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

Intersec 2019 Live From Dubai Day 2 on Jan 22, 2019
There’s a massive presence from Chinese or China-focused video surveillance firms, chiefly Hikvision, Dahua, Huawei, and Infinova, at...
Milestone Favorability Results 2019 on Jan 21, 2019
Milestone's favorability moderately strengthed, in new IPVM integrator statistics over their results from 2016. While the industry has been...
NYPD Refutes False SCMP Hikvision Story on Jan 18, 2019
The NYPD has refuted the SCMP Hikvision story, the Voice of America has reported. On January 11, 2018, the SCMP alleged that the NYPD was using...
Mobile Surveillance Trailers Guide on Jan 17, 2019
Putting cameras in a place for temporary surveillance where power and communications are not readily available can be complicated and expensive....
Avigilon Favorability Results 2019 on Jan 15, 2019
Since IPVM's 2017 Avigilon favorability results, the company was acquired by Motorola and has shifted from being an aggressive startup to a more...
Gorilla Technology AI Provider, Raises $15 Million, Profiled on Jan 15, 2019
Gorilla Technology is a Taiwanese video analytics manufacturer that recently announced a $15 million investment from SBI Group, saying this...
Arecont Costar Layoffs on Jan 14, 2019
Arecont Vision, a Costar Company, has laid off more than 10% of their workforce in a move the company described to IPVM as a result of "important...
The False SCMP Story on Hikvision NYC AI on Jan 14, 2019
In the past week, one of Asia's largest publications, the South China Morning Post (SCMP), posted an article about "Chinese [facial recognition]...
2019 Video Surveillance Cameras Overview on Jan 07, 2019
Each year, IPVM summarizes the main advances and changes for video surveillance cameras, based on our industry-leading testing and...
Infinova Deletes Xinjiang References, Hiding Evidence on Jan 07, 2019
Infinova has deleted all posts about Xinjiang on its website due to IPVM’s investigation of its business ties there and successfully directed...

Most Recent Industry Reports

Cable Trenching for Surveillance on Jan 21, 2019
Trenching cable for surveillance is surprisingly complex. While using shovels, picks, and hoes is not advanced technology, the proper planning,...
Milestone Favorability Results 2019 on Jan 21, 2019
Milestone's favorability moderately strengthed, in new IPVM integrator statistics over their results from 2016. While the industry has been...
Intersec 2019 Live Day 1 - Massive China Presence on Jan 21, 2019
There’s a massive presence from Chinese or China-focused video surveillance firms, chiefly Hikvision, Dahua, Huawei, and Infinova, at...
The IP Camera Lock-In Trend: Meraki and Verkada on Jan 18, 2019
Open systems and interoperability have not only been big buzzwords over the past decade, but they have also become core features of video...
NYPD Refutes False SCMP Hikvision Story on Jan 18, 2019
The NYPD has refuted the SCMP Hikvision story, the Voice of America has reported. On January 11, 2018, the SCMP alleged that the NYPD was using...
Mobile Surveillance Trailers Guide on Jan 17, 2019
Putting cameras in a place for temporary surveillance where power and communications are not readily available can be complicated and expensive....
Exacq Favorability Results 2019 on Jan 17, 2019
Exacq favorability amongst integrators has declined sharply, in new IPVM statistics, compared to 2017 IPVM statistics for Exacq. Now, over 5 since...
Testing Bandwidth Vs. Low Light on Jan 16, 2019
Nighttime bandwidth spikes are a major concern in video surveillance. Many calculate bandwidth as a single 24/7 number, but bit rates vary...
Access Control Records Maintenance Guide on Jan 16, 2019
Weeding out old entries, turning off unused credentials, and updating who carries which credentials is as important as to maintaining security as...
UK Fines Security Firms For Illegal Direct Marketing on Jan 16, 2019
Two UK security firms have paid over $200,000 in fines for illegally making hundreds of thousands of calls to people registered on a government...

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