Hesai Group_ In-line 4Q24 results and FY25 vol guidance the bright spot

Summary of Hesai Group Conference Call Company Overview - Company: Hesai Group - Industry: China Autos & Shared Mobility - Ticker: HSAI.O Key Financial Results - 4Q24 Performance: - First-time GAAP net profit of Rmb147 million compared to a net loss of Rmb70 million in 3Q24 [2] - Revenue of Rmb720 million, a 33% increase quarter-over-quarter, aligning with guidance of approximately US$100 million [2] - Total LiDAR shipments reached 222,000 units, up 65% quarter-over-quarter [2] - Gross margin decreased by 8.7 percentage points to 39% due to lower high-margin NRE services revenue [2] - Operating expenses were contained at 55.2% of total sales, down from 63.6% in 3Q24 [2] - Full-year non-GAAP net profit for 2024 was Rmb14 million [2] 2025 Outlook - Revenue Forecast: Expected net revenues of Rmb3-3.5 billion, representing a year-over-year increase of 44-69% [3] - Net Income Projection: Anticipated net income of Rmb200-350 million under GAAP and Rmb350-500 million under non-GAAP [3] - Seasonal Expectations: For the first quarter, net revenues are projected to be Rmb520-540 million, a 45-50% year-over-year increase, with total shipments around 200,000 units [3] - Breakeven Point: Expected to occur between Q1 and Q2 of 2025 [3] - Client Mix: Key customers include Li Auto, Xiaomi, Great Wall Motor, Leapmotor, and BYD, with a multi-year program with a European OEM expected to start by year-end [3] Gross Margin and Product Mix - Gross Margin Confidence: Management is optimistic about maintaining a gross margin of around 40% in 2025 despite lower average selling prices (ASP) for ATX and AT128 products [4] - Product Mix Impact: The ATX series is expected to dominate shipments, while robotics LiDAR products are anticipated to provide reasonable gross margins to offset the impact of a less favorable product mix [4] - Long-term Value: Management believes the content value per vehicle will remain between US$500 to US$1,000 with the introduction of Level 3 automation [4] Expansion into Robotics - New Market Entry: Hesai is expanding into the robotics market, forecasting shipments of 200,000 units of robotics LiDARs in 2025 [9] - Partnerships: Collaborations include a leading smart home robotics company for lawn mowers and orders from Agtonomy for autonomous agriculture vehicles [9] - Technological Applications: The XT series LiDAR is being utilized for advanced 3D vision in robotics and automating in-plant driving systems at BMW factories [9] Market Position and Valuation - Current Stock Rating: Equal-weight with a price target of US$15.00, indicating a potential downside of 6% from the current price of US$16.01 [6] - Market Capitalization: Approximately Rmb14.5 billion [6] - 52-Week Price Range: US$20.18 to US$3.52 [6] Risks and Considerations - Upside Risks: Potential market share gains, faster adoption of LiDARs by traditional OEMs, and sustainable pricing power [13] - Downside Risks: Slower adoption of LiDARs, ASP declines due to cost-cutting by OEMs, and threats from emerging technologies [13] This summary encapsulates the key points from the conference call, highlighting Hesai Group's financial performance, future outlook, market expansion, and associated risks.