The Zhitong Finance App learned that Goldman Sachs released a research report stating that it maintains the Hesai-W (02525) “buy” rating and the target price of H shares of HK$27, while maintaining the HSAI.US (HSAI.US) American Depositary Receipt (ADR) target price of 28 US dollars, and believes that the company's valuation is attractive. Hesai's revenue and net profit for the third quarter were in line with the forecast, while gross margin and profit before interest and tax (EBIT) were better than expected, mainly due to quarterly improvements in average sales prices driving up gross margin, but this was partly offset by non-operating expenses.
Goldman Sachs pointed out that Hesai's third-quarter lidar (LiDAR) revenue was 3% higher than the bank's forecast, mainly due to a 5.6% quarterly increase in mixed average sales prices and high service revenue. The latter mainly comes from SGI-related manufacturing and support services. The gross margin for the third quarter was 41%, 1.8 and 1.1 percentage points higher than the bank's and market expectations, respectively. Goldman Sachs believes it was mainly driven by improved prices for advanced driver assistance systems (ADAS) lidar. EBIT for the period was 43% higher than the bank's forecast, mainly due to higher gross margin and lower R&D expenses than expected. However, the increase in non-operating expenses, including foreign exchange losses, left non-GAAP net profit for the third quarter only in line with expectations.
According to management, net revenue for the fourth quarter was 1.1 billion to 1.15 billion yuan. The median value was lower than the bank's and market expectations of 3% and 23%, respectively. Goldman Sachs plans to hold a post-performance investor conference call with Hesai management on the morning of November 12. Investors are expected to pay attention to the strategic growth plan's business progress and the latest developments in cooperation with domestic and foreign automakers (OEMs), including L3 autonomous driving, as well as progress in commercialization of robotic lidars and humanoid robots, competitive landscape, average sales price and gross margin outlook.
Goldman Sachs pointed out that Hesai's global lidar revenue market share will reach 33% in 2024, and the company is expected to benefit from the accelerated popularization of NEV NOA in China, mass production of overseas ADAS orders from 2026 to 2027, and new orders from the global Robotaxi market and automatic lawn mowers. Among them, the company's global Robotaxi market share in 2024 was 61%.
The bank expects that as next-generation ATX products enter a three-year product cycle starting in 2025, the scale effect and operating leverage will accelerate Hesai's revenue growth and achieve strong compound profit growth. Key risks include lidar penetration rates falling short of expectations, increased competition, customer price pressure, and policy risks.