HIKVISION(SZ:002415) CSC SECURITIES (HK) LTD·2025-10-20 07:50Investment Rating - The report maintains a "Trading Buy" rating for the company, indicating a potential upside of 5% to 15% from the current price [6][8]. Core Insights - The company achieved a revenue of 65.76 billion RMB in the first three quarters of 2025, with a year-over-year growth of 1.2%. The net profit attributable to shareholders was 9.32 billion RMB, reflecting a year-over-year increase of 14.9% [6]. - The company has shown improvement in operating cash flow, which reached 13.7 billion RMB, a significant year-over-year increase of 426.1%. This improvement is attributed to the active collection of accounts receivable, which decreased by 6 billion RMB year-over-year [6]. - The report anticipates a recovery in performance driven by policy support starting in the second half of 2024, with a focus on expanding business in various sectors and the implementation of AI products [6]. - Gross margin improved to 45.7% in Q3 2025, up by 1.4 percentage points year-over-year, primarily due to inventory destocking and the rollout of AI products [6]. Summary by Sections Company Performance - For Q3 2025, the company reported a revenue of 23.94 billion RMB, a year-over-year increase of 0.7%, and a net profit of 3.66 billion RMB, up 20.3% year-over-year [6]. - The company’s domestic business is currently under pressure from the overall economic environment, while overseas business is expected to continue its positive growth trend [6]. Financial Projections - The company is projected to achieve net profits of 13.5 billion RMB, 14.86 billion RMB, and 16.52 billion RMB for the years 2025, 2026, and 2027, respectively, with year-over-year growth rates of 12.7%, 10.1%, and 11.1% [6][8]. - Earnings per share (EPS) are expected to be 1.47 RMB, 1.62 RMB, and 1.80 RMB for the same years, with corresponding price-to-earnings (P/E) ratios of 22X, 20X, and 18X [6][8]. Market Context - The company’s stock price as of October 17, 2025, was 33.06 RMB, with a target price set at 36 RMB, indicating a potential upside [2][3]. - The stock has shown a year-to-date increase of 22.5%, with a 12-month high of 34.78 RMB and a low of 26.09 RMB [3].