The company is a solution manufacturer based on big data, artificial intelligence and IoT sensing technology. The company provides software and hardware solutions for the digital transformation needs of thousands of industry scenarios: including sensing hardware products (such as cameras, audio, sensors, etc.) covering external information such as electromagnetic waves and mechanical waves; building a “cloud-side fusion, physical information fusion, and digital intelligence fusion” capability architecture based on cloud computing, big data and artificial intelligence technologies for data processing and analysis; under this framework, it has formed software and hardware digital solution capabilities covering more than 10 main industries and more than 500 segmented scenarios in nearly 90 sub-industries.

The operation is steady, shareholder returns are stable, and the intelligent IoT transformation is initially completed. With the development of video technology from security to IoT media, the company continued to transform and upgrade. The revenue scale grew from 0.7 billion yuan at the beginning of listing to 89.3 billion yuan in 23, and a cumulative cash dividend of 58.4 billion yuan from listing to 23 years. As video surveillance enters the intelligent stage, the company began intelligent IoT transformation: from establishing a cloud-side integrated three-tier computing architecture to integrating the product side (two pools, one bank, four platforms) and the business side (PBG/EBG/SMBG business group), combined with technology investments such as perception, big models and big data, the intelligent IoT transformation was initially completed in 23 years. The EBG enterprise business group accounted for 20% of the revenue share of the PBG public service business group, which became the main driving force for growth.

The industry is moving towards intelligence, opening up room for smart IoT growth. According to Roland Berger and Huawei data, the potential value of digitalization in manufacturing, financial insurance, retail, energy and electricity industries is more than 2 trillion US dollars; taking the manufacturing industry as a pillar industry, as an example, its industry is characterized by heavy assets and complex processes. It requires digital applications in various aspects such as manufacturing, transportation, and management to reduce costs and increase efficiency. The potential value of digital creation is 6 trillion US dollars. In this context, the unit value of enterprise intelligence solutions continues to increase; in the case of a new energy enterprise, the corresponding business value increased from 1.1 million yuan+ in 18 to a total of 25 million yuan+ in 21-22.

Focusing on intelligent elements, the company's intelligent IoT architecture and implementation capabilities create core competitiveness. Industry intelligence evolves from collecting data and establishing data relationships to mining the value of data. High-quality data and enabling tools are the core elements. Hikvision has accumulated high-quality data sources covering various industries based on comprehensive sensing products and fragmented scenarios. Based on cloud-side integrated computing architectures and AI open platforms, it provides users with “out-of-the-box” enabling tools. The introduction of superimposed models has improved the efficiency of solution implementation, and has finally established digital solution capabilities for thousands of industries based on software and hardware technology.

Profit prediction and valuation: We are optimistic about the long-term growth momentum brought about by the company's operational resilience and industry intelligence. We expect net profit of 16.3/18.1/19.5 billion yuan (YoY +16%/+11%/+8%) in 24-26; through relative valuation, the company's reasonable target price is 36-40 yuan, with 21%-33% premium space compared to the current stock price, maintaining a “superior to the market” rating.

Risk warning: Macroeconomic growth falls short of expectations, and overseas demand growth falls short of expectations.