Hikvision Strong Domestically, International Business Struggles

By: John Honovich, Published on Jul 25, 2018

Hikvision's H1 2018 results are out. Overall revenue growth has sharply dropped, with the company acknowledging their "facing geopolitical headwinds". Hikvision was hurt by Hikvision International (i.e., 'overseas') business but buoyed by the protected domestic market.

In this note, we examine:

  • Steep fall in gross margins
  • Sharp rise in sales expenses
  • Challenges and priorities for Hikvision going forward

*********'* ** **** ********** ***. ******* ******* growth *** ******* *******, with *** ******* ************* their "****** ************ *********". Hikvision *** **** ** Hikvision ************* (*.*., '********') business *** ****** ** the ********* ******** ******.

** **** ****, ** examine:

  • ***** **** ** ***** margins
  • ***** **** ** ***** expenses
  • ********** *** ********** *** Hikvision ***** *******

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

Financial ********

********* ************* / ******** business ******** * **** 6 ***** **** ** gross *******:

**** ** * ***** drop ** ***** ****** percentage **** ** **** change * *** ******, at ****, *** ****.

*** ******** **** *** Hikvision ** **** ***** domestic ******** (***** ******* competitors *** *********** ******), shot ** * ******.

*** *********** ***** *** very ********* ******* **** historically ***** *** ******** business *** **** ****** gross ******* **** ********, e.g.,**** *** ** **** results:

*** ******** ******** ***** much ****** ***** ******* because *** **** ** doing ******** ** *** US *** *** ** is *** ****** *** the ***** ** ******** they **** ***** ** much *****.

Exhange ***** ******* *** ** *** *******

********* ***** "******** **** fluctuation *** ******** ******* structure ******" ** ****** for *** ***** ****** drop. ***** *** ***'* fall ******* *** *** has ****** *** **** recently, ******* *** **** has ********** ** *** same ***** **** *** past * *****, ******** the ****** **** ***** have, ****** *** ***** *****:

Sales ***** ** *************

******* ******** ********* *** more **** ***** *** rate ** ******* ****** in ** ****:

***** ********* **** ******* a ****** ****** ******* expense, ** ** ***** likely **** ** ***** driven ** ************* ***** as ********* *** ************* expanded ******* ** *** outside ** *****.

**** ****, ******* ******* ratio ** ******* ** sharply. *** *******, **** in ****, ********* ***** less **** *% ** revenue ** ******* ********, now ** ** ****, it ** *********** **% of *******.

Coping **** *************

*********'* #* ****** *** was '******' **** *************. To ** *****, ********* does *** **** *** trade ************* ** *** benefited **** ****** ** China *** ***** *** the ** ***** ** the **** **** ****.

Revenue ****** ***** ***************

******* *** ***** ******* in ***** ****** *** sales ******** ********, ********* emphasized ****** ******* ****** as * ********:

****** ** ******** ****** growth ** ******* ** adopting ******** ******** **********.

通过采取有针对性的区域策略努力保持收入的稳健增长

******** ******* ****** *** 26.7% *** ** ****. Hikvision *** *********, *** unsurprisingly, *********** ******* ****** over ******* / ******** losses. ******* ****, ******** Hikvision ******* *** ***** higher **** ********, ******* and ********** *** *** domestic ********, ***** *** already ********** **** ****** of *****.

Overall ******* ****** ***** ** ** **

******* ******* ****** *** Hikvision *** ****** **% in ** ****, ******** to ~**% ** ** 2018. **** ****** **** a ***** **** ******* the *** ******** *** not ********* *** *** a ********* ******** ******* domestic *** ******** *** the ********.

Construction ******** ********* ***%

** *** ******** **** for *********, ** ***** domestically, ** **** ***** 'construction', *.*., *********** ******** more **** ******* **** over ****.

** ** ***** **** ~5% ** ***** ******* and ** ***** ****** but ***** *********'* ******** inside ** *****.

Net ******* ***** ******

******* ******* ******* ****** falling ******* ** **, increased ******* ******** *** decreased ************* ***** *******, Hikvision's ******* ******** *** profit ****** ********* **** 19.4% ** **.*% **** Q1 ** **. **** points ** * ****** domestic ******.

AI ******* #* ********

****** ****, ********* ********** their ******** ** **:

***** ********* ** *** ethics *** ******** ** Hikvision's ** *** *********, all ***** ***** ** strong ***** ******** ********** sales *** ***** ** products. ******* ** *****, Hikvision's ** ****** ** far **** ************, ****, e.g., ********* **********, ***** not ******* ** *** US, ****** * **** year ***** **** ****** it********* ****'* *******.

Roller ******* ***** *****

**** *** **** ****, Hikvision's *****'* **** *** been * ****** *******, with ****** ******** ** 2017, ******** ** **** turn ** ****:

** **********, *** ***** drop ******* **** ***** coincides **** ********* **** of *** ** ********** taking ******* ******* *********.

Future ** ************* ********* ********?

** *** *** ****, Hikvision *** ****** ** money ** ******** ** fund *** ************* ******** as ***** ******** ******** dominance *******. ** *** other ****, ****** ********* can ******* *** ***** margin ******* *** ****** the **** ** ******* expenses, ** **** **** under ********** ******** ** reduce *** ****** ***************.

