Highlights

• We initiate coverage on Hesai and RoboSense with BUY ratings and target prices of HK$33.00 and HK$50.00 respectively.
   
• Global LiDAR shipments are expected to grow at a five-year CAGR of 51% from 5m units in 2025 to 40m units in 2030, driven by cost reduction and the burgeoning demand from the ADAS and robotics industries.
   
• Chinese LiDAR companies slashed LiDAR costs from >US$9,000 to <US$300 via interlinked technological and manufacturing breakthroughs.
   
• China dominates the global LiDAR industry with a 90% market share; Hesai and RoboSense make up a 60% market share after industry consolidation.
   
• Hesai and RoboSense are entering an earnings inflection point, driven by sales scaling to critical mass and sustained cost reductions.

Analysis

• Light detection and ranging (LiDAR) employs laser pulses to generate dense, real-time 3D point-cloud maps with centimetre-level accuracy and reliability regardless of lighting, making it essential for advanced
  driver-assistance systems (ADAS), autonomous driving (AD), and robotics.
   
• Chinese LiDAR companies have dismantled the traditional high-cost structure of LiDAR via technological and manufacturing breakthroughs, turning a >US$9,000 component into a sub-US$300 mass-market sensor.
   
• Duopoly dominated by Hesai and RoboSense. China accounts for 80-90% of shipments in the global LiDAR industry. After intense industry consolidation, Hesai Group (Hesai) and RoboSense Technology Co (RoboSense) now command a 60% market share due to their technological leadership.
   
• Five-year shipment CAGR of 49% in 2026-30. Global LiDAR shipments surged from under 0.2m units in 2020 to roughly 5m units in 2025, and are projected to reach 37.3m units by 2030 (49% five-year CAGR), as cost
  reduction from chip-level integration unlocks mass-market adoption.
   
• Dual engines: ADAS and robotics. ADAS represents more than 80% of demand and is the primary growth engine of the LiDAR industry, while higher-ASP robotics is emerging as a fast-growing, high-margin second curve. Both could see their value grow at a five-year CAGR of over 30% in 2025-30.
   
• Foray into physical AI market with new fusion sensor products. Hesai’s Picasso SoC and Kosmo, and RoboSense’s Eocene series SoCs and ACseries Active Camera enlarge the addressable market by 10 times.
   
• Earnings approaching inflection point. Hesai turned around in 2025 with a net profit of Rmb436m, with earnings expected to grow at 46% three-year CAGR in 2026-28. For RoboSense, we expect net profit to turn positive at Rmb91m in 2026 and grow at a 173% two-year CAGR in 2027-28.
   
• Strong projected earnings growth supports premium valuations. Hesai and RoboSense trade at just 0.5x 2027F PEG, a discount to Chinese ADAS plays, with respective DCF-derived target prices of HK$33.00 and HK$50.00.