"Recently, Haikang disclosed the semi annual performance report of 2019. In the first half of the year, it realized an operating revenue of 23.923 billion yuan, a year-on-year increase of 14.60%; The net profit was 4.217 billion yuan, a year-on-year increase of 1.67%.
Previously, according to the first quarter report of Haikang, the net profit in the first quarter fell by 15%, showing the first negative growth in history, which triggered concerns about the growth of Haikang's performance; In May this year, it was also reported that Haikang was included in the prohibited list by the United States, which once again reminded the risks faced by its overseas business.
In the response to the first quarter report and the research of securities institutions, Haikang showed its consistent steadiness and confidence. "The negative growth in the first quarter was the first time in history for Haikang, but from the situation of orders and business opportunities in hand, the number of business opportunities was growing. The number of business opportunities decreased straight in the second half of last year. The number of business opportunities became better in March this year, which is the source of our confidence."
The release of the semi annual report responded to the previous decline with growth data.
In the semi annual report, Haikang also outlined its business direction and several key points in the first half of the year. The first is to strengthen R & D investment. At the same time, the previously proposed "Ai cloud edge integration" computing architecture and "material information integration" data architecture continue to be implemented.
Thirdly, adhere to the previous business structure optimization, that is, PBG (public service group), EBG (Enterprise Group) and SMBG (small and medium-sized enterprise group) effectively coordinate internal resources.
In addition, in response to the international situation and overseas risks, consolidate overseas channels, pay close attention to areas where the risk of uncertainty in the business environment is rising rapidly, and actively take countermeasures.
In addition to the original business, Haikang also takes fluorite business and robot business as innovative business, and continues to make profits. Other innovative businesses such as automotive electronics and storage business are also growing rapidly.
After the release of the semi annual report, APG and other securities institutions conducted research on Hikvision, and Ms. Huang Fanghong, senior deputy general manager and Secretary of the board of directors of Hikvision answered relevant questions.
Q: In the first half of the year, Hikvision's innovative business increased by 50%, compared with 12% in the main security industry. Can you explain the relevant data in detail? In addition, what is the expected development trend in the third quarter?
A: There is no split business data in the first quarter report. Let's roughly explain that although the innovative business in the first quarter was affected, the overall data is much better than that of the security business.
As a result of our low revenue growth and negative net profit growth in the first quarter, security, as our main business, accounted for about 95%, which was only due to our poor overall performance.
As for the third quarter, the net profit growth forecast we now give is a positive trend. At the same time, we hope to achieve the goal of annual revenue growth of more than 20%.
Q: Among all the business matrices, which business is more favored by Hikvision in the second half of the year?
A: From the perspective of industrial development space, we will vote for EBG because it represents the trend of social efficiency improvement.
SMBG is a distribution channel and has many improved business opportunities. It was obviously better in the second quarter. In short, PBG, EBG and SMBG cannot fall behind. If any BG falls behind, the overall business may not be able to drive. However, if it is a little faster, the expectation of EBG is higher.
Q: What is the situation of EBG business in the first half of the year?
A: From the perspective of revenue growth, the EBG sector performs well in several businesses.
This is related to the changes of the whole market, because there is a lot of demand space in the whole EBG market, which has not been seen in the past, or some new demand now.
For example, in the recent hot garbage classification, there is usually a monitoring probe around the dustbin. No matter which manufacturer the probe is used, it is a new demand for the whole market and increases the market capacity. Similar demand continues to arise, and the space of the industry is opening up rapidly.
For EBG, with the development of technology, the continuous enrichment of products, the improvement of product performance and the expansion of functions, many new opportunities have been added to our business.
Relatively speaking, PBG is a more traditional public service business. Compared with the past decade and the next decade, the main responsibilities of government management will not change substantially.
This is the reason for the large difference between the two industries at present. We expect the growth rate of EBG to be greater.
Q: Will emerging markets, including waste classification, bright cooking stoves and unmanned charging, become the new revenue growth point of Hikvision?
A: The company is doing sp (strategy plan) every year. We are constantly studying the business opportunities and needs in all aspects of the market. Combined with the macro trend of the market and the company's internal understanding of its own industry, we are studying which needs really have a substantial impact on the company and which only produce some increment.
