Last Update 18 Dec 25

HSAI: Accelerating Global Lidar Adoption Will Drive Multiyear Overseas Volume Expansion

Analysts have modestly raised their price target on Hesai Group to approximately $30 per share from about $29.80, citing expectations for accelerating LiDAR adoption in China in the near term and globally by 2026 to 2027 as key drivers of long term volume and earnings growth.

Analyst Commentary

Street research has highlighted both significant upside potential and emerging execution risks for Hesai Group as LiDAR adoption accelerates in China and, over time, across global markets.

Bullish Takeaways

Bullish analysts view the recent sequence of price target increases, including moves into the mid 30 dollar range, as confirmation that the market is still underestimating Hesai's long term earnings power.
Forecasts for LiDAR adoption ramping first in China and then globally by 2026 to 2027 support expectations of multi year revenue compounding and operating leverage, which are embedded in higher valuation multiples.
Volume projections of several million overseas advanced driver assistance systems LiDAR units by 2030, excluding the U.S., imply a diversified revenue base that could reduce concentration risk and sustain premium growth positioning.
Initiation of coverage with positive ratings is seen as broadening institutional awareness, which could improve liquidity and narrow any valuation discount to faster growing auto technology peers.

Bearish Takeaways

Bearish analysts caution that current price targets already factor in a smooth global ramp in LiDAR adoption, leaving limited room for execution missteps or delays in international programs before valuation multiples compress.
There is concern that reliance on aggressive volume targets for overseas markets by 2030 introduces forecasting risk, particularly if regulatory, geopolitical, or competitive dynamics slow adoption outside China.
Some see increasing expectations for operating leverage as a double edged sword, noting that any cost overruns in scaling production or supporting global customers could weigh on margins and earnings quality.
The exclusion of the U.S. from certain long term volume projections is viewed as a potential constraint on upside, with uncertainty around future access to that market limiting the scope for further multiple expansion.

What's in the News

Issued fourth quarter 2025 revenue guidance of RMB 1,000 million to RMB 1,200 million, implying approximately 39 percent to 67 percent year over year growth (Corporate Guidance).
Raised full year 2025 GAAP net income guidance to RMB 350 million to RMB 450 million, signaling stronger than previously expected profitability (Corporate Guidance).
Selected by Li Auto as the exclusive lidar supplier for all models in its next generation assisted driving platform, covering the L Series, i Series, and MEGA (Client Announcement).
Announced production of its 1,000,000th lidar unit in 2025, becoming the first lidar company globally to exceed one million units in annual production (Operating Results).
Scheduled a November 11, 2025 board meeting to review and approve unaudited results for the three and nine months ended September 30, 2025 (Board Meeting).

Valuation Changes

Fair Value: Unchanged at approximately $29.83 per share, indicating a stable intrinsic value assessment.
Discount Rate: Risen slightly from 8.85 percent to about 8.85 percent, reflecting a marginal uptick in perceived risk or required return.
Revenue Growth: Effectively unchanged at roughly 38.6 percent, suggesting no material revision to top line expansion expectations.
Net Profit Margin: Stable at around 19.9 percent, indicating consistent assumptions on long term profitability.
Future P/E: Fallen slightly from about 27.66x to 27.58x, implying a modest reduction in the forward valuation multiple.

Expanding global presence and design wins, including with a top European OEM, could significantly diversify and boost revenue streams.
Increasing LiDAR adoption in EVs and robotics could enhance market share and revenue growth, driven by anticipated shifts in demand dynamics.
Heavy reliance on major clients and expansion in emerging markets may strain finances, risking profit margins and revenue growth amidst competitive pricing and CapEx demands.

Catalysts

About Hesai Group

Through with its subsidiaries, engages in the development, manufacture, and sale of three-dimensional light detection and ranging solutions (LiDAR) in Mainland China, Europe, North America, and internationally.What are the underlying business or industry changes driving this perspective?

The projection of 2025 LiDAR shipments reaching 1.2 million to 1.5 million units, with nearly 200,000 high-margin robotic LiDAR units, is expected to significantly boost revenue.
Anticipated net revenues of RMB 3 billion to RMB 3.5 billion for 2025, driven by strong demand and mass market adoption, indicate potential growth in revenue.
The growth of the ADAS market and LiDAR adoption in EVs is expected to rise from 8% in 2023 to 20% in 2025 and 56% by 2030, potentially increasing future revenue and market share.
Expanding into the global market with new design wins, including a top European OEM, highlights the company's growing international presence and potential revenue diversification.
Continued robotics market penetration, including partnerships for robotic applications and the successful launch of the JT Mini LiDAR, could have a substantial positive impact on earnings.

Hesai Group Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Hesai Group's revenue will grow by 44.3% annually over the next 3 years.
Analysts assume that profit margins will increase from 4.1% today to 17.3% in 3 years time.
Analysts expect earnings to reach CN¥1.3 billion (and earnings per share of CN¥9.57) by about September 2028, up from CN¥103.1 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as CN¥685.3 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 28.4x on those 2028 earnings, down from 237.7x today. This future PE is greater than the current PE for the US Auto Components industry at 17.3x.
Analysts expect the number of shares outstanding to grow by 2.29% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.43%, as per the Simply Wall St company report.

Hesai Group Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The competitive pricing strategy, particularly with the ATX LiDAR being priced at approximately $200, may lead to pressure on profit margins if it becomes difficult to maintain efficiencies or if raw material costs increase, potentially impacting net margins.
Dependency on core clients like BYD, Li Auto, and Leapmotor for substantial revenue could pose risks if these clients shift suppliers or reduce orders due to strategic changes, potentially affecting future revenues.
The expansion into robotic LiDAR applications means tapping into markets that are still emerging, posing a risk of slower-than-anticipated adoption rates, which could delay expected revenue growth in new segments.
Overseas market expansion, particularly in regions like Europe with slower electrification rates, may face unforeseen regulatory or competitive hurdles, which could slow revenue diversification and impact overall earnings.
The ambitious production capacity expansion plan, requiring significant CapEx investments, may strain financial resources if expected demand does not materialize, affecting cash flow and potentially putting pressure on financial growth projections.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $28.491 for Hesai Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $37.1, and the most bearish reporting a price target of just $24.03.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CN¥7.5 billion, earnings will come to CN¥1.3 billion, and it would be trading on a PE ratio of 28.4x, assuming you use a discount rate of 8.4%.
Given the current share price of $25.84, the analyst price target of $28.49 is 9.3% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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