The stock price doubled in the 3 days of listing, and senseTime, the "first AI stock", was warmly welcomed

SenseTime-W (0020.HK), known as the "first AI stock," opened more than 9 percent higher in early trading on January 3, before its share price soared, rising as high as nearly 36 percent to HK$7.5, once again hitting a record high, with a total market capitalization approaching HK$250 billion in one fell swoop.

As of press time, SenseTime-W is up 27% at HK$7 and has a total market capitalization of HK$233 billion.

SenseTime was founded in 2014 by a team led by Xiaoou Tang of the Multimedia Lab at the University of Chinese, Hong Kong. At present, the company's main artificial intelligence software business radiates domestic and Japan, Singapore and other places, and has achieved revenue of 3.446 billion yuan in 2020, serving more than 1,200 customers worldwide.

Secondary offering

SenseTime-W's listing can be described as a series of twists and turns, and the company has conducted two public offerings. In this IPO, SenseTime-W raised a net amount of HK$5.552 billion, and after exercising the over-allotment interest, SenseTime-W can raise an additional HK$847 million. Nine cornerstone investors, including the Mixed Ownership Reform Fund initiated by China Chengtong, Xuhui Capital, Guosheng Overseas Hong Kong, Shanghai Artificial Intelligence Industry Equity Investment Fund, etc., subscribed to a total of about US$512 million in SenseTime-W shares.

SenseTime-W intends to use the proceeds to enhance the Company's R&D capabilities, invest in emerging business opportunities, pursue strategic investment and acquisition opportunities, working capital and general corporate use.

According to the data, SenseTime-W is an artificial intelligence software company focusing on computer vision technology and empowering hundreds of industries. According to Sullivan's report, SenseTime-W is Asia's largest AI software company in terms of revenue in 2020 and the largest provider of computer vision software in China, with an 11% market share.

As of June 30, 2021, SenseTime-W has more than 2,400 customers, including more than 250 Fortune 500 companies and other listed companies, 119 cities, and more than 30 automotive companies. At the same time, SenseTime-W has empowered more than 450 million mobile phones and more than 200 mobile applications, including 5 mobile applications with more than 500 million monthly active users.

In terms of performance, the prospectus shows that from 2018 to 2020, SenseTime-W's revenue was 1.85 billion yuan (RMB, the same below), 3.03 billion yuan and 3.45 billion yuan, respectively. In the first half of 2021, SenseTime-W revenue was RMB1.65 billion, up 91.8% year-on-year. However, the company has not yet achieved a profit, and in the first half of this year, the loss attributable to the shareholders of SenseTime was about 3.702 billion yuan.

SenseTime-W's main costs come from R&D expenses. From 2018 to 2020, the company's R&D investment was 849 million yuan, 1.916 billion yuan and 2.454 billion yuan, accounting for 45.9%, 63.3% and 71.3% of the current revenue, respectively. In the first half of 2021, SenseTime-W's R&D expenditure reached 1.772 billion yuan, exceeding the revenue of the same period. In the past three and a half years, SenseTime-W has invested nearly 7 billion yuan in research and development.

According to the prospectus, SenseTime currently has 40 professors and more than 5,000 employees, of which 2/3 are scientists and engineers. And the establishment of a systematic industry-university-research system, and Shanghai Jiao Tong University, Hong Kong Chinese University, Zhejiang University, Tsinghua University and other universities to build a joint training laboratory, not only let college talents deeply participate in the industrial technology landing research, but also formed a guarantee for the supply of SenseTime scientific and technological talents.

The increase nearly doubled after the listing

On December 30 last year, SenseTime-W was officially listed on the Hong Kong Stock Exchange, the opening market response was hot, the stock price rose by more than 20% at one point, and then gradually stabilized, and the first day of listing closed, SenseTime rose 7.27%, corresponding to a market value of HK$137.5 billion.

On January 3, SenseTime-W opened 8.91% higher on the third trading day of listing, and then the stock price rose sharply, with the highest increase of nearly 36% to HK$7.5, once again setting a new record high, and the total market value approached HK$250 billion in one fell swoop. The intraday high of HK$7.5 is a 95% increase from the IPO price of HK$3.85, nearly doubling.

The industry believes that the positive feedback of the market after the listing of SenseTime reflects the long-term optimism of the capital market for SenseTime, and it is also a long-awaited AI "national science popularization" in the industry. The successful listing of SenseTime has long-term significance for Chinese technology enterprises to connect with the capital market, cultivate scientific and technological talents, and boost the capital market.

Essence Securities pointed out that the compound growth rate of the integrated artificial intelligence industry and senseTime's revenue growth forecast shows that the revenue growth rate of SenseTime from 2021 to 2023 will be 60%, 60% and 50%, corresponding to the annual operating income of 5.513 billion, 8.822 billion and 13.233 billion, respectively, and predicts that the reasonable range of the market value after listing will be 162.030 billion to 194.436 billion Hong Kong dollars.

In fact, the rapid development of the Chinese intelligent software market also provides a broad growth space for SenseTime. The Sullivan report shows that AI software will be one of the fastest growing business segments over the next decade. The global ai software market size will reach $121.8 billion in 2025, with a compound annual growth rate of 31.9% from 2020.

Xu Li, co-founder, chairman and CEO of SenseTime-W, said in his speech at the listing ceremony that there is a continuous large-scale investment in technology to bring innovation, and then there is business model development, which is a rare road. The hard part is the uncertainty of the business. But when we see that artificial intelligence has broken through the "industrial red line" in many industries, let us be more convinced of the inclusive value that technological breakthroughs can bring. And our investors share a belief in the disruptive power of AI. It is precisely because of this that SenseTime has been able to grow into a leading enterprise in artificial intelligence in Asia in 7 years, using technological breakthroughs again and again to redefine scenarios and models, to refresh the industry, and refresh the public's understanding of artificial intelligence.

For a long time, SenseTime and Megvii Technology, Yuncong Technology, YITU Technology, three AI startups in the field of vision have been called "AI Four Little Dragons". In August last year, SenseTime officially submitted a listing application to the Hong Kong Stock Exchange. Among the other three, Cloudcong Technology and Megvii Technology chose to list on the A-share market, which were approved by the Shanghai Stock Exchange on July 20 and September 9 last year, respectively, but have not yet been officially registered. Yitu, who had previously applied for an early listing on the Shanghai Stock Exchange, terminated the IPO process in July last year.