Goldman Sachs has issued a research report assigning a 12-month target price of HK$2.03 to SenseTime (HKEX: 00020), based on a two-stage DCF valuation with a WACC of 11.5% and a perpetual growth rate of 2%.

Analysts from the investment bank recently met with senior management of the company in Hong Kong, where discussions centered on the expansion of its computing power platform, its artificial intelligence strategy, and the growth of AI customer demand and its client base.

Goldman Sachs holds a positive view on the company's ability to deliver multimodal and long-horizon AI Agent capabilities, 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.

System-Level AI Offerings Spanning Models, Tokens and AI Agents

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

Management also noted that the company's latest AI multimodal model is built on the NEO unified architecture, featuring an encoder-free design and MoT (Mixture of Transformation), enabling deeper integration of diverse content types including text, audio, images and video.

Continued Expansion of Computing Power Platform with Heightened Focus on ROI

The company continues to invest in its computing power platform to capture strong customer demand for AI products. With proceeds from an April 2026 placement, SenseTime plans to expand its AI computing cluster powered by domestic AI chips and strengthen its domestic AI cloud technology stack.

Management stated that the company remains focused on the return on investment of its computing power 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.

Increasingly Diversified Customer Base

Management indicated that the company's customer base for its products continues to diversify, with expanded customer coverage and reduced concentration on any single client. The company's products mainly serve three types of customers: first, small businesses or developers through its AI Token program; second, customers in sectors such as TMT, financial services, and consumer electronics through comprehensive AI solutions; and third, professionals or enterprise clients through AI applications such as Seko for generative AI video and Raccoon for AI office scenarios, the latter powered by the company's proprietary AI model SenseNova 6.8-Flash-Lite.

Valuation Details

According to the appendix of the valuation report, 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; EBITDA at RMB -993.5 million, RMB 574.9 million, and RMB 1,256.8 million, respectively; and EPS at RMB 0.00, RMB 0.01, and RMB 0.01, respectively.

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