SENSETIME(20.HK):LARGE LANGUAGE MODEL COMPETITION INTENSIFIES
SENSETIME(20.HK):LARGE LANGUAGE MODEL COMPETITION INTENSIFIES
Domestic LLM competition intensifies: SenseTime targets itself as China's SOTA LLM with SenseNova but we also see impressive progress made by domestic LLMs including Qwen by Alibaba, Ernie by Baidu, KimiChat, ChatGLM, and Baichuan, who have made remarkable publicity on various international LLM benchmark leaderboards including LMSYS Chatbot Arena, MT-bench, MMLU, GLUE and SuperGLUE. So far, SenseTime showed up in benchmark leaderboard competition much less often besides SuperCLUE, a Chinese language based leaderboard. We think with SenseTime's early and huge investment in pre- trained transformers since 2017, showing up in such public leaderboards will be key for investors to reinstall confidence. From the monetisation perspective, competition also intensifies as Bytedance initiated token price war, slashing price to 99.3% lower than the industry average for business users since May, which should also add near-term pressure to SenseTime's GenAI revenue and margins.We project SenseTime's generative AI related revenues should exceed 50% mix in 2024 and believe SenseTime's full transition to GenAI will pay off in the long term. However, we also see significantly intensified domestic LLM competition this year with more domestic competitors achieving good rankings in common international benchmark systems where SenseTime lacks enough presence. ByteDance's token price war since May may also weigh on generative AI growth and margin prospect of SenseTime. Based on the operating losses, token price war and huge AI investments required, we believe SenseTime may need new fundraising by 2025. We maintain HOLD and the key stock catalyst will be the outperformance of SenseNova's model intelligence over domestic and overseas peers. We lower our TP from HK$1.75 to HK$1.45 based on 7.5x 2025E EV/Sales.
我们预计，到2024年，商汤的生成式人工智能相关收入组合将超过50％，并相信商汤向GenAI的全面过渡将在长期内获得回报。但是，我们也看到，今年国内法学硕士竞争明显加剧，在商汤缺乏足够影响力的通用国际基准体系中，越来越多的国内竞争对手取得了不错的排名。字节跳动自5月以来的代币价格战也可能打压商汤的生成式人工智能增长和利润前景。根据运营亏损、代币价格战和所需的巨额人工智能投资，我们认为到2025年，商汤可能需要新的筹款。我们维持持有，关键股票催化剂将是SenseNova的模型情报表现优于国内外同行。根据7.5倍的2025年电动汽车/销售额，我们将目标从1.75港元下调至1.45港元。
Key Factors for Rating
评级的关键因素
Business momentum resumed upon GenAI: Sensetime has restructured its business into three key categories including Generative AI, Traditional AI and Smart Auto, with respective rev. mix of 35%, 54% and 11% in 2023. We are positive on Company's strategy of phasing out Traditional AI involving Smart City projects and fully embracing Generative AI.
GenAI恢复了业务势头：商汤已将其业务重组为三个关键类别，包括生成式人工智能、传统人工智能和智能汽车，2023年分别增长率为35％、54％和11％。我们对公司逐步淘汰涉及智慧城市项目的传统人工智能并全面采用生成式人工智能的战略持积极态度。
Domestic LLM competition intensifies: SenseTime targets itself as China's SOTA LLM with SenseNova but we also see impressive progress made by domestic LLMs including Qwen by Alibaba, Ernie by Baidu, KimiChat, ChatGLM, and Baichuan, who have made remarkable publicity on various international LLM benchmark leaderboards including LMSYS Chatbot Arena, MT-bench, MMLU, GLUE and SuperGLUE. So far, SenseTime showed up in benchmark leaderboard competition much less often besides SuperCLUE, a Chinese language based leaderboard. We think with SenseTime's early and huge investment in pre- trained transformers since 2017, showing up in such public leaderboards will be key for investors to reinstall confidence. From the monetisation perspective, competition also intensifies as Bytedance initiated token price war, slashing price to 99.3% lower than the industry average for business users since May, which should also add near-term pressure to SenseTime's GenAI revenue and margins.
国内法学硕士竞争加剧：商汤将自己定位为SenseNova的中国SOTA LLM，但我们也看到包括阿里巴巴的Qwen、百度的Ernie、KimiChat、ChatGLM和百川在内的国内LLM取得了令人印象深刻的进展，他们在包括LMSYS聊天机器人竞技场、MT-Bench、MMLU、GLUE和SuperGlue在内的各种国际LLM基准排行榜上大放异彩。到目前为止，除了基于中文的排行榜SuperClue之外，商汤科技在基准排行榜竞赛中出现的频率要低得多。我们认为，自2017年以来，商汤科技对预训练的变形金刚进行了早期的巨额投资，因此出现在此类公开排行榜上将是投资者重拾信心的关键。从获利的角度来看，随着Bytedance发起代币价格战，自5月份以来将商业用户的价格下调至比行业平均水平低99.3％，这也将增加商汤的GenAI收入和利润率的短期压力，竞争也将加剧。
Fundraising may be required by 2025: projecting losses over 2024-26 with a net cash balance of RMB4.4bn, SenseTime may need additional funding by 2025 given our concerns about 1) AIDC and AIaaS price war, and 2) a larger LLM training investment may be required to compete with SOTA models both domestically and internationally.
到2025年可能需要筹款：预计2024-26年将出现亏损，净现金余额为44亿元人民币，鉴于我们对1）AIDC和AiaaS价格战的担忧，商汤可能需要更多的资金；2）可能需要更大的LLM培训投资才能在国内和国际上与SOTA模式竞争。
Key Risks for Rating
评级的主要风险
Potential breakthrough of SenseTime's LLM; operating loss narrows faster than our forecasts; competition with domestic LLMs.
商汤法学硕士的潜在突破；营业亏损的缩小速度快于我们的预期；与国内LLM的竞争。
译文内容由第三方软件翻译。
