Goldman Sachs: SenseTime (0020.HK) - New AI Model/Architecture to Launch Ahead; 2H25 Beat; Buy
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Goldman Sachs maintains a Buy rating on SenseTime (0020.HK) with a target price of HKD 3.55, offering 90.9% upside from the current price of HKD 1.86. The company's 2H25 revenue reached RMB 3.13 billion, beating expectations by 5-6%, while net losses narrowed significantly to RMB 288 million.
SenseTime plans to launch a new generation SenseNova AI model and an updated NEO architecture in 2Q26E. Management emphasized that the NEO architecture features complex analytical and decision-making capabilities alongside high learning efficiency. The company continues to expand generative AI applications across office, e-commerce, financial, and content creation scenarios.
Goldman Sachs raised its 2026/27E net loss forecasts to RMB 774 million and RMB 73 million, respectively, reflecting faster efficiency improvements. The 2H25 operating expense ratio dropped substantially to 97.2%, down from 162.1% in 2H24, driving margin expansion to 43.2%. The valuation is based on a DCF model utilizing a 10.9% WACC and a 2% terminal growth rate. Key risks include slower-than-expected generative AI client acquisition, weaker client spending, and intensifying market competition.