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As the "Security Mao" of the A-share market, Hikvision's market value once exceeded 600 billion yuan. However, after the stock price reached a peak of 67.94 yuan per share in July 2021, the company's stock price began to fall continuously. As of the close of August 13, Hikvision's stock price was only 27 yuan per share, with a total market value of 252.8 billion yuan.

At the same time, Hikvision's performance growth has also slowed down significantly. In 2022, the company's net profit fell 23.65% year-on-year to 12.83 billion yuan, which was the first decline in Hikvision's 12 years of listing; annual revenue was 83.174 billion yuan, a slight increase of 2.15% year-on-year, a record low.

Once upon a time, Hikvision was regarded as a core asset by many fund managers, but now it has disappeared from the top ten holdings of star fund products such as E Fund.

As of the first half of this year, a total of 309 funds held Hikvision, with a total holding of 359 million shares, accounting for 3.94% of the circulating A shares. Compared with the end of the first quarter, 68 funds increased their holdings by 9.2414 million shares; 115 funds reduced their holdings by 24.3534 million shares; 63 funds newly appeared in the main list, holding 19.0452 million shares; 137 funds disappeared from the main list, originally holding 5.151 billion shares.

Hikvision, is it really not popular anymore?

The Three Musketeers are in their twilight years

Tianyancha App shows that Hikvision has recently undergone industrial and commercial changes. Chen Zongnan resigned as the legal representative and chairman, and was replaced by the former general manager Hu Yangzhong. Xu Peng was added as the general manager, and several key personnel also changed.

Hikvision was established in November 2001 with a registered capital of approximately RMB 9.233 billion. It is jointly held by China Electronics HIK Group Co., Ltd., Gong Hongjia, Hangzhou Weixin Equity Investment Partnership (Limited Partnership), etc.

As of March 31, 2024, China Electronics Technology Group Corporation holds 36.55% of the company's shares and is the company's largest shareholder. China Electronics Technology Group Corporation is a central enterprise for which the State-owned Assets Supervision and Administration Commission of the State Council performs the duties of an investor. Through China Electronics Technology Group Corporation and China Electronics Technology Investment Holding Co., Ltd., it holds a total of 39.18% of the company's shares and is the actual controller of the company together with the State-owned Assets Supervision and Administration Commission of the State Council.

On August 2, Hikvision held the first meeting of the Sixth Board of Directors and agreed to elect Hu Yangzhong as Chairman of the Sixth Board of Directors and appoint Xu Peng as General Manager.

The founding team of Hikvision is the famous "Three Musketeers" of Huazhong University of Science and Technology, all of whom were born in 1965.

The eldest boss, "Chen Zongnan", is a technical tycoon who is very low-key. He is known as a rare expert entrepreneur in state-owned enterprises who has both technical and management capabilities.

Under his leadership, Hikvision established the path of "technological innovation" from the beginning. In 2010, Hikvision became the leader in domestic security. On May 28, 2010, the company was listed on the Growth Enterprise Market of the Shenzhen Stock Exchange with a total market value of 40.97 billion yuan.

After 2011, with the development of technologies such as the Internet, big data and the Internet of Things, China's urbanization shifted to smart cities. Based on its previous technological accumulation, Hikvision also turned to the development direction of networking, high definition and intelligence.

In 2015, Chen Zongnan studied the incentive mechanism of Zhejiang private enterprises and established an innovative business follow-up investment system within Hikvision. He also established eight innovative businesses in succession.

The second son, Hu Yangzhong, is also a technician, but he is more inclined towards technical management. Hu Yangzhong has been the general manager of the company for many years, like a very competent housekeeper. Since its establishment, Hikvision has had many unique and persistent business philosophies, such as: insisting on endogenous and organic growth, not relying on mergers and acquisitions or financing to develop new businesses; insisting on making money from technological innovation, making huge investments and continuous accumulation in the determined technical direction; insisting on making small and specific products or solutions, not making large and comprehensive overall solutions, and not pursuing platform-based monopoly status and profits; insisting on stable operations, not making gambling-style bets on new technologies and businesses, and maintaining a safe and good financial situation.

Among the three, Gong Hongjia is probably the most famous. In 2001, in order to help his old classmates Chen Zongnian and Hu Yangzhong realize their dreams, Gong Hongjia became an angel investor of Hikvision, investing a total of 2.45 million yuan, accounting for 49% of the shares, and becoming the second largest shareholder of Hikvision.

Since the lifting of the ban on the restricted sale of Hikvision's listed shares, Gong Hongjia has sold more than 30 billion yuan in cash, and is known as the "A-share cash-out king", "China's most powerful angel investor", and "China's version of Masayoshi Son". He has long been the second largest shareholder of Hikvision. Even though he has sold his shares in Hikvision many times, he still holds 10.32% of Hikvision's shares.

Many investors are worried that as the "Three Musketeers" enter their twilight years, Hikvision may have no successors.

From excellent to mediocre?

Hikvision initially engaged in businesses such as video boards and hard disk recorders, and later entered the video surveillance industry and gradually extended to the field of smart Internet of Things.

Today, Hikvision's product matrix continues to expand, covering more than 300 sub-scenarios in 10 major industries and more than 70 sub-industries, including urban management, metallurgy, construction, agriculture, and medical care.

Due to the fragmented nature of the security and IoT businesses, Hikvision's employee numbers have continued to grow and expenses have continued to rise in recent years, resulting in the company's profit growth rate being lower than its revenue growth rate for a long time.

In the opinion of an employee who has worked at Hikvision for nearly two years, the biggest advantage of working at Hikvision is job stability, while the biggest disadvantage is the large number of customized projects, high work intensity, and limited room for technical improvement.

"The company's performance continues to grow, and the probability of employees being laid off is very low. However, compared with Internet companies, the technical atmosphere in the department is relatively weak. The product technology has long been finalized, and it is difficult to have breakthrough innovations. Our work focuses more on responding to customer needs and customizing products. Employees have clear professional division of labor, and each person is only responsible for a certain aspect of the work, so it is difficult to access a complete knowledge system."

In fact, Hikvision has also realized the importance of "reducing costs and increasing efficiency". As of the end of 2023, Hikvision has 58,544 employees, an increase of 260 from the same period last year. In addition to R&D technicians, Hikvision's sales and production personnel are generally on a downward trend.

Judging from the financial data in recent years, Hikvision has encountered the challenge of "increased revenue but not increased profits".

From January to March 2024, Hikvision achieved operating income of 17.818 billion yuan, a year-on-year increase of 9.98%, and net profit of 1.916 billion yuan, a year-on-year increase of 5.78%. The net profit after deducting non-recurring items was 1.76 billion yuan, a year-on-year increase of 13.27%.

Although Hikvision's performance growth momentum is still continuing, the growth rate has slowed down significantly compared with the fourth quarter of last year. The revenue growth rate dropped by 36.51% month-on-month, and the net profit fell by as much as 63.55% month-on-month.

Hikvision's business strategy has always been "eating what's in the bowl, cooking what's in the pot, and planting what's in the field." In the wave of digital transformation, facing many competitors from home and abroad, whether Hikvision can maintain its leading position in many sub-sectors will also be a great test of the wisdom of the new board of directors and management.