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Equity Research[Table_Title]Company Report:PATEO CONNECT (02889 HK) 公司报告：博泰车联网(02889 HK) Company ReportWe initiate coverage onPATEOCONNECTTechnology(Shanghai)Corporation("PATEOCONNECT" or the "Company") with "Buy"rating and TP of HK$280.20.We believe the Company's growth storyis just beginning.We forecast 2024-2027Frevenue to grow at a CAGRof 40.5%, and expect the Companyto turn profitable in 2026F. Ourtargetprice implies a premium 7.0x 2026F P/S,reflecting 1) theCompany'sstrong market position in smart cockpit solutions;2)significant growth potential from overseas expansion; and 3) emergingopportunities in AI andcockpit-driving integration. Share price股价:HK$171.900 Equity Research ReportOverseasexpansion accelerates through dual-track strategy.Beyond the favorable domestic industry trends, our confidence in theCompany's growth potential is underpinned by its overseas marketexpansion.The Company is accelerating its overseas expansionthrough two strategic paths: 1) supporting Chinese OEMs' overseasexpansion;and 2)direct collaboration with traditional globalautomakers.The strategic partnership with Porsche announced in Sep.2025 to develop next-generation infotainment systems for the Chinesemarket marks a significant milestone in penetrating the global premiumautomotivesegment.Additionally,the Company has establishedpartnerships with Hyundai and Kia,which will help to strengthen itsposition inthe Asian markets, in our view. Components究报告AI and cockpit-driving integration to drive second growth curve.The Company is actively advancing its AI capabilities through strategicpartnerships. The recent collaboration with SenseTime(00020 HK)coversmultiple areas including AI cockpits,large models,andcockpit-driving integration. Furthermore, the introduction of HorizonRobotics(09660 HK)as cornerstone investor should establishfoundation for intelligent driving development.By combining cockpitdomain, intelligent drivingdomain, and vehicle control domain,PATEOaimsto create comprehensive next-generation intelligent vehiclesolutions, potentially driving its second growth curve. 证券研Risks:1)uncertainty in maintaining long-term cooperation with existingcustomers; 2) risks associated with overseas expansion execution; and3) margin pressure from accelerating industry consolidation. Investment Thesis We initiate coverage on PATEO CONNECT with "Buy" rating and TP of HK$280.20.We believe the Company's growthstoryis just beginning. As a leading smart cockpit solution provider, PATEO ranked second in China'sNEVcockpit domaincontroller shipments during Jan.-Sep. 2025, capturing a 10.87% market share.Notably,the Company has built strong strategicpartnerships withNEVsectorleaders, particularly with HUAWEI and Li Auto as its core customers.With continuous productportfolio enhancement and expanding customer base, we forecast the Company'srevenue to grow ata CAGR of 40.5% during2024-2027F and expect it to turn profitable in 2026F. Based on the Company's strong growth momentum and path to profitability,we assign apremium valuation multiple of 7.0x 2026F P/S and set our TP at HK$280.20. Market leader to benefitfrom favorable industry trends.We believe the Company will benefit from two aspects of the marketdevelopment: 1)the increasing penetration rate of smart cockpitsolutions, particularly in mid and low-endvehicle segments;and 2)the ongoing premiumization of thesmart cockpit products, which aligns well with the Company's high-end productportfolio development.The penetration rate of smart cockpit domain controllers reached 41.1%in Aug.2025, representing asignificant YoY increase of 12 ppts, particularly driven by growing adoption in mid and low-end vehicle segments. Meanwhile,the industry demonstrates a clear trend towards premiumization, evidenced by PATEO'sASP of domain controllersincreasingfrom RMB990 in 2023 to RMB2,141 in 2024, drivenby growing demand for sophisticated in-cabin experiences. Overseas expansion provides significant growth potential.The Company's overseas expansion is gaining momentumthrough two channels:1)supporting ChineseOEMs' international operations; 2)and direct collaboration with global automakers.A notable milestone was the strategic partnership with Porsche to develop next-generation infotainment systems for theChinese market. Additionally,PATEO hasestablished partnerships with Hyundai and Kia, which will help the Company tostrengthen its position in the Asian markets. This dual-track expansion strategy could provide substantial growth opportunities inthe coming years. AI capabilities and cockpit-driving integration to drive second growth curve.The Company is actively advancing its AIcapabilities through strategic partnerships, such as the recent collaboration with SenseTime(00020 HK)covering AI cockpitsand large models. Furthermore, the introduction of Horizon Robotics(09660 HK)as a cornerstoneinvestor sets a foundation forcockpit-driving integration. By combining cockpitdomain, intelligent drivingdo