There are not only six dragons in Hangzhou, but also the "Haikang system".

Written by Wu Lijuan

Editor丨Gao Yuanshan

Source: Bronco Finance

Recently, the "Hangzhou Six Little Dragons" have become a hot spot in the capital market. Game Science, the production company of the first domestic 3A game "Black Myth: Wukong", the domestic open-source model DeepSeek, and the Unitree Technology of the Spring Festival Gala Yangge Robot, Hangzhou's technology-based enterprises have stepped into the spotlight of the world.

Security leader Hikvision is also in Hangzhou, compared with these "technology upstarts", as a 24-year-old technology company, Hikvision (002415. SZ) is optimizing its capital structure and enhancing its market competitiveness through the spin-off of its subsidiaries and the listing of its subsidiaries.

After 11 months, last month, Hangzhou Hikvision Robot Technology Co., Ltd. (hereinafter referred to as "Hikvision Robot"), a subsidiary of Hikvision, finally completed the reply to the Shenzhen Stock Exchange's opinion implementation letter, which also indicates that Hikvision's "A split A" will add another member, and the number of "Hikvision" listed companies will increase to 3. Previously, EZVIZ Network (688475. SH), which was listed on the STAR Market on December 28, 2022.

Since its IPO in May 2010, Hikvision's share price has staged a myth of ten times in ten years. From a little-known small board card seller, it has developed into the largest security listed company with a market value of 100 billion, and has also sent the founder Gong Hongjia to the position of the richest man in Hong Kong.

As of February 27, Hikvision's share price was 30.95 yuan per share, with a market value of 285.8 billion yuan; EZVIZ Network's share price is 39.49 yuan per share, with a market value of 31.1 billion yuan; Hikrobot has not disclosed the financing amount for the time being, and the asset territory of the "Hikvision system" is still expanding.

　　01

The "Haikang Department" re-established the Capital Bureau

The third IPO is on the way

China's machine vision industry started around 1990 with the sale of overseas products, and in the 21st century, various companies have embarked on the road of independent research and development. Although it started late, after 20 years of catching up, the gap between China and abroad has narrowed rapidly, the most famous of which is Hikvision.

In the smart home track, it is not too late for Hikvision, a major security manufacturer, to make efforts. In 2013, a wave of "smart hardware" was set off in China, and many companies have increased their layout, and Hikvision is not far behind. Relying on its Hikrobot, it occupies about one-third of the global video surveillance equipment market.

The launch of Hikvision Robot's IPO can be traced back to December 2021, and Hikvision announced that it will spin off its subsidiary company Hikvision Robot and list it in China. In March 2023, Hikrobot's listing application was accepted by the GEM of the Shenzhen Stock Exchange; Two rounds of replies to the letter of inquiry were made in May and August of that year; On January 15, 2024, we received a letter from the audit center to implement the opinions, and after a year of hiatus, the reply was completed in January this year.

The proposed funds will be raised up to 6 billion yuan, mainly for the construction of robot research and development and production platforms.

Source: Pexels

According to the prospectus, from 2020 to 2022 and from January to June 2023, Hikvision and its subsidiaries and subsidiaries of China Electronics Technology have been among the top five customers of Hikvision Robot. The two are also the main suppliers of Hikrobot. This also makes Hikrobot's operational independence questioned by the outside world.

In the inquiry of the Shenzhen Stock Exchange, the impact of industry fluctuations on the performance of Hikrobot is a common concern. Hikrobot's revenue in 2019, 2020, and 2021 will be 940 million yuan, 1.525 billion yuan, and 2.768 billion yuan respectively.

But the high growth did not continue. From 2022 to January to September 2024, Hikrobot's revenue will be 3.9 billion yuan, 4.91 billion yuan and 4.21 billion yuan respectively. In 2023, its revenue growth has slowed to 25%, and the company said that the slowdown in the growth rate of major sub-sectors of the downstream industry and the entry of some sub-sectors into the stage of stock competition have further intensified the competition. From January to September 2024, the revenue increased by 19.41% year-on-year, while the net profit attributable to the parent company decreased by 29.78% year-on-year, mainly due to the continuous increase in sales expenses and R&D expenses.

In addition, Hikrobot's operating cash flow is under certain pressure, and the net cash flow from operating activities will be negative from January to June in 2021, 2022 and 2023.

At present, Hikrobot has 2 direct controlling shareholders. Among them, Hikvision holds 60% of the shares, and Qinghe Investment holds 40% of the shares, which is the shareholding platform for Hikvision's "co-investment plan" to co-invest in innovative businesses.

