Hikvision’s gross profit margin was 43.1% in the period, slightly down compared with last year, mainly due to surging raw material costs
On August 15, 2022, Hikvision Digital Technology (002415: SH), the well-known Chinese maker of surveillance equipment, announced not to pay cash dividends regarding an 11% decline in net profit from January to June this year due to the increased cost of stockpiling parts amid supply chain concerns. Its stock price dropped 7% after the news was released.
According to the earnings report of Hikvision, its net profit reached CNY 5.8 billion (USD 854 million) in the six months ended June 30, 2022, lower than the level in the same period of 2021 (CNY 6.5 billion). Operating income reached CNY 37.3 billion (USD 5.5 billion), up 9.9% year over year. Mainly because of a significant increase in outlays on procurement and stockpiling, Hikvision’s net outflow of operating cash was CNY 2.2 billion, versus a net inflow of nearly CNY 2 billion a year earlier. The value of its inventories was CNY 20.7 billion at the end of June, up almost 37% compared with a year ago. Because of supply chain concerns, Hikvision will maintain a high level of inventory in the long term, an executive said on the firm’s earnings conference call. Hikvision ended today at CNY 31.70 (USD 4.69), bringing the stock’s decline to 39% so far this year.
In the second quarter of 2022, the Chinese market was negatively impacted by Covid-19 outbreaks that impacted the company’s business, which picked up in June. Domestic revenue rose 1.6% to CNY 20.1 billion in H1 2022, while income from the firm's main overseas business soared 18.9% to CNY 9.7 billion. We could learn from the earning call that Hikvision's main business has a large base, so adding a new category or new customers cannot offset the pressure of overall weak demand brought about by the economic downturn. According to Ping An Securities, Hikvision’s gross profit margin was 43.1% in the period, slightly down compared with last year, mainly due to surging raw material costs. The firm’s smart home businesses, including Ezviz and Hikvision Robots, and Hikvision Automobile had overall revenue of CNY 7 billion, an increase of 25.6%, accounting for 18.8% of the overall operating income