At present, we still believe that the general trend of continuous and strong demands for safety and prevention in domestic and overseas markets has not changed.
At the same time, there are many leading aspects in China, including garbage classification, bright cooking stove, transformation of high-speed toll gate, etc., which have been separated from the demand for simple security, but in improving efficiency.
From the perspective of efficiency improvement, we have always been much larger than the concept of security itself, which can be carried out at every point, and Haikang's specialty is precisely here.
Because our product line is particularly rich, we can produce applications in various fields. Our products are flexible and can be customized and adjusted at any time.
When a new application field is born, no matter how much share we can get, we certainly have a great opportunity to participate. From this perspective, there is a lot of application space outside the traditional security field, so we have confidence in the industry.
Of course, it is difficult to analyze this industry, and it is difficult to see that a specific demand has made earth shaking changes to the industry. Our industry is such a fragmented scene. What we need to do is to do a good job in these fragmented scenes one by one, lay a solid foundation and move forward bit by bit.
Q: In the case of relatively complex overseas markets, Hikvision can still achieve positive growth, but it is not easy. Can you share the main growth points of overseas business?
A: This problem may be difficult to predict, because the variables of China US relations are large. From March to now, it is expected to be good and bad, so it is really difficult for enterprises to make predictions.
From the current situation in the United States, it is difficult to eliminate the conflict between values and culture in a short time, so we prefer a slightly pessimistic prediction; The current national defense authorization act of the United States is already an effective bill, and it is difficult to make a substantial change at present.
As for other markets, there were many negative factors in the first half of this year, such as Turkey and Pakistan, which had a great impact due to exchange rates; Argentina and other countries are affected by politics and economy, so the business situation is not so ideal.
On the positive side, we see that with the process of urbanization in developing countries, the flow of personnel is accelerating, the demand for public security management in the whole country is increasing, the policies and regulations in the field of monitoring are relatively loose, and the number of industry practitioners is also increasing.
Therefore, the security needs of developing countries, such as India, Vietnam, the Philippines and some Eastern European countries, are still relatively optimistic and obviously moving upward.
The current situation in developed countries is difficult to predict. The demand for monitoring in these markets is also relatively mature, and some demand has entered the cycle of product upgrading and improvement; At the same time, it has high requirements for ideology, so we see both some optimistic factors and some resistance in developed countries.
Judging from various factors, we are still confident in the overseas market in the long run, but we see a lot of negative factors in the short term.
Q: Panasonic and Schneider spun off their security business to an independent PE company in June. Why did they choose this time point to do some actions?
A: I haven't paid particular attention to these two companies. In the past five years, the competitiveness of Japanese, Korean and European and American brands in the field of security has been declining, so they are gradually reducing their scale.
In the second half of 2018, due to the impact of some non market factors such as the Sino US trade war, including the restrictions of the US Defense Authorization Act, some Chinese companies, Japanese and Korean companies and Taiwan companies seized the opportunity to seize the gaps that may be left in some markets.
From the perspective of commercial competition, we think these companies are not particularly competitive in essence, but now there may be some growth opportunities because non market and non-commercial factors are working.
These things are beyond our control, so it may take a while, but I believe it can't be like this for a long time.
As for Panasonic and Schneider's considerations and plans, it's hard for me to judge.
Q: How to view the competition of Huawei security? Has the relevant business encountered some obstacles, especially in the Guangdong market?
A: The performance of our Guangdong business center in the past two years is good, and the performance ranking within the company is also relatively high. Government projects are bound by the bidding law. The rules on government procurement are relatively fair and clear, and everyone has the opportunity to participate fairly.
Where Huawei can do business, we can also do it. Conversely, in Zhejiang, we are not the only Zhejiang enterprises doing business, and Huawei is also doing it. Therefore, government procurement is still fair and gives everyone the opportunity to participate. How we do it depends on ourselves.
Compete with Huawei. However, we still think Huawei is an excellent company. In China's science and technology enterprises, if we talk about learning objectives, we should still learn from Huawei.
