iMotion Automotive rides DeepSeek fever to new fundraising

Key Takeaways:

• iMotion Automotive raised HK$228 million through new share placement, three months after raising a smaller HK$73 million
• Last month the company entered a strategic tie-up with Horizon Robotics aimed at speeding up sales of its intelligent driving solutions into mass-produced vehicles

The surprising release of DeepSeek, a low-cost Chinese AI model, has sent companies racing to integrating the technology into their ecosystems, hoping it will work magic not only for their business but also their stocks.

One group catching the DeepSeek fever is intelligent driving, where the technology promises to improve existing products at far lower costs than previously thought. One such company is iMotion Automotive Technology (Suzhou) Co. Ltd. (1274.HK), whose stock is up 90% over the past month after it entered a strategic cooperation agreement with intelligent driving chip maker Horizon Robotics (9660.HK).

iMotion seized on the rally to raise HK$228 million ($28 million) through a new share placement earlier this month, with 60% of proceeds earmarked for developing high-level autonomous driving and integrated cockpit solutions and products. The fundraising was iMotion’s second in the 14 months since its IPO, following one in early December where it raised a smaller HK$73.28 million. Only around HK$11.21 million in funds currently remain from that last fundraising, showing just how quickly iMotion is burning through its cash.

Word of the latest share sale brought iMotion exactly what it was hoping for. After initially dropping nearly 10% at one point on the day of the announcement, the stock powered back and ultimately closed up 4.2% for the day, pushing its valuation to HK$5.77 billion. The company began stoking up its cash pile just a few days earlier with its completion of the float of around 100 million unlisted H-shares on Feb. 6.

Under the latest fundraising, the company planned to issue up to 11.19 million shares to six or more underwriters, representing 4.63% of its enlarged share capital, according to its announcement. At HK$20.88 per share, the placement price represented a discount of about 13% to the HK$24 closing price the day before the announcement. But it was 18.57% higher than the stock’s average closing price over the previous five trading days, and 35.06% higher than the previous 20 trading days, showing just how quickly the stock has risen.

Horizon Robotics collaboration

iMotion has popped up on investor radar screens as it enters a new high-speed growth stage. Last month, it formed a strategic tie-up with Horizon Robotics that will see the pair co-develop mass-produced intelligent driving solutions based on Horizon’s Journey 6E series of chips. iMotion’s products have also reportedly been selected exclusively for use in a new model being developed by Geely New Energy, based on Horizon’s Journey 6 chip series.

Horizon’s Journey 6E chips are among the most cost-efficient computing chips in the intelligent driving space, able to support functions such as high-speed navigation, autonomous parking and city memory navigation at a competitive cost of less than 5,000 yuan for the full suite.

The Horizon collaboration allows iMotion to target the middle end of the intelligent driving market whose vehicles typically sell for between 100,000 yuan ($13,800) and 150,000 yuan. Cars in that range account for 60% to 70% of annual car sales and are highly sought by intelligent driving companies trying to commercialize their products.

DeepSeek era dawning

While the Horizon tie-up is bringing real business potential, DeepSeek is also charging up intelligent driving and other automotive stocks with its potential to boost the sector. Since the Lunar New Year, more than 20 automakers, including Geely, Chery, Dongfeng, Great Wall, FAW-Volkswagen and SAIC-GM have begun using the DeepSeek model in their systems, showing the intelligent auto industry has entered a “DeepSeek era.”

iMotion has also been gearing up for the integration. According to sources familiar with the situation, it has used DeepSeek to test over 200 video clips, achieving solid outcomes and enhanced efficiency. Cars equipped with such DeepSeek technology can achieve more precise target identification, scenario understanding and path planning at the vehicle perception level, ensuring the stable and safe performance of their autonomous driving systems when confronted with complex road conditions. Moreover, DeepSeek’s powerful model training and optimizing capabilities also help to improve algorithms and shorten product iteration cycles, thus improving the performance and stability of autonomous driving systems.

iMotion technology systems director Zhang Wei said in a media interview that “to put it simply, DeepSeek enables city autonomous driving functions with the same level of performance but with much cheaper training and less data.”

iMotion is still running on a capital-intensive model as it competes in a sector where heavy R&D spending is a must and competition to get your products into new mass-produced vehicles is cutthroat. In terms of price-to-sales (P/S) ratio, iMotion stands at 4.4 times, higher than Huizhou Desay SV Automotive’s (002920.SZ)’s 2.7 times but much lower than the 32 for Black Sesame (2533.HK) and 8.7 times for Mobileye MBLY, indicating the stock has yet to really take off despite its recent rally. That means the stock could have big upside potential if the company can roll out market-defining products that ultimately end up in mass-produced smart cars.

The Chinese intelligent driving technology market is still in its early stages, meaning anyone could still emerge on top if their products prove popular and reliable. With car makers such as XPeng, Nio and Li Auto all on the fast track to deploying intelligent driving technologies, speeding up R&D and enhancing competitiveness are top priorities for not only iMotion but also its peers as they seek to get their products into the latest models. The arrival of DeepSeek and more breakthroughs for large AI models is adding more pressure on companies to differentiate their products and use the latest developments to their advantage. Otherwise, they could risk getting left behind the dust.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.