Target price: HKD 76.24! Soochow International initiates coverage of HQVT (01392) with a "Buy" rating, corresponding to an upside potential of 380%-421%.

Soochow International released its first research report on July 31, giving the leading multi-spectral AI perception company HQVT (01392) a "buy" rating and a target price of HKD 76.24. As of the market close on July 31, the company's stock price ranged from HKD 14.64 to HKD 15.87, corresponding to a potential upside of 380%-421%, indicating significant growth potential. The company is set to be listed on the main board of the Hong Kong Stock Exchange on June 22, 2026, with an issue price of HKD 7.2, raising a net amount of HKD 537 million. It is the "first physical AI stock" in Hong Kong and a national-level key small giant enterprise specializing in innovative development. The company has established a full-stack closed loop of "multi-spectral hardware + edge AI inference + industry-specific large models," mainly focusing on modules, perception terminals, and customized large model services, deeply engaging in the physical security sectors of IDC, energy storage, and smart grids. On the industry level, the domestic multi-spectral AI market is expected to reach 21 billion yuan in 2025 and is likely to exceed 60 billion yuan by 2028, with an annual compound growth rate of over 40%. Based on 2025 revenue statistics, the company's overall market share in the industry is 3.3%, ranking first in China, while the market share in the sub-segment of multi-spectral AI large model services reaches 23%, solidifying its leading position. With over ten years of accumulated industrial multi-spectral imaging data, the company has implemented over 70 benchmark projects in leading IDC firms, achieving a risk identification accuracy rate of 94%, thereby creating data and scenario barriers that are difficult to replicate. From a financial perspective, the company's revenue for 2023-2025 is projected at 117 million, 523 million, and 669 million yuan, respectively, representing a compound growth rate of 138.9% over three years. The adjusted net profit for 2025 is expected to be 55.25 million yuan, with profitability continuing to improve after excluding one-time listing expenses. The business structure is continually being optimized, with the proportion of large model service revenue rising to 53.1% by 2025, becoming the core driver of growth. The report indicates that the gross margin of large model services is expected to decline from 50% to 30.4% in 2025, mainly due to upfront hardware investments for new scene expansion. As project repurchase rates improve, it is anticipated that gross margins will recover to 35% in the second half of 2026 and rise to the range of 40%-45% in 2027. On July 31, the company announced a significant technological catalyst: it has completed the migration of its large model to the NVIDIA Jetson edge platform, reducing reliance on high-performance servers, drastically lowering customer deployment costs, and opening up market space for standardized products among small and medium-sized clients, making it a key driver for short-term valuation recovery. According to Soochow International's analysis, from a valuation perspective, the current stock price corresponds to an adjusted PE of only 17-18 times for 2025. However, under baseline scenarios, it should be assigned a 83 times PE based on the expected 2026 figures, corresponding to a target price of HKD 76.24. The conservative and optimistic scenario target prices are HKD 56.6 and HKD 94.3, respectively. In comparison, the average P/S for peer companies in the A-share market is 68.35 times, and the rarity of the Hong Kong stock further creates significant valuation recovery potential. The research report highlights that the key medium- to long-term catalysts include positive operating cash flow, the landing of new orders in energy storage and grid applications, and the first overseas SaaS business contract. Investors should closely track three major indicators: quarterly gross margins for large models, IDC project orders, and the commercialization progress of edge AI products. Additionally, the report notes that the company has been deeply engaged in the IDC sector with strong cooperation and loyalty among core customers, while continuously optimizing and improving its supply chain system. As the edge AI products gradually scale up and the business footprint expands in an orderly manner both domestically and internationally, coupled with the unique attributes of multi-spectral AI stocks in Hong Kong, the long-term growth potential is outstanding, and follow-up value release can be closely monitored through changes in the three core operational indicators.