"Big Banks" Huayan lowers SenseTime's target price to 2 yuan, focusing on competition in the AI market position

HSBC Global Research report indicates that SenseTime (00020.HK) is a pioneer in China's AI industry, but over the past year, several latecomers have demonstrated strong capabilities in their respective verticals. The market is concerned about SenseTime's market position in the era of generative AI, as several of its products directly compete with these emerging competitors.

In terms of foundational models, SenseTime also faces fierce competition from ByteDance's Doubao, Alibaba (09988.HK)'s Tongyi Qianwen, and DeepSeek. If SenseTime's foundational models or application products lag behind and rely more on bundled computing power sales, the stock may face a valuation downgrade.

The firm expects SenseTime's revenue to grow by 29% this year to RMB 6.478 billion, compared to expected growth rates of 115% and 140% for Zhizhu (02513.HK) and Minimax (00100.HK), respectively, and anticipates that SenseTime's EBITDA will turn positive for the first time this year to RMB 791 million; it has lowered SenseTime's target price from HKD 3.1 to HKD 2, maintaining a "Hold" rating