The artificial intelligence leader Sensetime Group has initiated another share placement for financing less than four months after its previous round. The high frequency of its fundraising activities and the significant dilution of equity have raised deep market concerns about the continuous erosion of shareholder value.
On April 16, 2026 (after trading hours), Sensetime entered into a placement agreement with placing agent HSBC. The company plans to issue up to 1.7 billion new B-class shares to no fewer than six independent placees at a price of HK$1.91 per share. The total gross proceeds are expected to be approximately HK$3.247 billion, with net proceeds of about HK$3.230 billion after deducting related costs. The placement price of HK$1.91 per share represents a discount of approximately 8.61% to the closing price of HK$2.09 on April 16, 2026, and a discount of about 5.45% to the average closing price of HK$2.02 over the preceding five trading days.
This marks the third time Sensetime has utilized the general mandate obtained at its Annual General Meeting in June 2025 for a large-scale share placement. Previously, the company placed approximately 1.667 billion shares at HK$1.50 per share in July 2025, raising net proceeds of about HK$2.498 billion. In December 2025, it placed 1.75 billion shares at HK$1.80 per share, raising net proceeds of approximately HK$3.146 billion. Including this latest placement, Sensetime has raised a combined net total of nearly HK$9 billion through equity financing in just the past ten months. According to the announcement, as of April 16, 2026, the company had issued a total of approximately 3.417 billion B-class shares under the general mandate, with about 3.985 billion shares remaining available for issuance. If the company chooses to fully utilize the remaining quota, it would exert further substantial dilution pressure on existing shareholders.
Following the announcement, Sensetime's share price did not receive a positive response. By April 17, 2026, the company's share price closed at HK$2.01, showing a decline from the day before the placement announcement. As of April 30, the price hovered near the placement price, closing at HK$1.98, reflecting market apprehension over persistent equity dilution.
The proceeds from the placement are earmarked for four specific uses: 40% (approximately HK$1.292 billion) will be used to expand the scale of the SenseCore AI infrastructure, particularly the expansion of supercomputing clusters using domestic AI chips, to provide infrastructure for the group's upcoming AI token plan; 30% (approximately HK$969 million) is allocated for generative AI research and development, including self-developed native multi-modal large models based on the NEO architecture and product offerings for the AI token plan; 20% (approximately HK$646 million) will fund the exploration of AI technology integration into innovative verticals such as education, SaaS, and integrated hardware-software products; and the remaining 10% (approximately HK$323 million) will serve as general working capital. All funds are expected to be fully utilized by December 31, 2026.
However, what has truly alarmed investors is Sensetime's admission in the announcement that the net proceeds from the July 2025 placement have been "fully utilized," and the net proceeds from the December 2025 placement have also been "entirely used." In other words, approximately HK$5.6 billion in funds was depleted in less than a year. Concurrently, the company's full-year 2025 R&D expenses remained high at ¥3.775 billion, a decrease from the ¥4.132 billion in 2024 but still significant. Furthermore, the company's capital expenditure at the end of 2025 was substantial at ¥3.488 billion, primarily directed towards AI infrastructure investments.
This pattern of "raising large sums and spending them extremely quickly" raises profound questions about the company's long-term profitability and its ability to achieve self-sustaining cash flow. If Sensetime continues to rely on equity financing to support its R&D and infrastructure investments, shareholders' ownership percentages will be perpetually diluted. Uncertainty remains as to whether the company's commercial monetization can generate positive operating cash flow in the foreseeable future.
Full-year 2025 results showed that the company's total revenue reached ¥5.015 billion, a year-on-year increase of 32.94%, significantly faster than the 10.75% growth in 2024. This acceleration was mainly driven by rapid revenue generation from the generative AI business and the expansion of AI cloud services. However, profitability remains a significant challenge: the net loss for 2025 was ¥1.766 billion, a substantial improvement and a 58.7% reduction compared to the ¥4.278 billion loss in 2024, yet the absolute value of the loss remains high. More notably, since 2021, Sensetime's cumulative losses have exceeded ¥35 billion.
Regarding operating cash flow, the net cash outflow from operating activities in 2025 was ¥301 million. While this represents a significant improvement from the net outflow of ¥3.927 billion in 2024, the company has yet to achieve positive operating cash flow. In essence, Sensetime still cannot generate positive cash flow from its own operations and must continuously depend on external financing to maintain its operations and R&D investments. Coupled with the statement in the placement announcement that the "net proceeds are primarily intended for the development of core businesses," the move essentially represents using equity financing to subsidize operations that are not yet profitable.
Historically, Sensetime has exhibited a distinct pattern of high losses paired with high financing. Before its listing at the end of 2021, the company had raised over ¥30 billion. Post-listing, it conducted five rapid share placements in June 2024, December 2024, July 2025, December 2025, and now in April 2026, with a combined fundraising scale exceeding HK$30 billion. In contrast, the company's gross profit margin has continuously declined from 69.7% in 2021 to 41.0% in 2025, while its net profit margin has remained deeply negative, fluctuating between -35% and -365%. There has been no fundamental improvement in the efficiency of its spending.
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