Dahua's 'Profits' Investigated

Author: John Honovich, Published on Jun 15, 2016

Dahua's profits are up 100%+, defying common sense and industry trends.

We hired a China economics expert to investigate the source of those profits to better understand what is truly driving the world's second largest video surveillance manufacturer.

*****'* ******* *** ** ***%+, ******* ****** ***** *** ******** ******.

** ***** * ***** ********* ****** ** *********** *** ****** of ***** ******* ** ****** ********** **** ** ***** ******* the *****'* ****** ******* ***** ************ ************.

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

Financials **********

***** ********** **** **********, **** **% ******* ****** *** ***% ****** ********.

*** ******, ** **********, *** *** **** *****, ******* **** Dahua ****** *** ***** *********** ** ****** *** *** ****** more ****** **** *** **** *** *****. *** *****'* **** competitor, ********* *** ******** **** ************ ******* ********.

Profits ************

*****'* *******, *** **** *******, *** *** ******** ******** ** **** operational ******* *** ****** *********.

**** *** *** ****** ***** **** *** ***** ********* ******:

  • "**** ** ******** ** ***** *** ** **** ****** ***** from. *** ******* ************ ** ************* *****-*************** ** ***** *** ****** *** ********* **** **% ** nearly **%. **** ** ******* *** ****** ********** *********(***** ** ******** ** ******) ************* *********. ***** ***** ********* **** ******** *********, **** ******* **** were ******* ** ***** *** **** **** *** ** ***** rates. **** ** ********* ******** ** ******** ** * ****** of *************. ***********, ********** *********, ********** ***** *** **** **** the ********** ** *** ******* ********, ** ******** ** ********."
  • "*****'* ********* ******* **** **** ******* *** * *** *****. ** ** 2013, **** *** ** *********** ****** ** **.*% ***** ***** it ** *.*% *** ***** ** ****** *******, ********** ** fall."
  • ** *** **** ****: "**** **** ********* ** ***** ******* ************ **** ** **** are * **** ******* *** ******* ****** ** ****** *********  and ***** ** **** ** ******. ************, **** ** **** are * ****, **** ****** **** ****** ********* ** **** lots ** *******."
  • "*** ***** ***** ** ****: ***** ****** ******* ******** ****** by ***-********* *******.  ** *** ******* ***** ***-********* *******, *** drops **% ** * ***** * *****. ***** *** ******* margins, ******* ***, *** *** ************* ******** ** **** *** EPS **** ******* **********, **** **** ******* * ********* **** worrisome *******."

***** ******, **** ****** ******** *********'* ********** *** *** *** see ***** ****** ***** *** *********.

Dahua *******

**** ********** ***** ** *****, ** ** *** ****.***** ** ******* ************* **********, ** ********, **** * ******* ** * ******** **********.

***** ***** ** *****, ** **** ** *** ******* **** that ******* ********* *** *******, *** ******* ***** ***** *** future ** *** ******* ************ ******. ** ** ***** **** carefully ******** *** ***** **** ******* ** ***** *********.

Comments (14)

** ******* *** ******* *** ******** ** ** *********** *******? Does ** **** ********** **** ***** ******* ****** ** ***** upwards ** ***** *** ****** ** ** ***** ********** "*****" continue ** ********* *** *******? ***** *** *** ****** *** too *** ** ** ******* *** ** **** *** ******* able ** ******* **... * ***** ** **** ******** ********.

*** *******, *** **** *******, *** *** ******** ******** ** true *********** ******* *** ****** *********.

*** *** ******* ****, **** ** ***-**** ******?

*** *** **** ********, ** ****?

*** **** ** ***** ******** ** ****** ***** ** ********, shouldn't ******* ** ****** ***?

** **** ***** **** *** *** ****** ***** ** ******** but ******* **** **** **** **** ***** ** ******** ** the ******.

***** **** ***** ** ***** (*** ***** ** *****) **** are * **** ******* *** *** * ********** ******* *******. They ****** ******* ******* **** **** **** ** *** ** they ***'*, ** *** **** *** **** **** **** ** profit ** ***.

