Hikvision (002415) Annual Report Comments: Continue to Develop and Build a Wide Moat 深圳桑拿网 Security Leader for a Long Time

Key points of investment: The company announced the 2018 financial report, and the company achieved revenue of 498 in 2018.

3.7 billion yuan (18.

(An increase of 93% year-on-year), net profit attributable to shareholders of listed companies 113.

5.3 billion (20.

64%), the earnings reported in the annual report1.

24 yuan, the company plans to distribute a cash dividend of 6 yuan (including tax) to all shareholders for every 10 shares.

Ping An’s view: The company’s annual report performance is in line with expectations, and continuous R & D investment: the company achieved revenue of 498 in 2018.

3.7 billion (18.

(An increase of 93% year-on-year), net profit attributable to shareholders of listed companies 113.

5.3 billion (20.

64%), gross sales margin and net profit margin were 44.

85% and 22.

84%; rankings rose 0 in 北京夜网 2017 respectively.

85pct and 0.

46 points can bring benefits1.

24 yuan, performance in line with expectations.

In terms of different industries, the revenues of front-end products, preliminary products, central control products and engineering construction were 240.

8.3 billion (14.

Year-on-year growth of 19%), 67.

7.9 billion (10.

21%), 73.

2.7 billion (44.

And 22.

8.5 billion (-10.

(07% year-on-year), with revenue accounting for 48.

32%, 13.

60%, 14.

69% and 4.

59%, gross profit margin is 49.

95%, 46.

86%, 53.

84% and 12.

12%; Expense: The company’s financial expense ratio, sales expense ratio and management expense ratio (excluding R & D expenses) in 2018 were -0.

85%, 11.

82%, and 2.

76%, little change from 2017 rating.

On R & D budget: In 2018, the company’s R & D budget44.

83 ppm, 8 of the company’s shares.99%.

The company has more than 1 R & D and technical service personnel.

60,000 people, continue to maintain remedies in traditional security business-related technologies and products, and at the same time rapidly implement distributed research and development in the AI Cloud. After the AI Cloud computing architecture integrated at the cloud side, a data architecture for data fusion is proposedA series of platforms including two pools, one library and four platforms, an AI open platform, and a video surveillance construction evaluation system were released.

Security monitoring is the absolute leader with long-term operational services: The company is the world’s leading provider of security monitoring products and content services. Its products and services have achieved full coverage of all major equipment of video surveillance systems, ranking first in global market share.

In the domestic market, the company continues to promote the marketing strategy of “industry segmentation, regional sinking, and business end-to-end”, and pushes more resources to provincial business centers to improve the provincial business center’s ability to support regional business; overseas markets,In 2018, the company set up five new subsidiaries in Mexico, Panama, Pakistan, Pakistan, Peru, and Israel. The number of overseas branches increased to 44 and more than 100 authorized maintenance centers were established. The overseas sales service network was further improved.

In addition, compared with 57% of the European and American market operating services, the proportion of long-term operating services is still somewhat larger. The size of the European and American security operating service market is more than five times that of the security product market, and the huge blue ocean of security operating services is yet to be discoveredAt present, China’s security operation services are only in their infancy, and the golden period of security operation services will usher in the future.

AI leads the advancement of security intelligence, and the company continues to promote the development of innovative business: Under the trend of intelligent security upgrade, the core competitiveness of the industry is transformed into technical architecture and solution landing capabilities, and companies with deep technical strength will keep pace with industry changesAs a result, small companies with weak technology inputs were further eliminated, industry door performance was improved, utilization concentration was gradually increased, and the industry structure was continuously optimized.

At the same time, the development of artificial intelligence technology and computer image processing technology will greatly increase the efficiency of video surveillance and the use of big data value. The function of camera to collect images will no longer replace security purposes.
Therefore, while “AI + Security” helps customers improve business efficiency, it also greatly expands the market space for video technology to achieve business management needs.

Under the background that data is king, the company has a huge amount of data resources and will have absolute natural advantages in intelligent security transformation.

In addition, the company is profitable in the fluorite business and Hikvision robot business. Hikvision Automotive Electronics, Hikvision Storage and other innovative businesses have made breakthroughs in the transfer and promotion of the target market. It is expected to form a synergy with the main business in the future.

Investment strategy: The company is the world’s leading provider of security surveillance products and content services. The products and services have achieved full coverage of all major equipment of the video surveillance system. At the same time, the company’s overseas market expansion has steadily advanced, and its innovative business is gradually gaining momentum.The steady growth of the country adds momentum.

Taking into account the downward pressure on the macro economy, we slightly adjusted the company’s profit forecast downwards. It is expected that the company’s net profit attributable to its mother in 2019-2021 will be 136 respectively.

41/164.

79/199.

1.2 billion (original ranking of 140 in 19/20).

29/170.

52 ppm), the corresponding EPS is 1.

46/1.

77/2.

14 yuan, corresponding PE is 24/20/16 times, maintaining the company’s “recommended” level.

Risk reminders: 1) Technology replacement risk: With the continuous change of cloud computing, big data, artificial intelligence and other technologies, industry business and application requirements may evolve with it.

If the updates and changes in the industry’s cutting-edge technology cannot be tracked quickly, the uncertainty of the company’s future development will increase.

2) Network security risks: The company has consistently improved and actively adopted measures to improve the security performance of its products and systems, but under cloud networking application environments, there may still be situations like computer viruses, malware, hacking attacks, etc. that deliberately attempt to damage the company’s systemsOr products that cause safety issues.

3) Exchange rate risk: The company operates in multiple countries and regions with different currencies in overseas markets. The exchange rate risk mainly comes from sales, purchases, and financing of foreign currency exposures and exchange rate changes that are not settled in RMB (mainly in US dollars).Will affect the company’s profitability.

4) Global market development risk: The company’s business covers 150 countries and regions worldwide. If trade protection, debt problems, political conflicts, etc. occur in the country where the business is carried out, it may have an adverse impact on the company’s business development.