Key Takeaways
Hesai Group’s Hong Kong shares fell over 8% after the lidar maker reported a first-quarter profit swing that was overshadowed by a narrowing gross margin and declining selling prices.
"Hesai's core operating profit for 1Q was well above forecast," Citigroup analysts said in a report, but noted that the blended average selling price (ASP) decline was "below expectations."
The company reported revenue of RMB 681 million ($99 million), up nearly 30% year-over-year and 3% above consensus. It swung to a GAAP net profit of RMB 18.3 million from a loss in the prior year, but its gross margin contracted by 2.6 percentage points to 39.1%.
The negative stock reaction, despite a strong top-line beat and a new Mercedes-Benz partnership, highlights investor anxiety over pricing power in the competitive lidar market. For its second quarter, Hesai guided for revenue between RMB 850 million and RMB 900 million.
The company’s Hong Kong-listed shares (02525.HK) opened 8.15% lower on May 20, while its U.S. shares (HSAI.US) tumbled 9% in overnight trading. The selloff came after Hesai’s results showed its blended ASP fell 9% quarter-over-quarter.
Following the report, Citi cut its price target on the stock to HKD 223.3 from HKD 257.5, citing a potentially weaker EV market in the second quarter, though it maintained a Buy rating.
Operationally, Hesai delivered more than 471,000 lidar units in the first quarter and reaffirmed its full-year shipment guidance of 3 million to 3.5 million units.
A bright spot in the report was the confirmation that Hesai is a strategic lidar supplier for upcoming Mercedes-Benz models enabling Level 3 autonomy. Management noted that Level 3 systems could require three to six lidars per vehicle, substantially increasing the dollar content per car compared to current Level 2 systems.
The results present a mixed picture, with strong shipment growth and a key automotive design win offset by margin pressure. Investors will watch whether the ramp-up of higher-value Level 3 systems and new "spatial intelligence" products can reverse the ASP decline in the second half of the year.
This article is for informational purposes only and does not constitute investment advice.
