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01 Hu Yangzhong, chairman of Hikvision, has seen his annual salary rise by 24%, and he is committed to improving quality and efficiency after the new official takes office.

02 The company has recently carried out large-scale organizational adjustments, and the 32 R&D areas have shrunk to 12, which is expected to involve more than 1,000 people.

In 032023, Hikvision's R&D investment was 5.698 billion yuan, a year-on-year increase of 7.81%, and its sales expenses were 5.562 billion yuan, a year-on-year increase of 13.81%.

04 However, Hikvision's net profit margin fell to 13.69% in the first half of this year, hitting a new low, and accounts receivable increased to 36.8 billion yuan.

05Due to the change of the core senior management team, Hikvision pursues a younger management team, and Chairman Chen Zongnian focuses on the management of the controlling shareholder CLP Hikvision Group.

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Text/Rui Finance Zeng Shujia

Hu Yangzhong, who was promoted to chairman of Hikvision, has been talking about cooperation, investigation and research everywhere in the past few months.

Hu Yangzhong attended the signing ceremony of the strategic cooperation between Hikvision and Liaohe Oilfield, and also went to Zongshen Group and Humi Technology to visit and exchange, and signed strategic cooperation agreements with Zongshen Group and Humi Technology respectively. Subsequently, Hu Yangzhong also made a special trip to Dafeng Industrial Science and Technology Innovation Center, the vice president unit of the Chamber of Commerce, for investigation and research.

Whether it is the energy industry, or the cultural, sports and tourism industry, Hikvision is involved.

As a global security leader, Hikvision has tens of thousands of IoT sensing product series, covering front-end cameras, audio, sensing and other categories, which are widely used in public safety, transportation, finance, energy and other industries.

Hikvision is also the "first security stock", and its revenue has grown rapidly since its listing in 2010, and its share price has set a record of 68.44 yuan per share in 2021. Only in recent years, due to the adjustment of the market environment and the decline in its own performance, the stock price has fallen in response, and the current stock price is hovering around 28 yuan / share, down 58% from the highest point of the stock price three years ago.

Since the beginning of this year, Hikvision has been constantly changing. It has carried out a top-down personnel adjustment, from the change of the core senior management team to the optimization and adjustment of the core R&D team, all of which reflect the determination to change.

The marketing network is expanded

On Hikvision's official website, a report about Hu Yangzhong was prominently placed on the Home.

"At present, in order to make money for innovation and operation, Hikvision itself has been doing the work of improving quality, increasing efficiency and reducing costs." Hu Yangzhong said that in the past few years, everyone has been very optimistic about AI, but in fact, AI has not brought good returns, and it is still necessary to return to management to produce benefits.

Hu Yangzhong, the new official, has become the focus of market attention for what considerations Hikvision will have in the future.

Obviously, Hikvision pays more attention to improving quality and efficiency. A few days ago, Hikvision employees revealed on the Internet that the company is undergoing large-scale organizational adjustment in the near future, and the 32 R&D areas have shrunk to 12, "It is expected to involve more than 1,000 people." ”

Hikvision responded: "There is no large-scale layoff in the company, it is an adjustment of business strategy, and it is necessary to optimize the R&D strength of the headquarters and key sales cities, so it has adjusted some regional job settings accordingly." ”

In recent years, Hikvision has attached great importance to R&D investment. From 2019 to 2023, Hikvision has invested a total of 41.322 billion yuan in research and development.

In 2023, the total number of Hikvision employees will be 58,544, an increase of 260 year-on-year, including 28,479 technicians, an increase of 564 year-on-year, and 9,927 sales personnel, a year-on-year decrease of 158.

In the first half of this year, Hikvision's R&D investment was 5.698 billion yuan, a year-on-year increase of 7.81%, while sales expenses were 5.562 billion yuan, a year-on-year increase of 13.81%, a higher increase. Compared with 2023, the increase in R&D expenses is 16.08%, while the increase in sales expenses is 10.94%.

Hikvision continues to increase its investment in domestic and foreign marketing networks to increase revenue.

After all, after experiencing positive growth from 2010 to 2021, Hikvision has faced the problem of slowing revenue growth and negative net profit growth in the past two years, and gross profit margin and net profit margin have shown a downward trend.

In the first half of this year, Hikvision achieved a total operating income of 41.209 billion yuan, an increase of 9.68% over the same period of the previous year, a net profit attributable to the parent company of 5.064 billion yuan, a year-on-year decrease of 5.13%, a non-net profit of 5.243 billion yuan, a year-on-year increase of 4.11%, and a gross profit margin of domestic business of 43.58%, a year-on-year decrease of 1.76 percentage points.

