Goldman Sachs has released a research report stating that based on a two-stage DCF valuation of SenseTime (00020), it derives a 12-month target price of HK$2.03, with a WACC of 11.5% and a perpetual growth rate of 2%.

The bank recently met with company executives in Hong Kong, with discussion highlights including computing platform expansion, AI strategy, as well as AI customer demand and customer base expansion.

Goldman Sachs is bullish on the company's ability to deliver multimodal and long-horizon AI Agents, which can provide end users with higher quality output at lower Token consumption in office and content creation scenarios, thereby driving customer adoption and AI spending.

Goldman Sachs' Key Views Are as Follows

System-Level AI Products Covering Models, Tokens and AI Agents

Management highlighted the company's system-level AI product portfolio, including "One Model system, One Token factory and One Agent Harness," which, combined with the company's proprietary computing platform and AI models, helps customers achieve higher returns on investment through generative AI.

Management also stated that the company's latest AI multimodal model is based on the NEO unified architecture, adopting an encoder-free design and MoT (Mixture of Transformation), enabling deeper integration of different content types such as text, audio, images and video.

Continued Expansion of Computing Platform with Increased Focus on ROI

The company continues to invest in its computing platform to capture strong customer demand for AI products.

With proceeds from the April 2026 placement, SenseTime plans to expand the scale of its AI computing cluster powered by domestic AI chips and strengthen its domestic AI cloud technology stack.

Management stated that the company continues to focus on the return on investment of computing platform expenditures, enhancing returns by closely tracking customer demand, refining its product portfolio including AI Token initiatives and vertical applications, and optimizing the SenseCore platform.

Customer Base Continues to Diversify

Management stated that the company's product customer base continues to diversify, with expanded customer coverage and reduced concentration on any single customer.

The company's products primarily serve three categories of customers: first, small enterprises or developers through the AI Token program; second, customers in TMT, financial, consumer electronics and other industries through AI total solutions; and third, professionals or enterprise customers through AI applications, such as Seko for AI video generation, and Raccoon for AI office scenarios, the latter utilizing the company's proprietary AI model SenseNova 6.8-Flash-Lite.

Valuation

The valuation appendix of the report shows that Goldman Sachs estimates SenseTime's revenue for 2026 to 2028 at RMB 6,456.7 million, RMB 8,386.5 million and RMB 9,407.7 million respectively, with EBITDA of RMB -993.5 million, RMB 574.9 million and RMB 1,256.8 million respectively, and EPS of RMB 0.00, RMB 0.01 and RMB 0.01 respectively.

Based on a two-stage DCF valuation, the bank assigns a 12-month target price of HK$2.03, with a WACC of 11.5% and a perpetual growth rate of 2%.