AI cockpit volume + product going abroad: Guotai Haitong initiates PATEO (02889) with a "buy" rating, target price of HKD 236.98.

Recently, Guotai Haitong released a research report, covering PATEO (02889) for the first time, giving it a "buy" rating with a target price of 236.98 Hong Kong dollars. The report pointed out that as an AI-driven intelligent cockpit and connected car solutions provider, PATEO's integrated capabilities in software, hardware, and cloud are outstanding, and with the volume production of AI cockpits and high-end platforms, its growth potential is expected to continue to be released. AI-driven core theme, accelerated commercialization of large models on the car side Guotai Haitong pointed out in the research report that AI has become the core driving theme of the company's development. The company continues to advance its AI cockpit layout, building a capability system of "algorithm + computing power + scenario," and is expected to benefit from the trend of large models on the car. The report particularly emphasized that the company's layout in the car-side AI ecosystem is accelerating. Specifically, PATEO has deepened cooperation with leading new energy car manufacturers and NVIDIA, focusing on the continuous advancement of "integrated software and hardware + large models on the car," achieving deep coupling of ByteDance's AI general large model and the company's side large model on the car in mass production pinpoint projects, promoting the landing of multimodal interactions and edge reasoning capabilities. At the same time, PATEO has pioneered mass production applications based on the NVIDIA DRIVE AGX Thor platform, and relying on the "Qualcomm + Huawei Kirin" dual-platform strategy, significantly expanding the range of model adaptation, becoming one of the few suppliers with the ability to integrate multiple mainstream chip platforms. The company is also forward-looking in exploring innovative models such as computing power charges and in-car token billing, accelerating the commercial closure of car-side AI, strengthening long-term competitive barriers. Dual platform foundation, ecosystem synergy empowering intelligent cockpit and intelligent driving going global In terms of the main business of intelligent cockpits, PATEO has significantly expanded the range of model adaptation by relying on the dual-platform strategy of "Qualcomm Snapdragon + Huawei Kirin," becoming one of the few suppliers with the capability to integrate multiple mainstream chip platforms. The company has implemented mass production layouts on high-end platforms such as Snapdragon 8295, 8397, and Kirin 9610A, leading in market share in the mid-to-high-end vehicle market, deeply integrating with mainstream OEMs, and continuously obtaining pinpoint projects to ensure future income growth certainty. According to Guotai Haitong's forecast, as automobile intelligence and electronicization continue to improve, the company's cockpit business is expected to maintain robust growth, with the gross profit margin expected to increase from 12.14% in 2025 to 15.50% in 2028. Guotai Haitong believes that PATEO is accelerating its global footprint through ecosystem synergy. The company and Horizon are advancing resource sharing and cooperation in going global, forming platform-level solutions in the two core tracks of intelligent cockpit and intelligent driving, and by integrating domestic and foreign customer resources, creating comprehensive solutions that meet local demand to drive the "platform + solution" towards the global market, opening up medium- to long- term growth space. Based on the dual optimistic outlook for continuous volume production of AI cockpits and global going-out prospects, Guotai Haitong covered PATEO for the first time and gave it a "buy" rating with a target price of 236.98 Hong Kong dollars, corresponding to a market value of 35.545 billion Hong Kong dollars. It is also expected that PATEO's operating income for 2026-2028 will be 5.623 billion yuan, 8.172 billion yuan, and 11.005 billion yuan respectively, with year-on-year growth rates of 60%, 45%, and 35%.