SenseTime's road to IPO has made waves again!
The IPO process was delayed
On December 13, SenseTime issued an announcement on the Hong Kong Stock Exchange that it is expected to publish a supplementary prospectus and delay the listing, and refund the application for shares.
As for the reasons for the postponement of the IPO process, SenseTime said that on December 10, 2021, the U.S. Treasury Department included SenseTime Group Co., Ltd. in the "list of non-SDN China military complex enterprises".
As we all know, many of the investment institutions active in Hong Kong stocks have AMER backgrounds. At the time when SenseTime went public in Hong Kong, the US move directly restricted U.S. investors from investing in SenseTime, and at the same time, they could not trade SenseTime's shares in the market.
In this context, due to the reduction of the number of Hong Kong stock quotation group members, SenseTime's quotations listed on Hong Kong stocks will be affected, and may not reach the expected quotation height, thus affecting SenseTime's listing in Hong Kong stocks.
As a result, SenseTime said it made this choice to protect the interests of the company's intended investors and to help consider the potential impact of the latest developments on its investment decisions.
In fact, SenseTime has already received a round of sanctions from the US Department of Commerce as early as 2019, when SenseTime and domestic high-tech companies such as Hikvision and iFLYTEK were included in the "entity list".
Being on the Entity List means that these businesses face export controls and certain goods, technologies and services may not be made available to listed businesses without permission from the U.S. government.
However, at that time, the companies on the "Entity List" were limited to the export controls of the United States, and the impact on SenseTime was not large, and the sense-of-fame entities except for the Beijing subsidiary would not be affected.
Although SenseTime had to suspend the IPO process, SenseTime also stressed that it is still committed to completing the global offering and listing as soon as possible.
The R&D process may slow down
According to the data, SenseTime was established in 2014, is the "intelligent vision" designated by the Ministry of Science and Technology as the national new generation of artificial intelligence open innovation platform, together with Megvii Technology, Yuncong Technology, YITU Technology and called the FOUR LITTLE DRAGONS of AI in the field of computer vision.
According to the Frost & Sullivan Report, SenseTime is asia's largest AI software company in terms of revenue in 2020 and the largest computer vision software provider in China with an 11% revenue market share. Prior to IOP, SenseTime had raised more than RMB33.6 billion in 8 years, with investors including well-known institutions Such as SoftBank, Alibaba, Primavera Capital, Silver Lake, IDG, etc.
However, it should be pointed out that SenseTime is currently facing the dilemma of increasing revenue and not increasing profits. According to the prospectus, from 2018 to the first half of 2021, SenseTime's net losses were 3.433 billion yuan, 4.968 billion yuan, 12.158 billion yuan and 3.713 billion yuan, respectively, with a cumulative loss of 24.2 billion yuan in three and a half years.
For long-term losses, the company said that it invested a lot of resources in the construction of large-scale AI supercomputing centers and the development of core products such as AI chips and AI sensors, and the investment in research and development projects was large and the return cycle was long, resulting in negative cash flow. The data shows that during the reporting period, the proportion of R&D expenses to the company's revenue was 45.9%, 63.3%, 71.3% and 107.3%, respectively.
Subsequent R&D investment will increase, and according to SenseTime's prospectus, the use of the IPO is also disclosed in the prospectus, about 60.0% or HK$3.393 billion is used to enhance its R&D capabilities. This also means that SenseTime will be in a state of loss in the future or longer.
Judging from the current situation of SenseTime, there will be no increase in profits for many years, and R&D investment will continue, so the continuous transfusion of external capital is of great significance to SenseTime. Previously, some people in the industry expected that SenseTime has the largest reserve of R & D personnel, and once SenseTime is successfully listed, it is expected to become the largest artificial intelligence software company in Asia that has truly entered the market.
At present, SenseTime is forced to postpone its listing and fall into the embarrassing situation of "no rice cooking". Or have a certain impact on its research and development, or affect the long-term development of the company.
The process of the AI era may slow down
In recent years, under the continuous maturity of data, algorithms, computing power and other technologies and the promotion of a new generation of artificial intelligence landing policies and markets, China's artificial intelligence industry has developed rapidly and the market scale has been expanding. According to SenseTime's prospectus, in this segment, the average compound growth rate from 2020 to 2025 is 31.9%, and the total market size will reach $121.8 billion in 2025.
Artificial intelligence involves a wide range and many subdivisions. The basic layer is the cornerstone of the artificial intelligence industry, providing data management, computing power basis and algorithm models; the technology layer includes intelligent language, computer vision, natural language processing, etc., which is the core driving force for the development of the artificial intelligence industry; the application layer is the extension of technology in specific industries or scenarios, providing software and hardware products and supporting solutions for commercialization.
SenseTime has independently developed the SenseCore AI device of artificial intelligence infrastructure SenseCore, which can mass-produce AI models on a large scale and with high efficiency. As early as before, many AI industry insiders and capital market people were expecting SenseTime to become "China's first AI stock". SenseTime is highly anticipated by HSBC, once valued at US$26.5 billion to US$36.4 billion.
People in the industry generally believe that listing in Hong Kong stocks may be only a small step for SenseTime, but it is of great significance to the entire industry and means the opening of a new era. This means that AI will enter a period of accelerated growth, which naturally has the advantage of scale and is highly investable in the long term.
In fact, the AI head startups in the same period as SenseTime, Megvii Technology, Yuncong Technology, and Yitu Technology, three AI startups in the visual field, have reached the listing stage, but they have also stumbled all the way.
As the most promising listed company to become "China's first AI stock", SenseTime's suspension of listing this time can't help but remind investors that the process of China's AI may slow down.
Mainly because, although the current topic of "artificial intelligence" concept is hot, losses are still a common problem in the AI industry. The data shows that nearly 90% of the world's AI companies are still in a state of loss, and more than 90% of the enterprises in China's AI industry chain are also in the loss stage.
From the current point of view, AI applications have not been able to transform the entire industry, but to achieve the optimization of the AI-driven "core decision system", the power of algorithm research may only account for a relatively small percentage of them, and it cannot promote the leap forward of the entire vertical industry.
There is no doubt that the "artificial intelligence" track has broad prospects, but there are still many difficulties that need to be solved. For SenseTime, the most important thing is to increase its self-hematopoietic ability, achieve more landing scenarios, and prepare for the company's long-term development.