Citi: Maintains "Buy" Rating on HESAI-W (02525) H-Shares and HK$21.4 Target Price; Q3 Core Net Profit Up 60% Year-on-Year

Citi issued a research report maintaining the "Buy" rating on HESAI-W (02525) H-shares and the HK$21.4 target price, while maintaining the US$22 target price on its US shares (HSAI.US). The bank noted that Hesai's third-quarter net profit was RMB81 million, in line with the bank's and the lowered market expectations. Excluding a one-off gain of RMB185 million in Q3 2025 and FX effects, the bank estimates Q3 core net profit rose 60% year-on-year to RMB100 million. Third-quarter gross margin was 41%, up 0.9 percentage points quarter-on-quarter and slightly above expectations, mainly driven by improved product mix. Blended lidar ASP rose 3% quarter-on-quarter to RMB1,340. On shipments, Q3 lidar shipments were 729,700 units, up 16% quarter-on-quarter and up 65% year-on-year, in line with expectations; actuator module shipments were 23,400 units, up 97% quarter-on-quarter. Citi expects Siasun Robot&Automation actuator revenue to grow 160% year-on-year in 2027, mainly driven by shipments rising from about 70,000 units in 2026 to about 180,000 units in 2027, as well as full-body actuators ramping up and lifting ASPs. Management expects lidar pricing and margins to stabilize as industry competition becomes more rational. The company's Q4 group revenue guidance is RMB1.1 billion to RMB1.15 billion, reflecting relatively weak downstream automotive demand. The Siasun Robot&Automation business accounted for more than 50% of total Q3 revenue. Management maintained its 2026 SGI revenue guidance of RMB200 million to RMB300 million and targets SGI revenue of about US$100 million in 2027, expecting that segment to reach break-even in the same year. Citi believes that with its ASIC-based technology and cost advantages, leading market share, and a more solid financial position than peers, Hesai is well positioned to capture the sales growth momentum in the lidar industry.