bidding process, Li Xia and Wu Nda mentioned He Sai. More than a month later, the ideal car supplied by Designated A was given to Hoji. In response, Li Yifan once stated that Li Yifan should make a rational decision. “He cannot buy products solely because of his classmates, or because he has sufficient recognition of the products of the competition, thereby denying the rumors.”. However, Li Yifan also stated that because he is relatively familiar with Li Xiang and has learned a lot in the process of communication with Li Xiang, Hesai has invested more resources in achieving ideal cooperation.
Xiaomi, Meituan, and Baidu are shareholder customers, and there are doubts about the fairness of the sales price
In January 2021, Hesai Technology submitted a listing application to the Science and Technology Innovation Board, with a valuation exceeding 10 billion yuan, and plans to raise 2 billion yuan.
Two months later, Hesai voluntarily withdrew its listing application and conducted two rounds of financing in the same year: round D and round D+. In the D+round of financing in November 2021, Xiaomi Group only invested $70 million. According to Tianyan, since its establishment, Hesai Technology has experienced nine rounds of financing, with a cumulative financing of over $500 million. The investors include well-known institutions such as Baidu, Xiaomi Group, Gaoling Venture Capital, Meituan, Qiming Venture Capital, etc.
However, it is worth noting that Meituan, Xiaomi, and Baidu are both shareholders and customers of Hesai Technology. For example, in April 2017, Hesai provided Baidu with the first Pandar40, which entered the autonomous driving market with this high-performance laser radar. In May 2018, Baidu led the $250 million B-round financing of Hesai, becoming a shareholder of the latter. In June 2021, Meituan participated in the D-round financing of Hesai. At the end of 2021, Hesai and Meituan reached strategic cooperation. Meituan’s automatic delivery vehicle, Magic Bag 20, is equipped with Hosai’s long-range high-resolution Pandar series lidar and medium-range XT series lidar.
Although Xiaomi has not yet been listed, once Xiaomi’s plan is released, rumors surrounding it have been overwhelming. In September 2022, according to “Evening Car”, Xiaomi’s first car has been recognized as a laser radar supplier by Hesai Technology, which is a car with a price limit of more than 300000 yuan. The vehicle will use a hybrid solid state radar AT128 as the main radar and several hybrid solid state radars as blinding radars.
Does Hesai use equity relationships to strengthen contacts with customers such as Xiaomi and Meituan, thereby expanding market share? In addition, when Hesai Technology sells products to shareholders such as Xiaomi, Meituan, and Baidu, it is also questionable whether the sales price is fair.