Tracking developments across tech supply chains, Tech Supply Chain Tracker

Tech Supply Chain Tracker

Tracking developments across tech supply chains

Equity Bottom-Up

Hon Hai Precision Industry / Equity Bottom-Up

<ul><li>Foxconn increases investments in Zhengzhou, shifting focus to electric vehicles from phones.</li><li>Home solar energy storage options becoming more affordable with incentives.</li><li>Luxgen's N7 LR deliveries to start in November, Hikvision's RD department facing layoffs.</li></ul>

Foxconn increases investments in Zhengzhou, shifting focus to electric vehicles from phones.Home solar energy storage options becoming more affordable with incentives.Luxgen's N7 LR deliveries to start in November, Hikvision's RD department facing layoffs.

Tech Supply Chain Tracker (15-Oct-2024): Foxconn doubles down on Zhengzhou investments.

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>Hikvision delivered a weaker than expected FY1Q23 with revenue of RMB16.2bn (-2% YoY) and net profit of RMB1.81bn (-21% YoY).</li><li>Sequential improvement in top-line (vs -9% YoY in FY4Q22) and GPM (+1.4 ppts YoY) were the bright spots.</li><li>Hikvision will focus on quality growth in FY23E with better control on project profitability, headcount (+10% YoY in FY22, stable in FY23E) and opex. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Hikvision delivered a weaker than expected FY1Q23 with revenue of RMB16.2bn (-2% YoY) and net profit of RMB1.81bn (-21% YoY).Sequential improvement in top-line (vs -9% YoY in FY4Q22) and GPM (+1.4 ppts YoY) were the bright spots.Hikvision will focus on quality growth in FY23E with better control on project profitability, headcount (+10% YoY in FY22, stable in FY23E) and opex. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Hikvision (002415 CH) – Taking time to recover

Thematic (Sector/Industry)

<ul><li>In our last report dated 17 October, we highlighted a list of 21 long ideas.</li><li>The basket (equal weighted) of these 21 stocks underperformed MSCI China index by 5.4ppt, delivering 0.2% return (vs MSCI China 5.6%).</li><li>China Meidong Auto and Innovent Biologics delivered over 20% of return, and 4 of our 21 long ideas outperformed the benchmark.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

In our last report dated 17 October, we highlighted a list of 21 long ideas.The basket (equal weighted) of these 21 stocks underperformed MSCI China index by 5.4ppt, delivering 0.2% return (vs MSCI China 5.6%).China Meidong Auto and Innovent Biologics delivered over 20% of return, and 4 of our 21 long ideas outperformed the benchmark.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

CMBI Research Focus List (November Edition) – Our best high conviction stock ideas

<div><div><div><ul><li>Hikvision and Dahua both reported worse than expected 3Q22 results as macro headwinds surge. </li><li>However, the diverging performance implies that Hikvision is more resilient than Dahua amid macro fluctuations. In particular, Hikvision revenue was up +3% YoY while that of Dahua was down -11% YoY in 3Q22. </li><li>We are surprised to see Dahua’s QoQ decline in revenue, considering the lockdown impact in 2Q22. </li></ul></div></div></div>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Hikvision and Dahua both reported worse than expected 3Q22 results as macro headwinds surge. However, the diverging performance implies that Hikvision is more resilient than Dahua amid macro fluctuations. In particular, Hikvision revenue was up +3% YoY while that of Dahua was down -11% YoY in 3Q22. We are surprised to see Dahua’s QoQ decline in revenue, considering the lockdown impact in 2Q22. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China AI – Margin under pressure amid weakening demand

<ul><li>Number of China public security projects bidding remained weak in 3Q22 at -7% YoY (vs. -4% YoY in 2Q22) as Sep number deteriorated (-9% YoY).</li><li>Meanwhile, the US has broadened the restrictions from targeting specific companies (Entity List) to specific products (semiconductors/ equipment above certain computing threshold). </li><li>Our channel checks suggested that the new rules have limited impact to existing commercial AI applications.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Number of China public security projects bidding remained weak in 3Q22 at -7% YoY (vs. -4% YoY in 2Q22) as Sep number deteriorated (-9% YoY).Meanwhile, the US has broadened the restrictions from targeting specific companies (Entity List) to specific products (semiconductors/ equipment above certain computing threshold). Our channel checks suggested that the new rules have limited impact to existing commercial AI applications.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China AI – Public Security Demand Remained Weak in 3Q22

China

Hangzhou Hikvision Digital Technology Co., Ltd develops, manufactures and sells video surveillance products.  The Company manufactures video and audio compression card, network hard disk video recorders, video servers, cameras, network storage, and other digital products.

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Hangzhou Hikvision (002415 CH)

Tech Supply Chain Tracker (15-Oct-2024): Foxconn doubles down on Zhengzhou investments.

Foxconn invests more in China for electric vehicles, Formosa Smart Energy innovates storage with solid-state batteries, India aims to be...

Tech Supply Chain Tracker

Hikvision (002415 CH) – Taking time to recover

Hikvision delivered a weaker than expected FY1Q23 with revenue of RMB16.2bn (-2% YoY) and net profit of RMB1.81bn (-21% YoY).

CMB International

CMBI Research Focus List (November Edition) – Our best high conviction stock ideas

In our last report dated 17 October, we highlighted a list of 21 long ideas.The basket (equal weighted) of these 21 stocks underperformed MSCI...

CMB International

China AI – Margin under pressure amid weakening demand

We are surprised to see Dahua’s QoQ decline in revenue, considering the lockdown impact in 2Q22. Innovative businesses growth (Hikvison +18% YoY/...

CMB International

China AI – Public Security Demand Remained Weak in 3Q22

Number of China public security projects bidding remained weak in 3Q22 at -7% YoY (vs. -4% YoY in 2Q22) as Sep number deteriorated (-9% YoY).

CMB International

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