Hikvision Stock Down 50%+ From 2015 Peak

By: John Honovich, Published on Jan 26, 2016

While Hikvision is busy preparing for world domination, it faces increasing challenges at home in China. Last week, Hikvision announced weakened profits. Now the company's stock continues to fall, down over 8% today and more than 50% from its peak in mid-2015.

In this note, we examine Hikvision's stock rise and fall, analyzing its impact to the global video surveillance industry.

***** ********* ** **** preparing ******** **********, ** ***** ********** challenges ** **** ** China. **** ****, ********* ********* ******** *******. *** *** *******'* stock ********* ** ****, down **** *% ***** and **** **** **% from *** **** ** mid-2015.

** **** ****, ** examine *********'* ***** **** and ****, ********* *** impact ** *** ****** video ************ ********.

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

****

** *** **** **** year, *********'* ****** ************** was ~$** ******* ***, trading ** ** ********** 10x ******* ********* *** having * ****** ********* roughly ***** ** *** **** of *** ****** ***** surveillance ******** ********.

****

**** * ****** ***, Hikvision's ***** *** ****** ~53% **** **.** **** to **.** *****.

***** ***** *** * sharp **** ** *** early ******, **** ******* notable ******** ** *** past * ******.

****: *** ******* ********** suspended ******* ** *********'* shares *** * ****** in **** ** *********** by *** **** **** in *** ****** ** the *****.

China ***** **** ****** 

********* ** *** ***** here. *** ******* ***** market *** ***** ****** over *** **** ****.

**** ** *********'* ***** chart ***** **** ******* (2015):

*** **** *** ** the ***** **** ** 2015, **** *********'* ***** price *** ***** ***** than **** **** *******, despite ******* **** ******* growth ** ~**%.

Fears ** *** ******* *******

*** **** ******* ** the ****** ** *** Chinese *******. ** ***** has******** ******, **** *** *** slowest ****** ** ** years. ** *** ***** hand, ***** ********** **** growth ** ***** ********* high ** ***** ********* (a ******** *.*%) *** that **** *** *********** economic *********** ** * '*** ******'. ** *** **** in ***** ****** ****, many ************ ** *****'* ********** / *** *******. 

Government ********** ********** ***** ******

*** ******* ********** *** been ******* *** ** defend / **** ** stock ******,*********** ******* ********** **** **** ****** ** their *** *********, ****** shares ********** (*** '******** ****'),*********** ***** *******, *** ****** ******* of***** ****** '******* ********', ***.

*************, ***** ******* **** not **** ******* *** it ** ******* ** what ***** / ***** level *** ******* ********** can ********* *** ****.

Hikvision ******

* ******* ***** ***** has **** ********, **** acquisitions, ** ******* ******* equity (*.*., *** ************ postponed **** **** ***), to ******* *********.

*** ****** ******* ** weakness ****** *********'* **** China ******, ****** **** less ******** / ********* wealth *** ** ******* stock ****** *** **** the **** ** *** 'new ******' ******* ******* back ** *********** *** vast ************** ******** ***** 2008 **** *** ********* Hikvision ** ** *** biggest ***** ************ ******* in *** *****. *****'* government *** **** ** clear **** **** ********* ** **** ** a ********, ****** **** ********** driven *******, *** *** far ***** **** ***** significantly ****** *********'* **** market / ****** *********.

Further ****?

**** ***** *** ***** fall, *********'* ****** ************** is ***** ~$** ******* USD, ~** ***** **** sales. ** **** ******** to **** ** **%+ and ******** **% *** margins, *********'* ***** ** an ******** *****.

** *** ***** ****, even ***** **** **** only **** ***** ~**%. If ********* ***** **** to **** ***** *** their ****** ******* ******* (due ** * ******* Chinese ****** *** *** challenges ** ******* *********), Hikvision's ***** ***** ***** easily **** *** ******* as ~** ***** ********* is ***** ****** ****.

**********, ******, ** **** of *********'* ****** ***** on *** **** ** the ******* ********** / economy *** ** ******* to ** **** ******* it ***** * '****** landing', '**** *******' ** '***** *******'.

Comments (10)

Frank Yeh

01/28/16 05:55pm

Excellent info, thanks as always!

I can't help but notice the linear section of the charts from Jul '15 to Sep '15. What happened there? Seems like a 2 month gap in data.

Undisclosed #1

In reply to Frank Yeh | 01/28/16 07:24pm

Shenzhen Suspension.

John Honovich

IPVM | In reply to Frank Yeh | 01/28/16 11:39pm

Frank, good question. I found another source that had data during that time frame. Those 2 months the stock seemed to bounce up and down slightly but no major shifts. The 2 big downturns were late summer and now this winter.

Undisclosed #1

In reply to John Honovich | 01/29/16 12:16am

What was the other source?

Goldman says that trading was suspended for two months.

John Honovich

IPVM | In reply to Undisclosed #1 | 01/29/16 01:17am

Google Finance Hikvision chart

Frank Yeh

In reply to John Honovich | 01/29/16 08:23pm

Made me look. ;-)

Hikvision closed at 32.39 on Jul 8 and 33.26 on Sep 9. There was zero volume from Jul 9 to Sep 8.

Yahoo's chart shows a flat line from Jul 8 to Sep 8 and a one day jump from Sep 8 to Sep 9, which seems most realistic (zero volume = no change).

Bloomberg's chart shows a straight line from Jul 8 to Sep 9 which is sort of okay_ it just does not chart all the zero volume days.

Google's chart completely eliminates the days from Jul 9 to Sep 8! Really, Google? It's like they never happened. The really misleading thing is that the dates at the bottom show 8 then 9 so they look like a normal sequence of dates but if you hover over the dates the 8 is Jul 8 and the 9 is Sep 9. OMG!!!

Undisclosed #1

In reply to Frank Yeh | 01/30/16 12:24am

The really misleading thing is that the dates at the bottom show 8 then 9 so they look like a normal sequence of dates but if you hover over the dates the 8 is Jul 8 and the 9 is Sep 9.

Good catch, Frank! Mystery solved.

John Honovich

IPVM | In reply to Undisclosed #1 | 01/30/16 12:28am

I am stunned that they stop trading for two months and I am disappointed in myself for missing that.

Quite a free market they have to stop a stock's trading for 2 months...

Also, from the Goldman post, so much for a free and independent Hikvision: "It has been challenging for SOEs [state owned enterprises] to put forward such partnership share incentive schemes, and it took longer than Hikvision expected to get approval from its parent SOE company and SASAC. "

Frank Yeh

In reply to John Honovich | 01/30/16 03:06am

Yeah, I missed it too, and totally agree.

The market is crashing_ we'll just suspend trading for 2 months... wow.

China and state-sponsored capitalism definitely were not covered when I got my Economics degree. What is happening today is redefining things and will eventually be covered in textbooks (or whatever they will be using in the future). Adam Smith's brain would be exploding right now.

While the US does not have a totally free market either (the Fed has way too much influence to say otherwise), China takes things to a whole new level. There are plenty of examples in the western world that demonstrate that free market and free enterprise are not always the case (AirBus and GM come to mind) but nothing like what China is doing.

Undisclosed #1

In reply to John Honovich | 01/30/16 03:46am

Quite a free market they have to stop a stock's trading for 2 months...

I'm amazed that it 'worked' at all. Came right back where it left off.

I know this was mainly due to the government propping up everything, but regardless, from Hik's standpoint it paid off.

If it had slid another points before halting, that's probably where it would have come back at...

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