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Surveillance Firm Dahua Technology Reports 1H 2020 Results: Profits Up 10.5%
COVID-19 and China
Image credit: Dahua Technology official website

Zhejiang Dahua Technology company (002236:CH) released its semi-annual report today, August 21. The company generated CNY 9.8 billion revenue in 1H 2020, an 8.96% reduction on a year-on-year basis. However, the net profit increased by 10.5% on the same basis, reaching CNY 1.4 billion.

Zhejiang Dahua Technology Company designs, manufactures and sells electronic products and telecommunication devices. It also researches and creates electronic security solutions for transportation, education, retail and commercial markets.

The company set up a fiduciary called Dahua Storage Technology (Chinese: 大华存储科技公司) with 51% ownership in February 2020. The controlled firm produces solid-state drives. Since the development of IoT and cloud computing require faster data processing speed, the newly-established company is helpful for Zhejiang Dahua Technology to better control its industry chain and to expand its product line. In April this year, Zhejiang Dahua Technology announced to repurchase shares using more than CNY 200 million and less than CNY 400 million. The movement shows that Dahua has confidence in its profitability.

Telecommunication, computers and electronics sectors generated income for most of the time in 1H 2020 while the market index (000300:SHE) was a loss. At the beginning of 2020, the consumer electronics sector index surged 45% and the valuation then persisted to be high. At the end of July, the PE ratio of the electronics industry was as high as 48. The market remains positive towards it as 5G is gradually applied in all aspects of our life.

After the semi-annual report was released, the stock price of Zhejiang Dahua Technology dropped today slightly – by 0.47%. The shrink in market size mainly happened around 10 in the morning and then the share price decreased insignificantly afterward until the market closed.

ANALYST
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