UBS: First initiated coverage of Momenta-W (06880) with a "buy" rating and a target price of 360 Hong Kong dollars.

UBS released a research report stating that it has initiated coverage on China's largest autonomous driving software supplier (based on OEM coverage) Momenta-W (06880) with a "buy" rating and a target price of 360 Hong Kong dollars. The bank believes that Momenta's technology and scale make it a natural partner for leading domestic and global car companies, helping to accelerate the transition to the era of autonomous driving. Despite facing competition, profitability, and regulatory risks, its asset-light business model combined with strong revenue growth is expected to provide operational leverage for the company to generate high profit margins, thus supporting a higher price-to-sales (P/S) valuation. UBS points out that with rapid technological upgrades and cost reductions, the penetration rate of L2+ advanced driver assistance systems (ADAS) in various price range models is accelerating and becoming an essential feature for competing models. The bank expects that Momenta will benefit the most from the development trend of L2+ ADAS, with its annual installation volume expected to increase from 51,000 units in 2025 to 2.5 million units in 2028, and its market share in China's annual car sales to rise from below 2% to 10%. With the expansion of vehicle coverage, increasing vehicle installation volume, and the promotion of Robotaxi and Robovan business, UBS forecasts that Momenta's revenue compound annual growth rate will be around 50% from 2025 to 2030, and expects the company to achieve a balanced budget in 2028.