Performance growth slowed down, and the IPO process restarted again after a year of stagnation, and Hikrobot is facing a lot of pressure.

Source: Canned Gallery

As a spin-off subsidiary of Hikvision, in 2022, EZVIZ Network will be the first to go public. In 2013, Hikvision founded the "EZVIZ" smart life brand and set up an Internet business center, which is the predecessor of EZVIZ Network. Two years later, Hikvision invested in the establishment of EZVIZ Co., Ltd. with a registered capital of 1 million yuan. Since then, EZVIZ Network has officially entered the smart home track, during which it has launched a variety of cameras, fingerprint locks, etc.

EZVIZ Network's main business is smart home products, cloud platform services and computer software, and the specific products include indoor and outdoor PTZ machines, indoor waterproof machines, smart cat's eyes, smart doorbells, sweeping robots, children's video watches, etc.

Although EZVIZ Network's revenue has maintained positive growth in recent years, the net profit growth rate is not stable. From 2022 to 2024, the total operating income will be 4.306 billion yuan, 4.84 billion yuan, and 5.442 billion yuan, a year-on-year increase of 1.61%, 68.8%, and 12.41%, respectively; In the same period, the net profit attributable to the parent company was 333 million yuan, 563 million yuan and 504 million yuan, a year-on-year decrease of 26.1%, an increase of 68.8% and a decrease of 10.52% respectively.

The company explained that in 2024, EZVIZ Network will continue to launch competitive products, continue to expand and optimize the construction of domestic and foreign channels, and the overall revenue will grow steadily; However, the newly expanded intelligent new products are still in the early stage of market construction, the investment in various marketing expenses has increased, and the net profit attributable to the parent company has decreased year-on-year.

Huaan Securities believes that the robot and smart wearable business is the high-growth business of EZVIZ Network. In the second half of 2024, the company will also incubate the smart wearable business to cut into the elderly care scene with visual AI interaction; At the same time, the cloud service business is expected to grow faster than the C-end in this year.

Song Qinghui, a well-known economist, introduced, "there are pros and cons to spin-off and listing, from the 'pros' aspect: you can broaden financing channels, obtain a secondary premium on equity, etc., from the 'disadvantages' aspect: spin-off listing may dilute the parent company's profits from the subsidiary, while reducing the parent company's control over the subsidiary." The 'A splits A' policy and rules can be followed, which is relatively easy, but the time cost is high. ”

In addition, on November 29 last year, Lianru Technology (688449. SH) was listed on the Science and Technology Innovation Board. Founded in 2014, Lianru Technology is a platform-based chip design company that provides data storage master control chips, AIoT signal processing and transmission chips. Hikvision and Hikvision Technology hold 17.55% and 11.7% of the shares of Lianru Technology respectively, and are the second and third largest external shareholders respectively, and the "Hikvision" holds a total of about 29.25% of the shares. According to the market value of 26.8 billion yuan at the close of February 27, the book value of "Haikang Department" is about 7.839 billion yuan.

　　02

Why did the "first share of security" fall off the altar?

In addition to Hikvision Robotics, security leader Hikvision has built a strong innovative business camp through its subsidiaries, such as EZVIZ Network, Hikvision Weiying, Hikvision Automotive Electronics, Hikvision Storage, Hikvision Fire Protection, Hikvision Ruiying and Hikvision Huiying. This part of the business will contribute a total revenue of 18.553 billion yuan to Hikvision in 2023, accounting for 20.77% of the company's overall revenue.

Over the past decade, Hikvision's revenue has shown a strong growth trend. Unfortunately, 2022 will stall, and net profit will decline for the first time. At the same time, it also spun off and spun off its fast-growing innovative business.

In 2022, Hikvision's performance will change dramatically, with net profit falling 23.65% year-on-year to 12.83 billion yuan, which is the first decline in its 12 years since its listing. In 2023, in the case of market recovery, Hikvision's performance will usher in growth. In that year, the company's revenue and net profit were 89.34 billion yuan and 14.108 billion yuan respectively, a year-on-year increase of 7.42% and 9.89%; However, the good times will not last long, and the performance in 2024 will be under pressure again.

Source: Wind

In 2024, the total operating income will reach 92.486 billion yuan, a year-on-year increase of 3.52%, and the net profit will be 11.959 billion yuan, a year-on-year decrease of 15.23%. At the beginning of 2024, Hikvision's long-term and short-term borrowings totaled 11.059 billion yuan, and by the end of the third quarter of 2024, this indicator had dropped to 6.573 billion yuan, a decrease of 4.486 billion yuan. In this context, the company's debt ratio improved to 32.96%.

