2011 Surveillance Stock Analysis: China Plunge

Author: John Honovich, Published on May 26, 2011

In this note, we examine shifts in surveillance manufacturer stock prices for the first half of 2011. The most interesting theme is the plunging prices of many Chinese technology stock prices. Here we focus in on 4 companies: 2 from the Chinese stock market (Hikvision and Infinova) and 2 from the European markets (Axis and Mobotix).

2010 was a landmark year for Chinese surveillance stocks with two monster IPOs. First in May 2010, Hikvision IPOed and then at the end of 2010, Infinova followed. Both IPOs resulted in Billion dollar valuations.

The story in 2011 is quite different. The overall theme for the Chinese technology stocks in 2011 is increasingly distrust and concern. In May 2011, punctuating that is an exposed major fraud of a Chinese software company (see the NYTimes article: "The Audacity of Chinese Frauds" for background). Following this is a new report that a Chinese fire manufacturer is suspected of fraud.

We have no evidence that any surveillance manufacturer is engaging in fraud. Minimally, though, in an environment of distrust, the risk of stocks increases. More importantly, as we argued during our initial analysis of each IPO, the comparative valuations do not make sense.

The table below provides a snapshot of each company's positioning:

Company Valuation 2010 Revenue Price to Sales Ratio 2011 Stock Price
Infinova $739 M USD $74 M USD 10:1 -44%
Hikvision $5000 M USD $550 M USD 9:1 -34%
Mobotix $356 M USD $92 M USD 4:1 0%
Axis $1600 M USD $465 M USD 3.5:1 +25%

Even after big drops from both Chinese market companies, their relative valuations compared to sales are more than 200% greater than the European companies.

The table below illustrates Infinova's steep drop:

Here is Hikvision's drop, steep but moderately less than Infinova's:

Let's compare this to two prominent European surveillance companies. While Mobotix's stock price has bounced around over the first half of the year, overall it's roughly flat:

Finally, Axis's stock price is up notably, gaining ~25% in value over the first half of 2011:

What's Next?

On the fundamentals, we believe the Chinese market companies have significantly more downside risk than the Europeans. The primary factor is that the comparable valuations relative to sales and growth are still too high. Secondarily, the European companies are better positioned in the higher growth segment of IP cameras. On the contrary, Hikvision's geographic base provides it a natural advantage for the historically high growth Chinese market.

Will trust in the Chinese technology market regain or are we in the first half of a bursting bubble? The next 6 months will be revealing.

Comments : PRO Members only. Login. or Join.

Related Reports

Openpath Access Control Tested on Nov 20, 2018
Big investment in access startups is uncommon, but Openpath has recently attracted $20 million doing just that. The company has limited security...
Milestone Disrupts Milestone With Arcules on Nov 19, 2018
Milestone is now competing against... Milestone's own spinout Arcules. New IPVM testing shows that Arcules has incorporated a substantial amount...
Pressure Mounts Against Dahua and Hikvision Xinjiang Business on Nov 19, 2018
Pressure is mounting against Hikvision, Dahua, and other companies operating in Xinjiang as an international outcry brews against the Chinese...
ASIS Offering Custom Research For Manufacturers on Nov 15, 2018
Manufacturers often want to know what industry people think about trends and, in particular, the segments and product they offer.  ASIS and its...
Directory of Video Intercoms on Nov 13, 2018
Video Intercoms, also known as Video Door-Phones or Video Entry Systems, have been growing in the past decade as more and more IP camera...
Chinese Government Increases Hikvision Ownership on Nov 12, 2018
The Chinese government - Hikvision's controlling shareholder - is increasing its ownership of the video surveillance giant amid sharp stock price...
Ubiquiti Protect Video Surveillance Profile on Nov 07, 2018
Ubiquiti has now been in the video surveillance market for 7 years (see our first coverage back in 2011). In that time, the company's revenue has...
Directory Of Video Doorbells on Nov 06, 2018
Video doorbells are one of the fastest growing categories in video surveillance, especially among residences. The optimal placement of these...
Network Cable Shootout - Belden, Hikvision, Honeywell, NavePoint CCA, Windy City Wire on Nov 05, 2018
Every IP camera install needs UTP cabling. But how much of a difference is there between dirt cheap generic cables found online and the bigger,...
Unisight Company Profile on Nov 01, 2018
Hikvision's largest US OEM, LTS has started to carry Unisight, whose products (shown below) look a lot like Hikvision's rival Dahua: Who is...

Most Recent Industry Reports

Openpath Access Control Tested on Nov 20, 2018
Big investment in access startups is uncommon, but Openpath has recently attracted $20 million doing just that. The company has limited security...
No GDPR Penalties For UK Swann 'Spying Hack' on Nov 20, 2018
The UK’s data protection agency has closed its investigation into Infinova-owned Swann Security UK, the ICO confirmed to IPVM, deciding to take “no...
Milestone Disrupts Milestone With Arcules on Nov 19, 2018
Milestone is now competing against... Milestone's own spinout Arcules. New IPVM testing shows that Arcules has incorporated a substantial amount...
Pressure Mounts Against Dahua and Hikvision Xinjiang Business on Nov 19, 2018
Pressure is mounting against Hikvision, Dahua, and other companies operating in Xinjiang as an international outcry brews against the Chinese...
Arcules Cloud VMS Tested on Nov 19, 2018
Arcules is a big bet, or as they describe themselves a 'bold company', spun out and backed by Milestone and Canon.  But how good is Arcules cloud...
'Sticker' Surveillance Camera Developed (CSEM Witness) on Nov 16, 2018
The Swiss Center for Electronics and Microtechnology (CSEM) has announced what it calls the: world’s first fully autonomous camera that can be...
ISC East 2018 Mini-Show Final Report on Nov 16, 2018
This is our second (updated) and final show report from ISC East. ISC East, by its own admission, is not a national or international show, billed...
Facial Detection Tested on Nov 16, 2018
Facial detection and recognition are increasingly offered by video surveillance manufacturers. Facial detection detects faces in an image/video...
Throughtek P2P/Cloud Solution Profile on Nov 15, 2018
Many IoT manufacturers either do not have the capabilities or the interest to develop their own cloud management software for their devices....
ASIS Offering Custom Research For Manufacturers on Nov 15, 2018
Manufacturers often want to know what industry people think about trends and, in particular, the segments and product they offer.  ASIS and its...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact