CITIC SEC initiates coverage on 51WORLD (06651) with a "buy" rating, target price of HK$68.

As artificial intelligence moves from the digital world to the physical world, digital twins are becoming the underlying infrastructure connecting virtual and reality. In this arena, 51WORLD (06651) has quietly established itself as the core gateway to the physical AI era with its "3D+simulation+AI" full-stack capabilities. According to a recent research report by CITIC SEC, as physical AI applications such as autonomous driving, embodied intelligence, and low-altitude economy accelerate landing, the company is expected to become a "data shovel" in the physical AI era and enjoy long-term growth dividends. CITIC SEC has initiated coverage on 51WORLD, giving it a "buy" rating with a target price of HKD 68. 51WORLD is the industry leader in the Chinese digital twin solution market. Its three main businesses - 51Aes digital twin platform, 51Sim simulation synthetic data platform, and 51Earth digital earth platform - have synergistically developed solutions for over ten industries such as intelligent driving. According to Frost & Sullivan, the company's market share in the Chinese digital twin solution market is 2.4% in 2024, and 3.2% in the Chinese digital twin design and operation optimization solution market. In 2025, its market share in the Chinese end-to-end advanced intelligent driving simulation and data platform market is projected to be 53.5%, ranking first in the industry. 51WORLD has established clear growth curves for its three main businesses: 51Aes as the foundation, covering over ten industries such as smart cities, water conservancy, and energy; 51Sim focusing on the core training base for intelligent driving and embodied intelligence, entering a period of rapid growth; 51Earth focusing on user interaction and experience, providing a 3D interactive experience with high-precision global spatial data. CITIC SEC predicts that 2026 will be the year of explosive growth for the 51Sim business, benefiting from the implementation of L3-level autonomous driving regulations and increased vehicle production, with revenues expected to surge by 350% year-on-year. Although the company's gross profit margin is under short-term pressure due to strategic price adjustments and project cost structures in 2025, CITIC SEC believes this is a one-time strategic transition period, with short-term losses expected to higher-quality business growth in the long run, leading to a rapid recovery in profitability from 2026 onwards. Considering the company is still in a phase of rapid expansion, CITIC SEC expects the company to break even in 2027 and achieve positive earnings in 2028. CITIC SEC specifically noted in the report that, similar to NVIDIA's layout in the autonomous driving simulation data platform, the full-stack ecology from hardware to downstream applications is the underlying development logic of 51WORLD. Positioned in China's autonomous driving simulation data ecosystem, it is compatible with multiple mainstream hardware solutions domestically and internationally, building a closed-loop data solution connecting real-world data acquisition to model iteration, collaborating extensively with customers along the industrial chain, and possessing a strategic premium for domestic intelligent driving simulation platforms. In March 2026, the company released the world's first physical intuitive world model, 51WorldModel, embedding physical laws in the model's reasoning at a significantly higher confidence level than the industry average. At the same time, the company plans to launch a "physical AI factory" in collaboration with industry partners, packaging software, data, and computing power as a service to reduce customer deployment cycles and costs by 90%. Looking ahead, the surge in physical AI is driving demand for Beijing Vastdata Technology, with high-confidence physical data becoming a core production factor. 51WORLD is poised to become the central hub of physical AI data production through its simulation and synthetic data platforms. With forward-looking layouts such as the physical intuitive world model and physical AI factory coming to fruition, 51WORLD is expected to transition from a software tool to a data and infrastructure supplier, deeply benefiting from the long-term compound interest of industrializing physical AI.