In addition, in the first half of 2024, Hikvision's net profit margin fell to 13.69%, hitting a new low.

During the period, Hikvision received a government subsidy of 297 million yuan, but the one-time expense loss caused by the cancellation of the equity incentive plan was as high as 471 million yuan.

Hikvision is backed by state-owned assets and has always relied on large customers such as the government. However, in the first half of this year, Hikvision's PBG business achieved revenue of 5.693 billion, a year-on-year decrease of 9.25%, and the business from the government decreased. On the other hand, Hikvision's accounts receivable are rising, and they have increased to 36.8 billion yuan in the first half of this year.

At the 2024 interim results meeting, regarding the expectation of maintaining positive growth for the whole year, the management responded that from the company's perspective, we are still optimistic about the market.

"Although the promotion of special bonds and treasury bonds may not be so fast, the policy has been released, and it may take time for the water to flow to the fields, it is not that the water flow is slow, which means that the market has no opportunity at all." The management believes that in the past, it may have focused on making a few products, but now that Hikvision can supply more types of products, it can sell more products.

He said that the company can now provide users with a variety of business types, such as scenario digital business, marketing colleagues need to communicate more with users to promote business development, so that they can find more opportunities in deterministic projects.

Executive changes

Since the beginning of this year, Hikvision has changed and adjusted more, largely due to the changes in the core management team.

In August this year, Hikvision announced that Chairman Chen Zongnian, Executive Deputy General Manager Wu Weiqi, and Senior Deputy General Manager Jin Duo withdrew from management.

At the same time, Hu Yangzhong, the former general manager of Hikvision, was elected as the chairman, Xu Peng, the former senior deputy general manager, was promoted to the general manager, Huang Fanghong was the senior deputy general manager and secretary of the board of directors, and Jin Yan was the senior deputy general manager and financial director.

The chairman and general manager were rotated, and according to the management, "after this adjustment, all the post-60s executives in Hikvision's management team have withdrawn." ”

The pursuit of a younger management team is Hikvision's goal. According to the disclosure, Chen Zongnian, Wu Weiqi and Jin Duo are 59, 60 and 59 years old respectively.

However, the new helmsman, Hu Yangzhong, was born in 1965 and is now 59 years old. He is a native of Jingzhou and was admitted to the Computer Department of Huazhong University of Science and Technology in 1982, where he met Chen Zongnian and Gong Hongjia.

And Chen Zongnian, Gong Hongjia, and Hu Yangzhong are known as the founding three musketeers of Haikang. In the past ten years, Chen Zongnian, as the chairman of Hikvision, is the soul of the company's development and guides the strategic development direction, while Gong Hongjia holds shares, does not receive remuneration, and does not even participate in the management of specific affairs, while Hu Yangzhong focuses on daily operations.

At present, Hu Yangzhong has officially been pushed to the position of the top leader of Hikvision, considering the company's medium and long-term strategic planning and long-term vision.

Chen Zongnian, who withdrew, focused more on the management of China Power Hikvision Group, the controlling shareholder of Hikvision. Tianyancha shows that Chen Zongnian is currently the chairman of CLP Haikang Group and the chairman of Phoenix Optics. In addition, in September 2024, Chen Zongnian served as a member of the Chongqing Aerospace Information Industry Expert Committee.

CLP Hikvision Group is a core backbone enterprise under the state-owned China Electronics Technology Group Co., Ltd., with three listed companies, Hikvision (002415), Phoenix Optics (600071), and EZVIZ Network (688475), as well as a number of technology companies.

According to Hikvision's 2024 semi-annual report, CLP Hikvision Group, CETC Investment Holdings and the 52nd Research Institute of China Electronics Technology Group Corporation are both controlled by China Electronics Technology Group, holding 36.55%, 2.63% and 1.94% of Hikvision shares respectively. Gong Hongjia holds 10.32% of the shares, and Hu Yangzhong holds 1.67%.

Hu Yangzhong also holds shares of Hangzhou Weixun Equity Investment Partnership (Limited Partnership) and Hangzhou Pukang Equity Investment Partnership (Limited Partnership), which hold 4.83% and 1.96% of Hikvision shares respectively.

As for Chen Zongnian, he is regarded as 0 shareholding and 0 remuneration in Hikvision.

In 2023, Hu Yangzhong will receive a remuneration of 3.0093 million yuan from Hikvision, an increase of 23.56% from 2.4354 million yuan in the previous year.

According to the financial report, the total remuneration of Hikvision's overall executives has increased from 38.8367 million yuan in 2022 to 42.5554 million yuan in 2023, an increase of nearly 10%.

Related company: Hikvision SZ002415

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