Hesai’s Dual Play: Hong Kong Listing and Legal Battle Signal a Contrarian Buy in a Split Tech World

Hesai Group, the world’s largest LiDAR manufacturer, is executing a daring dual strategy: battling its U.S. military blacklist designation while pursuing a Hong Kong listing. This twin-track approach positions the firm to capitalize on Asia’s EV/LiDAR boom while shielding itself from escalating U.S.-China tech tensions. For investors, the question is clear: Does Hesai’s fight for global market share and regulatory survival make it a compelling contrarian buy?

The Legal Battle: A Crucible for Valuation

Hesai’s inclusion on the U.S. DoD’s “1260H list” since 2023 has been a reputational albatross, dragging its Nasdaq-listed shares down 81% from its 2023 IPO peak. The firm argues the DoD’s case hinges on flimsy evidence—its affiliation with China’s Ministry of Industry and Information Technology (MIIT), a civilian regulator overseeing EVs. In May 2025, Hesai filed a motion for summary judgment, demanding the court nullify its listing as “arbitrary and capricious,” citing precedents like Xiaomi’s 2021 delisting after insufficient evidence of military ties.

The stakes are high: A victory could erase the “blacklist discount” embedded in Hesai’s valuation. . The DoD’s flip-flopping—removing Hesai in late 2024 only to relist it in 2025—fuels skepticism about the process’s rigor.

Hong Kong: A Lifeline for Market Diversification

Hesai’s confidential Hong Kong listing filing in May 2025 is a masterstroke. By accessing Asian capital markets, it reduces reliance on U.S. investors spooked by the blacklist. Hong Kong’s new confidential filing rules, modeled after the U.S., allow Hesai to navigate regulatory scrutiny without immediate market pressure. The move aligns with China’s push for tech sovereignty, as Hesai’s LiDAR tech powers EVs for domestic giants like Leapmotor and global brands like Mercedes-Benz.

The listing also capitalizes on Asia’s LiDAR boom. . Hesai’s 2024 shipment of 501,900 units—a 126% jump—hints at its dominance. Analysts at Goldman Sachs reaffirm a “Buy” rating, citing undervaluation relative to peers.

Why This is a Contrarian Opportunity

1. Geopolitical Hedge: The Hong Kong listing insulates Hesai from U.S. regulatory overreach. Even if the DoD persists, Asian markets will reward its tech leadership.
2. LiDAR’s Golden Age: Autonomous vehicles need LiDAR, and Hesai’s cost-reduction strategies (unit prices down 30% since 2022) make it a supplier of choice.
3. Legal Upside: A court victory could trigger a valuation rebound. Xiaomi’s stock surged 20% after its delisting, a precedent Hesai could mirror.

Critics cite Hesai’s U.S. revenue drop (from 40% to 20% of sales) and lingering DoD risks. But the firm’s 2024 profit ($1.9 million non-GAAP net income) and 86% ADAS sales growth show operational resilience.

The Bottom Line: A Play on China’s Tech Future

Hesai isn’t just a LiDAR supplier—it’s a proxy for China’s ambition to control critical EV tech. The Hong Kong listing and legal battle are dual pillars of a strategy to thrive in a bifurcated tech world. For investors willing to bet on Beijing’s tech sovereignty push—and Hesai’s ability to outmaneuver U.S. regulators—the risk/reward is compelling.

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The verdict? Hesai’s fight is far from over, but its moves signal a company determined to win. For contrarians, this is a rare chance to buy a LiDAR leader at a 50% discount to its peak—while it bets on Asia’s EV revolution. The question isn’t whether Hesai will survive, but how much upside awaits if it prevails.