1、 Disclosures&Disclaimer This report must be read with the disclosures and the analyst certifications in the Disclosure appendix,and with the Disclaimer,which forms part of it.Issuer of report:The Hongkong and Shanghai Banking Corporation Limited View HSBC Global Research at:https:/ Fromneutral-land

2、withlove|The19theditionoftheEMSentimentSurveyClick to view DeepSeek gives access to high-performing LLMs for free;SenseTimes strength is in multi-modal and industry expertise Expanding computing power through rental and partnership;Higher flexibility for GPU upgrades but also higher uncertainty GPM

3、pressure ahead,partially offset by Opex control and one-off gains;Retain Hold and raise TP to HKD1.70(from HKD1.60)How to remain competitive:DeepSeeks R1 model launched in January gives Chinese customers a high-performing Large Language Model(LLM)that is free to use.We believe it will drive token pr

4、ices lower and model producers will face stronger competitive pressure.However,we think SenseTime still possesses two key advantages.First,multi-modal capability.Unlike DeepSeeks R1,which can only process text,SenseTimes SenseNova multi-modal model can take image,video and text as input,which percei

5、ves the real-world environment better.Second,strong industry knowledge.We think SenseTimes experience in serving business clients allows it to integrate AI solutions into client workflows,being more than just a chatbot.In 2024,SenseTimes total revenue grew 11%y-o-y.We forecast 2025 revenue to grow 2

6、6%y-o-y,driven by Gen AI(+55%y-o-y,78%of revenue),followed by Smart Auto(+20%y-o-y,7%of revenue)and Computer Vision(-35%y-o-y,15%).How to increase computing power:We believe Chinas leading short-video company and e-commerce player combined accounts for over 70%of new computing power deployment in Ch