SenseTime Group: Buy Rating Affirmed Amidst Strong Gen AI Growth and Strategic Initiatives

SenseTime Group, Inc. Class B (0020 – Research Report), the Technology sector company, was revisited by a Wall Street analyst today. Analyst Saiyi He from CMB International Securities maintained a Buy rating on the stock and has a HK$1.85 price target.

Saiyi He has given his Buy rating due to a combination of factors that highlight SenseTime Group’s potential for growth, particularly in the Gen AI business. Despite a revenue shortfall in FY24, the company demonstrated a significant 103% year-over-year increase in Gen AI revenue, which now constitutes a substantial portion of its total revenue. This growth is supported by an impressive expansion in operational computing power, positioning SenseTime among the top players in China’s Large Model Application Market.
Looking forward, Saiyi He anticipates further growth driven by strategic initiatives such as enhancing AI infrastructure synergies, developing advanced multimodal models, and improving commercialization efforts. Although the company faces challenges like a decline in gross profit margin due to increased costs, efficiency gains from organizational restructuring are expected to improve operating performance. These factors collectively underpin the optimistic outlook for SenseTime’s revenue and market position, justifying the Buy rating.