In terms of single-quarter performance, Hikvision only achieved a slight year-on-year increase in net profit in the first quarter, and the net profit in the second, third and fourth quarters all declined year-on-year, down 10.73%, 13.37% and 26.74% respectively, declining for three consecutive quarters.

In terms of regions, the growth rate of domestic business has declined, and overseas markets have grown steadily, and the company said that it will continue to focus on technological innovation, strive to improve operational efficiency, and promote the steady development of the company's business.

Shen Meng, director of Xiangsong Capital, believes that Hikvision's main business has been greatly affected by the sanctions imposed by the United States, but its other business segments within it are not closely related to the sanctions and have been affected, so the spin-off of the independent sector is conducive to minimizing the impact of sanctions and providing a better foundation for the growth of other sectors. At the same time, after the spin-off, Hikvision can continue to incubate new business projects, forming a virtuous circle.

In addition, Hikvision's performance in the secondary market is hardly optimistic. In 2021, its market value peaked at 645 billion yuan, and the overall downturn has been in recent years. After the release of the 2024 annual report on February 21, the stock price continued to decline, closing at 30.95 yuan per share as of February 27, and the market value fell below 300 billion yuan.

The competition in the security industry is becoming increasingly fierce, and Hikvision is also trying to find a way out. On the one hand, we will increase R&D investment and try to regain the right to speak in the market through technological innovation. In terms of technological innovation, Hikvision relies on its deep accumulation in the field of security and actively embraces the era of artificial intelligence. Combined with the self-developed multi-modal large model and intelligent computing hardware platform, the company has comprehensively upgraded its products such as intelligent computing, intelligent storage, intelligent search, and intelligent use.

In addition, Hikvision has also released a series of multi-modal large-model Wensou storage products, such as Wensou NVR and Wensou CVR. These products deeply integrate the multi-modal large model of large parameters and large sample size with embedded intelligent hardware, so that the backtracking of security video is no longer limited to traditional spatio-temporal, alarm and other retrieval methods, and improves the search efficiency of targets and events.

Brokerages also remain optimistic. Shenwan Hongyuan research pointed out that Hikvision has formed a benchmark case in energy, industry, agriculture and other industries. Considering that AI+ all-sensing downstream scenarios are relatively scattered, it will still take some time to form large-scale revenue. On the other hand, macroeconomic support policies have been introduced one after another, and fiscal pressure has eased, which is expected to drive a significant recovery in demand. The period of maximum macro pressure has passed, and the follow-up performance can be expected to improve quarter by quarter.

　　03

Hikvision has become "the richest man in Hong Kong".

As the former largest shareholder of Hikvision, Gong Hongjia, a famous technology entrepreneur, rarely appears in the public eye. However, what is talked about by the industry is that Hikvision once gave him the position of the richest man in Hong Kong, and Gong Hongjia also received more than 20,000 times the income, and also won the title of "China's Son Zhengyi".

As an angel investor, Gong Hongjia is not prominent in the domestic venture capital industry, and there are many labels about him on the Internet, such as "the most bullish angel investor", "A-share cash-out king", "China's version of Masayoshi Sun", ......

is known as the "most bullish angel investor" because Gong Hongjia has invested in many hard technology projects, the early results are not obvious, and then he continued to make additional investments and became a major shareholder, and some projects have also had good returns. He once publicly shared that he has a "three noes" principle for investment: "Only what others don't want to do, can't do, and dare not do, we can do." ”

Among them, the story of Hikvision lurking is well talked. It can be said that without Gong Hongjia's support at the beginning, I am afraid that there would be no Hikvision today.

Source: Canned Gallery

Gong Hongjia was born in 1964 in an ordinary family in Hubei Province, and her dream since childhood was to be a journalist or a lawyer. Later, he changed from a liberal arts student who loved literature to a science student, majored in computer science, and graduated from Huazhong University of Science and Technology.

At this university, he met his classmates Chen Zongnian and Hu Yangzhong (who are now the chairman and general manager of Hikvision, respectively). After leaving school, Gong Hongjia engaged in electronic product trading in Guangzhou and Hong Kong, and earned his first pot of gold through several years of hard work. After graduating, Hu Yangzhong and Chen Zongnian both worked in the 52nd Research Institute of China Electronics Technology Group Corporation.

