Incidents:
Hikvision released its 2023 annual report and 2024 quarterly report: On April 19, 2024, Hikvision released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 89.34 billion yuan, up 7.4% year on year; realized net profit of 14.11 billion yuan, up 9.9% year on year; in the first quarter of 2024, the company achieved revenue of 17.82 billion yuan, up 10.0% year on year; achieved net profit of 1.92 billion yuan, up 5.8% year on year.
Our point of view:
PBG continues to be under pressure. Looking at the EBG-driven growth classification, the public service business group PBG achieved revenue of 15.35 billion yuan, a year-on-year decline of 4.8%, mainly due to a clear decline in business revenue in the public security industry in the context of an overall decline in government investment; the enterprise service group EBG achieved revenue of 17.85 billion yuan, an increase of 8.1% year on year, mainly due to industrial and commercial enterprises, energy and metallurgy, education and teaching, financial services and other industries all achieved good growth; SMBG of the small and medium-sized enterprise business group achieved revenue of 12.68 billion yuan, the same Compared to 1.5%, it gradually stabilized, reflecting the trend of improving the confidence of small and medium-sized enterprises.
Overseas revenue continued to accelerate, and the innovative business maintained rapid growth. In 2023, the main overseas business revenue was 23.98 billion yuan, up 8.8% year on year, and the growth rate increased quarterly; revenue from the innovative business was 18.55 billion yuan, up 23.1% year on year, thanks to the synergy between Hikvision and innovative business subsidiaries.
Gross profit is expected to remain stable. Net profit due to mother in 2024 is estimated at 160-17 billion yuan, and the company's overall gross margin in 2023 is 44.4%. The company expects to continue to focus on cost reduction and maintain stable gross margin in 2024. At the same time, the company expects a small amount of personnel investment in 2024, and the overall workforce growth will not exceed 5%. The company expects the domestic economy to gradually stabilize, and the company's performance may show a trend of low to high. The company hopes that net profit returned to mother for the whole year will be 160-17 billion yuan.
2024Q1's performance is impressive, and there is room to continue to empower digital transformation. In 2024Q1, the company achieved revenue of 17.82 billion yuan, an increase of 10.0% over the previous year. At the same time, it achieved net profit to mother of 1.92 billion yuan, an increase of 5.8% year on year, and realized net profit without return to mother of 1.76 billion yuan, an increase of 13.3% year on year. We believe that the digital transformation of future enterprises will provide considerable room for the company's future business growth.
Profit forecast and investment rating Taking into account the trend of slow recovery in the overall economic environment, we adjusted the profit forecast. The company's 2024E/2025E/2026E revenue is 98.9 billion yuan/112.93 billion yuan, net profit to mother is 17.3 billion yuan/20.3 billion yuan/23.9 billion yuan, corresponding EPS is 1.85 yuan/2.17 yuan/2.56 yuan respectively, and the corresponding P/E is 17.32/14.77/12.53x, respectively. Considering the company's leading position in the industry, it is expected to be recovering Be the first to benefit and maintain a “buy” rating.
Risks suggest that macroeconomic recovery falls short of expectations; trade conflicts between China and the US have intensified; innovative business growth falls short of expectations; overseas business risks; exchange rate risks; and increased market competition.