Recently, Hunan Iron and Steel Group and Hikvision Digital signed a strategic cooperation agreement. This cooperation is beneficial for both parties to complement each other's advantages, share resources, and achieve a win-win situation.
Hikvision publishes the 2023 Annual Report and 2024 Quarterly Report. In 2023, the company achieved operating income of 89.340 billion yuan, +7.42% year-on-year; realized net profit to mother of 14.108 billion yuan, +9.89% year-on-year. With 2024Q1, the company achieved operating income of 17.818 billion yuan, +9.98% year-on-year; realized net profit of 1.916 billion yuan, or +5.78% year-on-year.
In 2023, the company's revenue and profit improved quarterly, and the innovative business grew rapidly. 2023Q4, the company achieved revenue of 28.065 billion yuan in a single quarter and net profit of 5.256 billion yuan to mother. The year-on-year growth rate of Q1-Q4 company revenue in Q1-Q4 in 2023 was -1.94%/3.06%/5.52%/19.71%, respectively, and net profit growth rates to mother were -20.69%/1.49%/14.00%/31.51%, respectively. The performance growth rate increased quarterly. By business, in 2023, the company's public service business group (PBG) achieved revenue of 15.354 billion yuan (-4.84% year over year); enterprise business group (EBG) achieved revenue of 17.845 billion yuan (+8.12%); enterprise business group (EBG) achieved revenue of 12.679 billion yuan (+1.46% year over year); overseas main business achieved revenue of 23.977 billion yuan (+8.83% year over year); innovative business achieved revenue of 18.553 billion yuan (YoY +23.11%).
2024Q1's revenue slightly exceeded expectations, and gross margin continued to rise. With 2024Q1, the company achieved revenue of 17.818 billion yuan (+9.98% year over year), and the growth rate exceeded the full year level of 23. The gross margin reached 45.76%, up 0.59 pct from 23Q1. The faster growth in non-net profit was mainly due to the impressive profitability performance of individual innovative businesses and storage businesses.
The company is gradually developing into an OT manufacturer, and big model technology is expected to be deeply empowered. The company continues to develop AIoT strategies, which mainly include businesses in the direction of security and digitization of scenarios. It is gradually becoming an OT (Operational Technology) manufacturer, providing digital products and solutions in many scenarios for the digital transformation of various enterprises. In addition, the Haikang Guanlan Big Model incorporates the company's accumulated practical experience in more than 10 main industries, nearly 90 sub-industries, and more than 500 scenarios into the model, helping AI technology quickly empower various industries.
Investment advice: We expect the company's 2024-2026 revenue to be 997.35, 1120.49, and 126.493 billion yuan, respectively, and net profit to mother of 169.08 billion yuan, 193.66 billion yuan, and 22.290 billion yuan respectively. The company is a leading domestic AIoT manufacturer, and artificial intelligence technology is expected to continue to empower the company's various businesses and maintain a “buy” rating.
Risk warning: downstream demand falls short of expectations; industry competition intensifies.