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:

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

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

Financial ********

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

**** ** * ***** **** as ***** ****** ********** tend ** **** ****** a *** ******, ** most, *** ****.

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

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

***** ********* **** ******* * single ****** ******* *******, it ** ***** ****** this ** ***** ****** by ************* ***** ** Hikvision *** ************* ******** efforts ** *** ******* of *****.

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

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

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

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

******* *** ***** ******* in ***** ****** *** ***** expenses ********, ********* ********** steady ******* ****** ** a ********:

****** ** ******** ****** 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 ******* #* ********

****** ****, ********* ********** ***** priority ** **:

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

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)

John Honovich

IPVM | 07/26/18 12:09pm

******: *** ** ***** and ****** ************* ***** ************** ******. ***** *** ********* ban ***** *******:

** *** ********* *********** the ******* ** **** but, *********, **** ** an ********* **** ******* for *** ***.

****: *** ******* (*****) has ******* *** ** broader **** ****** (*** mentions, *.*. ******** **************, which ** ***** *** government *****, *.*. *********). We *** **** ********* that *******.

Undisclosed Integrator #2

In reply to John Honovich | 07/26/18 10:59pm

*** ********, *.*. ******** infrastructure, ***** ** ***** not ********** *****, *.*. utilities

** ** **** ** utilities.  * ***** ** very ********* **** *** or ***** *****/***** **** be ********* **, ***, a ********** ** **** farm.  *** **** *** I ***** *** **** accidentally ***** ********* ***** is ** **** ******* were ****** ***** ** OEM **** ** ********* or *****.  ***** ** a *** ** ********** compliance *******.

John Honovich

IPVM | In reply to Undisclosed Integrator #2 | 07/26/18 11:30pm

** ** **** ** utilities. * ***** ** very ********* **** *** or ***** *****/***** **** be ********* **, ***, a ********** ** **** farm.

*********, **** ******* *** not ********* ** ******** who ** ******* ********* utilities **** ***** ******* cameras *** ***** ********** offerings.

Undisclosed #1

07/26/18 12:18pm

*** *** **** ****** was ** *** ***, thanks. ****'* *** **** two-way ***** *********** ** Motorola * **** ** - *** ***** *** other **********? **** ** difficult ** **** **** if ***'** *** * partner.

John Honovich

IPVM | In reply to Undisclosed #1 | 07/26/18 12:22pm

****** *** ******** ** the******** ***** ********* **** May.

* ******* **** **********: ***-*** ***** Alternatives ** ********?*** ****. ******!

Avatar

Jon Jones

In reply to Undisclosed #1 | 07/26/18 05:25pm

***** *** ******, *** I ** * ******** dealer *** ***** ** my **** ** ** easy ** **** ****.  Feel **** ** ***** out ** **.

John Honovich

IPVM | 07/26/18 02:01pm

********* ****** *********: ******* ******* Titan's ***** ** ******* $11 ******* ****** ****

** ** ********* * positive ******* **** *** perspective ** *** ******** of *** ***** ***** increasing.

*******, ** **** ******* Hikvision ************* **** ******** issues ("* ********** ******** ** curtail **** *** ******** government ********") *** ************* ones ("************ ******** **** the *.*. *** ****** on ******* ***** **** ties ** ******* *** discourage *** *******.").

*************, *** ******* ****** that ********* *** ******* on *********'* ******** *********** capabilities:

“** ** **** ******* to *** ******** ********* capability **** *** ******* is ********* *** *** a ****** ********** *******. It’s **** **** **** selling *** ********,” **** Rex **, ** ******* with *********. “****’* *** investors **** *** ******* and **** ** * higher *********.”

*** ***** ****, **** it **** ****** **************...

Avatar

Sean Nelson

Nelly's Security | 07/26/18 05:34pm

********* *** ************* ***** down * *****. **** went **** "********** *********** the ***********" ** "****** giving ******** ** *** whoopin" 

John Honovich

IPVM | In reply to Sean Nelson | 07/26/18 05:54pm

* **** *** * funny ****, ****.

*** *** ** *** Hikvision ***** ** *** very ***, * *** it. *******, ***** ******* show *** ******** ** an "*** *******". **** your ***** ***** *** shooting ** *** **** gross ******* *** ********, it ***** ***'** ********** to *** *** ****** to *** ********. **'* not ***********.

*** ** ** *****, I ***** *** ********* can **** * *********** business *** *** ** the ********* **** ** has ***.

John Honovich

IPVM | 07/26/18 09:41pm

********* ******* ******** **** ***** *** **** *********** details:

*** ****** ** *** distribution ******** ** ******** markets ***** ** ** flat. *** ******* ****** *** made ******** ** **** countries *** ******* *** ** ***** *********, it ***** ***** ******

************* ************* *** ******. ****, *********’* ***** ** **** quite *******.** ** ******** **** such * *********** ******* will ******** *** **** time.

*** *******'* ******** *** the ***** ***** ******** of *********** ****** ******* in *** ***** ** 15% ** **%. ** *** ******** *********** changes * ***, ** will ****** *** ************ of ***********.

****** **** ** *****-*** products. **** *** ******** ** overseas *******. ********** **** *** ** and ********* ********* *** ** **** political *******. ******** ****. *** ****** ***** *** areas *** ****** ***** products. ** *** ******** ***** at *** ***** ***.**** ** ** ******** situation..

** *******, *** ****** is ********* ** **%.,** ***** *** ****** is *** *** ***, ***** ****** ** ********** range.*** ** *** *** this *** **** ** 20%,**** **% ** ***,**** **** ********** ***** affect. ** ****, * ********* in *** **** ***** days **** * **** to *** **% ******. ** *** * **** serious ********** ** *** time ** ** ******** *** entire ************* ******** ** the ****** ******. ****, ******* *** ****** of **** ****** *** not **** ** **** as ** *** **** s* *** ****** ******* again.

*** ******** **** *** a ****** ******. ***** 2 ******. *** **** are ***** ******* ** the ******.

Undisclosed #3

In reply to John Honovich | 07/26/18 11:23pm

** *** * **** serious ********** ** *** time ** ** ******** the ****** ************* ******** to *** ****** ******.

***, ** ****** ******** lines ** *** ******** Chinese ********** **********.

***** ** ***** ** be **** ******!

Edward Knoch

08/01/18 05:00am

** **** - *** you ***** ************ ** the ***** ******* ** the ******* **********? * would **** ** ******* that **** ******* **** push * "**** *********" line *** ********* *** Dahua ********. * **** it's ***** ********* (****** and ********* ****) - or **** ** ** - ** *** ********* of **** ***-** ******* line (***** ***-**** *** camera). * ***** ** interested ** **** *** what *** ****** ** overall.

 

John Honovich

IPVM | In reply to Edward Knoch | 08/01/18 10:45am

************ ** *** ***** listing ** *** ******* Government? 

***** '*******' *** *** referring **?

**'* ***** ********* (****** and ********* ****) - or **** ** ** - ** *** ********* of **** ***-** ******* line (***** ***-**** *** camera)

***** ******** **** ***** from *****. *******, ******* this ****,**** **** *** ***** SMB / ***** (***** OEM ******** ***********) ** Dahua.

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