Key Takeaways:
Guoyuan International initiated coverage on automotive supplier Nexteer (01316.HK) with a “Buy” rating, sending its shares up, after the company’s first steer-by-wire system went into mass production for Li Auto’s new flagship L9 Livis SUV. The broker set a price target of 8.12 HKD, suggesting a 57.6% upside.
"Line-of-control steering and chassis are the development trend of the automotive industry, and Nexteer is in a leading position in this field," Guoyuan International said in a research note. The firm noted that "the certainty of the company's continued rise in revenue and profit is relatively high."
The bullish call is supported by a strong start to the year. Nexteer secured $1.6 billion in new orders in the first quarter of 2026, a 100% increase from the $800 million in the same period last year. Following the strong results, the company raised its full-year new order target to $60 billion from $49 billion in 2025.
The Li Auto partnership is a crucial validation of Nexteer’s technology. The L9 Livis is marketed as an "embodied intelligence" vehicle, with Li Auto's CEO Li Xiang dedicating half of the launch presentation to its advanced chassis technology. Nexteer provides the complete steer-by-wire (SbW) solution, a core component of the vehicle's drive-by-wire architecture.
Li Auto's strategy centers on integrating SbW with an 800-volt active suspension and electromechanical brake-by-wire (EMB) to create a fully coordinated chassis. This system allows for a "generational lead in user experience," Liu Liguo, head of vehicle electric R&D at Li Auto, said in an interview.
"Without coordinated chassis execution, even the smartest driving assistance system cannot stay steady," Liu said. He explained that combining the three systems creates value where "the addition of three ones exceeds three," enabling advanced features and improved safety. Li Auto's internal tests show the EMB system alone shortens braking distance by over two meters compared to traditional electrohydraulic brakes.
While Nexteer supplies the SbW hardware, Li Auto develops the control software in-house. This integration is a key differentiator, as many automakers procure systems from different suppliers, resulting in "black boxes" that cannot communicate effectively. Li Auto's unified software allows the steering, braking, and suspension to coordinate in real-time.
The system is powered by a dedicated vehicle control area within Li Auto's Mach M100 chip, with 100-200 TOPS of computing power reserved for the chassis algorithms. This ensures the execution system can keep pace with the decisions made by the vehicle's advanced driving assistance systems.
The successful launch of its SbW system in a high-profile vehicle like the L9 Livis solidifies Nexteer's role as a key supplier in the transition to intelligent electric vehicles. Investors will watch for further design wins and the company's first EMB project confirmation, which is expected later this year.
This article is for informational purposes only and does not constitute investment advice.
