Investment Rating - Maintains a Buy rating for SenseTime with a target price of **HK1.36, based on a 9.0x EV/Sales multiple for FY25E [1][18] Core Views - SenseTime has completed a strategic reorganization, adopting a "1+X" structure to focus on its core AI cloud services, large models, and AI applications, while other ecosystem businesses (smart cars, home robots, smart healthcare, smart retail) operate independently with flexible incentives and financing [1] - The reorganization is expected to accelerate SenseTime's path to breakeven, with breakeven now projected in FY26E (previously expected adjusted net loss of RMB 1.7 billion) [1] - The core AI cloud and Gen AI businesses grew 256% YoY in H1 2024, contributing 60% of total revenue, with significant cost reductions expected as core business headcount is reduced to less than 2,000 (50% of pre-reorganization total) [2] - SenseTime's Gen AI business is expected to grow at a 68% CAGR from FY24 to FY26, driven by increasing computing power and strong demand for AI computing [5] - SenseTime's total operational computing power reached over 20,000 PetaFLOPS in August 2024 (up 233% YoY), with management targeting over 25,000 PetaFLOPS by the end of FY24 [5] Financial Summary - Revenue is projected to grow from RMB 4,541 million in FY24E to RMB 7,498 million in FY26E, with adjusted net profit turning positive at RMB 84.1 million in FY26E [4] - Gross margin is expected to improve from 42.8% in FY24E to 39.0% in FY26E, while adjusted net profit margin is forecasted to turn positive at 1.0% in FY26E [15] - Operating cash flow is expected to improve significantly, turning positive at RMB 199 million in FY24E and reaching RMB 2,798 million by FY26E [25] Valuation - SenseTime's target EV/Sales multiple of 9.0x for FY25E is higher than the industry average of 7.8x, reflecting its leading position in China's Gen AI cloud services market and strong AI infrastructure [18] - The company's EV/Sales multiple is expected to decline from 9.8x in FY24E to 6.8x in FY26E, indicating improving profitability and valuation [25] Market Position - SenseTime ranks third in China's Gen AI IaaS market with a 15% market share as of Q2 2023 [5] - The company's strong AI infrastructure positions it to benefit from the growth of Gen AI, with significant investments in computing power and large models [5]
商汤-W：重组以专注于 Gen AI 业务并加速盈亏平衡进展