A Fresh Valuation Look at Hesai Group (NasdaqGS:HSAI) Following CICC’s Lidar Sector Leadership Call

Hesai Group (NasdaqGS:HSAI) shares were in focus after China International Capital Corp. (CICC) named the company as a sector leader. The recognition was based on Hesai Group's recent profitability milestone and its fast-growing shipments across lidar and robotics markets.

See our latest analysis for Hesai Group.

This latest recognition comes as Hesai Group rides a wave of renewed momentum. The past week alone delivered a 24.6% share price return, which offset some of this quarter’s earlier volatility. Despite a challenging few months, the company’s one-year total shareholder return stands out at 135%, showcasing both long-term promise and the market’s excitement around its profitability milestone.

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With robust financial growth and analyst optimism fueling recent gains, the central question emerges: Is Hesai Group's surge an opportunity for new investors, or has the market already priced in the next phase of its expansion?

Most Popular Narrative: 35.7% Undervalued

Hesai Group’s most popular valuation narrative suggests a fair value of $29.90, standing well above the last close price of $19.23. With such a gap, the underlying assumptions behind this bullish perspective are especially crucial. Here is what is driving sentiment at the high end.

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.

Read the complete narrative.

Want to know what powers this ambitious price target? There is a set of growth forecasts and bold profit margin assumptions that support the outlook just beneath the surface. Wonder how high Hesai’s future profits and market share could climb? The full narrative breaks down the projections in detail. You will want to see what is next.

Result: Fair Value of $29.90 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, the narrative faces real headwinds, such as intensifying competition and possible execution delays as Hesai expands production to meet rising global demand.

Find out about the key risks to this Hesai Group narrative.

Another View: Market Multiples Tell a Different Story

While some see Hesai Group as undervalued, looking at its price-to-earnings ratio paints a more cautious picture. The company is trading at 49.4 times earnings, which is well above the US Auto Components industry average of 21.3 times and even higher than its peer average of 20.6 times. Compared to its estimated fair ratio of 41.7, Hesai’s current valuation suggests investors are paying a premium, which could mean less upside if expectations are not met. Is the market’s optimism justified, or does it raise the risk if growth slows?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Hesai Group Narrative

If you have a different take or want to dig into the details for yourself, crafting your own perspective is quick and straightforward. Do it your way

A great starting point for your Hesai Group research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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