Dahua Revenue Plunges, 3 Execs Resign

By: Charles Rollet, Published on Apr 29, 2020

Dahua's sales dropped by 19.47% in the first quarter of 2020 amid the coronavirus pandemic, while three senior executives resigned, including its CFO.

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The drop is far worse than crosstown rival Hikvision, whose sales fell ~5%. Plus, the Dahua resignations add to significant turbulence, with the firm's CEO leaving only two months ago.

In this note, we examine this news and what it means for Dahua's long-term outlook, including:

  • Sales Plunge
  • Dahua Blames Pandemic, "Big Projects" In Q1 2019
  • Executives Resign for "Personal Reasons"
  • Dahua Response to Resignations: Execs Need to take Responsibility
  • Li Ke Was Supposed to Make Things "Clear"
  • Chinese Media Reaction: What Happened to Dahua?
  • Dahua Says Overseas Sales Still Growing
  • Dahua's Mysterious Rise in Profits
  • Thermal Camera Sales Surge But Still "Niche"
  • Thermal Cameras Dahua's Best Hope?

*****'* ***** ******* ** 19.47% ** *** ***** quarter ** **** **** the *********** ********, ***** three ****** ********** ********, including *** ***.

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*** **** ** *** worse **** ********* ***** Hikvision, ********** **** ~*%.****, *** ***** ************ add ** *********** **********, with*** ****'* *** *********** *** ****** ***.

** **** ****, ** examine **** **** *** what ** ***** *** Dahua's ****-**** *******, *********:

  • ***** ******
  • ***** ****** ********, "*** Projects" ** ** ****
  • ********** ****** *** "******** Reasons"
  • ***** ******** ** ************: Execs **** ** **** Responsibility
  • ** ** *** ******** to **** ****** "*****"
  • ******* ***** ********: **** Happened ** *****?
  • ***** **** ******** ***** Still *******
  • *****'* ********** **** ** Profits
  • ******* ****** ***** ***** But ***** "*****"
  • ******* ******* *****'* **** Hope?

[***************]

Sales ****** **%

** ***** **** **********, ******** ***** **, Dahua **** *** ** revenue **** **.**% ** about $*** ******* ****-**-****, a ******** **** (******* below *** ** ******* yuan):

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Dahua ****** ********, "*** ********" ** ** ****

** *** ******** ****, Dahua ********** *** **** drop ****** ** *** pandemic:

***** *** ***** *******, the *******'* ******** *** been ******** ** * certain ****** *** ** the *********** ******** *** the ******** ** *** macro *******. *** ****** of *** ******** ******** orders *** *********, ******* execution *** ******** **** also **** *******.

*******, ***** ***** **** the ***** **** *** also *** ** ******* "big ********" ***** ******* as ******* *** ** 2019 - ******* *****,"*** ****** ** *** revenue ****** ** **** or **** *** ****" as *** ***********:

*******, ***** **** ****big ******** **** *** ****** ******* ********* ** *** same ****** **** ****so *** **** ***** [** ****] *** ****. Therefore there's been a [big] decline on the revenue part. But if ** **** *** *** ******* *** ******* ****** ** ** ****, *** ****** ** *** ******* ****** ** **** ** **** *** **** with what was disclosed by two other competitors. [emphasis added]

***** *** *** ******* what ***** ******** ***** were *** **** ***** not **** **** ** prior ***** ***********.**** ** ***** ** that *****'* ** ***** ****** has ************ **** ****** than *** *** **** year, ** ***** *** certainly ****** ** ******* that *** ****:

Executives ****** *** "******** *******"

***** **** ************* ***** **** ********** had ******** ***** ******** "for ******** *******": *** Meizhong, *** ****, *** Zhang ***. *** ******** was *** ****'* *** as ****. * ** the * *** *** but *** **** ******* with ***** ** ** of ******* **********.

Dahua ******** ** ************: ***** **** ** **** **************

** *** ******** ****, Dahua **** ***** ***** executives, ********* *** *** CFO, *** **** ****** from *** ********* **** the **** *** ***** and ****** ** **** "responsibility":

***** *** ********** ******: frankly ********, *** ****** management ****** **** **** this ****haven't ****** **** ******** ** *** *******'* **** ******** **** **** *** **** *** *****. We want to use this chance to sort things out clearly. This is also in line with our management principle that was brought up this year, which is making **** *** ************** ** ***** for every matter and every matter falls on the shoulder of specific personnel. [emphasis added]

***** ******* *** *** CFO ** ******* ** a ****** **** - Qiaofen ** *** ** of *****'* ******* ********** and *** **** **** the ******* ***** ****:

*** *** *** *** the ****** ** *** new ******* ********. *** had **** *** ******* manger ** *** ******* department ****** ** ** practice ***** ****'* **** too **** ****** ******** to *** ****.

Li ** *** ******** ** **** ****** "*****"

***** **** *** ************ were **** ** * move "** **** ****** out *******" *** **** "clear" **** **** ****** had ** ****** ***** "responsibility".

********** *******, **** ** the **** ****** **** Dahua's ****** *** ** Ke *** ******* **; Ke ** * ****** executive ** ******, ***** is ***** *** *************/*********** ********* *******.*** **** ** ***** three ********** *** ** more ******* ** * historically ***** ********* ****** and *** **** *** someone ** **** *** fall.

*** ***** *** **** left *** ** * lucrative***** ********* ****** ***** (********* the **** *** ** their ************) ***** ****** from $*.* ******* ** $5.4 ******* ***** ** stock. ***** ** *********, the ***** ***** *** relatively *** ******** ($***,***-$***,***) and $*.* ******* ** $3.4 ******* ** ***** stock ****.

