Target price: HKD 520! BOC International initiates coverage of Momenta (06880) and gives a buy rating.

Recently, BOC International released its latest research report, initiating coverage on MOMENTA-W (06880) with a "Buy" rating and a target price of HKD 520. BOC International stated that Momenta is a leading physical AI technology provider, possessing mature commercial capabilities in L2/L2++ ADAS (that is, L2-level mass production business), and its upside potential in L4 autonomous driving is underestimated. In the report, BOC International wrote: "With its leading position in the L2/L2++ ADAS (that is, L2-level mass production business) sector, a scalable software-driven profit model, and a reliable development roadmap towards L4 Robo-X, Momenta is fully prepared to seize the global wave of smart driving upgrades. The company has validated its commercialization model through passenger vehicle (PV) deployments and is building a differentiated physical AI platform, centered around a unified data flywheel shared across L2-level mass production business and L4 Robo-X applications. BOC International expects that Momenta's continuously expanding vehicle ownership and strong OEM coverage will lead to robust revenue growth for several consecutive years; the acceleration of Robovan commercialization is expected to open up the next stage of upward potential before scaling opportunities in Robotaxi and broader embodied intelligence markets." "We forecast the company's revenues for the years 2026-2028E to be RMB 4 billion, 7 billion, and 12.6 billion, respectively. Using a 15x price-to-sales (P/S) ratio for 2027E, we arrive at a target price of HKD 520 and initiate coverage with a 'Buy' rating," the report stated. BOC International believes that Momenta's "one flywheel, two legs" strategy can support the multi-scenario expansion of physical AI: the L2/L2++ mass production passenger vehicle business contributes cash flow, OEM channels, and large-scale real driving data, while L4 Robo-X applications can be reused for more complex scenarios based on the same core architecture. This move will create synergies in model iteration, engineering reuse, and infrastructure efficiency, supporting the company's future expansion into a broader physical AI field. BOC International also noted that Momenta's L4 commercialization path, led by Robovan, is a pragmatic choice due to its clearer monetization potential. The company's no-map solution capability, massive real-world data, and engineering efficiency are expected to support rapid operational scale expansion. Robotaxi remains an important long-term business and is expected to contribute significantly to upward valuation potential.