Soochow Securities has released a research report stating that PATEO (02889) is a leader in China's smart cockpit domain controller industry. The firm is optimistic about the company's steadily increasing proportion of high-end domain control products, continuous improvement in profitability, and growth rate that outpaces the industry. Initiating coverage with a "Buy" rating.
The main viewpoints of Soochow Securities are as follows: The company is a leading supplier of smart cockpit solutions in the industry, with an integrated hardware-software-cloud approach revolutionizing its core competitiveness. Established in 2009 during the early stages of the automotive intelligence industry, PATEO initially focused on R&D for telematics systems. In 2018, the company shifted its focus to integrated smart cockpit solutions encompassing software, hardware, and cloud services, gradually consolidating its leading position in the industry. It currently operates 6 R&D centers and 3 manufacturing bases, making it a leading comprehensive full-stack supplier of smart cockpits and intelligent connectivity.
The company boasts a wide range of customers, having served over 50 brands cumulatively. Li Auto, as a core client, has driven rapid revenue growth for the company since 2024. The ongoing iteration of automotive intelligence upgrades is continuously enhancing the company's market position. The penetration rate of smart cockpits in both domestic and global passenger vehicles is steadily increasing, driving forward the adoption of smart cockpit solutions. The penetration rate in the Chinese market has risen rapidly from 35.3% in 2019 to an estimated 75.9% in 2025; the global market penetration rate has increased swiftly from 38.40% in 2019 to 59.40% in 2025. The market size for smart cockpit solutions in domestic/global passenger vehicles is growing rapidly. In 2024, the market size for China's passenger vehicle smart cockpit solutions industry was RMB 129 billion, and it is projected to reach RMB 299.5 billion by 2029. Benefiting from Qualcomm's leading position in the smart cockpit chip industry and Huawei's rapidly rising stature, the company's market position is steadily strengthening.
Deep integration within the dual ecosystems of Qualcomm and Huawei, along with the full-stack "Qing" series technology, solidifies its competitive moat, while volume production of high-end domain controllers leads growth. The company's collaboration with Qualcomm Technologies has further expanded, with plans to jointly develop a new generation of smart cockpit solutions powered by the Snapdragon Cockpit Platform Premier Edition (QAM8397P). Furthermore, the bilateral cooperation with Qualcomm continues to deepen, laying a solid foundation for long-term stable partnership. Since 2018, PATEO's cooperation with Huawei has continuously intensified. In 2025, Huawei's Intelligent Automotive Solution BU and the company reached a cooperation intent for smart vehicle control modules, further deepening their partnership in this area.
The company's developed Qing OS, Qing Core, and Qing Cloud together form the core technology stack of PATEO's "integrated hardware-software-cloud" strategy. This trio supports the scalability, rapid customization, and continuous evolution capabilities of PATEO's smart cockpit solutions. Concurrently, the trend towards premium upgrades in the company's domain controller products is evident. Since their market launch in September 2025, they have already secured four major project wins for high-end smart cockpits. Earnings Forecast: The company's future revenue growth will primarily come from the ongoing volume production of orders for high-end domain control products. The firm is optimistic about the company's rapid revenue growth. The bank forecasts the company's total operating revenue for 2026-2027 to be RMB 5.452 billion and RMB 7.839 billion, respectively; and net profit attributable to shareholders to be RMB 10 million and RMB 1.002 billion, respectively.
Risk Warning: Risk of significant short-term stock price fluctuations; Risk of over-reliance on a single major customer; Risk of insufficient supply or significant price fluctuations from upstream chip suppliers; Risk of customer expansion falling short of expectations; Risk that products and solutions fail to meet evolving market demands.
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