JP Morgan: First coverage of MANYCORE TECH (00068) with a "neutral" rating, target price of HKD 19. Clear business but valuation is high.

JP Morgan released a research report stating that it is initiating coverage on MANYCORE TECH (00068) with a "neutral" rating and a target price of HK$19. The bank pointed out that MANYCORE TECH is a leading indoor design SaaS provider in China and has potential competitiveness in the field of spatial intelligence or "world models". However, since its IPO, the stock price has risen by 156%, currently trading at around 26 times price-to-sales ratio and approximately 180 times expected 2027 price-to-earnings ratio valuation. This is significantly higher than the 6 times price-to-sales ratio and 17 times expected price-to-earnings ratio of global design software leader Autodesk, reflecting the market's recognition of its AI potential value. JP Morgan believes that MANYCORE TECH's traditional SaaS business is a high-quality asset, with the company holding a 23% market share in the Chinese interior design software market based on 2024 revenues. In 2025, subscription revenue accounted for 97% of total revenue, with a gross profit margin of 82% and an adjusted net profit margin of 7%. JP Morgan predicts a compound annual revenue growth rate of 11% from 2025 to 2028, with the adjusted net profit margin expanding to 17% by 2028. However, the current premium on the stock price indicates that investors are not only paying for its SaaS business, but also have high hopes for its AI advantage, utilizing its accumulated database of 480 million 3D models over the past 15 years to enter the field of spatial intelligence. While the narrative for spatial intelligence is clear, the business is still in the early stages of commercialization, with estimated revenue of less than $1 million in 2025 and a lack of industry benchmarks. JP Morgan admits the difficulty in accurately evaluating this part of the value, so they referenced valuations of similar early-stage projects in the market (such as AMI Labs and World Labs) and gave MANYCORE TECH a valuation of $4.2 billion, corresponding to HK$19 per share.