Falling Hikvision Sales in Europe And North America; Rise Elsewhere
Hikvision confirmed a split in financial performance across the world. Hikvision's sales fell across North America and Europe while they rose in other overseas markets including Latin America and Asia, in Q3 2022, a trend the company expects to continue.
This is a fundamental shift from Hikvision's heretofore strategy of becoming the #1 or #2 in every world market, including the US, with Hikvision now acknowledging and adapting different strategies in response to growing pushback on Hikvision for national security, cyber security, and human rights grounds.
Inside this Research note, we examine the financials, Hikvision management commentary, the changes in strategy, and the strengths and weaknesses of this strategy.
Q3 ********** ****
********* ****** ************* ** ******* ** Q3 ****, ******** *** ***** ******** presentation ** ********** * ****** ** problems:
** *** ***** ******* ** ****, the ******** ******** ********** *** ****-******** situation ** ***** **** ******, **** economic ******** *** **** ******. *****, heated **** ** **** *******, **** inflation ** **** *********, *** *** overall ******** *********** ** **** ** challenges *** *************
***** ******* **** **** ************* **** over **** *** **** ******* **** year, ******* *** ******** ********* ** both ** **** ***** *** ****** profit:
** ***** ** ***** ****** ******, the ***** ****** ****** ** *** first ***** ******** *** **.**%, **** 3.98 ********** ****** **** *** **** period ** *** ******** ****. ** which *** ***** ******* ***** ****** margin *** **.**%, **** *.** ********** points **** *** ****** *******
***** ********* *** ****** ****** *** its ********** *** ***** ******** ********* (****** **,*** ********* **** ****), ********* *** **** ** **** not ******:
*** ***** ** ********* **** ** longer ** ********, *** *** ************* cost ****** **** **** **** ****. A ******* ****** ** ******* **********, we ***** ** **********,
**** ******** *** ******** *** ********, we **** **** ******* *** ************* slowdown. ***** *** ******* ******** *************, our ******** ** **** ***** ** not ** ******.
West ** ****
* ***** ***** ** *********'* ********* results *** ********* ******* ****** *** world:
******** ******** **** ** **% ****-**-**** in *** ***** *******, ** *****Europe *** ***** ******* were greatly affected by inflation and experienced regional **************.
****** *** * ******* ****** ** the ******* ******** ********.Latin *******, **** and other regions continued to maintain ***** ******. Expected future overseas business [emphasis added]
Polarization *** ****-*************
********* *** ***** **** **** ** not ** ******** ** * ****, emphasizing ************ ** *** *****, ********* uncertainty *** "****-*************" ********* *** *****:
*** ***** ****************** ********, *** *** ******** ************ pattern ** ******** ****** **** ******...
Political *********** overseas is difficult to eliminate, requiring companies to operate prudently and make targeted actions in a timely manner adjustment and response. ****-*************[逆全球化] **reshaping *** ***** pattern [emphasis added]
***** ** *** **** ***** ** the ***-***** ********* ********** ********** ***** goal ** ***** *** *** (** second) ******* ******* ** ***** ******, Hikvision ** *** ******** * ******* world:
*** ********** ** ********** ** *** caused ** *********'* ********, ** ** more ********* **** ******* ** *******. Different ******** *** ********* *****-**** **** to **********, *** ** ****** **** result. *** *********, ** **** **** pushing *** ******** ********* ******** ** "one *******, *** ******" ** ***********. The ****** *** "*** *******, *** policy" ** **** **** *******'* *******, culture, ** *** ********** ** *** product *** *** ********** ** ********* management ******* **** **** ***********
Product ***** ** ********** *********
*** ********** ********* (********* ** ****** and ****) ***** ***** ****** ******, Hikvision ***** **** ** ** ********* from ******* ***-**** ******** ****** **** higher-end ********:
********* ********, ******** ***** ***mainly ***** ** ******* ******** *** ********. There will be some project-based needs in developing countries.
******** ******** ***** *********. *** ******* of *** ******* *** *********, *** is ***** *******-*******
**** **** ****** *** ******* ** where ********* *** **** **** ********, including ** *** ****, **** ****** looking *** **** ****** *** ***-**** products.
Developing ******* ******* ********
** ****** ********* ** ******** ** do **** ** ********** ********* ** we ** *** *** *** ****** non-PRC *********** **** **** ********* ****, given *********'* ******* ** **** ** such *** ****** *** *** ***-*** competitors ******* ** ********* ** *** West.
*** ****-**** **** ** **** ***-*** competitors ********** *** **** *** ** seriously ******* ** ********** *******'* **** market **** ******** *****/** ********* *** that ***** ** ** ** **** years **** *** ***** * **** if ***** ********* *** *** ******* to **** *** ***** ******* ** compete **** ********* ** ***** *******.
USA / ** *******
** ***** **** ********* **** ********* problems ** *** *** *** ** will ********. ** *******'* ************* *** power ** *** *** **** **** further ******** ******* *** *** *** the ****, ***** **** **** ********* effects ** ******** ******** *** ************ on ***** *********.
*** ******* ******* ** ****, ** this *********, ** **** *****, ** becomes *********** ************ ** ******** *********** operations ** ******* *********. ***** ** do *** ***** **** ********* **** continue ** **** ** *** **** so **** ** **** ******* *** allowed, ***** ******* ************ *** ********** (e.g.,** ****** ******** ** *********), **** **********, ** *********, ****** in ********* ****** ** **** **** cuts ** ***** ******* ******** ** reflect ******** ** ******* *** *************.
PRC **** ****** *******
**********, ****** *********'* **** ** ****** by *** **** ****** (**** **%+ of *** *******) *** *** ********** ownership. ******, **** ** *** **** leadership ** *** *** **** **** connections ** *********'* **** ******** ** Zheijiang ***** ****** ********** *********'* ********* position.
** *** ****** **** *** *** will ******** ** **** *** ** ~5% (** ***** ** ****), ********* will ****** ** ** **** ***** (albeit *** ** *** ****), ******* modestly *******, ** ** **** **** domestic *********** ** *** ** / analytics **** *** *** ** *** core ************ ******** ******. *******, ** the ***'* ******* ***** ********* (****** this *******, *********'* *** ******** *** down **%+), ********* ***** ********** **** the **** ******.