Core Viewpoint - Goldman Sachs maintains a "Buy" rating for SenseTime-W (00020) with a 12-month target price of HKD 3.53, highlighting the significant growth potential of the company's generative AI segment [1] Group 1: Revenue Projections - The revenue contribution from generative AI is expected to reach 77% by the first half of 2025, driven primarily by private/public cloud and AI projects [1] - By 2030, Goldman Sachs forecasts that the revenue contribution from generative AI will increase to 91% [1] Group 2: Product Offerings - SenseTime has recently launched several generative AI products, including the AI script generation platform (Seko 2.0), AI office assistant (Racconn 3.0), and AI marketing agent (SenseAvatar) [1] - These products emphasize enhanced features for generating higher quality content through one-click operations and provide more cost-effective solutions based on local computing platforms [1] Group 3: Pricing Model - The company primarily charges users through subscription fees, with Seko 2.0 priced between RMB 95 to 195 per month and Racconn 3.0 priced between RMB 29.9 to 1599 per month [1] - Additionally, SenseTime offers customized solutions for enterprises on a project basis [1]

Summary of SenseTime (0020.HK) Conference Call Company Overview - **Company**: SenseTime (0020.HK) - **Market Cap**: HK$72.6 billion / $9.3 billion - **Enterprise Value**: HK$70.6 billion / $9.1 billion - **Target Price**: Upgraded to HK$2.72 from HK$1.83, indicating a potential upside of 30% [26][27] Key Industry Insights - **AI Guidelines**: The State Council's "AI Plus" guidelines aim for over 70% penetration of new-generation intelligent terminals and AI agents by 2027 in key sectors, with a target of over 90% by 2030E [2] - **Generative AI Transition**: SenseTime is transitioning to a generative AI business model, with 77% of revenue from generative AI in 1H25, up from 60% in 1H24 [2] Financial Performance - **1H25 Revenue Growth**: Revenues increased by 36% YoY, exceeding expectations by 6% compared to estimates [3][18] - **Gross Margin**: 1H25 gross margin was 38.5%, in line with estimates [17] - **Operating Expenses**: Opex ratio improved to 127% in 1H25 from 170% in 1H24, attributed to enhanced employee productivity [17] Revenue Projections - **Future Revenue Estimates**: - 2025E: Rmb 4,874.1 million - 2026E: Rmb 6,493.7 million - 2027E: Rmb 8,364.6 million [5][15] - **Generative AI Revenue Contribution**: Expected to rise from 64% in 2024 to 91% by 2030E [1] Earnings Revisions - **Net Loss Projections**: Revised net losses for 2025E, 2026E, and 2027E to Rmb 2.5 billion, Rmb 972 million, and Rmb 238 million respectively, reflecting higher revenues from generative AI solutions [20] - **Gross Margin Adjustments**: Gross margin estimates revised up by 0.1 to 0.5 percentage points for 2025-2030E due to a shift towards higher-margin generative AI products [20] Product Development and Market Strategy - **Product Expansion**: Plans to enhance AI inferencing models and develop AI agents and robotics, with significant user growth in Office Raccoon exceeding 3 million in 1H25 [19] - **Ecosystem Collaboration**: Launched "SenseCore Mall" in August 2025, integrating various AI solutions for clients [19] Market Positioning - **Competitive Advantage**: SenseTime's comprehensive product offerings and focus on large-scale projects are expected to drive new client penetration and increased spending on generative AI projects [23] Valuation Metrics - **Valuation Methodology**: Target price derived from a combination of EV/Sales and DCF valuations, with an implied EV/Sales of 14.5x [26][28] - **DCF Valuation**: Estimated DCF value per share is HK$2.60, reflecting higher free cash flow expectations [28] Conclusion - **Investment Recommendation**: Upgraded to Buy from Neutral based on strong growth prospects in the generative AI sector and favorable policy support, with a target price indicating significant upside potential [1][26]

Summary of Conference Call Records Company and Industry Overview - **Company**: Sensetime - **Industry**: Artificial Intelligence (AI) and Software Solutions in China Key Points and Arguments 1. **Gen-AI Trend**: Sensetime is positioned to benefit from the growing Gen-AI trend, with expectations of increased Average Revenue Per User (ARPU) and a shift from hardware to software delivery models, particularly Software as a Service (SaaS) [1][2][3] 2. **Revenue Projections**: Gen-AI revenues are projected to contribute 81% by 2030, up from 64% in 2024, indicating a significant growth trajectory [2] 3. **Product Offerings**: Sensetime offers a range of AI solutions, including SenseNova (foundation model), SenseAvatar, SenseChat, and SenseMirage, targeting various sectors such as finance, healthcare, and government [2][3] 4. **Cost Structure and Profitability**: The company is focused on reducing operational expenses (opex) to improve profitability, with a projected opex ratio decreasing from 98% in 2025 to 29% by 2030 [3][102] 5. **Market Positioning**: Sensetime's integrated solutions are designed for easy deployment, enhancing monetization opportunities across different client types (ToC, ToB, ToG) [3][11] 6. **Valuation Metrics**: The 12-month target price is set at HK$1.83, with an expected upside of 11%, indicating that current prices largely reflect positive expectations [4] 7. **Earnings Estimates**: Net profits are anticipated to begin in 2028, with earnings estimates aligning with Bloomberg consensus [4][102] 8. **Risks**: Potential risks include fluctuations in customer spending, competition intensity, and the pace of generative AI adoption [11] Additional Important Insights 1. **Product Development**: The launch of new AI agents and upgrades to existing products are expected to drive growth in the second half of 2025 [4] 2. **Client Engagement**: Sensetime has secured various projects across industries, including significant contracts with government and healthcare sectors, indicating a diverse client base [28][29] 3. **Revenue Growth Drivers**: The company anticipates a revenue CAGR of 21% from 2025 to 2030, driven by private cloud solutions and project-based AI applications [97] 4. **Competitive Landscape**: Sensetime's R&D expenses and ratios are compared with peers, highlighting its commitment to innovation in the AI space [22] 5. **Long-term Outlook**: The company aims for a long-term operating profit margin (OPM) of 19.4% by 2032, which is competitive compared to industry averages [101] This summary encapsulates the essential insights from the conference call records, focusing on Sensetime's strategic positioning, financial outlook, and market dynamics within the AI industry.