Huawei has done a good job in group operations and scale effects. We should strive to learn from the advantages of others, including the excellent practices of other friends in the industry. We will maintain an open attitude in business, technology and company management.
Q: We can see now that in fact, the whole AI has strong demand at the PBG level, but from a series of cases shown by Haikang at the EBG level, AI may not be completely out of the scope of safety. When do you think AI will have a better rapid landing at the EBG level?
A: It's really a spark now.
We EBG are conducting business cooperation with leading users in various industries. From real estate, various energy enterprises, intelligent buildings, parks, etc., the dimensions are particularly rich and scattered. It is also difficult to see that once a certain type of business is launched, it will form a mode that can be carried out only by replication. This is a real state of the industry, that is, it is very fragmented.
Like the site real name system, to some extent, it is still biased towards the needs of safety management, but it also contains a strong need to improve efficiency. Because of the large number of migrant workers working on the construction site, it is difficult to manage hundreds of thousands of people on a construction site by several people.
According to statistics, there are more than 700000 construction sites in China. The real name system of construction sites uses intelligent algorithms to identify the identity of workers, including whether to wear safety helmets. On the one hand, it is the demand of safety management, on the other hand, it is the demand of improving management efficiency. The boundary between the two is not so clear.
The need to improve efficiency has accelerated the development of AI business to a certain extent. The current site management is not the manual registration and man-to-man management in the past. There should be more and more applications like this.
At present, it is really difficult to find cases of rapid replication and universal promotion, because this industry is a small particle fragment business.
Q: As for AI landing, PBG is not a big problem, and EBG may still have some resistance. From the perspective of Haikang, what is the biggest threshold and bottleneck for AI to be used in the industrial enterprise sector? The effect is not good enough, the cost does not come down, or the customized scheme of the application is relatively strong, and there is no way to balance with the expansion speed?
A: At present, what I know is whether AI is expanding in industrial enterprises or in the investment stage. Because products have a wide range of applications, it is a gradual process to invest enough human resources in various fields.
Our cost control is also very strict, so instead of spreading out all at once, we implement gradual investment, that is, we have the opportunity to increase investment, have more opportunities and increase investment.
For us, it's better to be half a step ahead of others in rhythm. It's best to have a momentum, products are ready and orders come in.
If you are one or two steps ahead of others, you are much ahead. You have developed in the market for a long time and spent a lot of expenses, but you don't see the market volume for a long time, this feeling is very bad.
So this is a matter of rhythm. We control the rhythm. From the aspects of products and technology, we still have confidence in ourselves.
Q: In terms of revenue splitting, the growth rate of "other products" is close to 40%. What does this business refer to? Are there any more specific figures?
A: Other products contain a large number of products. We put some non video monitoring products, such as access control alarm and outsourcing products (such as hard disk) in other products.
For business classification, this is inherited from the previous report structure. We will also make some business splitting adjustments in the future.
From the perspective of alarm and access control products, we acquired a British alarm company three years ago and expanded the product line; Access control intercom may also be a good industry in China. Now, after using face recognition technology for access control, the needs of many applications can be derived.
As for the hard disk, it's relatively simple. It's just for supporting the project. If the customer needs it, we'll sell more. If the customer doesn't need it, it doesn't matter if we don't sell it.
In the first half of the year, the gross profit of other products fell, which is due to the faster growth of hard disk sales.
Q: You said before that you planned to split the revenue structure, and then change it to be presented according to three business divisions. In the first half of the year, in fact, we still maintained the original division method. You can see that the central control equipment still maintained a relatively high growth rate. Can you briefly introduce the potential of this area.
A: With regard to the presentation of the report, I hope to promote the company to make some adjustments and changes in this regard and make the presentation of the report consistent with the current business layout of the company. Because simply splitting the business from the product dimension will cause a lot of confusion, as if we were just a company selling products.
In addition, as for the product category of center control, there are many products in it, and the data center is placed in this category. Some analysts may want to use the growth of this category to judge whether the company's strategic business is developing well.
It is undeniable that some of our AI products do sell well. We are better than others
Our other product:
