Goldman Sachs maintains a "buy" rating on SenseTime Technology (00020) with a target price of 3.53 Hong Kong dollars and is optimistic about its layout in generative AI.

Recently, the internationally renowned investment bank Goldman Sachs released a research report pointing out that based on the technological advantages, product innovation, and vast market prospects of SenseTime (00020) in the field of generative AI, Goldman Sachs maintains a "buy" rating on SenseTime. The 12-month target price is HK$3.53. At the same time, Goldman Sachs predicts that the revenue contribution rate of SenseTime's generative AI will reach 91% by 2030, with the potential to achieve positive EBITDA (earnings before interest, taxes, depreciation, and amortization) in 2026, reaching a total of 205 million RMB. SenseTime releases a series of new generative AI products, opening up a new mode of cost reduction and efficiency improvement Goldman Sachs believes that SenseTime has recently launched several new generation generative AI products, including the multi-series generative intelligent body Seko2.0, the office intelligent body "Xiao Huaxiong 3.0," and the "Ru Ying" marketing intelligent body. These products have not only significantly improved their content generation capabilities but also shown strong cost advantages in deploying solutions at the end. It is worth mentioning that Kapi Camera, an upgraded version of the commercial camera released during the SenseTime AI products launch week, successfully topped the "Photography and Video" category application list in the Apple App Store China, sparking another wave of AI application frenzy. Previously, Kapi Camera had become popular overseas, ranking first in the App Store overall rankings in countries like the Philippines and New Zealand, and entering the top five in multiple European countries such as the UK, France, and Germany, with a total user base exceeding tens of millions. SenseTime's multi-series generative intelligence body Seko 2.0 has become a major highlight, with its core advantage relying on SenseTime's independently developed industry's first inference architecture LightX2V that can achieve real-time video generation, resulting in low-cost, high real-time video generation. Compared to traditional production methods, the production cycle of animated dramas can be shortened by 80% to 90%. Goldman Sachs analyzes in its report that with the continued reduction in the price of AI video generation tools and the further extension of the length of generated videos, the commercial prospects of Seko 2.0 are very promising. In the office field, SenseTime's AI office intelligent body "Xiao Huaxiong 3.0" is also highly anticipated. The core upgrade point of this product is the one-click generation of high-quality PPT, completing large-scale data processing in seconds based on long-chain thinking ability, and cross-platform workflow implementation through multi-terminal deployment. Goldman Sachs expects that the office software market size in 2030 will reach 17 billion US dollars, and generative AI functionality will bring incremental revenue to the market. For live streaming e-commerce, SenseTime's "Ru Ying" marketing intelligent body improves its operational efficiency through a "Five Major Intelligent Body Matrix" composed of four e-commerce Agents and DIGIHUMAN, meeting diverse user needs. For example, the Shop Operations Agent achieves comprehensive automation of backend management processes; the Live Operations Agent improves the efficiency of live data playback by six times; the Traffic Placement Agent can simultaneously monitor data from multiple shops and generate summarized reports, and even provide intelligent advertising strategies; the Live Control Agent enables hosts to complete control operations in a "self-service" manner; the DIGIHUMAN Agent can replicate high-quality live human broadcasts, allowing for "same-day replication and broadcast". Goldman Sachs believes that the release of this new product signifies SenseTime's expansion into specific scenarios, driving value realization by enhancing customer productivity. Goldman Sachs is optimistic in the long term, forecasting SenseTime to turn a profit by 2026 In terms of valuation assessment, Goldman Sachs combined the two-stage DCF (discounted cash flow) model and the expected EV/Sales ratio for 2026, taking into account SenseTime's long-term growth potential and recent market momentum, ultimately giving a target price of HK$3.53 for SenseTime within 12 months. This represents a 73% upside compared to the current stock price. In terms of business revenue structure, public data shows that in the first half of 2025, driven by the business of private clouds, public clouds, and artificial intelligence projects, the revenue contribution rate of generative AI of SenseTime has already reached 77%. Goldman Sachs further predicts that by 2030, this proportion will substantially increase to 91%, demonstrating the strong DRIVE of the generative artificial intelligence business for SenseTime's future performance growth. In terms of profit expectations, Goldman Sachs predicts that SenseTime will achieve positive EBITDA by 2026, amounting to 205 million RMB; by 2027, this profit figure is expected to further increase to 1.119 billion RMB.