Hikvision: Shifting from a growth perspective to a survival perspective

Hikvision, a leading security company, mentioned that the focus this year should be shifted from a growth perspective to a survival perspective.

Due to the impact of the epidemic, Hikvision's initial supply pressure in February has gradually recovered to full production, and upstream supply is no longer in short supply. However, on the corporate demand side, the domestic impact is more direct. Consumer activities that rely on travel and meeting have stopped. Although it is gradually easing at this stage, the operating conditions of small and medium-sized businesses have not yet truly recovered. Hikvision's management believes that it will take at least another month for domestic corporate demand to recover.

The impact from overseas has just begun. The demand side is the same as the initial stage in China, where consumption cannot be carried out. At the same time, the logistics environment is also restricted. Even if there is demand, delivery is controlled. Hikvision management expects that overseas demand will continue to affect at least one quarter.

For most corporate customers, security business is productive consumption of the enterprise and is a guarantee product. Although Hikvision is not directly impacted by the epidemic, due to the impact of the epidemic on its downstream customers, it is expected that the impact on corporate security business in the first half of the year will be relatively large.

In addition to corporate customers, there is also uncertainty in government business. According to the company's management, this year the government's attention is on helping local enterprises reduce costs, so without additional spending, government demand will be weaker than in the previous two years.

However, given the market's expectation of a subsequent loose fiscal policy, continued observation is needed. In response to weak downstream demand, management said that this year, it will no longer aggressively invest in product production for businesses and regions with unclear demand to prevent the consumed cash from turning into inventory.

The epidemic has had a negative impact on demand, but it has also brought new opportunities. The previously niche infrared thermal imaging market has experienced a brief boom. Hikvision's thermal imaging products currently have a monthly shipment capacity of 100,000 units, with an annual production capacity of 1 million units.

Slightly different from other military products, Hikvision's product line is to enter the civilian market with an economical price range of 1,000 to 10,000 yuan. Based on the cost-effectiveness, infrared products may become similar to fire-fighting products in the medium and long term and become part of the company's strategic reserve.