******, *********'* ********* ** a *** **** ***** own ****** *** *** been ***************** "****** '******** ** *********' in ******". *** **** **** Hikvision ** **********?

Comments (13)

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

** *** ********* *********** *** ******* ** **** ***, *********, this ** ** ********* **** ******* *** *** ***.

****: *** ******* (*****) *** ******* *** ** ******* **** before (*** ********, *.*. ******** **************, ***** ** ***** *** government *****, *.*. *********). ** *** **** ********* **** *******.

*** ********, *.*. ******** **************, ***** ** ***** *** ********** owned, *.*. *********

** ** **** ** *********. * ***** ** **** ********* that *** ** ***** *****/***** **** ** ********* **, ***, a ********** ** **** ****. *** **** *** * ***** see **** ************ ***** ********* ***** ** ** **** ******* were ****** ***** ** *** **** ** ********* ** *****. There ** * *** ** ********** ********** *******.

** ** **** ** *********. * ***** ** **** ********* that *** ** ***** *****/***** **** ** ********* **, ***, a ********** ** **** ****.

*********, **** ******* *** *** ********* ** ******** *** ** clearly ********* ********* **** ***** ******* ******* *** ***** ********** offerings.

*** *** **** ****** *** ** *** ***, ******. ****'* the **** ***-*** ***** *********** ** ******** * **** ** - *** ***** *** ***** **********? **** ** ********* ** work **** ** ***'** *** * *******.

***** *** ******, *** * ** * ******** ****** *** would ** ** **** ** ** **** ** **** ****. Feel **** ** ***** *** ** **.

********* ****** *********: ******* ******* *****'* ***** ** ******* $** Billion ****** ****

** ** ********* * ******** ******* **** *** *********** ** the ******** ** *** ***** ***** **********.

*******, ** **** ******* ********* ************* **** ******** ****** ("* ********** ******** ** ******* **** *** ******** ********** ********") and ************* **** ("************ ******** **** *** *.*. *** ****** on ******* ***** **** **** ** ******* *** ********** *** clients.").

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

“** ** **** ******* ** *** ******** ********* ********** **** the ******* ** ********* *** *** * ****** ********** *******. It’s **** **** **** ******* *** ********,” **** *** **, an ******* **** *********. “****’* *** ********* **** *** ******* and **** ** * ****** *********.”

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

********* *** ************* ***** **** * *****. **** **** **** "completely *********** *** ***********" ** "****** ****** ******** ** *** whoopin"

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

*** *** ** *** ********* ***** ** *** **** ***, I *** **. *******, ***** ******* **** *** ******** ** an "*** *******". **** **** ***** ***** *** ******** ** and **** ***** ******* *** ********, ** ***** ***'** ********** to *** *** ****** ** *** ********. **'* *** ***********.

*** ** ** *****, * ***** *** ********* *** **** a *********** ******** *** *** ** *** ********* **** ** has ***.

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

*** ****** ** *** ************ ******** ** ******** ******* ***** to ** ****.*** ******* ****** *** **** ******** ** **** ********* *** regions *** ** ***** *********, ** ***** ***** ******

************* ************* *** ******.****,*********’* ***** ** **** ***** *******.** ** ******** **** **** * *********** ******* **** ******** for **** ****.

*** *******'* ******** *** *** ***** ***** ******** ** *********** growth ******* ** *** ***** ** **% ** **%.** *** ******** *********** ******* * ***, ** **** ****** our ************ ** ***********.

****** **** ** *****-*** ********.**** *** ******** ** ******** *******.********** **** *** ** *** ********* ********* *** ** **** ********* *******.******** ****.*** ****** ***** *** ***** *** ****** ***** ********.** *** ******** ***** ** *** ***** ***.**** ** ** ******** *********..

** *******, *** ****** ** ********* ** **%.,** ***** *** ****** ** *** *** ***,***** ****** ** ********** *****.*** ** *** *** **** *** **** ** **%,**** **% ** ***,**** **** ********** ***** ******.** ****, * ********* ** *** **** ***** **** **** I **** ** *** **% ******.** *** * **** ******* ********** ** *** ****** ** ******** *** ****** ************* ******** ** *** ****** States.****, ******* *** ****** ** **** ****** *** *** **** as **** ** ** *** **** ** *** ****** ******* *****.

*** ******** **** *** * ****** ******. ***** * ******. The **** *** ***** ******* ** *** ******.

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

***, ** ****** ******** ***** ** *** ******** ******* ********** nationwide.

***** ** ***** ** ** **** ******!

** **** - *** *** ***** ************ ** *** ***** listing ** *** ******* **********? * ***** **** ** ******* that **** ******* **** **** * "**** *********" **** *** embedding *** ***** ********. * **** **'* ***** ********* (****** and ********* ****) - ** **** ** ** - ** the ********* ** **** ***-** ******* **** (***** ***-**** *** camera). * ***** ** ********** ** **** *** **** *** impact ** *******.

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

***** '*******' *** *** ********* **?

**'* ***** ********* (****** *** ********* ****) - ** **** to ** - ** *** ********* ** **** ***-** ******* line (***** ***-**** *** ******)

***** ******** **** ***** **** *****. *******, ******* **** ****,**** **** *** ***** *** / ***** (***** *** ******** effectively) ** *****.

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