20180820-广发证券_香港_-A-Share_Electronics_Sector_3页_561kb

A-Share Electronics Sector: Security Surveillance Industry Analysis

Core Content

The security surveillance sector is undergoing significant transformation driven by upstream technological innovation and cost savings. These factors are improving system capabilities, expanding application scenarios, and laying the foundation for sustainable development in the industry.

Main Development Stages

The security surveillance industry has evolved through four key stages:

1. Simulation Surveillance: Early stage with basic analog systems.
2. Digital Surveillance: Introduction of digital technologies, improving storage and replay efficiency.
3. Network HD Surveillance: Transition from analog to network-based video recording, enhancing coverage and image quality.
4. Intelligent Surveillance: Current phase, characterized by the integration of advanced technologies like deep learning and computer vision.

Key Technological Drivers

• Algorithm Advancements: Improved coding compression algorithms have enhanced storage and replay efficiency.
• Chip & Component Innovations: The shift from CCD to CMOS sensors and the localization of chips and lenses has led to significant cost reductions.
• Deep Learning Maturity: The maturation of deep learning algorithms is enabling new functionalities such as face recognition, vehicle identification, and behavior recognition, which are driving a new wave of intelligentization.

Intelligentization Opportunities

Intelligentization is expected to bring substantial improvements in the marginal utility of surveillance systems for customers and expand the range of application scenarios. This transformation, combined with new demand and business model upgrades, is anticipated to accelerate market growth.

Cost Trends in Smart Chips

The cost of deep learning chips is a major constraint for the widespread adoption of intelligent surveillance systems. However, the development of specialized SoC chips is expected to significantly reduce these costs, thereby promoting the adoption of intelligent surveillance technologies.

Investment Highlights

Leading manufacturers in the security surveillance sector are expected to benefit from:

• Economies of scale in R&D
• Quality customer bases
• Access to data resources
• New demand and business model upgrades

Recommended companies include:

• Hikvision Digital Technology (002415 CH)
• Dahua Technology (002236 CH)
• Fullhan Microelectronics (300613 CH)

Risks

• De-leveraging Policies: May impact domestic demand.
• China-US Trade Disputes: Could create challenges in overseas market expansion.

Sector Ratings

• Positive: Sector expected to outperform the Hong Kong Hang Seng Index by more than 10%.
• Neutral: Expected sector relative performance ranges between -10% and 10%.
• Cautious: Sector expected to underperform the Hong Kong Hang Seng Index by more than 10%.

Analyst Certification

The research analyst(s) certifies that:

1. All views expressed accurately reflect their personal opinions.
2. No part of their remuneration is directly or indirectly linked to specific recommendations in the report.

Disclosure of Interests

• GF Securities (Hong Kong) and its affiliates do not hold shares in the securities mentioned.
• No investment banking relationship with the companies in the past 12 months.
• Analysts and their associates do not serve as officers of the companies and have no financial interests in the securities.

Disclaimer

• This report is for informational purposes only and does not constitute an offer to buy or sell securities.
• The research report is intended solely for GF Securities (Hong Kong) clients.
• No action has been taken to permit distribution in jurisdictions where it may be unlawful.
• GF Securities (Hong Kong) accepts no liability for losses arising from the use of this report.
• Investment involves risks, and past performance does not guarantee future results.

Copyright

This document is copyrighted by GF Securities (Hong Kong) Brokerage Limited. No part of the materials may be copied or reproduced without prior written consent.