***** ********* **** **** * ***** **** ** ****, **** a "*****" *** ****** ***** ********* **** ****** ** ****-****** or *** ***** ****** *** ** ***** ***** *** ******* or ***** *** ********** ** ***** ******** ********* *** *** cloud *** ******** ** ****** *********.

** **** ***** **** *** *** ****** ***** ** ******** but ******* **** **** **** **** ***** ** ******** ** the ******.

** **** ******* ** ********** ****** * ******?

******, **** **** "**** *******" *** **** *** "******** ** continue".

*'* *** * ********* ****** ** * ***** ** *****.
**** **** * ********** **** *** "*******" **** *** *** will *** **** **** *** *** ****** *** ********* **** they **** ******* ** *** ******.

*** **** ** **** *** ***** *** *** *** **** get ******** *** **** ******... ** **** **** **** **** have ***** ***** ****** ** ***.

******* ***** **** **** *** ******** ***** *****. ** ** they **** ** *** **** **** **** **** ** *******. This ** **** ********** *** ********* ** **** ** **** risks ******* ** ******** *****.

** **** ***** * ***** * ****** **** **** *** let ******* **** **** **** ********* ******* **** *** **** the **** :)

**** ********** ** *** "******* ******" *** ********* *****.

*. *** ***** *** ******/**** **** ***-********* ********** (***-********* ******) for ** **** ** *.*** ***, ***** *% ** *** total *****-*** ****** **** ***.

***** *** *** *** *** **%?

*. ***** *** ** ******** ** ***-********* ****** **** **** Q1 ** **** **. *** ** *** *** ***********.

** **** ***-********* ******: *.*** ***

***. *********: *.*** ***

*** ** ***** ******* ********: *.*** ***

** **** ***-********* ******: *.*** ***

***. *********: *.*** ***

*** ** ***** ******* ********: -*.*** ***

*. *** ***** ******** ** ************* ** **** ** ** a ****** ** "*** ****" ** **** **.

**** ** ***** ******: **** ***

**** ** ***** ******: *** ***

**** ** ***** ******: **** ***

***** *** **** *** + ****** ** **** **. **** Q1, ******* *** ************ ***, **** ****** *** ******* ********* from ****.

**** **, ***, *** * "*** ****", ******* **** *** Dahua ********** ************ **** **** ******* **** *** ** **** when *** **** ****-**-**** ******* *********** ******* "******", ********* **** see * *** **** *** ***** *** ******* **** ****** stock *****.

**** *** * *** ****** ** ******** ** *****'* "*** Bath":

*. ** **** *** ***** ******** ** ********* ******* (********* loss ********** ** ********* *** ***** *****; ***** ** ***** subject ** **********'* ************.)

*. *** *******, ***, *** *** ******** ****** *** ******** principle *** ***** ****** **** ** *** ****** ******* ** this *******, **** ** ********* *** *****;

*. ***** *** **** **** ** ********** ******* ** ****** advantages ** ********** ********** ************, **** ** ************ ** ********* R&D ***** *** ******** *********** **** ***.

**********:

**** *** ****** *** ***% ******** ** **** ** ** simply *** ** *** ************ ******* **** **.

**** **, ***, *** * "*** ****", ******* **** *** Dahua ********** ************ **** **** ******* **** *** ** **** when *** **** ****-**-**** ******* *********** ******* "******", ********* **** see * *** **** *** ***** *** ******* **** ****** stock *****.

****** **** **** ** *** ***** ******* ** **** ******** of * *** ******* *** ** **** ****.

** **** **** ****** * *** ****, **** ** ***** imagine **** *** ******** **** ************* ******, *** ************* ******** lower. *** *** ****** *** **** ******** ****, *** **** reason *** *** ****. ******** ** *** **** ******** **** at ****, ** ** * ****** * ****** ******** ** unhinge ********* *** ** ***** ********** ** ****** ******** ********* by ********* ** ********** *** ******?

*** *** **** ****** ** ******* ** * ******? *** then **** *** **** **** *** ****** **** **, **** a **** ****** ***, ** **** **** *** ** ***** under *** *** ** *** ****?

...*** ***** ********** ************ **** **** ******* **** ***.

** ******, * ****** ****** *** *** **** ** ********** trashes * *** ******, *** ***** ** ***** ******* **** are *** ** *** ***** ***** ****** *** **** ******. Or * ******** *** ****** *** ******** ***'* **** ******* to **** *** ****** **** **** ******.

**** ******* **** ***** ** *** ******* ** ********* *** the **** **** ***** ***** ***** **** ** ********* ******** by *** ********* **********, **** ***** *** *********** "****" ******* reinstates *** ********.

*** ** *** **** ** *****, ** **** ** *****/*******/********* who **** ~**% ** *** *****. ** **** ************ *** likely **** ********** *** ********** ******* *** *** ****** ** likely ******** ** **** *****.

*** **** **** *** ********** **** * **** *** ***** preclude ***** ********* *** *** ****. *** ***** *** * totally ********* ***** ****** **** ***** ************ *** ********* ******* tradings.

** *** **** ** *****, *** *** ******* *** *********** that ******** *** ******* ** ** ********** *** ******* ******** by ******** *** ******* ** *** ********** ******?

*********, *** ******** ********* * *** ****. *** ********* ** provision, ***** ******* *** *****. ******* ******* *** *** ** 2015 ** ** *** ********** ** **** **.

**** **** ******** **** ********** ** *****, * **** *** accounting *** ********* *** ***** **** *** ************; *** *** sales **** ******** ** *** ****** ***** ****** ** ****-**** relationship **** **** ***** ***** ** *** ******* **** * period ** ****; *** **** ****** **** **** *********** ** pre-paid *******.

******** * **** ******* *** *** **** ***** *** ******** and ******** ******* ***** *****, *** ** *** ***** *** still ********* *** ********* ** ****** **** *** ************ ** new ***********, ** ***** ** ***.

*** **** ****** ******* ** ** * ******/********** ** **** is **** *** **** ** ********* *********. ***** *** *** get *** **% ** * ***** ** ***-********* ****** **** total ******?

** *** **** ** *****, *** *** ******* *** *********** that ******** *** ******* ** ** ********** *** ******* ******** by ******** *** ******* ** *** ********** ******?

** ** ******* *** *******, ** ***** ****** ******* ** buy ** ******* *** **** ****** ** *** ***** ********?

****'* *** *******, **** ******* ******* ***** *** ** ************ without ** ******'* **********. *** **** *****'* **** ** ** to ** ****** *****

**, ****** **** *** ***** ** *** ******* ** *** pre-dump *****, ***** **** ** ********* ***, ** ***** ** least, *** ******* **** *** ******** ****** ** *** ********. Sure ** ***** **** **** ******** ********** **** ****** ** pre-bath ****** *** *** ***** ***** **** ** ***** ** was, ** ** ***** ** * ****, *** **** **** he's *** * ****** ** ***** ** *% ******, *** tarnished *** *******'* ********** **********.

** ***** ** *** ******* *** *** ****** ***-**** *** bought **** **** ****-****? *****, ** ***** **** ** ** a *****, ***** ****-*** ***-**** ** ******* ******* ******** ****** you ***** ***.

* ***'* **** ***** *** **%, *'* **** **** **** answer **** ******.

*** ******* ******* *** ** ***** ******* ***. ******, *** stock ****** *** ***** ********** ** *** **** ** ******.

** *** **** ****, *** ******** ** *** ******* ***** be *********** *********. *** **% ******** ** ***** ******* ** 2015 ** ********* ** **** ** ***** ** **** ***** jobs. *** *****.

*** **** ** **** ***** *** ********** ********** ******* *** Dahua ** ***** * ********** *******.

****, ********** ***'** *** ****** ***** *****, **'* **** **** in **** ********** **** ***** *** ********* ** **** **** 50% ** *** ******* *****, *** ******** **** ************* ********* the ***** ***** ** ******** ** **.

*** *** ******** **** ***** *** *******'* ********* ******** **** you **** * ****** **** *** *** ****, ** *** you ******* ****-***?

