SenseTime Shanghai Headquarters (Source: Photographed by Titanium Media App)
In the past two days, the "first share of artificial intelligence (AI)" SenseTime is a bit hot, mainly because 23.3 billion shares have ushered in a huge amount of unbanned.
On June 30, SenseTime (SenseTime-W, 0020.HK) ushered in its first lifting day. However, before the opening of Hong Kong stocks in the morning, SenseTime issued an announcement that management voluntarily extended the ban period for Class B shares until December 29, accounting for about 5.98% of the total number of issued shares, demonstrating management's confidence in the company's long-term value and prospects.
"Xu Li, Wang Xiaogang, Xu Bing and certain members of the Group's management voluntarily undertake, in the benefit of the Company, not to sell the Class B shares involved in the pre-IPO restricted share units adopted by the Company on 1 November 2016 and the Class B shares in which the options vested under the IPO Employee Incentive Plan (revised) adopted by the Company on 1 November 2016 are exercised." The announcement said that SenseTime founder Tang Xiaoou will continue to hold Class A shares, equivalent to 20.61% of the number of shares already issued by the company, and 68.2% of the voting rights.
Although there are fluctuations on the first day (30 days) of the unblocking day, from a business point of view, AI technology has long-term value potential. The four-year cumulative R&D investment of more than 8 billion yuan in SenseTime has a long-term competitive advantage.
In 2021, due to the external environment, the stock price performance of technology companies has fluctuated significantly. Relatively speaking, SenseTime's stock price rose against the market when it was listed, and it has shown some resilience. A number of investment banks have given them an "outperforming industry" rating or an "overweight rating.".
Mr. Wu Shangzhi, Chairman of CDH Investment, an early investor of SenseTime, said: "The development of AI is the general trend of global development. At present, the trillion-level track of artificial intelligence is accelerating the integration and reshuffle, and there will inevitably be leading enterprises with a market value of 100 billion US dollars in the future. As a leading enterprise in artificial intelligence, SenseTime has unique advantages in talent reserves, infrastructure construction, original research and development, large-scale applications, etc., and it can be said that it has taken the lead in this competition and is expected to become the core asset of smart China's intelligent manufacturing infrastructure. ”
On June 20, market research institute IDC released the "2021 China AI Software and Application Market Research Report". The report shows that in the second half of 2021, SenseTime ranked first in the field of computer vision in China, surpassing a number of manufacturers with an overwhelming advantage. SenseTime's market share also increased from 18.4% in the second half of 2020 to 22.2% in the second half of 2021.
In addition, SenseTime's AI hashrate output is leading the world; The research institute Frost & Sullivan and the Head Leopard Research Institute released the "2022 China Digital Human Market Observation Report - Milestones" shows that SenseTime has become a leader in Chinese enterprises in the field of digital people, and the overall competitiveness is the first.
Compared with Internet companies with traffic dividend models such as Ali, Tencent and Baidu, SenseTime, as a Chinese company with "hard technology" attributes, has invested money in AI technology, deepened its business through technology investment, resisted short-term risks, and become a growth force that cannot be ignored in China's AI field.
Where is the growth space of the "FIRST AI Stock"?
Since the beginning of this year, under the pressure of the epidemic and inflation, the valuation of global AI companies has generally adjusted.
According to Tencent News, a number of professional investors said that SenseTime's sharp rise and fall was mainly attributed to liquidity factors, not fundamental factors. The early stock price surge, mainly because the liquidity was too small, institutional shareholders could control the market, and the stock price was easily affected by short-term traders.
About 70% of the shares on the first day of the lifting date were lifted, but it is expected that more of SenseTime's early investors will enter at a lower cost and may face maturity or performance appraisal pressures. In fact, early investors profit exit is a normal, short-term market behavior, but also conducive to new investors to build a new bottom after entering the market.
In other words, the long-term trend of SenseTime's fundamentals will not change due to events such as lifting the ban and restrictions.
So, from the perspective of the development of AI technology, as the "first ai stock", where is the growth space of SenseTime?
The first is the revenue growth of technology landing.
According to the financial report, from 2018 to 2020, SenseTime's annual revenue reached 1.853 billion yuan, 3.027 billion yuan and 3.446 billion yuan respectively, and its performance continued to increase steadily. In 2021 alone, the company's revenue was 4.7 billion yuan, an increase of 36.4% year-on-year, and the gross profit margin was 69.7%; Net cash was $21.45 billion and net adjusted loss was $1.42 billion.
SenseCore's commercialization model for customers to produce AI models on a large scale has begun to be verified in the case of serving large smart cities and large car companies.
