In-Depth Analysis of Hesai Technology's Half-Year Report: They Made Money, but Has the Cash Really Entered the Company's Wallets?
Hello everyone, I'm your financial journalist. Today, we're talking about a company that's quite popular in both the tech and automotive circles—Hesai Technology.
If you follow the news on new energy vehicles or robotics, you've probably heard of "lidar." Hesai is one of the two companies that sell the most lidar in the world (the other being Speedtronics). They just released their financial results for the first half of the year, and at first glance, they look impressive: net profit increased by 234%, and they've been making a profit for five consecutive quarters.
However, as an economist, I need to bring you a bit of a reality check, along with some positive news: Making money on paper doesn't mean having cash in your pocket, and the money they've earned seems a bit strained, even somewhat like "robbing one pocket to fill another."
Let me break down this complex financial report into five key points in plain language so you can understand Hesai's current situation clearly.
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1. Core Summary: Good Appearance, but Hidden Problems
In one sentence: Hesai has indeed started making money, mainly from selling lidar for cars (their main business), but they're also investing heavily in their new robotics business (SGI), which has almost completely offsetted the profits from their main business. More importantly, although the report shows a profit of 89 million yuan, the actual cash flowing into the company's account was negative (-103 million yuan), and the cash on hand decreased by 1.2 billion yuan over half a year, with an unknown destination.
To put it simply:
Imagine a restaurant owner (Hesai):
- Main Business (Lidar Sales): Their signature dish is selling well; even though the price per dish has dropped, the total profit is positive because they're selling a lot.
- New Business (SGI Robotics Components): It's like a new experimental dessert shop that's just starting to sell products, but the costs for renovation, research, and labor are huge.
- Result: The money from the signature dish is just enough to cover the losses from the dessert shop, leaving the owner with little cash left in their pocket. Moreover, although the books show a profit, the actual cash in the drawer has decreased because the owner might have used it for investments, debt repayment, or expansion—these details aren't clearly explained in the report.
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2. Analysis 1: Can the Profit Last Based on "Cutting Prices to Increase Sales?"
Observation: In the first half of the year, Hesai's lidar sales increased by 78%, but revenue only increased by 25%. What does this mean? The price per unit of lidar dropped by 32%! The average price went from over 2,000 yuan to just over 1,300 yuan.
Plain Language: This is a typical strategy of "selling more at a lower price." When autonomous driving was just starting to gain popularity, car companies tried to sell cars at lower prices by pressing down on suppliers' prices. Hesai had to follow suit to maintain their market share (they currently hold 44% of the Chinese automotive lidar market, having been number one for 17 months).
Risks:
- Gross Margin Decline: Even though they're selling more, the profit per unit of lidar has decreased. The gross margin fell by 2.4 percentage points compared to the same period last year.
- Race to the Bottom: Hesai's current profit depends on whether they can reduce costs faster than car companies can lower prices. If car companies continue to cut prices next year and Hesai can't lower their costs, their profit will disappear immediately.
- Conclusion: This profit is fragile and is based on a fierce price war, not on a technological monopoly that allows for higher prices.
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3. Analysis 2: The Main Business is Losing Money, While the New Business is Losing Even More
A Hidden but Critical Detail in the Report:
- Main Business (Lidar): Made a profit of 66 million yuan.
- New Business (SGI, Robotics Components): Lost 64 million yuan.
- Total Profit: Only 2 million yuan (barely breaking even).
Plain Language: Hesai is trying to expand from selling lidar to selling core components for robots (SGI).
- SGI is Just Starting: They only made revenue for the first time in the second quarter (45 million yuan), but the investment was substantial, resulting in significant losses.
- Main Business Subsidizing the New Business: In other words, Hesai is using the money they make from selling lidar to support the unprofitable SGI business. Without the main business's profits, the SGI business would have already caused the company to fail.
- Key Questions:
- Who are SGI's customers? The report mentions that SGI's revenue forecast was raised partly due to demand from related parties (the founder's company, Sharpa). This raises concerns about whether there's self-supporting sales. If non-related customers (such as other robotics companies) don't buy their products, the new business won't be sustainable.
- Sustainability: With the main business making only 66 million yuan and SGI losing 64 million yuan, it's a nearly 50-50 split. If the main business's profits decline due to price wars or SGI's losses worsen, the company's entire profit model could collapse.
