Report Interpretation

Overview

This earnings review assesses Hesai’s 2Q26 results, near-term LiDAR demand, and the emerging contribution from Strategic Growth Initiatives. Bernstein maintains an Outperform rating, arguing that SGI commercialization and a projected 3Q26 growth reacceleration support the longer-term case despite lower near-term revenue expectations and an operating-profit miss.

Core views

Hesai reported 2Q26 revenue of RMB861 million, broadly matching consensus of RMB864 million, but operating income of RMB2 million was far below consensus of RMB114 million and Bernstein’s RMB46 million estimate. The shortfall was attributed mainly to higher-than-expected G&A and R&D expenses. Revenue rose 21.9% year-on-year, while gross margin declined 243 basis points year-on-year to 40.1% and operating margin fell 298 basis points to 0.3%. Net income attributable to shareholders nevertheless increased 60.0% year-on-year to RMB71 million. The report identifies a divergence between shipment growth and revenue growth in Hesai’s core LiDAR business. In 2Q26, ADAS LiDAR shipments rose 60% year-on-year and robotics LiDAR shipments rose 193%, but revenue excluding SGI rose only 16% because blended average selling prices were lower. Bernstein nevertheless notes that Hesai retained leadership in China’s long-range ADAS LiDAR market with a 47% share, ahead of RoboSense at 23%, Huawei at 21%, and Seyond at 9%. The report also points to Li Auto extending multi-LiDAR configurations from flagship L9 and L8 models to the RMB250,000-class L6, which it views as evidence that multi-LiDAR adoption could become more mainstream. Strategic Growth Initiatives are the report’s principal incremental growth driver. SGI began generating revenue in 2Q26 through robotic-actuator shipments to Sharpa. Hesai had delivered more than 10,000 actuators by the end of the quarter at an ASP above RMB3,000. Bernstein expects solid actuator growth and sustainable pricing over the next year, citing Sharpa’s approximately USD50,000 dexterous-hand ASP and market traction. Kosmo, another key SGI product, is expected by management to begin contributing revenue in 3Q26. Management raised 2026 SGI revenue guidance from RMB100 million to RMB200–300 million and targets US$100 million of SGI revenue and segment breakeven by 2027. For the near term, management guided to 3Q26 revenue growth of 38%–45% year-on-year, which Bernstein describes as a reacceleration after recent-quarter slowing. Bernstein reduced its 2026 EPS estimate for 02525.HK to RMB0.40 from RMB0.41 and for HSAI to RMB3.18 from RMB3.31; its 2027 HSAI EPS estimate was reduced to RMB5.26 from RMB5.28. The firm still reiterates Outperform, but lowers its DCF-based price targets to USD29 and HKD29 from USD30, reflecting lower near-term revenue growth. The valuation uses an 8.3% WACC and a 3.0% terminal growth rate, incorporates the existing core business and rising robotics contribution, and implies 38x forward P/E at end-2026.

Analysis framework

Bernstein compares reported quarterly results with consensus and its own forecasts, then links shipment trends, average selling prices, competitive market share, and OEM adoption to LiDAR revenue prospects. It separately evaluates SGI commercialization and applies a DCF valuation using long-term assumptions for the core business and robotics contribution.

Methodology notes

• Valuation methodsDCF (Discounted Cash Flow)

  Discounted cash flow valuation

  Bernstein values Hesai using a DCF framework with an 8.3% WACC and 3.0% terminal growth rate, incorporating the existing business and expected robotics contribution.

• Industry AnalysisVolume-price decomposition

  Shipment-volume and blended-ASP analysis

  The report explains that strong ADAS and robotics LiDAR shipment growth translated into more modest core revenue growth because blended average selling prices declined.

• Industry AnalysisIndustry Concentration Analysis

  China long-range ADAS LiDAR market-share comparison

  Bernstein compares Hesai’s 47% market share with RoboSense, Huawei, and Seyond to assess its competitive position.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Hesai Group (02525.HK / HSAI)

  Primary covered LiDAR and robotics company; SGI commercialization is expected to add to its core LiDAR growth.

  Strengths

  China long-range ADAS LiDAR market leader with 47% share; rapid ADAS and robotics LiDAR shipment growth; raised SGI revenue guidance.

  Weaknesses

  2Q26 operating income materially missed expectations because of elevated G&A and R&D expense; lower blended ASPs constrained core revenue growth.

  Comparison

  Hesai’s 47% China long-range ADAS LiDAR share exceeded RoboSense’s 23%, Huawei’s 21%, and Seyond’s 9%.

  Risks

  LiDAR failures, escalating US sanctions, market-share loss at key clients, and slower-than-expected profitability improvement.

Key data

• 2Q26 revenueRMB861 millionUp 21.9% year-on-year; versus RMB864 million consensus and RMB883 million Bernstein estimate.
• 2Q26 operating incomeRMB2 millionDown 90.4% year-on-year; versus RMB114 million consensus, affected by higher G&A and R&D expenses.
• 3Q26 revenue growth guidance38%–45% YoYManagement guidance indicating reacceleration from recent-quarter slowing.
• 2026 SGI revenue guidanceRMB200–300 millionRaised from RMB100 million.
• China long-range ADAS LiDAR market share47%Hesai’s 2Q26 share; RoboSense 23%, Huawei 21%, and Seyond 9%.
• Robotic actuator deliveriesMore than 10,000Delivered to Sharpa by the end of 2Q26, at ASP above RMB3,000.
• DCF assumptions8.3% WACC; 3.0% terminal growth rateUnderlying Bernstein’s HKD29 and USD29 target prices.

Impact & implications

Bernstein’s investment case rests on a transition from core LiDAR shipment growth, which is currently pressured by lower blended ASPs, toward broader ADAS adoption and a growing robotics revenue stream. The firm considers SGI’s higher guidance, initial actuator shipments, and expected Kosmo revenue contribution supportive of longer-term growth, even as it trims near-term estimates and target prices.

Risks

• Serious car accidents caused by LiDAR failures.
• Escalated sanctions from the US government.
• Loss of market share at key clients.
• Slower-than-expected improvements in profitability.

What to watch

• 3Q26 revenue growth delivery against management’s 38%–45% year-on-year guidance.
• Whether Kosmo begins contributing revenue in 3Q26 as management expects.
• SGI revenue progression toward RMB200–300 million in 2026 and US$100 million with breakeven profitability by 2027.
• Blended ASP trends and whether strong LiDAR shipment growth converts into faster revenue growth.
• Hesai’s market share at key clients and in China’s long-range ADAS LiDAR market.