The three alumni shared the same entrepreneurial passion and ideals, and together they founded Hikvision, and these three were once known as the "Three Musketeers" of Hikvision. At that time, Hikvision had a registered capital of 5 million yuan, of which Gong Hongjia invested 2.45 million yuan, holding 49% of the shares.

Subsequently, with the help of Gong Hongjia, Hikvision had its own H.264 algorithm standard software, got rid of its dependence on external software, and no longer had to pay software license fees to the patent owner of the software.

On May 28, 2010, Hikvision officially landed on the A-share market. At that time, Gong Hongjia held 124 million shares, accounting for 24.8%, and his wife Chen Chunmei indirectly held 3.42% of the shares. After Hikvision went public, it quickly grew into a leader in the industry, and its performance has maintained high growth for more than ten consecutive years. Since then, Gong Hongjia's worth has continued to rise, and she has also become a frequent visitor to various rich lists.

However, after the ban on restricted shares was lifted, Gong Hongjia began to reduce his holdings. According to Hikvision's announcement, from 2011 to 2018, Gong Hongjia reduced his shareholding in Hikvision at least 21 times, with a cumulative cash amount of 14.6 billion yuan. According to the statistics of the new media "City Boundary", as of March 2021, Gong Hongjia and Chen Chunmei have reduced their holdings and cashed out about 28 billion yuan, and have received a total of more than 6.4 billion yuan in dividends. Roughly calculated, Gong Hongjia's investment in Hikvision that year has returned more than 28,000 times.

According to the disclosure, the funds obtained by Gong Hongjia's reduction are mainly used for life and investment, and the investment areas are mainly health, environmental protection, education and other industries, and some angel investment.

As of January 17, 2025, Gong Hongjia holds 10.42% of Hikvision's shares, making it the second largest shareholder, with a value of about 27.143 billion yuan.

In 2014, Gong Hongjia founded Shenzhen Jiadaogu Investment and co-founded Jiahao Investment. In Gong Hongjia's investment map, Hikvision is only the tip of the iceberg. Tianyancha shows that Gong Hongjia has founded and invested in 27 companies and served as a director or chairman, covering fields ranging from stem cells, genes, Chinese medicinal materials to soil treatment. Among them, several projects are quite well-known, such as Nebula Dream Technology, Yandian, Boya Gene, Zhongyuan Concord, Yongtai Hung Hom, Fullhan Micro, etc.

According to incomplete statistics, in addition to Hikvision, EZVIZ Network, and Lianru Technology, Gong Hongjia has also led the investment in many projects, harvested many IPOs, and invested in at least 9 listed companies.

In 2000, China's first Chinese concept stock AsiaInfo (privatized and delisted) was listed on the NASDAQ in the United States, and Gong Hongjia was an important shareholder behind it. Gong Hongjia invested in 2004 in the domestic chip company Fullhan Micro (300613. SZ), listed on the Shenzhen Stock Exchange in 2017, Gong Hongjia received a return of more than 1,000 times; United Optoelectronics (300691.SZ), which invested in 2005, was also listed on the A-share market in 2017; In 2020, Genetron Health (GTH. O, delisted) and chip company VeriSilicon (688521. SH) was listed on the NASDAQ and the Science and Technology Innovation Board respectively, and Gong Hongjia received more than 100 times the return; In 2021, Gong Hongjia and his wife invested in the listed pharmaceutical company Zhongyuan Concord (600645. SH）。

In 2018, Gong Hongjia and Chen Chunmei ranked 31st in the "Hurun Report" with a wealth of 59 billion yuan. In 2019, it ranked 34th with a wealth value of 65 billion yuan. In 2020, the couple's wealth increased to 70 billion yuan again, ranking at the top of the 100 richest list. In the "Forbes Chinese Mainland Rich List" released on November 4, 2021, Gong Hongjia ranked first with a wealth of 95.3 billion yuan and won the position of "Hong Kong's richest man".

On the 2022 Forbes Global Billionaires List, Gong Hongjia's family wealth is 13.2 billion US dollars, about 89 billion yuan, far exceeding many entrepreneurial tycoons, such as his Hubei hometown Lei Jun (11.7 billion US dollars), as well as Internet tycoons Huang Zheng, Wang Xing, Liu Qiangdong, etc.

With the decline in Hikvision's market value, Gong Hongjia's wealth value has also been affected. On January 15, 2024, Gong Hongjia's family ranked 257th on the "Hurun Global Rich List" with a wealth of 65.5 billion yuan.

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