** * ******* ****, ** *****, *** *** **** ******* as *****?

**, *** ****/******** *** ******* *** ***** ****** ** ******* expense, * ******* ***** *******. ****** ** *** ******* *** same ***** ** ******* ***. *** *** **** ** ** is ** ******** *** ******* **** *** ******** *** ******** future ******* ** *** ******* ****** * ****.

*** ********* ****** **** **** **% ***** ******. ** *** case ** *****, ** ****** ***** ** ***** ******* *** for *** ***** **** ** ****** *** ******* ************ ***. No *** ******* ** ***** *** ***** *****. *** **** of *** **** ** ****** ** **** *** ****** ** one ****** ** **** ***** ******* ***** **** ****. *** stock ***** ********** ** ****** *** ************ ** *** ******* management. ****'* ** ******** ********.

***** ***, ** ******* **** *** ******* ****** ****** **** you **: *** ****. *****.

*** *********** ********:

******** * ******* ********* ********* ******** ** ****, ***** ** meetson *******, which of results would you think the market would react the most positively to?

**:*****:******:*****:****

**:******:******:*****:****

**

**:*****:******:*****:***

**:******:******:*****:****

*, ******** **** *** ******:

*'* *** **** ******* **** ******* **/*** ** ******* **. According ** ****, *** ******* ******* ** *********, ***** *** can *** ** ************** * **** *********** *********** **** * ***** **** *******, ***-********* ******* *** 161m *** *** ***-********* ******** **** *.* *******. ***** ** not * ******** ********* **** **** *** ***-********* ****** ** I ********** **** ***** **** ***-********* ******* ***** ***-********* ********. The ***-********* *** ********* ****** ** *** *** ********* ** total ****** *** **** ** ******** ********. ********* ****** (*********** in ****) ** ****** ** *********; ************ ****** ** ****** as **** ***. ******** ***** *** ***** *** ** **** RMB. *** ****** (*********** ** ******) ** ** ** ****** as **** *** *** * ********** ** **** **%. ***** expected ******* ** *** ****** **** ** ***** *** ******* items, **** ********** ** ***** ****** ** ** **********. *** reason * ******* **** ** ** ********* **** ******** ****** operating ****** *** ** *********** ** ***-********* ****** ********* ****** closely ** *** ******** *** ****** ******.

** *** **** '*** ****' ********, *** ********:

**** ** ********** **** ****** **** ********. * ***** **** however * ****** ** ******. *****, **** ** ********** ****** practice *** ***** **** **** *********** **** ****. ******** **** rush ** ***** ******* ** **** *** ****** **** ***** there ** * *** ******* ** ****. * ****** **** this ** * *****. ******, * ***** ** ** ******** we *** ********* ** **** ******** ***** ****** ** **** lots ** ****** *********** *** *** ******* **** *********** ** start ******** "******" **********. *** *********/**** ******* **** ** ****** correct ***** *** **** **** ******* ******* *****. *** **** reasons ******, * ***** ** *** ** * ******** ******* unless ** ****** ** ** * ************* ******** *** *** this ***** ********** ****** *******. ** **** * ****, *** me *** * ****** *******. ****** ***** ** *******, ***'* assume *** ****** ****** ** **** *** ** ** **** and **** ** ****. **** ** ** *** **** **** their ***** ******* *** *** ******* *** ******* * ****** between **** *** **** **** ********** ****** *** *******? *****, most ********* ***** **** **** ** ******** **** ***** ********. They **** **** *******, **** **** ** ** **** **** for **** ** **** *** **********, ** **** **, **** they **** ***** ** **** ***** ********. *** *** ***** in *** ****, *********** ***, *** ***'* ***** ***** *** revenue ** **** ********** **** ****. ** *****, *** ********* is ******** *****. ** ****, ** **** ** *** ******* accounting ******* **** ******* *** **** ***** ********** *****. *******, it ***** ** *********** ********* ** ******* ****** ******* ** an ******** *** ********* **** **** *** ***** ********* ***********.

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