Hikvision Investment Quality Review (002415.SZ)

Data timestamp: 2026-08-03 22:12 UTC
Quality score: 81/100
Valuation position: current price/base FV 1.04
Final signal: WATCHLIST

Core Conclusion

Hikvision remains watchlist only. Current price of CNY37.95 is slightly above base FV of CNY36.38 and materially above conservative FV of CNY24.48. The business quality is sufficient, but valuation does not provide a buy margin.

Business Breakdown

Five-year revenue CAGR is 3.2%, and latest-year revenue was CNY92.51bn. The installed base, product breadth, and overseas exposure support durability, while geopolitical risk, public-sector demand cycles, and margin pressure cap the multiple.

Business Quality

The 81/100 score is supported by cash generation, return on capital, and net cash. Latest-year FCF was CNY21.72bn. Five-year average ROE was 20.2% and average ROIC was 17.1%, but evidence quality and external risk prevent a stronger signal.

Financial Audit

Fiscal 2025 revenue was CNY92.51bn, net profit CNY14.20bn, operating cash flow CNY25.34bn, capex CNY3.62bn, and FCF CNY21.72bn. Five-year FCF/net income was 0.84 and OCF/net income was 1.12. Latest net cash was CNY38.36bn.

Valuation

The conservative case uses CNY21.72bn normalized FCF, 1.6% growth, and 8.7x, producing CNY24.48 per share. The base case uses 3.2% growth and 13.8x, producing CNY36.38. The optimistic case uses 4.7% growth and 19.9x, producing CNY51.01. Current price/base FV is 1.04, so there is no margin of safety.

Buy And Tracking Discipline

The action is watch. Upgrade requires price/base FV below 0.70, quality score at least 75, intact FCF repeatability, no worsening of export restrictions, and no governance or capital allocation deterioration.

Risk Review

Risks include sanctions, overseas market access, public-budget cycles, hardware margin compression, inventory or receivable stress, and capital allocation mistakes. Two weak cash-flow periods or a large net-cash drawdown would lower the FV.

Data Sources

The memo relies on public market and financial data, company filings or investor-relations materials, ChinaBond yield data, and public FX data where applicable. This is research only, not personalized investment advice.