UBS lowers Hesai's target price to $36, with product average price decline greater than expected

UBS released a report, raising its profit forecast for Hesai-W (02525.HK) this year by 22%, reflecting the company's gains from selling stock investments. However, the bank indicated that the decline in the average selling price of the company's products was worse than expected, lowering its profit forecast for the company for next year and the year after by 6% to 8%. The target price for Hesai (HSAI.US) ADR was reduced from $39.5 to $36, with a rating of "Buy."

The bank noted that the company's product sales continue to shift towards lower-priced ADAS LiDAR systems, resulting in a further quarterly decline in the average selling price of products by 9.9% to RMB 1,790. However, benefiting from cost and scale optimization, the quarterly gross margin remained at a healthy level of 42.1%. Along with a decrease in operating expenses and other income of RMB 173 million mainly from stock investment sales, the company's quarterly net profit was RMB 256 million, with a non-GAAP net profit of RMB 288 million