By Jiahui Huang
Car-sensor maker Hesai Technology enjoyed a solid trading debut in Hong Kong, joining the wave of Chinese companies that have sought secondary listings in the city amid U.S.-China tensions.
Shanghai-based Hesai produces lidar sensors that help cars sense their surroundings. It is a dominant supplier of the technology, which stands for light detection and ranging, for the robotaxi industry. That has been good for business but also landed it in the midst of the U.S.-China technology rivalry.
Labelled a security concern, Hesai was added to the Pentagon's list of companies with alleged ties to the Chinese military last year, claims it has repeatedly denied.
But the trade frictions don't appear to have dented investor appetite for the company.
It raised nearly half a billion U.S. dollars in an oversubscribed Hong Kong offering. Hesai's H-shares rose as much as 15% early Tuesday before paring gains to 11% by midday. The Hang Seng Index was up 0.1%.
Hesai's Nasdaq-listed stock has more than doubled year to date, and on Monday it signed an expanded $40 million contract with a U.S.-based robotaxi company.
For the Chinese company's chief executive, David Yifan Li, a secondary listing in Hong Kong was a logical move as it looks to grow its business.
"Being able to access the capital and the market and shareholders who have more knowledge about the industry closer to us is very beneficial," he told The Wall Street Journal.
The company said in a filing that it plans to use about half of the net proceeds from the Hong Kong IPO for research and development. The rest will be put toward boosting manufacturing capabilities and expanding its business, among other purposes.
Hesai swung to profit in the second quarter of the year thanks in large part to slashing costs for its latest generation of sensors. Li is keen to cut prices of its sensors even further, he said in a recent interview.
"Automotive safety components like lidar are like invisible airbags or seat belts," the CEO said. "It's always been in our DNA to democratize such sensors via innovation."
Hesai has also benefited from China's autonomous driving boom, which has seen carmakers like BYD and Li Auto roll out mass-market models equipped with lidar sensors.
According to Li, that is in part because automakers see lidar as a must-have safety feature.
Research firm Yole Group estimates that Hesai holds a 61% share of the global lidar market in the high-driving automation segment known as L4. While it remains a market leader in the segment, competitors like Chinese electronics giant Huawei and Hong Kong-listed RoboSense are closing in.
China's auto industry is facing slowing demand amid a recent government campaign to limit pricing competition, but Beijing's new 2025-2026 strategy plan for the sector signaled continued support for autonomous driving tech.
New policy incentives could be good for lidar makers, but may well drive up competition too.
"We think this policy is positive for Hesai given advanced autonomous driving should boost lidar penetration and value content per car," Citi analysts wrote in a note. The bank has initiated coverage of Hesai H-shares with a buy rating.
Despite the competitive headwinds, Li remains confident in the company's outlook.
"We have consistently spent more money than our competitors on R&D especially in China," the chief executive said. Right now, demand for lidars is rising, and Hesai can meet that demand while maintaining a reasonable gross margin and not spending excessively on R&D, he added.
"This is a very good moment to be optimistic and aggressive in capturing that volume," Li said.
Write to Jiahui Huang at jiahui.huang@wsj.com
(END) Dow Jones Newswires
September 16, 2025 02:16 ET (06:16 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.