CITIC Securities: HESAI-W's gross margin is affected by product mix disturbances but remains resilient overall. Target price lowered to 250 yuan

The research report from China Merchants Securities International indicates that Hesai-W (02525.HK) had a net profit attributable to the parent company of RMB 153 million in the last quarter of last year, representing a year-on-year growth of 4.2% but a quarterly decline of 40%, mainly due to a high base from significant one-time gains in the third quarter. The company has raised its shipment expectations for 2026 from the original range of 2 million to 3 million units to a new range of 3 million to 3.5 million units, primarily benefiting from the accelerated deployment of FTX blind spot radar in L3 models, the realization of large orders from the JT series, and demand for ATX exceeding expectations, reflecting a significant enhancement in downstream demand certainty.

The firm stated that in the short term, the company is in a rapid expansion phase, with gross margins being affected by product mix disruptions but overall remaining resilient. The average selling price (ASP) is under pressure in the short term, and R&D investment is higher than expected; the firm has lowered its net profit estimates for the company by 22% and 29% for this year and next. It also noted that Hesai's technology is leading, and it is optimistic about its upgrade from a lidar manufacturer to a physical AI supplier in the long term, with new products expected to open up market space several times larger than ADAS; it maintains an "Overweight" rating, assigning a price-to-earnings ratio of 61.3 times for the fiscal year 2026 or a growth rate of 1.3 times; the target price for Hesai (HSAI.US) in the US stock market has been lowered from $40 to $32, and the target price for H shares has been reduced from HKD 311 to HKD 250