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4. Analysis 3: Why Is the Cash Decreasing Despite Making Money? (The Biggest Mystery)
Observation:
- Net Profit: +89 million yuan (they made a profit).
- Operating Cash Flow: -103 million yuan (money left the company instead of coming in).
- Cash on Hand: Decreased by about 1.215 billion yuan over half a year.
Plain Language: This is the most concerning aspect of the financial report.
- Net Profit vs Cash Flow: Net profit is a figure from the accounting books and includes many non-cash items (such as stock-based compensation, which doesn't result in actual cash outflow but is counted as a cost).
- Reasons for the Discrepancy:
1. Stock-Based Compensation: Giving stocks to employees is recorded as a loss in accounting but doesn't require cash outflow, so the Non-GAAP (adjusted) profit is higher.
2. Working Capital: Goods are sold, but the money hasn't been collected (increased accounts receivable); or inventory has piled up in warehouses, using up cash.
- Where Did the Cash Go? The 1.2 billion yuan difference is a huge mystery.
- Did it go towards capital expenditures (building factories, buying equipment)?
- Was it used to repay debts?
- Or for investments?
- The report doesn't provide details. If this money was used for high-risk investments or to repay high-interest debts, the company's financial risk increases significantly.
Conclusion: Hesai's current profit is illusory wealth; their actual cash reserves are being rapidly depleted, and the whereabouts of this money are unclear.
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5. Analysis 4: What's Speedtronics Doing? Two Paths, Which One Is More Stable?
Observation: Hesai and Speedtronics are the two dominant players in the lidar market.
- Hesai: Leads in the automotive market (44% share) and was the first to make a profit, but they have tight cash flow and rely on their main business to support their new business.
- Speedtronics: Is still losing money (lost 16 million yuan in the first half of the year), but their robotics business accounts for a larger proportion of revenue, and their revenue structure is changing faster.
Plain Language: The two companies are taking different approaches:
- Hesai's Path (Conservative): First, they grew their scale by selling lidar for cars and reduced costs to make a profit. Then they used the profits to develop their robotics business. Advantage: They can survive for now, but they face significant cash flow pressure and rely on their main business.
- Speedtronics' Path (Aggressive): They're betting on the robotics market. Although they're losing more money now, their revenue structure is changing, which could give them more flexibility in the future. Advantage: They're transforming quickly, but they're currently losing a lot of money and face greater survival pressure.
Which Is Better?
For now, Hesai has more credibility in the capital market because they were the first to make a profit. However, if Speedtronics can succeed in the robotics market, they could overtake Hesai.
The Decisive Year Will Be 2026: Whether Hesai can turn their operating cash flow into a positive number and whether Speedtronics can reduce their losses will determine who will be the winner.
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6. Investment Advice and Key Points for Investors
If you follow Hesai Technology or want to understand the investment logic behind such high-tech companies, keep these in mind:
1. Don't Just Look at Net Profit: For growing tech companies, operating cash flow is more important than net profit. Hesai's negative cash flow indicates they're still in a phase of spending money, though less so than their competitors.
2. Be wary of the End of the "Cutting Prices to Increase Sales" Strategy: The lidar price war isn't over. If car companies continue to lower prices next year, Hesai's profit margin will further shrink.
3. Examine the Quality of SGI's Business: Pay close attention to the list of SGI's customers. If most of their revenue comes from related parties, the credibility of this new business is questionable. Only when non-related customers (like Yushu, Galaxy General, etc.) place large orders will the new business be truly viable.
4. Investigate the Cash Flow: In future investor meetings or annual reports, find out the exact whereabouts of the 1.215 billion yuan. If it's used for core technology research and development or capacity expansion, that's good; if it's for non-operating expenses, it's a warning sign.
Summary: Hesai Technology is a company going through a transitional period. They've demonstrated that lidar can be profitable, which is a milestone for the industry. However, they also have issues with low profit quality, tight cash flow, and a new business that relies on their main business for support.
They're not a company that makes easy money; they need to continuously reduce costs and prove their ability to develop new businesses. The next six months will determine their success or failure, based on their cash flow and the number of non-related orders they receive for their SGI business.