A rumor has severely impacted Hikvision, causing a domino effect on many stockholders. It is well known that Hikvision has always been a magnet for capital. Under the sharp decline in stock prices, these investors are the first to be affected. Among them, Chongyang Investment is the tenth largest circulating shareholder of Hikvision, with a position value of 1.8 billion yuan. In addition, more than 600 funds across the market have heavily invested in Hikvision, including well-known fund managers such as Liu Yan Chun and Gui Kai.
Hikvision's "backyard fire" has caused many investors to complain bitterly.
On June 9th, Hikvision's stock fell by 9% during the trading day, and the abnormality behind it may be related to rumors. There are rumors that the UK, citing security risks, plans to require government departments to remove surveillance equipment produced by Chinese companies.
Under the severe decline in stock prices, Hikvision's investors have also been "innocent victims". Among them, the billion-yuan private equity Chongyang Investment has just been promoted to the tenth largest circulating shareholder of Hikvision in the fourth quarter, stepping on a mine innocently.
In addition to private equity, Hikvision is also a target for public fund clustering. As of the end of the first quarter of this year, more than 600 funds have heavily invested in Hikvision, with a total position value of about 25 billion yuan. Among them are star fund managers, such as Qu Yang from Qianhai Open Source, Liu Yan Chun from Jing Shun Great Wall, and Gui Kai from Harvest Fund. With the sharp decline of Hikvision, these funds have also been "inadvertently injured".
Why did Hikvision "collapse"?
On June 9th, Hikvision's stock fell by 9% during the trading day, with a closing price of 32.36 yuan per share and a transaction volume as high as 3.852 billion yuan, attracting widespread attention from the market. Hikvision stated that the reason for the stock collapse may be the adjustment of public funds.
However, rumors on the street suggest that the reason for Hikvision's "collapse" may be related to a "small composition".
The rumor states that the UK government will issue a timetable for removing surveillance equipment produced by enterprises subject to relevant regulations from central government sensitive sites. The specific names of the enterprises were not mentioned in the statement.
According to statistics from the UK government's surveillance camera commissioner, at least one-third of the police forces in England and Wales use surveillance cameras produced by Hikvision. In 2016, the UK's Daily Mail reported that, according to research institute data, within just four years, the products of this Chinese company have accounted for 14% of the UK's closed-circuit television camera market share.However, some securities firms believe that leading companies have a very low proportion of income from government markets abroad, especially in developed countries. Therefore, the UK government does not contribute much actual business volume, and the company's To B, channel, and C-end businesses in the UK are not much affected.
Public and private funds are "collateral damage"
Hikvision has always been a target for various funds. With the recent sharp decline in stock prices, these public and private funds are the first to be hit.
Data shows that as of the end of March this year, Baiyi Private Equity, with 41.42 million shares, ranked as the tenth largest circulating shareholder of Hikvision. This private equity firm became a new circulating shareholder of the listed company in the fourth quarter of last year with 47.776 million shares. Based on the closing price of 34 yuan per share on December 30 last year, the market value of Chongyang Investment's holdings was 1.6 billion yuan.
After that, in the first quarter of this year, it reduced its holdings by 4.36 million shares. During this period, the average stock price of Hikvision was 38.61 yuan per share, and the amount of cash realized by Chongyang Investment was about 168 million yuan.
Now, Hikvision's stock price has fallen to 32.36 yuan per share. From this perspective, it is highly likely that Chongyang Investment did not gain much.
In addition to private equity, public funds are also affected.
Choice data shows that as of the end of March this year, a total of 629 funds have heavily invested in Hikvision, with a market value of about 24.9 billion yuan.
There are 12 fund companies that hold a market value of more than 500 million yuan in Hikvision products, namely Yifangda Fund, Jiashi Fund, ICBC Rui Xin Fund, Huaxia Fund, Nanfang Fund, Tianhong Fund, Qianhai Kaiyuan Fund, Huaan Fund, Bosera Fund, Hongde Fund, Xingquan Fund, and Dongfanghong Asset Management. The market value of the products under these 12 fund companies are 2.9 billion yuan, 2.4 billion yuan, 1.3 billion yuan, 1.59 billion yuan, 669 million yuan, 750 million yuan, 1.5 billion yuan, 680 million yuan, 700 million yuan, 600 million yuan, 2.2 billion yuan, and 730 million yuan, respectively.
