(Yicai) Oct. 24 -- Shares of Horizon Robotics surged on the Chinese self-driving technology developer's first trading day on the Hong Kong Stock Exchange.

Horizon [HKG: 9660] was trading up 25.6 percent at HKD5.01 (64 US cents) as of 11.20 a.m. today, giving it a market valuation of HKD65.3 billion (USD8.4 billion).

The Beijing-based company offered 1.36 billion shares priced in the range of HKD3.73 to HKD3.99 apiece in its HKD5.4 billion (USD695 million) initial public offering, which was the city's biggest so far this year. Goldman Sachs, Morgan Stanley, and China Securities International were the IPO's joint sponsors.

Its cornerstone investors -- Alibaba Group Holding's unit Alisoft China Holding, Baidu's Hong Kong arm, a company under Merit France, and an investment fund backed by the Ningbo government -- subscribed for a total of USD219.8 million.

Horizon was founded in 2015 by artificial intelligence scientist Kau Yu, who previously worked at the autonomous driving business of Chinese tech giant Baidu.

Since its establishment, Horizon has completed 11 financing rounds, raising a total of over USD8.7 billion from pre-IPO investors such as Chinese carmakers SAIC Motor and BYD, private equity giant Hillhouse Investment, and venture capital firm Sequoia Capital.

Horizon was China's fourth-largest provider of advanced driver assistance systems and autonomous driving solutions by installed capacity last year and in the first half of this year, according to China Insights Consultancy. Its revenues and gross profit margin have increased in recent years, but the firm's net losses have widened on high research and development costs.

Revenues were CNY910 million (USD127.8 million) in 2022 and CN1.5 billion (USD210.6 million) last year. In the six months ended June 30, income was CNY935 million, up 152 percent from a year ago. Gross profit margin was 69 percent, 71 percent, and 79 percent, respectively, in the three periods.

However, the company's net losses have been shrinking, coming in at CNY8.7 billion in 2022, CNY6.7 billion last year, and CNY5.1 billion in the first half of 2024. R&D spending accounted for 208 percent, 153 percent, and 152 percent of revenues over the three periods.

"It is difficult for these types of autonomous driving companies to be profitable," an executive from an automaker that worked with Horizon told Yicai.

Horizon experienced some setbacks in recent years. For example, its chip Journey 5 has not been fully deployed yet. Horizon's products have been installed in 290 car models, but they are mostly Journey 2 and Journey 3, two generations behind the latest product.

"We tested the Journey 5 when checking for chips for our cars, but we found out that the product is not as advanced as we thought," a spokesperson from a self-driving tech company told Yicai.

Another issue for Horizon is the fact that it is reliable on its five main customers, which generated nearly 80 percent of the company's revenue in the first half of the year. One of these clients is Cariad, the auto software subsidiary of German carmaker Volkswagen Group.

Editor: Futura Costaglione