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HSBC Global Research Downgrades SENSETIME-W (00020.HK) to Hold, Axes TP to $1.7
2023/09/06
HSBC Global Research released a report, highlighting that the 1H23 revenue of SENSETIME-W (00020.HK) has grown 1% YoY to RMB1.433 billion, 24% below the broker's estimate.
The company's smart city and smart car revenues fell 58% and 31% respectively due to stringent AI upgrade budgets by local governments and the completion of R&D contracts with Japanese customers.
SENSETIME's gross profit margin for 1H23 was under pressure and exceeded general expectations, falling 20.7 ppts YoY to 45.3%, mainly due to an increase in hardware and AI data centre-related costs as a percentage of revenue.
The group expected gross margins to remain stable in 2H23, which the broker expected to reach 45.6%.
HSBC mentioned that SENSETIME has significantly lowered its guidance and is now expecting revenue to grow by 15% to 20% YoY in 2H23, compared with the broker's expectation of 16% growth.
Revenue is guided to grow at a CAGR of about 20% to 23% from 2023 to 2027.
The broker has also chopped the company's 2023 to 2025 revenue CAGR forecast to 28% from the original 62%, and its revenue forecast by 17% to 48% to reflect growth normalisation and uncertainty in generative AI monetisations.
Gross margin forecasts were lowered by 9.5 ppts, 8.5 ppts and 6 ppts for 2023/24/25 respectively to account for increased competition in generative AI and revenue growth in AI smart computing centres.
HSBC axed its target price from $3 to $1.7 and downgraded its rating to Hold.
Source: AAStocks Financial News
http://www.aastocks.com/en/stocks/analy ... stock-news