SENSETIME(20.HK)：FOCUS ON AIAAS PLAN IN FY22

机构：招银国际
研究员：Marley Ngan/Bowen Li

　　SenseTime delivered in-line FY21 revenue of RMB4.7bn (+36% YoY) and opex control was better than expected. Smart City/ Smart Business remained the core driving force (87% of FY21 revenue) and achieved strong revenue growth at +57%/+32% YoY respectively. Looking into FY22, as the Company plans to open up its SenseCore capabilities through AIaaS, this could potentially bring recurring revenue. Maintain BUY with lowered target price of HK$7.84 (prior HK$8.08) to reflect uncertainty in macro economy and that AI adoption pace could slow.
　　FY21 revenue in-line, opex control better than expected. SenseTime　delivered in-line revenue of RMB4,700mn (+36% YoY) in FY21. Gross margin slightly declined to 69.7% (vs. 70.6% YoY) but its operating loss was smaller than feared at RMB3,316mn. SenseTime remains committed in R&D. The Company spent RMB3,614mn R&D expense in FY21 (+47% YoY). Adjusting for share-based compensation and listing expense, opex was up +32% YoY.Opex ratio declined -3.4 pct pts YoY to 103.7%.
　　Smart City and Smart Business growth remained strong. In FY21, Smart　City delivered robust growth of +57% YoY to RMB2.14bn, largely driven by expanding cities coverage to 140 (+49% YoY). Meanwhile, Smart Business grew strongly at +32% YoY to RMB1.96bn. We are encouraged to see increase in both no. of customers (+9% YoY to 922) and avg. revenue per customer (+21% YoY to RMB2.1mn). Smart City + Smart Business revenue contribution increased to 87% in FY21 (vs. 83% in FY20) as new business segments (Smart Life + Smart Auto) are still in early monetization stage.
　　Focus on AIaaS plan in FY22. In Jan 2022, SenseTime AIDC in Lingang, Shanghai was officially launched. With a designed peak computing power of 3.74 exaflops, SenseTime plans to further open up its SenseCore capabilities through AI-as-a-Service (AIaaS) in FY22. The Company has tested out on several large customers in Smart City and Smart Auto and targets to penetrate into scientific research institutions and city managers. We think it takes time to scale up the AIaaS business given competition with existing cloud service providers. AIaaS could provide recurring revenue to SenseTime but this may result in a lower gross margin in the medium term.
　　Maintain BUY. We revised down FY22-23E revenue by 8-9% mainly to reflect uncertainty in macro economy and AI adoption pace could be slower than expected. Maintain BUY with lowered target price of HK$7.84 (prior HK$8.08).