Chinese ***** ********: **** ******** ** *****?

*** ************ **** ******* by *** ***** **** some ********, ******** ******* much *********** ** *** they ********.

**** **** ******* ******** asked,"**** ******** ** *****?"

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*** **** ******* ************** ***** *****'* ******:

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Dahua **** ******** ***** ***** *******

******* ******* **** ** Dahua's ** **** ****** is *** ***** **** overseas ******* ****, ******* the ******* ****-**% **** in ***** *****:

*** ********, *** ********* covid-19 ******** *** **** affected **** ** *** business **********. *** *** systematic ************* ** *** overseas ******* **** *** past ******* ***** *** gradually ***** *******. *** overseas ****** *** ********** growth ** **

***** *** *** ********* its ***** ******* ***** and ******** *** **. In*** **** ******, ***** **** **.**% of *** ***** **** overseas, ************* ****** **** Hikvision's ~**% ******** *****:

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Dahua's ******* **** ** *******

*********, **** * ******* reports * ********** **% drop ** *****, ******* go **** ** ****, since ** ** ****** to *** ***** ** quick ** ******* *****. However, ***** ******** * 0.5% ***************** ** ****. ** its ******** ****, ** explained ** ********* **** this *** **** ****** to ***** ********* ***** it ******** ****** ** "continuous ************ ** ******* structure":

*** ********* **** ********* by **.**% ******** ** the **** ****** **** year, ****** ** *) the *******'* ******** ********** over **** ******* **** continuous ************ ** ******* structure *** *) *** decrease ** ******* ** the **** ******.

**** *********** ** ***** and ********* ** ********* with ****** ********* ******** but ***** ******* ** further *******.

***** **** ** *******

** *** ******** ****, Dahua **** "*** ******* will *** *** *** staff":

the ******* **** *** *** *** *****. The cost control will strengthen some local operations and improve some online operations and delivery capabilities. Overall we will do some flexible budget management, strengthen investment accuracy and effectiveness, reduce unnecessary losses, optimize our fee structure, including investing in some key areas. [emphasis added]

**** ** ******** **** negative ********** **** *********, which**** ** *****"******* ****** ** ***** size".

Thermal ****** ***** *****, *** ***** "*****"

** *** ****, ***** said ** *** ********* from ******** ****** ********, *** **** **** was ***** * "********** niche" *******:

******** ******* ******* ******** have *********** ** ** and **,they *** ***** ********** ***** ******** ******** ** *** ******* ’* ******* ******* ******. They can really contribute to the company from the perspective of the year. [But] the performance may not be very large, more reflects the company's rapid response ability as a platform company [emphasis added]

Thermal ***** ******* *****'* **** ****?

************, ***** **** ** had ******** "******* *** hundred ******* ** ***** [of ******* **** *****]" of ***** ** ***** cameras ** **, ****** domestic. ** *****, **** expression ****** ** ***** 600m ($***), ** **** means ***** ******* **** up **% ** *** Q1 ***** ** *.* billion ******* **** ($****), a ************ ********** ***** will ****** ** ***** surge ********:

** *** ***** *******, there **** ******** ** millions ** ******** ******* imaging *****. ** *** first *******, ** *** mainly *** ******** ******. It ** ******** *** ****** ******* ** thermal ******* ****** ** dominated ********

******, ******* ******* *** Dahua's **** ****, **** the **** ************ ********* them ****** *** ***** (unlike *********'* **** ******** approach); ** ******* **** reported,****** *** ************ *,*** ***** ******* cameras ** * **** $10 ******* ****.

Outlook ********** *** ****** ** ***** *******

*****'* **** **% ***** drop ** *** ****** than *** ***** **********'* and ** ************* *** result, ******* *****'* ************. The ********* ** ****** staff, ********* *****'* ***, also ***** ********* ********** at *** **** ** an ******* ********* ************* time.

*******, *** ****'* ********** move **** ***** ******* is ****** *** *** should ******* * *********** buffer, ************ ** *** pandemic ******* ****** *** globe *** *****'* ******** branches ** *******.

Comments (8)

*** **** ** ********* in *** ******. ** also **** **** **** posted ** ****:"****** ***** ** ******* Firm [*****] ** *.*. Blacklist ** **** ******* Camera *****" ******* *******

**... ****** ** ******* Dahua, *** ***** ** on *** “****** ****” and *** ** *** restrictions ******* ** ****... What ***** **** **** for ****** ******* ** US ********** ***********, ***?

***, ******* ******* **** up. ** ******* ** how *** ** ********** implements (** ******) *** blacklisting ******.

*** ***** ****** ** that ***** ******* *** likely (*********) ** ** trashed ** **** ***** regardless.

****** **** **** **** to *** ***********.

****** **** **** **** to *** ***********

******, *** '*********' ** is ********* ** ** the *** ***** ***** of ****** ********* *** no ****** **** ** the **********. ** **** case, ****** ***** *** need *********** ** *** ** government, ****** ***** ****** have ** *** ***** to ** ****** **** selling ** *** ** government. **** ** ********* to ** **** ****** this ******, ***:***** ***** ******** ********* of *****, ********* *****,** *** ******** "*** No ****** ** ********" With *********** ***** *****, Hikvision, ******

*** **** ****** ** Covid19 ** *** ******** will ** ******* ** Q3 ****. * *** of ******* ** ** were *** ******** ** the ***** ***** *** contracts *** ********** *** signed **** **** *** especially *** *** ********. In ** ******* *** number ***** ******* **** made ***** ************ ** buy ***** ** ***** in ** ****.

***** ****** ******** ******* to *** ********* **** calling ** ******:

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**** *** ********* *** lead ** *****'* *** financial ******* **** ****.

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