Taking the "intelligent manufacturing demonstration factory" Foton Cummins engine production plant as an example, there are tens of thousands of parts on a car, even if the same kind of parts have multiple models, and different production processes will produce different defects, in order to achieve high enough accuracy for each defect detection, the AI quality inspection program has extremely high requirements.
Faced with complex quality inspection needs, the Deep Spring Platform, which integrates optical, electromechanical and soft computing based on SenseCore, a large device of SenseTime' AI, gives full play to the advantages of its rich model accumulation, and realizes the optimization of the overall production line efficiency by providing a variety of product forms for pre-production, production and post-production, and combined with SenseTime's self-developed AI chip to play the efficient reasoning advantage of soft and hard integration. At present, the platform has landed in multiple stations.
SenseTime's four core business segments (Urban, Commercial, Automotive, and Lifestyle) are all supported by SenseCore, providing products and services for various industries.
According to the 2021 annual report, the cumulative number of cities in SenseTime's smart city sector increased from 94 at the end of 2020 to 140, including Shanghai and Shenzhen, an increase of 48.9% year-on-year; In the smart business sector, senseTime's Ark platform served the digital transformation of more than 900 enterprise customers, an increase of 10.3% year-on-year, and the average revenue per customer increased by 21.3%, typical customers include the State Grid, China Southern Power Grid, Beijing-Shanghai high-speed rail, China Telecom, SoftBank Group, Alibaba Cloud and other industry leaders; SenseAuto Smart Car Platform launched by SenseTime has served more than 40 car companies by the end of 2021, and the cumulative number of pre-installation fixed points of its intelligent driving and intelligent cockpit products has reached 23 million units, ranking first in the industry, covering more than 60 models mass-produced in the next five years; In the smart life sector, last year's mobile phones equipped with SenseTime AI SDK have shipped a total of 1.5 billion units, with a cumulative embedded in more than 200 mobile applications and mobile games, providing virtual and real fusion interaction technology for 60+ shopping malls, museums and airports.
In February this year, SenseTime was included in the Hang Seng Technology Index and hang Seng Composite Index; Previously, CICC had issued a research report saying that because SenseTime is a WVR company with the same shares, after 6 months and 20 trading days after listing and still meets the inclusion criteria of the Hong Kong Stock Connect, it may be allowed to be included, and it is expected that its inclusion time will be around August this year. This all shows that senseTime's core competitiveness is recognized and will attract more incremental capital inflows from investors.
The second is long-term technical investment, talent construction and other resources.
In terms of R&D scale, SenseTime can be called "excellent students", with a cumulative R&D investment of more than 8 billion yuan in the past four years, far exceeding its peers.
In 2021 alone, after deducting equity incentives, SenseTime invested 3.06 billion yuan in R&D, accounting for 65.1% of revenue. Compared with the Internet giants 6%-20% of R & D expenditure is not inferior, accounting for more than BAT (Baidu, Alibaba, Tencent).
In terms of AI talents, SenseTime is also luxurious.
Since October 2014, SenseTime has been compiling elite players in the field of deep learning. In the past year, SenseTime has significantly expanded its team, with the number of R&D personnel increasing from 2803 in 2020 to 4274 in 2021, accounting for 70% of the total number of employees.
Continuous R&D investment, a large number of high-precision talents, further upgrade SenseCore AI large device to develop the world's largest number of parameters of computer vision model.
In 2021, SenseTime has produced and commercially produced 34,000 AI models, an increase of 152% year-on-year, and the average number of commercial AI models produced by each R&D personnel per year increased by 72% year-on-year, and the efficiency of R&D personnel was significantly improved. By the end of 2021, the total number of global patent assets exceeded 11,000, an increase of 96% compared with the end of 2020, of which invention patents accounted for 78%.
Finally, it is based on the scene application and industrialization released by SenseTime AIDC.
In January 2022, SenseTime's next-generation Artificial Intelligence Computing Center (SenseTime AIDC) was put into operation.
It is reported that SenseTime's AIDC has a construction area of 130,000 square meters and a total investment of about 5.6 billion yuan, which is an important computing power base for SenseCore's AI device, and the largest AI computing center in Asia - the peak computing power is as high as 3740 Petaflops (1 Petaflop is equal to 100 trillion floating-point operations per second), and it is also the first super-large AI computing center in East China, thus supporting the company's parallel training in ultra-large-scale clusters. Carry out research work in the fields of trillion-level parameter large models and protein folding research.
