The Geely Group's autonomous driving supplier is going public

Author | Wang Xiaojun

Editor | Zhou Zhiyu

The queue of autonomous driving companies going public has become a major highlight of this year's capital market.

Star companies like Horizon Robotics and WeRide have already reaped the rewards by successfully going public, while other players in the industry are also gearing up and eager to try.

On November 22, the industry supplier focusing on intelligent driving solutions, Furukawa Tech (Zhejiang) Intelligent Technology (hereinafter referred to as "Furukawa Tech"), submitted its IPO prospectus to the Hong Kong Stock Exchange, intending to list on the main board of Hong Kong. The joint sponsors are CITIC Securities, CICC, Huatai International, and HSBC.

In this star-studded industry, Furukawa Tech is not very well-known, but it is closely tied to the Geely group. According to information, Furukawa Tech originated from the technology licensing of Volvo's ADAS system.

In addition, many members of the company's founding and current executive team come from the "Geely system." Founder and Chairman Zhang Lin previously served as Vice President of Geely Holding, and Co-Secretary Guo Ling was once the Investment Director at Geely Holding. Geely Holding's Vice Chairman Yang Jian serves as a non-executive director at Furukawa Tech.

Currently, the largest institutional shareholder of Furukawa Tech is Ningbo Junma Investment Partnership (referred to as "Ningbo Junma"). After equity penetration, Geely Holding Chairman Li Shufu is the ultimate beneficiary of Ningbo Junma, holding over 90% of the shares.

With continuous support from the Geely group, Furukawa Tech has gained a certain position in the market.

According to data from ZhiShi Consulting, based on the number of L2 and L2+/L2++ level intelligent driving solutions installed in China in 2023, Furukawa Tech ranks third among independent suppliers, with a market share of 14.6%.

The characteristic of having founders from automotive companies has created a different personality for Furukawa Tech compared to other autonomous driving companies. From the beginning, Furukawa Tech has aimed to provide full-stack intelligent driving solutions for OEMs.

Since 2021, Furukawa Tech has completed nine rounds of financing. The funding sources include both professional capital companies and numerous funds from local and industrial sources, such as Changxing Financial Holdings, PICC Capital, Yuan Chuang Capital, Everbright Financial Holdings, Wuzhen Tourism Investment, Chunxin Hongtu, China Communications Capital, BAIC Industrial Investment, TCL Venture Capital, Shaanxi Automobile Group, and Geely Group.

As of the C3 round of financing on May 30 this year, its valuation reached 6.06 billion yuan. Although it does not match the many star companies with numerous accolades in the industry, it can still be considered a small unicorn company.

Currently, Furukawa Tech's core technology is the ODIN platform. Through this platform, it provides three intelligent driving solutions for OEMs: FT Pro, FT Max, and FT Ultra.

Among them, FT Pro is the basic assisted driving solution, covering L0 and L1 automation, paired with Furukawa Tech's integrated machine and front radar, primarily applied in commercial vehicles.

FT Max is an enhanced solution aimed at L2 intelligent driving. In terms of configuration, in addition to the integrated machine, it offers three combinations for OEMs to choose from: 1V (single camera), 1V1R (single camera + front radar), and 1V5R (single camera + five radars).

FT Ultra is a high-level intelligent driving solution that can achieve L2+/L2++ and L3 automation, with additional sensors and controllers in its configuration, and can also realize high-speed NOA and urban NOA, among others Due to its ability to provide diversified intelligent driving solutions, it has accumulated a considerable number of clients over the past few years.

According to its prospectus, as of June 30, 2024, it has established partnerships with 46 OEMs, including Geely, SAIC, and GAC, with a total of over 280 designated projects and more than 200 mass production projects.

In terms of financial status, the situation for Furui Tech is not optimistic; it is currently still in a loss state. Although its revenue has increased, its gross margin performance is average.

According to its prospectus, Furui Tech achieved revenues of 333 million yuan in 2021, 328 million yuan in 2022, and 908 million yuan in 2023. The net losses for 2021, 2022, and 2023 were 296 million yuan, 855 million yuan, and 738 million yuan, respectively. Furui Tech's gross margin was 11.2% in 2021 and 6% in the first half of 2024.

However, by the first half of 2024, its net loss was 277 million yuan, a year-on-year decrease of 13%, indicating that overall losses are gradually narrowing.

Like many companies in the industry, Furui Tech's main revenue also comes from major clients.

Data shows that the revenue from the top five clients (including Geely Holding Group) accounted for 84.0%, 73.6%, 76.4%, and 85.9% of total revenue for the years 2021, 2022, 2023, and the six months ending June 30, 2024, respectively, which poses a potential risk for the company.

With continuous losses, Furui Tech's cash on hand is also somewhat tight. As of June 30, 2024, Furui Tech had cash and cash equivalents of only 276.7 million yuan.

Currently, Furui Tech has just begun its IPO journey and has many mountains to climb before it can reap the rewards.

This year, although intelligent driving suppliers are planning to go public, many of those achieving results are industry frontrunners, often with stories favored by the capital market, such as genius founders and extremely high gross margins. Compared to its competitors, Furui Tech has a relatively simple story.

Additionally, many OEM manufacturers have begun to frequently emphasize self-developed intelligent driving functions this year, especially for advanced intelligent driving capabilities. This will inevitably compress market share for suppliers and poses a potential risk for the future. Furthermore, for many L4 and L2 parallel autonomous driving companies, there is another leg to stand on, which further reduces Furui Tech's competitiveness.

In other words, whether in its IPO journey or in maintaining its position in a fiercely competitive market, Furui Tech faces significant challenges. The company needs more stories and self-sustaining capabilities to keep moving forward