On the afternoon of October 11, Hikvision (002415. SZ) employees recently revealed that the company is undergoing large-scale organizational adjustment in the near future, and the 32 R&D areas have shrunk to 12, "only a few core areas will be retained, and the rest will be optimized, which is expected to involve more than 1,000 people." ”
Regarding this adjustment, Hikvision responded: "The company does not have large-scale layoffs, it is a business strategy adjustment, and it is necessary to optimize the R&D strength of the headquarters and key sales cities, so it has adjusted some regional job settings accordingly." ”
As of the close of trading on October 11, Hikvision reported 29.63 yuan / share, a decrease of 5.55%, which has been halved from 68 yuan / share in July 2021, and the latest total market value is 273.58 billion yuan.
The performance has been under pressure year after year
As soon as the news of Hikvision's "big layoffs" came out, it rushed to the hot search, causing heated discussions among netizens.
"It's too hard now, and the industry leaders are also laying off employees. The government and state-owned enterprises have no money and no cases, and the monitors are already everywhere, and they don't have to be replaced if they can still be used. Many netizens speculated that in order to cope with this challenge, Hikvision may have to take measures such as layoffs to optimize costs and structure.
Haikang Satellite TV started with monitors, took the high-speed train of urban infrastructure, and achieved the miracle of 36% annualized revenue growth and 31% annualized profit growth from 2010 to 2019, and is known as a security giant.
At present, Hikvision is gradually transforming from a manufacturer of security products to a practitioner of digital scenarios, using a variety of new technologies to solve the ever-changing difficulties and diverse needs of different types of customers in multiple industries.
The business may seem complex, but in a word, it aims to reduce costs and improve quality and efficiency for customers. However, in recent years, this business has become more and more difficult to do.
First, the demand in the market environment is weak and the competition in the industry is intensifying; Second, the government and enterprises are also downgrading consumption, "more willing to choose cost-effective products, unlike in the past, they are more willing to try innovative and high-performance products, and to a certain extent, low-margin businesses are now more attractive."
In the first half of 2024, the company's performance still failed to rebound, achieving a net profit attributable to the parent company of 5.064 billion yuan, a decrease of 5.13% over the same period.
Among them, the revenue in the second quarter was 23.4 billion yuan, a year-on-year increase of 9.5%, but this growth rate was lower than market expectations. The net profit attributable to the parent company in the quarter was 3.1 billion yuan, down 10.7% year-on-year, which was also lower than market expectations.
At the business level, while the performance of the large and medium-sized enterprise group (EBG) and the small and medium-sized enterprise group (SMBG) increased, the growth was not significant. The performance of the company's domestic public service group (PBG) experienced a near-double-digit decline, which had a large negative impact on the overall performance.
R&D "hard-hit areas"
A few days ago, a Hikvision employee revealed that the company is undergoing large-scale organizational adjustment recently, and said that the R&D department is the hardest hit area, "Hunan and other regions are gone, but Hangzhou and other headquarters areas have not yet started." ”
This is not unfounded. At present, Hikvision's product matrix is constantly enriched, covering more than 300 sub-scenarios in ten major industries and more than 70 sub-industries such as urban management and municipal, metallurgy, construction, agriculture, and medical care. In recent years, the number of employees has continued to grow, and expenses have continued to rise, resulting in the growth rate of the company's profit side falling short of revenue growth for a long time.
While "reducing costs, improving quality, and increasing efficiency" for customers, how to "reduce costs, improve quality, and increase efficiency" for themselves has become Hikvision's top priority.
From the perspective of the division of labor, R&D technicians are the "hardest hit areas".
In recent years, Hikvision has continued to invest in additional R&D. In 2023, the company's R&D investment will be 11.4 billion yuan, an increase of 16.08% compared with 2022; In 2023, R&D investment accounted for 12.75% of operating income, an increase of 0.95 percentage points from 2022.
As of the end of 2023, the number of R&D personnel in the company is 28,479, accounting for 48.65% of the company's total headcount, an increase of nearly 8,000 compared with 20,597 in 2020.
In the breakdown of R&D expenses, the amount involved in wages and salaries is as high as 9.1 billion yuan, accounting for an increase in operating income year by year.
In fact, as of the end of 2023, Hikvision has 58,544 employees, an increase of 260 from the same period of the previous year. Among them, Hikvision's sales and production personnel generally showed a downward trend.
It is imperative to "move the knife" for R&D technicians.
What is the prospect?
For the development prospects of Hikvision, the market has shown a state of polarization.
There is a view that Hikvision's current management is second to none in the industry, and the industry in which it is located depends very much on the ability of management, and it can be said that management is Hikvision's biggest moat.
"Haikang's management ability is really strong, and it is a management miracle that such a fragmented business can manage business and finance so well."
There are also opinions that Haikang is a mediocre company, not doing top-level R&D, but relying on the mountains to eat the mountains and do some basic projects. In the past, the economy was good, and the government took a lot of projects; The economy is not good, and when you fight for strength and innovation, you will have a disadvantage.
"I have gradually moved away from Haikang since the first half of this year, and I will clear all of them in the near future, mainly because its long-term growth is worse than I imagined."
From the perspective of institutional shareholdings, once upon a time, Hikvision was once regarded as a core asset by many fund managers, but now it has disappeared from the top ten heavy stocks 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 of 359 million shares, accounting for 3.94% of the outstanding A shares. Compared with the end of the first quarter, 68 companies increased their positions and increased their holdings by 9,241,400 shares, and 115 companies decreased their positions and reduced their holdings by 24,353,400 shares.
Hikvision, is it really not fragrant?
From the perspective of the main business, the growth of domestic security business has seen a ceiling effect, and overseas business and innovative business may become the two pillars of future performance growth.
Today, Hikvision has incubated 8 innovative businesses, including EZVIZ Network, Hikvision Robotics, and Hikvision Microimaging, covering smart home, mobile robots and machine vision, infrared thermal imaging, automotive electronics, smart storage, smart fire protection, smart security, smart medical and other fields.
In the first half of 2024, the overall revenue of Hikvision's innovation business was 10.328 billion yuan, a year-on-year increase of 26.13%, accounting for 25.06% of the company's revenue, which has become the core growth engine of the company's performance.
Hikvision's overseas business has also gradually developed from the initial foreign trade model to the establishment of regional centers to carry out localized sales, and then to the establishment of sales and service channels all over the world, with the strategy of "one country, one policy" for localized marketing.
As of 2023, the company has set up 80 branches in the international and Hong Kong, Macao and Taiwan regions, providing localized services for more than 150 countries and regions.
In the first half of this year, Hikvision's gross profit margin of overseas business increased by 3% year-on-year, and its operating income also achieved a rapid growth of 17.51%. Among them, the proportion of developed countries and developing countries has reached the level of 37 open, and there is still a broad market space in Latin America, Southeast Asia, South Asia, Central Asia, the Middle East, and Africa in the future.