稳健的第三季度业绩；业务发展势头仍然强劲

Solid 3Q results; businessdevelopmentmomentum remains strong Target PriceUS$26.70(Previous TPUS$16.30)Up/Downside28.5%Current PriceUS$20.78 Hesai Group (Hesai) released (11Nov)3Q25 financial results: total revenuewas RMB795.4mn, up47% YoY, and was1.4% ahead of Bloomberg consensusforecast; non-GAAP net profit was RMB288mn,or RMB140mn if excluding one-off gains from equity investment in an early-stage tech company,ahead ofconsensusat RMB61mn, aided by the beat in revenue,and better-than-expected GPM (42.1% vs consensus at 40.9%).Consideringthe beat in3Q25results, management lifted 2025EGAAPNPguidance to RMB350mn-450mn(fromRMB200-350mn).Managementremainsupbeatonbusinessdevelopment outlook,andguidedforat least2mn-3mntotalLiDAR shipmentvolume in 2026E,or potentially higher if L3 adoption becomes an industry-widetrend,inwhichcaseitexpects shipment volume of Robotics LiDAR to doubleYoY in 2026E compared to that in 2025E.We remain positive thatHesaiispoisedto grow alongside the rising demand for LiDAR products.More use casesin robotics and industrial markets should propel further TAM expansion forHesaiover the longrun, in our view.Weroll over valuation window to 2026E,and ournewTPofUS$26.7isbased on5.3x2026E P/S(vs. prior 4.8x 2025E P/S),a10% premium to comparable industry peers which in our view can be justifiedby Hesai’s competitive advantage and solid revenue and earnings growthoutlook. Maintain BUY. China Software & IT Services Saiyi HE, CFA(852) 3916 1739hesaiyi@cmbi.com.hk Ye TAO, CFAfranktao@cmbi.com.hk Joanna Ma(852) 3761 8838joannama@cmbi.com.hk Wentao LU, CFAluwentao@cmbi.com.hk Stock Data Strong LiDAR shipment growthsustained driven by ATX.Theno. oftotal LiDARshipmentsreached441.4kin3Q25, up229% YoY, amongwhich the no. of ADAS LiDARshipmentsreached380.8k, up193% YoY,and the no. ofroboticsLiDAR shipments reached60.6k. Average sellingprice (ASP) for LiDAR wasRMB1.8k in3Q25, down10%QoQ, in our viewmainly due to product mix changesas ASPofATX productsis lower thanthatof AT128.Weare looking forLiDAR shipmentsof 1.6mn in 2025E,representing218% YoY growth,driven by better-than-expected marketadoption of ATX. Hesai hassecured design wins from both ofitstop 2 ADAScustomers across all their 2026 models,featuring100% lidar adoption.Also,Hesai’s high-end ETXLiDARsecured a design winwitha top 3 domesticNEV automaker (which isan existing customer of Hesai), paired withmultiple FTX units,and mass production is slated for late 2026 or early2027. Although ASPislikelytocontinuedeclining in 2026E owing to productmix shift, the solidgrowth in shipment volume should support Hesai’srevenue growth, in our view. GPMstayedatahealthy levelwhile cost optimization drove marginexpansion.GPM for 3Q25 reached 42.1%,better than consensus at40.9%, which we attributed tobetter-than-expectedGPM of ATX products.Operating expenses(S&M, G&A, andR&D) declined8% YoY in 3Q25. Asapercentage of revenue, S&M/G&A/R&D expenses were5.5/9.2/25.0% in3Q25,optimized from 8.6/14.2/40.8%in 3Q24,and operating marginimprovedto9.7% in 3Q25 (3Q24:-14.3%). Source: FactSet TP of US$26.7based on 5.3x 2026E P/S.Our targetmultiple of 5.3x 2026EP/S is10%premium compared totheindustry average, but in our view couldbe justified byHesai’srobust revenue and earnings growth outlook, andstrong competitive advantage.We are looking for 47% 2024-2027E CAGRfor revenue and 41% YoY growth for non-GAAP NP in 2026E (or 96% YoYif excluding one-off gains from equity investment in 2025E). Risks 1)Potential product defects, and other routes oftechnology proven to be more effectivethan that of LiDAR (such as camera-based system), which may both lead to reducedmarket adoption of LiDAR solutions;2)Lower-than-expected pace of penetration of LiDAR/ADAS;3)Rising competition from other companies developing LiDAR products, as well asapotential price war in LiDAR industry weighingontheblended ASP of HSAI’s products;4)Higher-than-expected operating expenses leading to slower-than-expected marginexpansion. Disclosures& Disclaimers Analyst CertificationThe research analystwho is primary responsible for the content of this research report, in whole or in part, certifies that with respect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personalviews about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither theanalyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to thedate of issue of this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3)serve as an offi