Looking at the fund managers, there are no lack of star fund managers in the market.Among them, in Xingquan Fund's holding of up to 2.2 billion yuan, Xie Zhiyu accounts for the majority. Specifically, Xie Zhiyu of Xingquan Fund, along with Ye Feng and Dong Li, managed the Xingquan Hechun Mixed (LOF) and Xingquan Trend Investment Mixed (LOF) respectively. As of the end of the first quarter of this year, the number of shares held in Hikvision were 32.63 million and 12.98 million, with a holding market value of 1.39 billion yuan and 550 million yuan, respectively.
In addition, Gu Kai from Harvest Fund, Qu Yang from Qianhai Kaiyuan, Rong Ying from Huaxia Fund, and Liu Yan Chun from Jing Shun Great Wall also without exception "got hit". Choice data shows that as of the end of the first quarter of this year, these fund managers managed 3, 8, 1, and 2 funds, holding 8.7264 million, 27.2539 million, 7.6371 million, and 26.6 million shares of Hikvision, with a holding market value of 370 million yuan, 1.1 billion yuan, 330 million yuan, and 1.1 billion yuan, respectively.
Security giant's growth dilemma
The security market has entered an adjustment period in recent years, and Hikvision, which is mainly based on traditional business, is inevitably affected.
In 2022, Hikvision's net profit declined for the first time in nearly a decade. The annual report shows that last year, Hikvision achieved a revenue of 83.166 billion yuan, a year-on-year increase of 2.14%; the corresponding net profit attributable to the mother company was 12.837 billion yuan, a year-on-year change of -23.59%.
Since the beginning of 2023, the situation has not improved. According to the first quarter report this year, Hikvision achieved a revenue of 16.201 billion yuan in the first quarter of this year, a year-on-year decline of -1.94%; the net profit attributable to the mother company was 1.811 billion yuan, with a year-on-year change of -20.69%.
In fact, as early as 2018, Hikvision's overall revenue began to slow down, with a year-on-year growth rate of 18.93%. From 2014 to 2017, Hikvision's year-on-year growth rates were 60.37%, 46.64%, 26.37%, and 31.22%, respectively.
Some analysts believe that the above phenomenon is due to the saturation of traditional domestic security business.
The Security Exhibition Network points out that affected by the overall environment, the domestic economic growth slowed down to 6.1% in 2019. In addition, the governance rectification of security terminal users, the gradual saturation of industry equipment and software supply, and the security system integration industry growth rate will also slow down in the short term.
In the traditional security field, Hikvision divides its domestic business into three major business groups: PBG (Public Service Business Group), EBG (Enterprises and Institutions Business Group), and SMBG (Small and Medium Enterprises Business Group), corresponding to the G-end market (government), large B enterprise market, and small and medium enterprise market. According to the 2022 annual report, this saturated business accounts for 55.39% of Hikvision's revenue.Beyond the saturation of the security business, Hikvision also has to face competition from industry giants. For example, Huawei entered the security field in 2018. According to the latest news, in early May, Huawei has released four upgraded products: the ultra-low-light full-color spherical camera, the HP all-structured small tube camera, the Rubik's Cube 2.0 dual-eye full-color AI tube-shaped camera, and the AI ultra-low-light 3.0 electronic police card tube-shaped camera, which have attracted industry attention. Huawei's entry into the security field undoubtedly poses a certain threat to Hikvision. In addition, the "AI Four Little Dragons" are also following Huawei's pace. SenseTime Technology launched the second generation of 3D facial recognition smart lock solutions in 2021; facial recognition technology has been applied to urban security and traffic monitoring systems; CloudWalk Technology had already released its first high-performance AI camera in 2018...
Obviously, the second half of the security industry is full of thorns. However, Hikvision, with its keen sense of smell, has not been waiting to die but has been looking for new growth points for performance. Since 2015, Hikvision has encouraged internal employees to innovate and start businesses, established an internal innovation co-investment system, and successively established 8 innovative businesses (EZVIZ Network, Hikvision Robotics, Hikvision Automotive Technology, Hikvision Microvision, Hikvision Storage, Hikvision Huiying, Hikvision Fire Protection, and Hikvision Security Inspection, etc., as well as corresponding products).
From the current situation, the growth rate of this part of the business is relatively fast. Data shows that from 2020 to 2022, the revenues were 6.168 billion yuan, 12.271 billion yuan, and 15.07 billion yuan, respectively. However, the revenue proportion is only 18%.
In addition, among Hikvision's innovative businesses, EZVIZ Network has gone public on the A-share market, and Hikvision Robotics is on the verge of an IPO.
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