20211025-招银国际-海康威视-002415.SZ-Resilient_3Q21_with_high_inventory_buffer_9页_1mb
报告摘要
Hikvision (002415 CH) Company Update Summary
Core Content Overview
Hikvision, a leading Chinese security and surveillance technology company, reported FY3Q21 results that were in-line with expectations. The company achieved revenue growth of +22% YoY to RMB21.7bn and operating profit growth of +24% YoY to RMB4.8bn. This performance was driven by innovative business growth of +53% YoY to RMB3.7bn, which now contributes 17% of total revenue.
Despite a weakening macro environment in China, which may impact EBG (Enterprise Business Group) in FY2H22 due to declining construction activity, Hikvision's high inventory levels helped mitigate potential disruptions from power cuts. Inventory reached a record high of RMB19.1bn, up +26% QoQ and +71% YoY, with an inventory-to-sales ratio of 0.88, still lower than the level in 1Q20.
The target price for Hikvision was revised down to RMB76.25 from RMB79.62, based on an unchanged 36x FY22 P/E ratio, which is 50% above its 3-year mean. The analyst maintains a BUY rating, citing improved gross margins, emerging AI growth drivers, and the spin-off of smart home business (Ezviz Network) to the STAR board as positive developments.
Key Financial Highlights
Earnings Summary (YE 31 Dec)
| Metric | FY19 | FY20 | FY21E | FY22E | FY23E |
|---|---|---|---|---|---|
| Revenue (RMB mn) | 57,658 | 63,503 | 80,796 | 94,686 | 108,649 |
| YoY growth (%) | 16% | 10% | 27% | 17% | 15% |
| Net profit (RMB mn) | 12,415 | 13,386 | 16,454 | 19,775 | 22,833 |
| EPS (RMB) | 1.33 | 1.43 | 1.76 | 2.12 | 2.45 |
| YoY growth (%) | 8% | 8% | 23% | 20% | 15% |
| P/E (x) | 41.7 | 38.7 | 31.5 | 26.2 | 22.7 |
| P/B (x) | 11.5 | 9.6 | 8.2 | 8.0 | 7.9 |
| Dividend Yield (%) | 0.01 | 0.01 | 0.03 | 0.04 | 0.04 |
| ROE (%) | 30% | 27% | 28% | 31% | 35% |
FY3Q21 Results
- Revenue: RMB21,727mn (+22% YoY, +9% QoQ)
- Gross Profit: RMB10,078mn (+26% YoY, +10% QoQ)
- Gross Margin: 46.4% (+1.5 pct pts YoY, +0.4 pct pts QoQ)
- Operating Profit: RMB4,826mn (+24% YoY, +24% QoQ)
- Operating Margin: 22.2% (+0.3 pct pts YoY, +2.6 pct pts QoQ)
- Net Profit: RMB4,484mn (+18% YoY, +4% QoQ)
- EPS: RMB0.48 (+18% YoY, +4% QoQ)
Earnings Revision
- Sales: No change for FY21E, slight decrease for FY22E and FY23E
- Gross Profit: Slight decrease for FY21E, slight decrease for FY22E, slight increase for FY23E
- Operating Profit: Decrease for FY21E, decrease for FY22E, slight decrease for FY23E
- PBT: Decrease for FY21E, decrease for FY22E, slight decrease for FY23E
- Net Profit: Decrease for FY21E, decrease for FY22E, slight decrease for FY23E
- EPS: Decrease for FY21E, decrease for FY22E, slight decrease for FY23E
Business Segments and Revenue Breakdown
- Core Camera Solution: Dominates revenue with 82% in FY21E, growing from RMB52,130mn to RMB66,335mn
- Construction: Contributes 2% of revenue, growing to RMB1,670mn
- Smart Home Business: Grew to 5% of revenue in FY21E, reaching RMB4,337mn
- Robotics: Increased to 3% of revenue in FY21E, reaching RMB2,825mn
- Other Innovative Business: Grew to 7% of revenue in FY21E, reaching RMB5,628mn
Valuation and Key Ratios
| Metric | FY19 | FY20 | FY21E | FY22E | FY23E |
|---|---|---|---|---|---|
| P/E (x) | 31.5 | 26.2 | 22.7 | 26.2 | 22.7 |
| ROE (%) | 28.2 | 31.0 | 35.2 | 31.0 | 35.2 |
| Revenue Mix | |||||
| - Core Camera Solution | 90% | 88% | 82% | 78% | 77% |
| - Smart Home Business | 4% | 5% | 5% | 6% | 7% |
| - Robotics | 1% | 2% | 3% | 5% | 5% |
| - Other Innovative Business | 2% | 3% | 7% | 9% | 10% |
Key Ratios
- Gross Margin: 46.2% in FY21E, expected to rise to 46.8% in FY23E
- Operating Margin: 20.8% in FY21E, expected to rise to 22.4% in FY23E
- Net Margin: 20.4% in FY21E, expected to rise to 21.0% in FY23E
- Current Ratio: 2.79 in FY21E, expected to decline to 1.98 in FY23E
- Inventory Turnover Days: 54 in FY21E, expected to increase slightly to 56 in FY23E
- Receivable Turnover Days: 128 in FY21E, expected to remain stable
- Payable Turnover Days: 81 in FY21E, expected to rise to 105 in FY23E
Analyst Recommendations
- Rating: BUY (Maintain)
- Target Price: RMB76.25 (down from prior RMB79.62)
- Price Performance:
- 1-month: +0.3%
- 3-months: -18.1%
- 6-months: -10.9%
- 12-month Price Performance: As per the chart
Key Risks
- Raw material shortages may persist
- Higher logistics costs impact margins
- Weaker-than-expected demand in certain sectors
- Macroeconomic slowdown affecting SMBG (Small and Medium Business Group) in FY2H22
Operating Model and Growth Drivers
- Growth Drivers: AI integration, expansion into new industries (now covering 70 industries), and spin-off of smart home business to STAR board
- Innovative Business: Continued expansion and growth, contributing 17% of revenue in FY3Q21
- Inventory Strategy: Maintained high inventory levels to mitigate supply chain risks
Shareholding and Stock Data
| Metric | Value (RMB) |
|---|---|
| Market Cap (mn) | 517,577 |
| Average 3 months turnover (mn) | 2,165.40 |
| 52-week High/Low | 70.48 / 38.92 |
| Total Issued Shares (mn) | 9,336 |
Shareholding Structure
- CETC: 38.9%
- Kung Hong Ka - Chairman: 10.3%
Related Reports
- China AI surveillance - Gov't projects picking up, power cuts impact limited - 12 Oct 2021
- Hikvision (002415 CH) - Innovative business gaining momentum - 26 Jul 2021
Conclusion
Hikvision demonstrated resilience in FY3Q21, driven by strong performance in innovative businesses and high inventory levels. Despite macroeconomic headwinds, the company is expected to maintain growth, with a BUY rating and a revised target price of RMB76.25. The analyst highlights AI integration, new business segments, and spin-off strategy as key growth drivers, while lower sales and higher costs are noted as potential risks.
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