In fact, computing power, algorithms, big data has always been the "troika" of AI technology, with the increasing number of IoT devices, performing trillions of AI reasoning operations every day, it is imperative to establish a set of AI computing centers, so that AI technology can be more large-scale application and commercial landing.
Taking the medical and health field as an example, due to the empowerment of intelligent technology and the digitization of a large amount of life information, the speed of new drug research and development will be greatly accelerated, and it took 10 to 15 years to develop new drugs in the past, and now it is likely to become two or three years to complete a new drug research and development cycle.
In August 2021, based on SenseTime, SenseTime announced a number of new drug development and precision medicine with original AI technology, including in-depth exploration of potential laws in compounds, proteins, cell lines and clinical big data, and related research progress involved protein interactions, cancer drug responses, genetic mutation prediction based on pathological images, and drug redirection, realizing another innovation in AI technology.
In addition, the concept of a "metacosmic" requires strong infrastructure capabilities, and SenseTime will be an important driver. At the World Intelligence Conference held in late June, Xu Li, co-founder, chairman and CEO of SenseTime, said that meta-universe has brought new productivity, new production models and supply-side explosions. The confirmation of metaversic elements through digital chains has stimulated people's desire for production, which in turn has promoted the large-scale explosion of overall productivity.
Lu Yanxia, research director of IDC China, told Titanium Media App that the future establishment of data sharing mechanisms including data trading markets, data exchange and sharing platforms, and open source datasets, open source to expand data volumes, build a prosperous ecosystem of large models through open source communities, and continuously reduce the cost of training and reasoning, and train more refined models for small data sets for specific fields, are the future development paths of AI technology.
Therefore, we see that both SenseTime, Alibaba and Tencent attach great importance to AI technology investment, seek new growth space, help traditional industries to be digitally upgraded, and allow enterprises to maintain long-term technical capabilities.
Insisting on technology investment is the real long-termism
Each new technology has its own growth cycle, and in today's era of complex and rapid technological development, long-termism requires strategic determination and ignores short-term noise.
At the 2022 World Intelligence Congress, Xu Li presented a Gartner 2021 Emerging Technology Maturity Curve (Hype Cycle), showing that AI software engineering will explode in the next 2-5 years. In addition, NFTs, digital people, generative AI, etc. have become popular technologies.
And Shang Tang is already ready.
Lu Yanxia said in an interview with Titanium Media App that SenseTime and other companies are early market entrants, accumulating technical advantages and market resources in the past 5-10 years, and have a deep understanding of products and market demand.
This is the core reason why SenseTime continues to rank first in the field of computer vision in China.
"From a business point of view, SenseTime's revenue scale is indeed the largest in Al Company, and its achievements in recent years are also more prominent, and its position in the Al industry is beyond doubt." Lu Yanxia said.
The development of China's economy is shifting from factor-driven to intelligent innovation-driven. In the "New Generation Artificial Intelligence Development Plan" issued by the State Council in 2017, it was mentioned that "in 2030, China will reach the world's leading level and become the world's major artificial intelligence innovation center... The scale of core industries exceeds 1 trillion yuan, driving the scale of related industries to exceed 10 trillion yuan. In the "14th Five-Year Plan" Outline, it is also clear again that It will support Hong Kong in building an international innovation and technology center, emphasizing the deepening of economic and trade and science and technology cooperation between the mainland and Hong Kong and Macao, and the high-quality construction of the Guangdong-Hong Kong-Macao Greater Bay Area.
Sintime comes at an opportune time. When China vigorously develops AI technology under the important opportunity, SenseTime invested a lot of investment in technology research and development, continuously promoted digitalization, intelligence, and industrialization upgrades, in line with the characteristics of the times under scientific and technological innovation, waiting for the future large-scale production of AI software to blossom and bear fruit, becoming a scarce "head goose" in the industry.
On the day of the listing on December 28 last year, Xu Li said in his speech: "Continuous large-scale technology investment brings 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 AI has broken through the 'industrial red line' in many industries, let us be more convinced of the inclusive value that technological breakthroughs can bring." ”
In fact, only continuous investment in original technology research and development is the true long-termism of an enterprise, and it is also in line with the goal of long-term development of the country and self-reliance and self-reliance of science and technology.
In just 8 years, SenseTime has grown into a leader in AI in Asia, using technological breakthroughs to redefine scenarios and models again and again, to refresh the industry and refresh the public's understanding of AI. As Xu Li said, SenseTime has always believed that the incremental value brought by ai technology transformation will surely promote the advent of an intelligent era of inclusiveness and fairness.
SenseTime has proven in practice that insisting on technology investment is the real long-term doctrine.
(This article was first published on titanium media App, author | Lin Zhijia)